Expert Zone

The resurrection of Congress

(This piece comes from Project Syndicate. The opinions expressed are the author’s own)

The overwhelming victory of the Indian National Congress in elections in the important southern state of Karnataka in early May has shaken up the country’s political scene. India’s troubled ruling party had appeared headed downhill in the build-up to the next general elections, which must be held by May 2014. Now, following its huge win in Karnataka, all bets are off.

Karnataka (whose capital, Bangalore, is a symbol of India’s thriving software and business-process-outsourcing industries) had been ruled for the previous five years by the Bharatiya Janata Party, the country’s main opposition party, which governed India from 1998 to 2004. The BJP’s victory in the state in 2008 was hailed as a milestone in its effort to position itself as a natural party of government. Support for the BJP in Karnataka, with its affluent, well-educated voters and its significant Christian and Muslim minority populations, was widely depicted as evidence that the party – usually identified with Hindu chauvinism and an electoral base concentrated in Hindi-speaking northern states – could broaden its appeal beyond its traditional constituencies.

As the Congress-led national government (of which I am a member) reeled under a series of political and financial scandals, the BJP increasingly sought to position itself as the obvious national alternative. India’s hyperactive media began to celebrate the ambitions of the BJP’s most visible leader, Narendra Modi, chief minister of the western state of Gujarat, who has assiduously presented himself as an avatar of effective government, in contrast to the controversy-ridden establishment in New Delhi. The BJP, however, proceeded to paralyze Parliament with unruly calls for the government to resign.

Why India slowed

This piece comes from Project Syndicate. The opinions expressed are the author’s own

For a country as poor as India, growth should be what Americans call a “no-brainer.” It is largely a matter of providing public goods: decent governance, security of life and property, and basic infrastructure like roads, bridges, ports, and power plants, as well as access to education and basic health care.

Is finance too competitive?

The opinions expressed are his own

Many economists are advocating for regulation that would make banking “boring” and uncompetitive once again. After a crisis, it is not uncommon to hear calls to limit competition. During the Great Depression, the head of the United States National Recovery Administration argued that employers were being forced to lay off workers as a result of “the murderous doctrine of savage and wolfish competition, [of] dog-eat-dog and devil take the hindmost.” He appealed for a more collusive business environment, with the profits made from consumers to be shared between employers and workers.

Concerns about the deleterious effects of competition have always existed, even among those who are not persuaded that government diktat can replace markets, or that intrinsic human goodness is a more powerful motivator than monetary reward and punishment. Where the debate has been most heated, however, concerns the effects of competition on incentives to innovate.

Is inequality inhibiting growth?

By Raghuram Rajan
The opinions expressed are his own

To understand how to achieve a sustained recovery from the Great Recession, we need to understand its causes. And identifying causes means starting with the evidence.

Two facts stand out. First, overall demand for goods and services is much weaker, both in Europe and the United States, than it was in the go-go years before the recession. Second, most of the economic gains in the U.S. in recent years have gone to the rich, while the middle class has fallen behind in relative terms.

The hazard of second best

By Mohamed A. El-Erian

(The views expressed in this column are the author’s own and do not represent those of Reuters)

NEWPORT BEACH – The international community risks settling for second best on two key issues to be discussed this month at global meetings in Washington, DC: the lingering (if currently somewhat dormant) European debt crisis, and the selection of the World Bank’s next president. It is not too late to change course, but doing so will require the United States and governments in Europe to resist harmful habits, and emerging countries to follow up effectively on recent initiatives.

Scary oil

(The views expressed in this column are the author’s own and do not represent those of Reuters)

Today’s fragile global economy faces many risks: the risk of another flare-up of the euro zone crisis; the risk of a worse-than-expected slowdown in China; and the risk that economic recovery in the United States will fizzle (yet again). But no risk is more serious than that posed by a further spike in oil prices.

Egypt’s unfinished revolution will succeed

By Mohamed A. El-Erian

(The views expressed in this column are the author’s own and do not represent those of Reuters)

NEWPORT BEACH – A year ago, Egyptians of all ages and religions took to the streets and, in just 18 days of relatively peaceful protests, removed a regime that had ruled over them with an iron fist for 30 years. Empowered by an impressive yet leaderless movement – largely of young people – the country’s citizens overcame decades of fear to reclaim a voice in their future.While much has been achieved since those euphoric times, Egypt’s revolution today is, unfortunately, incomplete and imperfect – so much so that some now doubt whether it will fully succeed. I believe that the doubters will be proven wrong.