Diminishing Glory of UK and USA

The British empire had colonies across the globe. They were there everywhere on earth. Thus there was a saying that, ‘the sun never set on British Empire’, because always it was day time somewhere in the empire. Today United Kingdom is a developed country, but is loosing it’s significance day by day. 

USA emerged as world leader, after British Empire. USA the superpower helped several poor nations and been a true world leader. Now, we see both USA and UK moving in the direction which will make them insignificant in few decades.

The sole purpose of controversial Brexit’s was not just to end mango and curry war. It was an ambitious decision with an intention to make UK a more sustainable economy. But the people in UK and their lawmakers are still in the hangover of Brexit. They of course can blame Covid-19 and lockdown. USA on the other hand didn’t  make any such remarkable change in the recent past, other then voting out former US president Donald J Trump, after his first term in office.

Today the world order is capitalism, which is accepted by most of the countries in the world. So it is not the ideology, but a radical change is need of the hour, for both USA and UK to make their economy flourish and to continue as world leaders. 

Import Export deficit in UK and USA:

The outbreak of covid-19 worked like a litmus test for both UK and USA. It was a deadly virus and not a war. Both UK and USA banked heavily on other countries like China, Turkey etc. for PPE kits. USA had quite a few companies manufacturing ventilators, while UK had to import them from other countries. This is a textbook example of how bad the manufacturing sector in both countries and how prepared they are to face an emergency like Covid-19. Those countries who supplied it, has manufacturing units which provides employment for many. Promoting manufacturing sector is one good way to create employment and to reduce dependency. 

In 2019, United Kingdom exported for a total of $446 billion, making it the number 10 exporter in the world. And their import in the same year was for an amount of $664 billion. Similarly, for USA the total exports was for an amount of $2.5 trillion, while the import of goods and services stood at $3.1 trillion. The manufacturing cost may be equal or little more than the price for which they import from a country like China, due to increased tax and cost of labour in USA and UK. But that is an issue which local governments can deal, with increased duty on imported goods, when it’s available from local vendors.

 

Firms in USA and UK reducing business operation cost:

Couple of years ago, I used to work in call centres. My job was to speak with customers from USA, UK and Canada. Few callers used to say; ‘you Indians have taken away our jobs’. Call centres, software development and whole bunch of jobs in service sector is being outsourced to India, Philippines and some African countries. It’s been a practice for more than two decades or more. And it cannot be reversed now, because credit card companies agreed to give their customers in USA or UK, a low APR (Interest rate), a toll free number to call, assuming that the call will be answered by someone in India for a much lower wage than their counterparts in USA or UK. Similarly, insurance companies agreed to give insurance cover for a reasonable premium because backend works like underwriting (risk calculation), checking records will be done from India and service calls will be answered by someone in India or Philippines for a lower wage. But there is something more to it.

On 17 August 2021, labour market overview released data from ‘office for National Statistics' which says unemployment rate in UK as 4.7%. 

National unemployment rate in USA stands at 5.2. Most of the jobs in service industry is outsourced to other countries from USA and UK. USA is in world’s second position with global manufacturing output of 16.8%, next to China. UK stands at ninth position in global manufacturing output with 1.8%. And the unemployment rate in China is at 5% with a global manufacturing output of 28.7%, Japan’s unemployment rate is at 2.9% with global manufacturing output of 7.5% and in Germany the unemployment rate is at 5.6% with global manufacturing output of 5.3%.  China, Japan and Germany don’t outsource their jobs in service industry to other countries. So the above figures states that the parameters used to calculate unemployment rate in USA and UK is either wrong or misleading. 

Furthermore, the poverty rate in USA as per the ‘United States census Bureau' is at 10.5% in 2019. And poverty rate in UK is well above 10% in all people, children, working-age adults and pensioners as well. This tells us that the unemployment rate excludes those under-employed and the employment rate is calculated including jobs which cannot be considered as a day job. For example; those who say things like; I am a blogger, I am a Youtuber and so on cannot be considered as a day job, unless it helps them to earn the national minimum wage of £8.91 and earns amount equivalent to that of at least 30 hours a week. 

     

In United States, the minimum wage itself is not uniform across all states. In few states it is $15 an hour and in many states it is $12 an hour or less. There were protests for pay rise in USA. Several business owners in USA said that they had difficulty in getting workers after pandemic, till they offered to pay $15 an hour. If employers are ready to pay $15 an hour even in states where the minimum wage is less than $15, then the government should raise the minimum wage across United States to  $15 an hour.  American workers cannot come out of debt trap, unless the government raises their minimum wage to $15 an hour.

In the above picture, those states in Saffron colour had increase in minimum wage.

America cannot be the superpower for long, unless they stop spending American tax payers money on waging war against other countries to create market for weapon lobby. America cannot afford to wage war for helping oil lobby, using tax payers money. America and all other G7 countries cannot think of sustainable development through heavy tax exemption for large corporates like Amazon, Mc.Donalds, KFC and so on. A fundamental change in the way they handle their economy is the only way ahead for progress.

Another major issue which comes in the way of development is debt trap. American lawmaker Bernie Sanders  once said on CNN that American workers are living pay check to pay check and they don’t have a nickel to put into their bank for their future. Pay rise alone will not help Americans to save money for tomorrow, unless government makes some policy changes.

The average American debt total is $52,940.

Average total debt per UK household in June 2021 is £62,706.

Someone who is out of college, or got separated from parents  and is doing part time job while studying will get a magic card at the age of eighteen. He or she who was taught that building and maintaining a great credit history will help them to live a great life will readily accept it. And they know a credit card is necessary to rent a car, to rent a hotel room and to avail various service. 

On a weekend, they will use the card for shopping, party and movies. The card will soon reach it’s limit of $300 and will start paying interest, which will continue for the rest of their life. A better job after education may help them to pay off all the card balance. So they get cards from other banks and will take personal loan, even without knowing what it is for. The bank offering personal loan is to collect interest, but the borrower often borrows it even without a real need for money. And they will end up using their credit cards for an expensive vacation or honey moon. And a loss of job will end in bankruptcy, sordid relationship or even divorce. Then they start spending their hard earned money on lawyers and financial consultants who help them in debt consolidation. One will get to see many youngsters deceiving others for a $100 bill for weekend party. It is time for us to teach values for them to be successful in their lives and to avoid expensive therapies for depression. 

We need to understand that our lives are not meant to maintain a burden. Our lives are not meant to get a score for effective management of a burden. And this is applicable not just for UK and USA, but to all those countries, where credit history matters. 

We teach our young ones that maintaining a great credit score will help us to get an expensive car, house and whatever we want. Instead, we should teach our young ones to save money for tomorrow. And in order to make this a habit, the government should make laws to accept savings as much as they accept credit history. If credit score is an aggregate of repayment history, assets and liabilities of an individual, then credit card shouldn’t be a prerequisite for availing any service like car rentals. Any sort of insurance provided for using credit card for a transaction should be made available on debit cards as well. There shouldn’t be a service, which one cannot avail without a credit card, when he or she has money in the bank account. We are not meant to work through out our lives to pay interest, past due fee, over limit fees to banks and financial institutions. 

Most of these issues I have listed in this article like poverty, unemployment, etc. existed in USA and UK. And one could see a remarkable improvement in the last four or five decades. However, many developing countries who were worse in all this metrics are doing far better than USA and UK.  So it is time for a course correction to stay relevant and to be the world leaders.

India declared nationwide lockdown on 24 March 2020. It’s been eighteen months since then. Now more than 50% of our population has been vaccinated. Yet we see restrictions here and there, which depends on increase in Covid-19 infection rate. Mass gatherings like wedding and parties are not allowed. Movie theatres and shopping malls in India are either shut or are open with restricted COVID norms. Soon we will be going back to normalcy.

Our union government and every state governments have helped people with basic necessities like an increase in groceries supplied through PDS. Few states did extremely well, while others did not do much. Kerala did extremely well in supplying quality food stuffs and essential commodities through PDS till last month. In Kerala, it was extended to all, regardless of their financial status. 

On 12 May 2020, our Prime Minister Narendra Modi announced 20 lakh crores Athmanirbar Bharath Abiyan ( self-reliant India campaign). Athmanibar Bharath Abiyan was projected as a major economic relief package from our Union government.  Union finance minister Nirmala Sitaraman and our prime minister made many announcements about various measures meant to help the poor during lockdown. But most of them remained as mere campaign. Of course there were some relaxation in penalty for not filing GST and income tax. The package offered certain loan schemes for MSMEs in manufacturing industry. Those in manufacturing sector were eligible for such loans even without this special scheme. Rest of the scheme were to help power corporation and so on, which meant nothing to the middle class and the poor.

In the last eighteen months, lockdown was on and off in India. Shops, factories and offices were closed. And all those employed in private sector, who could not do they job remotely from home  and the  small shop owners are the worst affected. Many of them had credit card bills, personal loans, home and car loan. Those who had savings to repay their credit, despite unemployment have done that. But there are thousands who couldn’t do it. 

Union government of India should consider making policies to waive all the interest, late fee and other penalties from banks to enable the working class and small business owners to repay their debt, without ruining their credit history. Complete waiver of interest, late fee and any penalty from March 2020 to October 2021 for those who are delinquent will help them to repay. Not doing so will make many decide not to repay their debt, which is too much for them. It will be a huge loss for banks. Other than that it will lead to collection agents harassing the working class and the poor. Paying to collection agents will not help the banks to recover even the principle amount and the borrower’s credit history will remain bad. And that could mean denying credit to a large population of our country. Punishing the public or denying opportunities for a section of society, due to a calamity is not right.

Kerala:

Kitex moving out of Kerala:

Apparel giant Kitex decided to setup their new garment factory in Telangana. Sabu. M.Jacob, managing director of Kitex Garments LTD decided to withdraw from ₹3500 crores investment in Kerala. He said that he had an emotional attachment with Kerala and wanted to setup his factory in Kerala. He blamed the ruling LDF and said that 11 inspections were held at his factory premises, even without warning.  

flamesofdissent.com appreciates the officers who conducted inspections and the ruling LDF government for not compromising with environment and safety norms. Sabu M Jacob, managing director of Kitex Garments LTD need not have to take it personally. It is business. And people of Kerala should accept this move and should continue to purchase their favourite brand, without any prejudice and shouldn’t boycott brand ‘Kitex’. 

For ‘Kitex’, Telangana is far better option with great infrastructure, labour available in abundance and some special concession from government. A plant worth 3500 crores in Kerala will lack work force. People in Kerala will look for executive jobs and will have to depend on migrant labourers for the rest. Majority of labourers in small and big factories in Kerala are from Bengal, Bihar, Odisha and UP. It cannot be different in existing ‘Kitex’ factory in Kerala.

Those who blame Kerala Government for not accommodating ‘kitex’  with some special concession should ask themselves, will people of Kerala accept a proposal  for road widening across Kerala? The world has changed, but not Kerala. It is true, because we just cannot change the terrain, climate and vegetation in Kerala. Kerala cannot change and it should not change. The tranquillity and serenity of nature we enjoy in Kerala is because, we don’t allow large scale excavation and exploitation of nature.  

It is not an attempt to justify something or to preach ideas which are not practical. International organisations like ‘World Bank' are spending millions across the globe to protect nature, to stop global warming and for sustainable development. Hence, we should appreciate the bold decision of Kerala chief minister Pinarayi Vijayan.  

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