‘Losers in globalisation are those held back by the lack of it (globalisation)’

In an era of high-profile, highly visible journalists, The Economist has also held on to its idea of the anonymous journalist and remains deeply suspicious of the byline.

Its Editor-in-Chief, John Micklethwait, was in Delhi last week, and found time, with its Asia Editor, Simon Long, and South Asia Correspondent, James Astill, to talk to journalists from the Express group on India and the world economy and the latest challenges in print journalism.

JOHN MICKLETHWAIT: When we went to interview the Prime Minister and as we sat there pestering him, as journalists are wont to do, it struck me how much things have changed. I last came here about twenty years ago. The idea that someone could regard a 7 per cent rate of growth as somehow sluggish seemed rather odd. Back then, we were coming to interview people about things like steel quotas, rather than asking about the number of hi-tech jobs and talking about things like talent shortage in Bangalore. Back then we were writing about the license raj and what it meant. Now, by contrast, we’re writing about them taking over Corus, about software, about a whole different version of things like corporate-social responsibility from an Indian perspective, because an Indian perspective matters around the world.

I think, yes, we are critical about India, too, but I think that’s probably the right way in which to treat India nowadays. I think the days when you could look merely at India as just another emerging economy and you didn’t have to treat it, if you like, at a sort of “grown up” level, have gone. You are now the third biggest economy in the world by purchasing power parity. And with that comes a certain degree of circumspection and criticism. Yes, we are occasionally critical of India, but if you look at our pages, you will find that we are more critical of other small countries, such as America, Britain, China, Japan, Russia!

GAUTAM CHIKERMANE: At your press conference you said that India’s growth would rise by 7.7 per cent, while everyone else is talking about 8-10 per cent. You also said that this growth rate can slow down to 6 per cent if structural reforms do not happen. Would you like to mention three key structural reforms that are needed today?

SIMON LONG: In answer to your question on what seems to be the biggest obstacles to growth, they are the obvious ones — infrastructure, education, and perhaps — I was surprised when I was doing this business report last year — the extent to which people cite labour market rigidity as a hindrance, particularly in labour intensive manufacturing.

JOHN MICKLETHWAIT: Actually, there seems to be quite an interesting gap. If you talk to politicians in India, they tend to play down labour market reform, but if you talk to Indian business people, particularly people remotely connected to manufacturing, they do bring this up. Especially, business people outside India who will bring this up for not investing here.

A. SATYA AYYAGARI: What are your views on “reverse globalisation”, for instance, Indian railway engineers working in British railways or Indian nurses and English teachers being in demand in Britain. Is this “reverse globalisation”?

JOHN MICKLETHWAIT: I don’t see that as reverse globalisation but globalisation. Globalisation is about the free movement of people, capital, and goods. And it is very convenient sometimes to avoid free movement of people and to think about other things. But that is part of how the global economy works, and is a part of the benefits of globalisation. Look at the huge contribution that the Indian people have made to the British economy, or for that matter, the American economy — go to Silicon Valley and see the enormous contribution Indian engineers have made. At the same time you see some degree of fear, if you mention the word Bangalore in Silicon Valley now, people no longer look on you quite so kindly, they’re worried about it. And that is essentially the process of globalisation, sometimes cruel, uneven, or even unfair. But overall, as a process, it enriches the world and you can see India as one of the great examples. If you open up the market and society, you can see enormous growth in its wake. I don’t see Indians coming to work in Britain or vice versa as a reverse, but that is what globalisation is about, the dream of a liberal free market and open society that The Economist has always supported.

MINI KAPOOR: What is The Economist’s position on Iraq, because The Economist had made a very confident case for war, and ever since, you’ve been moderating your position. How did it change editorial processes?

JOHN MICKLETHWAIT: It hasn’t changed editorial processes. The Iraq decision was certainly one of the more difficult ones. But it was one I supported. But the Iraq war has plainly been a disaster. James has spent a lot of time in Iraq, detailing the ways the war has gone badly. It hasn’t been well-handled. At the moment, the current debate which we have controversially supported is the idea of the surge, which is not universally supported by the journalists. But we think the surge was worth it in terms of what has happened in Baghdad. Not because we think that Iraq will be turned rapidly into a paragon of democracy and peace, but the possibilities of things getting much worse if the Americans left , which is the other alternative. The common view you often hear is that things that can’t get much worse in Iraq is sadly untrue. They could get worse. We thought that by trying this policy, giving the Iraqi government some room to move ahead with other reforms that it was doing. But we don’t make any great pretence that it’s a case of redeeming the entire situation.

SAUBHIK CHAKRABARTI: There has been an intellectual paradigm shift over the last 20 years. Many more people think the way The Economist does than they did in the 1970s. Do you see the possibilities of a regression from here? And if you do see this, where do you think it will come from?

JOHN MICKLETHWAIT: I think you’re right. If you look at the reasons why The Economist has grown, you can argue it is because, in broad terms, the things we argue for have done well. The mere fact that last year the emerging world accounted for half the world’s output, and the changes in India as well, is what we have stood for. I don’t feel smug though, but worried. In general, there are more people who feel the same way about the world than we do, but there’s a conspicuous lack of political parties who do. You go to America, and find the Republicans are more liberal, in our sense of the word, on economic policies. But hopelessly illiberal when it comes to social policies. The Democrats are the other way round. Wherever we go, its very difficult to name a party in the world (somebody suggested an obscure party in Germany) that follows our policy and that, I think, says something about the ability to turn these kind of messages into politically powerful ones.

In terms of where I think the problem will come from, I think basically the huge mistake of the business community is to presuppose that because something is backed by economic logic and by technology, it is inevitable. If you look back at history of India or anywhere else — the idea that economic logic or technology will conquer baser emotions like Nationalism or religion — is completely disproved by history. There are, therefore, reasons always to be wary. You look at what is happening with the Doha round and its virtual collapse, you look at the growing amount of bilateral deals, you look at problems of immigration, xenophobia, you see problems in America and other countries — there are grounds to be worried. I think this time the real danger is regional trade blocks. That would be the area where I see the most frustrations. These blocks would leave a lot of parts of the world uncovered and a lot of poor people will suffer.

MAHUA VENKATESH: There is talk of the US economy slowing down. If it indeed does, how will this affect the process of globalisation and the emerging economies.

JOHN MICKLETHWAIT: We had a cover last year which said ‘America drops, Asia shops’, which sort of summed up what is happening. The prospect of a hard landing because of the imbalances in the world economy are still possibly there, but the current picture of consumption is picking up quite dramatically in Asia and also in Europe.

But as far as globalisation goes, I’m worried about one thing: if you look at inequality, particularly in America, the rich have got even richer and the median income has barely budged. What is interesting is that just in the last couple of quarters, you began to see a sign of the wages beginning to rise. What if you’ve seen in the last ten years is the returns to capital increasing dramatically and returns to labour proportionately going down? What is happening now is that if you have the prospect of a downturn then inequality will become much bigger issue in the American elections. Around the world it is already a much bigger issue, including in places like Japan. The corporate boss in Japan now is paid 35 times what the median worker is paid. In America it is 411 times.

MANINI CHATTERJEE: Several people have said that the world has come around to The Economist’s point of view of being very pro-reforms and pro-globalisation. But there is a persistent feeling, in India especially, that somehow, reforms, despite their obvious benefits, are still anti-poor. You yourself said that in very advanced capitalist economies, inequality is growing. Do you see this as a worldwide trend that despite the benefits, the image of reforms continues to be anti-poor in vulnerable sections?

JOHN MICKLETHWAIT: It is interesting, and the debate is different in different countries. In general, in formerly poor countries (there are) two groups of winners: people pulled out of poverty and pushed forward, and the well-educated, well-off global elite around the world. The interesting thing about the sea of losers — yes, there are collections of them still inside the formerly emerging world — is how much are they being held back and punished by globalisation and how much by the lack of it. And our argument would be repeatedly that it is much more the lack of it. It’s the cruel and uneven failure of Indian politicians to push reforms here for narrow reasons and equally the western politicians for not lowering tariffs to open up things which are having that effect. But overall, I think, the amount of suffering will go down.

A worrying thing as defenders of economic liberalism is that the pain of economic liberalism in the developed world is beginning to shift from blue-collar workers to white-collar ones. It is no longer steel-makers who are losing their jobs, but computer programmers, chartered accountants, advertisers, lawyers, even journalists, which is another reason to be nervous about the process.

VARGHESE K GEORGE: You had a story recently predicting the death of the newspaper and you just said that globalisation may take our jobs as well. But in India the print media seems to be growing. So is this not a globally uniform trend?

JOHN MICKLETHWAIT: India is repeatedly cited as the great exception in that respect. We, too, are often cited as the great exception that magazines are going down or losing circulation. The Indian newspaper industry is doing rather well. But I think it is a big problem, particularly for newspapers. Magazines generally are doing okay and newspapers are doing badly because the Internet is a much fiercer competitor for the daily newspaper than the week-end read of a magazine and you can see that the daily papers are not doing well but the weekend papers are.

SHEKHAR GUPTA: In the era of instant television fame and mugshots in newspapers, how do you keep such wonderfully talented journalists in The Economist without bylines?

JOHN MICKLETHWAIT: We have a tradition of anonymity which is now a brand. People have told us that we are trying to make a statement by doing this, but what we argue is that everyone else has deserted anonymity because that used to be the way in which magazines and newspapers used to do business. It is partly a brand but it also has to do with the way we work, which is much more collaborative than other magazines. If someone was to send in a piece which was changed in London to such an extent that they may not want to see their name attached to it, from that perspective, everything that comes out of The Economist is a collaborative, and dare I say, socialist experiment. And that is important to us.

JAMES ASTILL: As reporters, we all, in The Economist, put up with the anonymity because we all like the product. But that is not to say that anonymity is not deeply, deeply painful.