Business World: Anna Hazarel : South East Asia on its way to a Pub...

Business World: Anna Hazarel : South East Asia on its way to a Pub...: Now veteran social reformer Anna Hazare, has caught the state off guard, bringing tens of thousands on to the streets of the country’s majo...

Anna Hazarel : South East Asia on its way to a Public Led Revolution after Middle East

Now veteran social reformer Anna Hazare, has caught the state off guard, bringing tens of thousands on to the streets of the country’s major cities. Many are young and middle class, and their outcry – broadcast round the clock by the nation’s TV channels – is one of anger with rampant corruption, and a Congress party-led government leaden-footed in its response.

As one Delhi-based businessman explained, the middle class are working harder and yet finding their goals – such as education or buying a house – further out of reach. The idea that politicians, bureaucrats and oligarch-like business leaders are plundering a growing national cake is increasingly intolerable to India’s “squeezed middle”, touching a nerve in a country whose economy is much changed over the past 20 years, but whose vote bank politics remain stuck in the past.

Yet while Mr Hazare’s cause is well-intentioned, it is also dangerous. The 74 year old is not an obvious champion for India’s youthful, urban classes, who are supporting him in growing numbers in what is becoming an uncomfortable face-off with a flagging Mr Singh.

A former army driver, Mr Hazare was previously best known for running a rural model village, where he implemented religiously-inspired iron discipline to raise education standards and improve agricultural productivity. He overtly encourages comparisons with Mahatma Gandhi, India’s liberation leader; but his background proves he is no Gandhi.

True, his resort to hunger strike as a weapon against the government has proved as effective today as it did when Gandhi held British rule to ransom in the 1930s and 40s. But Mr Hazare, despite being a formidable lobbyist, has neither legitimacy to rewrite the laws of the land himself, nor to subvert democratic process.

Even so the Congress party-led coalition, which has lost traction since its re election 2009, is at a loss as how to handle him. This week it made the crashing mistake of jailing him when he threatened a public fast. Overnight, he became the next best thing to a Bollywood blockbuster. India loves an arrest, and the martyrdom it confers. The government’s mis-steps made Mr Hazare a hero, not the people.

The real risk – for the government, and India’s stability – is that this anti-corruption movement will gather momentum, becoming a lightening rod for malcontents all over India – of which there are many. Already the issue at hand has changed, from corruption in Asia’s third-largest economy to one of a governance deficit in the world’s largest democracy. India’s leaders stand accused of silencing dissent and trampling the constitution.

Senior lawyers line up to warn the government that it had committed a “colossal folly”. The shrill Hindu nationalist opposition cries that India had returned to the era of the Emergency, under former president Indira Gandhi, from 1975 to 1977. But far worse is a growing public disdain for the political class itself, with doubts about whether it really represents a young population of 1.2bn with rising economic ambition.

Here the Congress-led government has itself to blame. On its watch a number of corruption scandal have blown up, including the $39bn estimated to have been lost from state coffers during the auction of 2G mobile spectrum. Graft scandals marred last year’s Commonwealth Games, while a Mumbai property scam also managed to tar the handlebar-moustached rectitude of the army’s top brass.

Some in the Congress party plainly regret this week’s action against Mr Hazare. Rahul Gandhi, the scion of the Nehru-Gandhi dynasty and, at 41 years old, a symbol of generational change, is probably among them. The legacy he is set to inherit from his mother, Congress party president Sonia Ghandi, now looks all the more shaky.

Others, however, risk complacency by seeing Mr Hazare’s arrest to be business as usual. Salman Khurshid, the Oxford-educated law minister, says the protests in Delhi are simply part of the nation’s political theatre. “This is one way of showing dissent in Indian democracy,” he says, “You sit there, you sing songs, you are given food by the police and that’s the part of the compassionate Indian state. What’s wrong with that?”

Mr Hazare’s campaign may yet fizzle, of course. Many political analysts predict India will muddle through, in a prolonged monsoon of discontent, characterised by grievances, bungling and a weakened government. They are probably right: this Indian Summer is certainly no Arab Spring, or at least not yet. The jail in which Mr Hazare was put is no Tahrir Square. Mr Singh, a respected leader, is not comparable to Egypt’s Hosni Mubarak.

But deafness to appeals for change risks something worse, if not now, then soon. For this anti-corruption struggle does bear some of the hallmarks of that which unfolded in the Middle East earlier this year. Young populations, armed with better information, do not suffer gerontocrats, distant power and cheats indefinitely. Instead they seek peaceful renewal – and if denied it by defunct parliaments, they seek it on the streets. India is right to have faith in its democratic institutions, but until its leaders become less self-serving and more honest, that faith alone is unlikely to be enough to keep India’s dreams alive.

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Obama surrenders on debt ceiling

By PAUL KRUGMAN
Paul Krugman is a Nobel Prize Economist and writer to many newspapers

The deal to raise the federal debt ceiling, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America's long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.

Start with the economics. We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond.

The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further. Pay no attention to those who invoke the confidence fairy, claiming that tough action on the budget will reassure businesses and consumers, leading them to spend more. It doesn't work that way, a fact confirmed by many studies of the historical record.

Indeed, slashing spending while the economy is depressed won't even help the budget situation much, and might make it worse. On one side, interest rates on federal borrowing are currently very low, so spending cuts now will do little to reduce future interest costs. On the other side, making the economy weaker now will also hurt its long-run prospects, which will in turn reduce future revenue. So those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker.

And then there are the reported terms of the deal, which amount to an abject surrender on the part of the president. First, there will be big spending cuts, with no increase in revenue. Then a panel will make recommendations for further deficit reduction — and if these recommendations aren't accepted, there will be more spending cuts.

Republicans will supposedly have an incentive to make concessions the next time around, because defense spending will be among the areas cut. But the GOP has just demonstrated its willingness to risk financial collapse unless it gets everything its most extreme members want. Why expect it to be more reasonable in the next round?

In fact, Republicans will surely be emboldened by the way Obama keeps folding in the face of their threats. He surrendered in December, extending all the Bush tax cuts; he surrendered in the spring when they threatened to shut down the government; and he has now surrendered on a grand scale to raw extortion over the debt ceiling. Maybe it's just me, but I see a pattern here.

Did the president have any alternative this time around? Yes.

First of all, he could have and should have demanded an increase in the debt ceiling back in December. When asked why he didn't, he replied that he was sure that Republicans would act responsibly. Great call.

And even now, the Obama administration could have resorted to legal maneuvering to sidestep the debt ceiling, using any of several options. In ordinary circumstances, this might have been an extreme step. But faced with the reality of what is happening, namely raw extortion on the part of a party that, after all, only controls one house of Congress, it would have been totally justifiable.

At the very least, Obama could have used the possibility of a legal end run to strengthen his bargaining position. Instead, however, he ruled all such options out from the beginning.

But wouldn't taking a tough stance have worried markets? Probably not. In fact, if I were an investor I would be reassured, not dismayed, by a demonstration that the president is willing and able to stand up to blackmail on the part of right-wing extremists. Instead, he has chosen to demonstrate the opposite.

Make no mistake about it, what we're witnessing here is a catastrophe on multiple levels.

It is, of course, a political catastrophe for Democrats, who just a few weeks ago seemed to have Republicans on the run over their plan to dismantle Medicare; now Obama has thrown all that away. And the damage isn't over: There will be more choke points where Republicans can threaten to create a crisis unless the president surrenders, and they can now act with the confident expectation that he will.

In the long run, however, Democrats won't be the only losers. What Republicans have just gotten away with calls our whole system of government into question. After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation's economic security, gets to dictate policy? And the answer is, maybe it can't.