The U.S. economy is growing slowly and Europe's hardly at all. The stock market lurch last week is a belated acknowledgement that our two economies share a common affliction, and Europe suffers more seriously. The affliction is austerity. And yet the main remedy being promoted by the U.S. government and its European allies is a trade and investment deal known as T-TIP, which stands for the Trans-Atlantic Trade and Investment Partnership. According to the deal's sponsors, T-TIP would help stimulate recovery by removing barriers to trade and promoting regulatory convergence and hence investment. The proposed deal is not popular in the U.S. Congress, which has to approve negotiating authority. The administration, say well-placed sources, hopes to cram through the necessary approval during the lame duck session of Congress after the November 4 election. That still will not assure approval, because the deal is also increasingly unpopular in Europe.
Underlying and reinforcing fears is the knowledge within the financial community that sovereigns expended so much of their capital in coping with the last worldwide economic crisis, there is little left for policymakers to react with when the next big financial and economic tsunami strikes the global economy.
Without economic prosperity and the lifting of the lower and middle classes, no amount of social justice will enable India to compete in the global marketplace; or its citizens, including minorities, to thrive and advance. Narendra Modi, having come from a humble background, understands this fact well.
Our elected representatives would rather upset those who come back from the office or the factory than those returning from the supermarket. The person elected chooses to encourage the lowering of product prices because that appeals to the consumer, even though this decrease favors imports and hurts local workers. The elected official chooses to increase taxes on work and to lower taxes on consumption: more income tax and less value added tax.