Anti-Indian rhetoric hits US firms

American firms are beginning to feel the impact of the anti-Indian rhetoric now current in the Maga community, says an FT report. 

FedEx CEO, Raj Subramaniam, faces charges of laying off  American workers and replacing them with lower-cost Indian workers. Walmart, Verizon and Dish Network are among the other companies targeted by those who believe the H 1-B visa has been misused to let in low-cost Indian workers. There is also a clamour to kick out Green Card holders of Indian origin.

The rise to prominence of Indians in the American corporate world is clearly evoking a backlash. Indians are also prominent in educational institutions: an estimated 60 or more schools have Indians as dean. At HBS and Stern School, Indian succeeded Indian as dean. The hard work and success of Indians in the US, once touted as a tribute to American society, is beginning to now working to the detriment of the Indian community.

Unfortunately, negativity towards Indians in the US seems to be spilling over into US policy stance towards India. 

US National Security Strategy document is hawkish on China and soft on India

The US National Security Strategy document was released a few days ago by the White House. I read media reports that said the document regarded China merely as an economic competitor, not an existential threat. And that India did not seem to matter.

The reports are wrong. The report is  hawkish on China and - this will gladden Indian hearts- it does see India as a counter-weight to China in the region.

Let me first highlight the positions the document takes with respect to China:

1. China has emerged as a threat to the rules-based international order.

President Trump single-handedly reversed more than three decades of mistaken American assumptions about China: namely, that by opening our markets to China, encouraging American business to invest in China, and outsourcing our manufacturing to China, we would facilitate China’s entry into the so-called “rulesbased international order.” This did not happen. 

2. No change in the US policy of preserving Taiwan's independence

 Given that one-third of global shipping  passes annually through the South China Sea, this has major implications for the U.S. economy. Hence deterring a conflict over Taiwan, ideally by preservingmilitary overmatch, is a priority. We will also maintain our longstanding declaratory policy on Taiwan, meaning that the United States does not support any unilateral change to the status quo in the Taiwan Strait.

2. Restrictions on trade with China will continue, both through tariffs and through export controls.

Since the Chinese economy reopened to the world in 1979, commercial relations between our two countries have been and remain fundamentally unbalanced. .......Going forward, we will rebalance America’s economic relationship with China, prioritizing reciprocity and fairness to restore American economic independence.Trade with China should be balanced and focused on non-sensitive factors.

 If that is not hawkish, I don't know what is.

The tone towards India is distinctly friendly.  

1. India remains an important partner in preventing  China's dominance in the Indo-Pacific region.

We must continue to improve commercial (and other) relations with India to encourage New Delhi to contribute to Indo-Pacific security, including through continued quadrilateral cooperation with Australia, Japan, and the United States (“the Quad”).

2. The economic partnership with India too is important 

President Trump’s May 2025 state visits to Persian Gulf countries demonstrated the power and appeal of American technology. There, the President won the Gulf States’ support for America’s superior AI technology, deepening our partnerships. America should similarly enlist our European and Asian allies and partners, including India, to cement and improve our joint positions in the Western  Hemisphere and, with regard to critical minerals, in Africa.

Not exactly effusive about India but friendly in tone. At least India is spared the harsh comments the document for America's allies in Europe. 

Key Supreme Court rulings awaited in the US

 In the months ahead, the US Supreme Court will pronounce on some truly important matters:

i. Trump tariffs: Is President Trump justified in using emergency powers to impose tariffs? Or is that the remit of the US Congress? If the Court rules against the Trump adminstration, the US  government will have to return billions in tariffs imposed so far. Legal experts say the President has recourse to several statutes for imposing tariffs, so he will prevail even if the Court rules against him.

ii. Birthright citizenship: Does being born in the US confer citizenship automatically? The Trump administration says it doesn't apply to illegal immigrants nor children born of those temporarily visiting the US.

iii. Can Trump fire officials of the Federal Reserve?: Trump fired Fed Governor Lisa Cook on the ground that she had committed mortgage fraud without such fraud being proved in a court of law.  A lower court judge blocked the order. The administration then sought to prevent Cook from attending office until the case was decided but the US Court of Appeals ruled against it. The Court has indicated that it is inclined to treat the Fed differently from other government agencies that enjoy autonomy.

Three key US negotiators have no foreign policy background

President Trump has three negotiators in the foreign policy for various purposes: special envoy Steve Witkoff, army secretary Dan Driscoll and his son-in-law Jared Kushner.

None of them has a background in foreign policy or diplomacy. Witkoff is a close friend of Trump's from their real estate days. Driscoll served briefly in the military before working in investment banking and venture capital. Kushner is a businessman who helps his father in law in sundry matters.

Witkoff has been active in respect of Ukraine and earlier was involved in talks with Israel about Gaza. Driscoll has recently been pressed into service in respect of Ukraine, as has Kushner.

Does it matter that we have three businesmen handling  negotiations and not career diplomats?  Not really. Because not one of the three persons is setting foreign policy. They are merely implementing policy set by Trump. They are out to cut deals based on directions that Trump gives- and who better than businessmen to make deals?

 

Question mark again over Fed chief's continuance

"Numbskull", "fool", "moron", "stupid".... one has lost track of the expletives Trump has used to characterise US Fed chief Jerome Powell. Can you imagine anybody such things about the RBI Governor here? There would be a pretty strong reaction. Partly, I guess Trump's outbursts have to do with the incredible powers vested in the office of President of the United States.

Trump was inclined earlier to send Powell packing for not lowering interest rates. Media reports then said that Scott Bessent, his Treasury Secretary, had stayed his hand, pointing to the possible adverse reaction of the markets. The argument was that it's not done to remove a Fed chief who displays independence.

Trump is now hinting again at the possible removal of Powell. And he seems to be on more solid ground. The issue is the $2.5 billion the Fed has spent on renovation, including a cost overrun of $700 million. Various reports have highlighted details of the extravagance, including private lifts, dining areas, marble finishes etc. What is worse, Powell is said to have misled Congress on the issue by denying features in the renovation that, it turned out, were very much there.

Frankly, Trump is on strong ground this time around. It is wrong for a Fed chief to indulge in extravagance because the Fed is in many ways the custodian of the interests of ordinary people. And going on a spending binge on renovation sends out quite the wrong signals about where the Fed stands in relation ordinary people face. Especially when the Fed is at odds with the administration, it would be appropriate for a Fed chief to be watch his steps very carefully. Powell, it appears, has tripped up. Many will see his conduct as proof of the culture of impunity that pervades the higher echelons of power. 

Trump would, no doubt, be using the renovation issue as a pretext to replace Powell with somebody he finds more pliable and in line with his thinking. What does that say about central bank independence? 

That, I am afraid, is an over-rated idea. Heads of central banks are unelected officials. They cannot afford to be entirely out of line with the preferences of the democratically elected authority. Where the central bank chief does not see eye to eye with the political authority on a range of important matters, either he should step down or the government should have the right to remove him. 

In India, the RBI Governor serves as the pleasure of the government. More than one governor has stepped down after getting suitable signals from the government. The protection given to the Fed chief is misplaced. And ultimately it cannot help. If the President wants to go after a Fed chief, he can always find ways to do so- as the rumpus  over the issue of extravagance at the Fed clearly shows.

100 days of Donald Trump: demolishing to rebuild

Paul Dans, the author of Project 2025, the grand plan prepared by the Heritage Foundation in anticipation of Trump's victory in the 2024 elections, argues that Trump is the quintessential builder who has to demolish first before he can rebuild.

What needs to be demolished is the present edifice of government. It costs $7 trillion to run it with a budget deficit forecast of $1.9 trillion. More importantly, it delivers little to the people. It is of the bureaucracy and for the bureaucracy, an unelected and unaccountable lot whom Trump is now bringing to heel:

But what exactly does the American citizen get for $7trn? A country falling apart and potentially unable to defend itself.

Supply shocks from covid-19 underscored the strategic danger of a hollowed-out industrial base in the 21st-century global economy. Next came depletion of weapons stocks during the Ukraine war, raising concerns that we might no longer be able to defend ourselves because we lack productive capacity. America may lead in innovation and intellectual property, but what about good old-fashioned gunpowder? We have a single factory in all of America that produces it. And steel and heavy industry? Following a push under Barack Obama’s Environmental Protection Agency, America dismantled many of the coal- and nuclear-power plants required to sustain the electric load needed to power that production. How can a country serve as the arsenal of democracy when it takes seven years to restock the stinger missiles sent to Ukraine?

The economy needs to remade with manufacturing being brought back to the US in a big way. The bureacuracy will not do the job, so it has to be demolished first. 

That sounds plausible. But Dans takes the argument further. Apart from the bureacuracy, who is coming in Trump's way? Well, it's an activist judiciary:

Historically courts preserved their own legitimacy by abstaining from political questions decided by the other two branches of government. District courts have now crossed this red line and stepped into a constitutional minefield, imposing their political views on issues that are clearly the province of the executive.

The judiciary can afford to be activist because it has the support of the universities and Big Law (which is the big legal firms that fight pro bono for the establishment ranged against Trump).

Now, you begin to understand why Trump has gone after top law firms and why he is swinging his axe at the nation's top universities: they are a threat to his attempt to remake the United States.

The remaking of the US is not just about remaking the economy with pride of place for manufacturing. It's also about remaking the important political institutions of the country, including the judiciary. 

You have to give this to Dans: he's pretty clear about what Trump's followers want to accomplish.

US universities face challenges but will not lose dominance

 

The battle lines are drawn. More than 200 American universities and colleges have united in opposing what they regard as overreach on the part of the Trump administration.  A statement signed by, among others, the presidents of Columbia, Princeton, Brown and Harvard, says:

As leaders of America’s colleges, universities, and scholarly societies, we speak with one voice against the unprecedented government overreach and political interference now endangering American higher education. We are open to constructive reform and do not oppose legitimate government oversight. However, we must oppose undue government intrusion in the lives of those who learn, live, and work on our campuses. We will always seek effective and fair financial practices, but we must reject the coercive use of public research funding.

The pushback comes as the Trump administration demands sweeping changes in the way American universities are run, in particular, their response to alleged antisemitism on campuses. The US government is mounting pressure on universities in three ways: withholding federal grants, looking into their tax-exempt status, monitoring international student enrolment (which is a source of funding as well as diversity of talent).

The large universities have huge pools of endowment. Harvard sits on over $50 bn in endowments. Does the US government withholding around $ 2bn matter? How material is government funding for American universities? The Economist has some useful data and points to make.

Federal research grants account for a double-digit share of the revenue of most prestigious private universities, so losing them permanently would be a body-blow for any of them. They make up 11%, 15% and 18% of the income of Harvard, Yale and Princeton universities respectively. Columbia, at 20%, is especially vulnerable.

The proportion may be higher for small universities, rendering them even more vulnerable to government pressures. Can the leading universities use their endowments to tide over the cutbacks? It's not easy:

Universities’ endowments are not as much help as their billion-dollar valuations would suggest. For a start, much of the money is reserved for a particular purpose, funding a specific professorship or research centre, say. Legal covenants often prevent it from being diverted for other purposes. In any case, the income from an endowment is typically used to fund a big share of a university’s operating costs. Eat into the principal and you eat into that revenue stream.

 What is more, eating into the principal is difficult. Many endowments, in search of higher income, have invested heavily in illiquid assets, such as private equity, property and venture capital. That is a reasonable strategy for institutions that plan to be around for centuries, but makes it far harder to sell assets to cover a sudden budgetary shortfall. 

There is also the threat to the tax-free status. The previous Trump administration had imposed a tax of 1.4 per cent on endowments larger than $500,000 per student-it affected only 52 institutions. Moves are afoot to lower the endowment threshold and increase the tax rate. Why not tax the richer universities and use the money to fund public education, many argue.

American universities are in no mood to bend before the US administration's demands, so they do face challenges in respect of their finances. The Economist warns in another report:

The MAGA plan to remake the Ivies could have terrible consequences for higher education, for innovation, for economic growth and even for what sort of country America is. And it is only just beginning. 

Well, the Economist exaggerates the threat. US universities will find ways to raise resources- through debt, more endowments, more projects, higher fees. Even if there is some hit to the income, the scale of research funding will dwarf what is available in the rest of the world. Government departments, such as the Pentagon, will continue to fund projects of importance to them, entirely out of self-interest- they need the cutting edge that American universities alone can provide. 

American leadership of higher education is so dominant that it's hard to see it reduce in the foreseeable future. The Trump administration's moves pose headaches but are unlikely to pose any major threat to American universities. 

 

A Supreme Court judgement that could impact the US Fed's independence

Can Trump fire US Federal Reserve Chairman, Jerome Powell? Trump's statement that Powell's "termination can't come fast enough" has fuelled fresh speculation about the possible fate of the Fed Chair.

There is a case before the US Supreme Court that could conceivably have some bearing on the Fed Chair's position, according to some legal experts. See this report in FT and this one from Bloomberg. Here is a brief summary of the issues.

In 1933, President Franklin Roosevelt fired William Humphrey, head of the Federal Trade Commission, for opposing New Deal policies. After he died, Humphrey's Executor pursued the case in order to recoup wages. The Supreme Court ruled that Roosevelt had fired Humprhey without "cause". That phrase has been interpreted to mean inefficiency, neglect or malfeasance.  Himphrey's Executor has come to be seen as a landmark ruling. 

If the US Fed Chair differs from the President on a matter of policy, say, cutting interest rates, can that qualify as inefficiency, neglect or malfeasance? Well, it doesn't sound like it does but a President might contend that the Chair is seriously hurting the economy through gross incompetence .... and then what happens? We are in uncharted waters.

That brings us to the case now before the US Supreme Court. In January, President Trump fired two ladies, the heads of two independent agencies, the National Labor Relations Board and the Merit Systems Protection Board. The two heads moved the courts that ordered their reinstatement. The US government went on appeal to the US Federal Court of Appeals which upheld the orders of the courts. The government then moved the Supreme Court. In early April, the SC Chief Justice John Roberts issued orders asking the two ladies not to attend office until the SC ruled in the case. A ruling is expected in the coming days.

There are some who argue that the law only talks about Governors of the Fed, it doesn't say anything about the Chairman. Some legal scholars argue that the President can remove Powell as Chairman but leave him on the board as Governor- a demotion of sorts!

There are others who say that the Fed cannot be compared with other independent agencies. A ruling that favours the Trump administration in the present case cannot,therefore, be used to remove the Fed Chair. There is some support for this view in a 7-2 ruling last year in favour of the head of the Consumer Protection Bureau.Even the dissenting judges said at the time that the Fed was a unique institution that would merit different treatment.

Fed Chair Jerome Powell himself has opined that any SC ruling relating to the case that involves the two lady heads of agencies would not apply to the Fed.

What if President Trump, nevertheless, removes Powell and the case goes to the Supreme Court? Remember that, in a recent case that involved the US government's illegal deportation of a citizen, the government has said it cannot do anything to bring back the citizen....

Trump is not kidding about his MAGA agenda, he's dead serious

It amuses me that nearly two months in Trump's second term, his critics see his pronouncements as posturing or clowning. Sorry, folks, Trump is dead serious about his MAGA agenda. All nations will have to find ways to cope with it: either they fall broadly in line (perhaps with some negotiation) or they end up confronting the US and paying the price.

Whatever Trump is attempting now is what he wanted to accomplish in his first term itself. The Washington establishment managed to scuttle his initiatives then. Trump has learnt since and will not be deterred. Peter Navarro, an insider in Trump's administration then and now, tells the story in crystal clear terms in his book, Time to Take Back Trump's America.

I have a BS article on how the MAGA agenda is unfolding relentlessly. 

Donald Trump is a man in a hurry

Say the worst about Donald Trump, but you can’t deny that he has hit the ground running. Tariffs, immigration, the Ukraine war, the conflict in Palestine, slashing jobs in government—the pace of initiatives and executive orders has been breathtaking. 

The US stock market has taken a beating. America’s allies in Europe are dismayed. Leaders across the world are bracing to cope with the impact of the tariffs that Mr Trump has rolled out.  Mr Trump is unfazed. 

Critics see Mr Trump as sowing chaos across the world in pursuing ideas that he hasn’t really thought through.  John Bolton, national security advisor during Mr Trump’s first term and now one of his most bitter critics, says the President has no philosophy or policy—his moves are all about making himself look good.     

Mr Trump’s critics underestimate him,   as they did after his loss to Joe Biden in the presidential elections of 2020. They never imagined that Mr Trump would fight off the “lawfare”- the use of the legal machinery to keep him out of the political arena- unleashed on him by the Biden administration and claim the Presidency a second time. They now find it hard to accept that Mr Trump is simply delivering on his election promises. Sensible leaders aren’t supposed to do that — election promises are meant only to win votes. 

To understand that Mr Trump means business, you must read Peter Navarro’s Taking back Trump’s America, published in September 2022. Mr Navarro was an advisor on trade policy in Mr Trump’s first term and remains one in his present term. He’s widely seen as a trusted confidante and a member of the President’s inner circle. 

Mr Navarro has earned his boss’s trust the hard way. He refused to testify before a US House Select Committee in the matter involving Mr Trump’s attempts to overturn the election result of 2020 and ended up being jailed for four months for contempt of Congress. 

You may read the book for sheer pleasure. Mr Navarro is no hack: he has a doctorate in economics from Harvard and was a professor at the University of California (Irvine) School of Business. He   writes with verve and wit about the intrigues and manoeuvrings within the White House—and he doesn’t believe in pulling his punches.   All that is unfolding now falls neatly into place when you have read Mr Navarro’s narrative. Here is the gist of it. 

Mr Trump was elected in 2016 on the plank of what Mr Navarro calls Populist Economic Nationalism. This included: Restoring US manufacturing by keeping out imports through tariffs; cracking down on illegal immigration; being tough on China; and bringing US troops home from endless wars.

Mr Trump was new to politics and Washington and he made the mistake of appointing Washington establishment-types as key members of his team. These were committed globalists and status quoists, with little use for  use for Mr Trump’s policy agenda. The Trojan horses within the administration used every trick to mislead him and thwart his agenda. Mr Navarro quotes Robert Lighthizer, the then US trade representative, as saying there were only two types of people in the Trump administration: Those people who thought they had to save the world from President Trump, and those who thought President Trump would save the world. For the most past, the former prevailed.

 It was, as Mr Navarro puts it, a case of Bad Personnel and Bad Process making for Bad Policy and Bad Politics. Many of these Bad Personnel were fired down the line. However, Mr Trump woke up to their tricks a little late in the day. By the time the 2020 elections came up, the constituencies that had voted Mr Trump to power were left unsatisfied with the outcomes. It was the failure to deliver on the economic nationalist platform that resulted in Mr Trump narrowly losing to Mr Biden in 2020.

The Biden administration failed to address the root causes of widespread discontent in the electorate, notably the loss of jobs through offshoring and unchecked immigration. In the 2024 presidential elections, the electorate was even more responsive to Mr Trump’s platform of Populist Economic Nationalism, handing him a more emphatic victory than in 2016.

Mr Trump has learnt from the failures of his first term. He has made sure his administration is now packed with loyalists he can count on to carry out his mission, not people who will find ways to stymie his orders or cook up misleading intelligence. He knows very well that, given time, the Washington establishment will regroup and attack. That’s why Mr Trump is a man in a hurry.

Mr Navarro spells out the three legs of the Economic Triangle that will serve to achieve Mr Trump’s vision of MAGA (Make America Great Again). First, strengthen American manufacturing. This is to be done through policies such as high tariffs and Buy American, Hire American.   

The second leg of the Triangle is cracking down on illegal immigration. American workers losing jobs to those who are willing to work for lower pay has been another big cause of resentment in the electorate. The third leg is putting an end to America’s endless wars. Mr Navarro speaks for Mr Trump when he says, “They are futile and pernicious ‘plowshares into swords’ wars that have drained trillions of dollars from the American economy to the benefit of a military-industrial complex and at the expense of modernizing our infrastructure, improving our schools, and lowering our taxes.Think Ukraine.

One thing should be clear enough: Mr Trump’s near-daily references to his agenda are not cheap bullying, negotiating tactics, or theatrics. All that has happened in the past seven weeks is strictly according to plan. Mr Trump is determined to  remake the world order and he knows full well that his plans will be disruptive for the everybody.    He concedes  that there will be short-term pain for the US. 

Optimists had construed this to mean at most a one-time increase in the US inflation rate of one per cent. Mr Trump has since spooked the markets by refusing to rule out the possibility of a recession in the US.  He’s confident the US will eventually emerge the winner from whatever turmoil his policies cause.   

 Recent history suggests that the US has the least to fear from global disruption. In the past two decades, we have had a global financial crisis (GFC), a Eurozone crisis, the Covid crisis, the Ukraine conflict, and a conflagration in West Asia. America’s share of world GDP has risen from 23 per cent in 2008 at the time of the GFC to 26 per cent in 2023. Mr Trump has reason to believe that the US has the economic and political clout needed to remake the world order to its advantage.

Why is media talking about Trump firing the Fed chief?

One is intrigued by the incessant speculation in the media about Trump's firing Fed Chairman Jay Powell once Trump is sworn in as president later this month. Kenneth Rogoff resurrects this speculation in a recent article but is quick to shoot down the possibility. 

By law, the Fed Chairperson has a fixed tenure. The President does not have the legal right to fire him or her. Of course, the President can get Congress to amend the law so as to enable to the President to fire a Fed Chief. But pushing through such legislation will not be easy despite the fact that Mr Trump is riding high at the moment. Opposition from Congressmen apart, Mr Trump has to risk with the damage such a move could inflict on the financial markets. Mr Powell, for his part, has said he has no intention of resigning.

Mr Trump can, of course, seek to undermine Mr Powell by criticising his moves. But he did so in his first term without inflicting any serious damage to the functioining of the Fed. Central bank independence does not mean the political authority cannot air its differences with the central bank in public. 

There is the larger question of whether the central bank chief must serve at the pleasure of the government. That is the case in India. It is open to the government to ask the RBI Governor to go- and without assigning reasons. That does not mean that is easy for any government to do so- as I mentioned earlier, the credibility of the central bank and the damage to financial markets and the economy are considerations that no government can brush aside. It's not easy to ask an RBI Governor to go even if the government has the authority to do so.

That apart, the RBI is not in the same position as the Fed. The Fed focuses on monetary policy and has some responsibility for bank regulation. The RBI is a full-scope central bank encompassing monetary policy, bank regulation, exchange rate management, government borrowings, currency management etc. Independence of the central bank is about independence in monetary policy. Such independence cannot extend to the other areas for which RBI has responsibility.

Lastly, chemistry at the top is important. The head of government must have a certain degree of comfort with the central bank chief . Where that comfort level is not there, the government should have the right to replace the central bank chief. That is not to say that the central bank chief must be a stooge of the government- no intelligent head of government would even want that because ultimately politicians in a democracy do feel the need to deliver. And they would understand that having an independent central bank is crucial to that objective. 

Mass deportations are not new to America

Trump's threat to throw out illegal immigrants in large numbers has raised hackles in several quarters. He is portrayed by some as a heartless monster who will show no mercy to illegal immigrants.

Hang on! Mass deportations are not new to the US at all. During President Biden's time, the US is said to have deported over 140,000 persons in fiscal 2023 alone. The Economist reported recently that the peak in Obama's time was 400,000. And the all time high was in during Eishenhower's tenure- one million! 

Wonder which of these numbers Trump will be able to beat. 

Is Elon Musk making a big mistake?

Elon Musk, as is well known, has thrown his not inconsiderable weight behind Donald Trump. His recent interview with Trump was meant to boost the latter through access to a platform with a huge audience.

Musk's support is partly a matter of conviction: he genuinely believes that Trump is the best bet for the US. He backs Trumps' economic policies, as do many other business leaders in the US.

But if Musk thinks that he can benefit from a Trump presidency or if he believes that Trump will dance to his tune, he may well be mistaken, says this article in the Economist. 

The article makes the point that in the interview, it was clearly Trump who was calling the shots. It goes on to cite a recent book that shows how many business leaders' attempts at gaining from backing particular presidents did not work out:

John D. Rockefeller ignored Washington as he built Standard Oil into a vast monopoly in the late 1800s. But when antitrust fervour rose in the 1890s he sought to squash it by backing William McKinley, a president he thought he had in his pocket. McKinley was assassinated in 1901. His replacement was Theodore Roosevelt, a man Standard Oil had unwisely recommended as McKinley’s vice-president because he was too much trouble as governor of New York. Thus began the Progressive Era, and the eventual dismantling of Rockefeller’s monopoly

......Lee Iacocca, who ran Ford and then Chrysler, was a master White House manoeuvrer. He helped persuade Richard Nixon to protect the car industry from Ralph Nader’s safety onslaught. He won loan guarantees for Chrysler from Jimmy Carter in the 1970s. But though he liked Ronald Reagan personally, he rejected the then-president’s free-market tilt and tried (unsuccessfully) to get more government support for his business.

The regulatory state is much bigger than it was earlier. No business leader can afford to seriously antagonise the state, however big he may be. If Musk's bet does not work out, he can pay heavily for it. But even if it does, Musk may not have it his own way- as the history of businessmen's relationship with presidents clearly indicates.

Crackdown on pro-Gaza student protestors in the US

Like many others, I have been watching the response of America's great universities to the pro-Gaza student protests with some consternation. I cannot imagine how disallowing peaceful student protests can be consistent with the spirit of academic freedom at all. Several universities have had students evicted by police from the camps that had set up on the campus. Students have been suspended, expelled, arrested. 

One of the things I find disconcerting is that America's star faculty have not been sufficiently forthcoming in defence of the students. There is the odd vote of no-confidence from a section of the faculty in some universities (eg. School of Arts and Sciences at Columbia university) but these are few and far between. There has not been the sort of unequivocal defence of students' right to peaceful protest that one would have expected of American faculty.

My latest article in BS is on this subject, US protests: why are faculty voices muted?

Here is the full text:

FINGER ON THE PULSE
T T RAM MOHAN

US protests: Why are faculty voices muted?

American university campuses erupted in protest last month over the conflict in Gaza. The pro-Palestine protests are still on and have since spread to Europe. These protests have raised fundamental questions about freedom of expression at universities. University administrators (often distinguished academics) have not been able to withstand pressure to silence the protestors. The voices of faculty, too, have been strangely muted. 

In dealing with such protests, universities obviously need to strike a balance between allowing freedom of expression and maintaining order on campus. The American Civil Liberties Union has spelt out ground rules that nobody can quarrel with. 

First, no viewpoint, however offensive, must be censored or disciplined.  Secondly, no student or group should be targeted or intimidated in any way in the name of free speech. Thirdly, universities can place restrictions on the time and place of protests so that the functioning of the university is not disrupted. Fourthly, the police must be called in only as a last resort. Lastly, campus leaders must not yield to political pressures.  

It should not have been difficult for the university authorities to have allowed the protests subject to these rules. Sadly, the situation has got out of hand at many American universities, such as Columbia in New York. Police (including anti-terrorist squads in combat gear) have been called in to clear out encampments of students even where they were not disruptive of normal activities.  The universities’ response to the protests may be disappointing, but nobody should be overly surprised. 

The United States is almost unique in the scale of philanthropic contributions to universities. Donor contributions are typically the single biggest source of finance for universities. Student fees don’t even cover operational costs, let alone capital expenditure.  The more funds a university or college can raise by way of donations, the more it can invest in infrastructure, research, and faculty and hence the greater its stature. Annoying donors is a terrible idea for any university.

In addition, universities get large funds for research projects from the government.   The US Defence Department, for instance, has historically been a major source of funds. Corporations, too, fund research projects. Universities, in turn, invest their endowment funds in corporations. 

Leading donors, major corporations and politicians have not cared to conceal their displeasure over the pro-Palestinian protests on campuses. Many tend to reflexively label the pro-Palestinian protests as anti-Semitism. America’s donors and politicians have been keen to oblige Prime Minister Benjamin Netanyahu of Israel, who has called on the universities to shut down the protests. 

So deep are the links between universities on one side and the government and the private sector on the other that the universities can’t afford to antagonise either. The students’ demand that the universities divest from corporates with links to Israel is thus a non-starter for most universities. A crackdown on the protestors was inevitable.

It’s not just university administrators who have been timid in responding to outside pressures. Faculty have not been sufficiently forthcoming in support of the students’ right to legitimate protest. At Columbia university, the 111-member university senate considered but did not pursue a vote to censure the university president for her decision to call in the police, among other things.  

At Harvard, about 300 faculty have signed a letter urging the president to negotiate with the student protesters. That is a relatively small number out of the 2400 faculty the university boasts of. Most of the signatories are from the humanities departments. Faculty at Harvard’s famous schools of law, business, medicine, and the departments of physics, chemistry and economics appear largely absent from the list. At a few universities, faculty have passed a vote of no-confidence in the leadership.  Such faculty actions have been pretty rare.

Where, one wonders, are America’s many Nobel Laureates and other thought leaders? Columbia University’s Joseph Stiglitz, himself a Jew, has decried the “interference in academic freedom”. He has said in an interview, “They (the students) had empathy for what was going on in the world. How could anybody not react after seeing the pictures, after seeing the numbers of people dying, being injured?” Professor Stiglitz is a distinguished exception to the silence of the leaders of America’s academic community.  How come?

Faculty in the US comprise two groups: clinical or adjunct faculty and tenured faculty. Clinical faculty do mostly teaching and are on contract. They would be reluctant to put their jobs on the line by taking a position on such issues. Tenured faculty enjoy complete job security and are not subject to any retirement age. With that sort of protection, people would expect tenured faculty to speak up on issues of academic freedom. 

Alas, that doesn’t happen. For one thing, governance in American academia has changed quite a bit over the decades. American universities are said to be “faculty governed”; that is, faculty are supposed to play an active role in the running of colleges and universities. Over the last two or three decades, however, American colleges have tended to become Dean-centric, which means more power has come to be concentrated in the office of the Dean. Finance, faculty appointment and confirmation, and faculty compensation (including annual increments) are all matters on which  Deans have come to have the larger say.  

The “incentives” that have caused academic administrators to fall in in line with donors and politicians also operate to keep faculty on a leash. Distinguished faculty hold Chairs that are endowed by wealthy donors, whether individuals or companies. Funding for research projects and, broadly, power and influence within the college or university are contingent on faculty keeping administrators and donors happy. 

So faculty may hold forth on human rights abuses and limits on freedom of speech in China, Russia, Myanmar and other places. They may sit on government and regulatory bodies and record stirring notes of dissent. They may write searing critiques of political parties succumbing to powerful lobbies. They may exhort graduating students to stand by the “values” of the university and to speak truth to power. 

Within their own colleges or universities and in their dealings with Deans and Presidents, however, faculty know how to lie low on issues that matter- and not just in the US. Your columnist, who has had a long stint in academia, is happy to share a little secret: The internal culture of academia is not all that different from that of the typical corporation (whose authoritarian culture academics are apt to decry). 

Academics, like sensible people everywhere, know which side their bread is buttered. They understand that the price of annoying administrative leaders and powerful external lobbies is steep. Freedom of expression, “governance” and “values”, then, are strictly for the birds. 

Roe v Wade: the economics of abortion

Martin Sandbu, writing in FT, argues that the recent US Supreme Court judgement overlooks the economic implications of abortion and the judgement is flawed for that reason. (Please see my earlier post below first).

In his judgement, Justice Alito said that a balance has to be struck between the "interests of a woman who wants an abortion" and the individual states'  "interest in protecting fetal life". It was for individual states to determine where that balance lay.

Sandbu argues that not granting abortion in the interest of protecting fetal life has serious economic implications for the women involved. He cites a study that has shown that women denied abortion are more likely to end up in poverty than those who were not. There are other studies that have shown that women who had the right to abortion had a better chance of finishing college and getting a professional occupation.

The right to abortion not only has implications for poverty and inequality in society, it also influences the equations between the sexes. Besides, Sandbu argues, those who profess concern for fetal life have not shown much interest in providing the necessary economic support to those denied abortion and who are compelled to raise children in trying circumstances. The anti-abortionists often are also against welfarist measures.

These are all valid and fairly incontrovertible points. But how does change the fundamental proposition put forward by the US Supreme Court? Faced with all the above facts, it is legislatures that have to make choices and they have to make those choices based on their understanding of the will of the people. If people in a given state believe that denying abortion results in an incorrect balance between individual and societal interests, they are free to give expression to their will through the power of the ballot.

I'm afraid the point I made in my earlier post on the subject does not change: the Supreme Court ruling is about what the Constitution says, it is not about taking a position on abortion

Roe V Wade: it's about interpreting the US Constitution

There has been outrage over the judgement of the US Supreme Court overturning the historic judgement in Roe V Wade that affirmed women's right to abortion. 

A commonly heard observation is that right-wingers, who hate abortion, have been planted in the Supreme Court by Republican administrations and they have had their way.

One needs to be clear about what the US Supreme Court has said. The Court does not say that abortion is bad and should be outlawed. No, it says that the US Constitution does not include the right to abortion. So, if people want the right to abortion, it is up to individual states to make legislation that reflects the will of the people. 

The SC is interpreting the Constitution as it understands the document. It is not taking a position on abortion. If the people of the US want an overarching legislation that confers the right to abortion across states, it is is up to Congress to make suitable amendments to the US Constitution. I'm afraid many of the harsh comments on the judgement seem to overlook these points.

FT has provided excerpts from the judgement that make the above points crystal clear. Here is a quote from the majority judgement written by Justice Samuel Alito:

We hold that Roe and Casey (another ruling on the abortion question) must be overruled. The constitution makes no reference to abortion, and no such right is implicitly protected by any constitutional provision, including the one on which the defenders of Roe and Casey now chiefly rely — the Due Process Clause of the Fourteenth Amendment. That provision has been held to guarantee some rights that are not mentioned in the constitution, but any such right must be “deeply rooted in this nation’s history and tradition” and “implicit in the concept of ordered liberty”.

A concurring judgement by Justice Cavanagh provides the clarification I mention above:

 To be clear, then, the court’s decision today does not outlaw abortion throughout the United States. On the contrary, the court’s decision properly leaves the question of abortion for the people and their elected representatives in the democratic process.  ..... In sum, the constitution is neutral on the issue of abortion and allows the people and their elected representatives to address the issue through the democratic process. In my respectful view, the court in Roe therefore erred by taking sides on the issue of abortion.

 

Trump baiters need to chill

 I wasn't impressed at all by the coverage of the events in Washington last week.

The mobs storming into Capitol Hill last week were a disturbing sight. But this was hardly an armed insurrection or a coup d'etat. President Trump believes the election was stolen- and he has made no secret of it. His followers and admirers think likewise. A large number of them decided to vent their feelings last week. 

Sorry, but that doesn't amount to an insurrection nor was it President Trump inciting violence. And the calls to restrain Trump from using the nuclear option were really over the top. What's happening is that the liberal media and the Washington establishment are desperate to see Trump off. They have wanted badly that he should concede defeat. They are miffed at the legal challenges he has mounted. Never mind that all that President Trump has do so far falls within the ambit of the law.

So when a large mob- estimated at anywhere upwards of 200,000- showed its support to Trump, the anti- Trump brigade seem to lose perspective and we had shrill hysteria from politicians and the mainstream media, with social media such as Twitter jumping into the fray.

It was refreshing to read this article in Russia Today that asked Trump-baiters to tone down the rhetoric:

A coup attempt, an insurrection, sedition – whatever wonderfully evocative term you care to reach for – is not some strange-looking dude with a painted face and horns on his head posing for the cameras inside the Capitol's hallowed halls.

It's not an incredibly dim, grey-haired bloke sitting in the House leader's office chair and scrawling notes. It's not a bunch of not-very-bright people tearing through the corridors of power with Confederate flags and MAGA hats stealing a laptop or two.

That's not a coup d'etat, it's a much smaller thing – it's called ‘crap security’.

An armed insurrection is a leader pointing his army at the Capitol, and tanks driving up the steps and smashing through the doors. Rifle-wielding troops following up in its wake. 

A coup d'etat would be Donald Trump pulling on his military fatigues and taking to the airwaves, sitting at the Resolute Desk and solemnly declaring he had taken absolute control for the good of the nation.

If the president was imposing martial law, then all these screaming people would have a point.

But he isn't. And that's not what happened. It simply is not what's happening now, nor is it going to happen in the final ten days of Trump's term.

.....There was no American coup. It's hyperbole and four years of pent-up fury and score settling. The folk shouting the loudest simply despise The Donald the most, and they don't much like his supporters either. They do fear them, though, because there are loads of them and these people – for some reason – adore their president. Biden, Pelosi et al will simply never get their heads around “why?” 

It doesn't matter. Trump is over.

Is Trump authoritarian?

US President Donald Trump is portrayed as part of the current set of authoritarian leaders that includes Russia's Putin, Turkey's Erdogan and Brazil's Bolsanaro.

An article in the FT makes the interesting point is that Trump's instincts are libertarian rather than authoritarian. He simply doesn't match the profile of the classic authoritarian leader  who favours greater use of executive power. The author argues that Trump wants to roll back the state, not advance its frontiers:

If the president’s illness has shown anything, it is that he differs from classic strongmen in a very US way. His populism tends more to the libertarian than the repressive. The mask-spurning, the cavalier gatherings, the call to not let the virus “dominate”: it is personal freedom to which the president has shown a heedless attachment. A conventional despot would use the pandemic as a pretext to hoard and exploit executive power. Mr Trump has used it to define himself against a meddling state. His line of attack against Joe Biden, the Democrat candidate, is that he would smother America’s economic bounceback with fussy curbs on everyday life. 

In other ways too, Trump's instincts go counter to those of the classic autocrat. He is wary of the military, he doesn't favour too much of a fiscal stimulus and he doesn't want the state intruding into the life of the ordinary person. 

Trump may brush aside rules, his utterances may be jingoistic, he may be impatient with criticism but  he is not your classic dictator who uses the state to repress citizens. Liberals are wont to call somebody they think is unpleasant 'authoritarian' but that doesn't make the characterisation accurate.

 

US is no paragon of justice or fairness

Following the sentencing of Rajat Gupta, many commentators went to town about the fairness of the US system, which does not hesitate to bring the high and mighty to book. Rubbish, says Shankar Sharma in an interesting two-part article in BS. (part 1 and part 2).

Sharma contends that Gupta was nailed precisely because he was an outsider and interloper in a system that protects its own zealously. He lists other offenders who got away: Hank Paulson, former Goldman Sachs CEO and US Treasury Secretary; Hank Greenberg; Warrent Buffett; Steve Jobs.

Sharma contends that Paulson disclosed to a group of fund managers information that the government intended to place Freddie Mac and Fannie Mae under conservatorship, a move that would wipe out the firms' equity. The fund managers proceeded to short the firms' equity if they were not already holding short positions. Sharma writes:

If this is not giving out material, non-public information, then what is? If Rajat Gupta is guilty, why isn’t Paulson? If Gupta had given Raj Rajaratnam information that Goldman Sachs was going to get an investment from Warren Buffett (and suppose, if Rajaratnam had not sold an already long position in Goldman stock based on this material, non-public information), would this have amounted to a criminal offence on Gupta’s part?
Of the many things I don’t like about this Rajat Gupta affair, one is the Indian media’s sickeningly fawning portrayal of the American justice system as one that “doesn’t spare the rich and powerful, unlike ours where the well-connected get away”, and “how justice is dispensed speedily in the US”, and so on.
Nothing could be farther from the truth. The US protects its own rich and powerful better than we can ever do. Paulson got away clean. Not even an investigation. No investigation by the Securities and Exchange Commission into the trading by these attendee hedge funds. Nothing. Just a conspiracy of silence.

About Buffett, Sharma has this nugget:

Then, we have the strange case of David Sokol. He was Buffett’s No. 2, and was widely tipped to take over from the old man. Sokol bought shares of Lubrizol, prior to getting Buffett to buy the company outright. After the deal was done, Sokol told Buffett of this purchase. Buffett waved it aside, saying it was no problem. No problem? Sokol traded on inside knowledge of material, non-public information, and Buffett joined him in keeping this a secret.
When the problem came out, Sokol resigned, Buffett shrugged. And, that was it. The cover up had happened. Because any serious investigation would have led to Buffett himself becoming a party to any offence, since he chose not to report this to the authorities. Consideration for his old age? Well...

Corruption in the US

Margaret Alva set off a storm a few weeks ago when she said the Congress was selling legislative assembly seats in Karnataka. But who says this sort of thing happens only in India? The governor of Illinois was arrested- he was carted away in handcuffs-for allegedly trying to auction the Senate seat vacated by Obama. FT reports:

Rod Blagojevich, governor of Barack Obama’s home state of Illinois, was arrested on Tuesday on a raft of federal corruption charges that included an alleged conspiracy to sell the president-elect’s vacant Senate seat for cash – or favours from Mr Obama himself.

The case was described by federal authorities as a “new low” for a state that has seen more than 1,000 people convicted on corruption charges since the 1970s – including the Democratic Mr Blagojevich’s predecessor as governor, Republican George Ryan, now serving six and half years in prison for racketeering.

<>.... ..The complaint appears to portray Mr Blagojevich as overseeing an auction for the Senate seat. “We were approached ‘pay to play’,” he told an associate of one potential replacement, according to the complaint. “That, you know, he’d raise 500 grand. An emissary came. Then the other guy would raise a million, if I made him a senator.”

Mr Blagojevich was also taped discussing whether he could use his power over the appointment to obtain other benefits. He speculated about securing a cabinet position or ambassadorship from the Obama administration or seeking Mr Obama’s help in obtaining a well-paying job at a trade union organisation or corporate board seats for his wife. Mr Blagojevich even mentioned asking Mr Obama to solicit $10m-$15m from Warren Buffett and Bill Gates for a non-profit organisation that the governor could run

Somehow, we think of Indian politics and politicians as uniquely corrupt. I have long pointed out that not just in the US but also in Europe- in France, Germany and Italy, for instance- politics can get really dirty. One thing we can say for Indian politics: it has not been entirely subverted by money power, although huge amounts are required for election finance. What I mean is: elections are not always won by those with the biggest financial muscle.

The prize for political lows goes to Israel: their former president had to quit following allegations of rape.