Protect Consumers If You’re Democratic Protectionists

While President Donald Trump seeks to protect American businessmen and Prime Minister Narendra Modi guards their Indian counterparts, shed a tear for the more populous yet choiceless consumers in either country


One of the ironies of social sciences lies in nomenclature wherein policies are given names opposite in character to what they actually do. If working against the interests of society by handing over destinies of the people to a bunch of bureaucrats is called socialism, to protect the interests of the minuscule population of the business class is called protectionism! All the fire and brimstone in the parallel economic tussle between India and the United States over import tariffs — even as the two countries draw closer strategically — are occurring ostensibly because the politicians who lead these nations are ‘nationalists’ in economic policy as well. It’s President Donald Trump’s ‘America first’ versus Prime Minister Narendra Modi’s ‘India first’. Sadly, the consumers in either country do not figure first in the scheme of things of either government. Making Indian goods expensive in the United States and American products exorbitant in India could only mean that the people who would wish to buy these commodities in the targeted country are being punished for no fault of theirs. At the same time, business people in either country are assured that they would face no international competition and, therefore, they could take their respective customers for a compulsory ride.

The argument of the other side is compelling but half-baked. They say if cheaper goods flood the market, it devastates the local businesses, which eventually not only results in the same absence of competition but also in job losses as the local companies lose their ability to employ workers. This excuse is not strong enough for the simple reason that the government in the targeted country can easily lift regulations that make the local products expensive. If Chinese goods, for example, are a problem, it beats reason why India does not make doing business in the country as easy as it is doing business in China. German businessmen in the retail trade have demonstrated in their country how the predatory pricing marketing strategy of Wal-Mart could be made to bite the dust. The example is worth emulation by the Indian government that recently stopped e-tailers like and Flipkart from sourcing goods from their own subsidiaries. The Modi dispensation could have instead allowed the Indian competition to do the same. It must be noted here that the e-tail giants are making huge losses to sink their teeth in the Indian market, and by the principle of fair economics, one has the right to deliberately lose or waste his own money. The state has no business depriving the consumers of better quality, affordable options. But protect the consumers the state does not.

The rationale could indeed be extended to fighting black money. Indian politics has been troubled by astronomical figures cited as the money allegedly stashed abroad by Indian tax evaders. These destination tax havens are, from the Cayman Islands to Seychelles, but struggling, poor economies that desperately need foreign investment to uplift their lot. In a bid to attain a $ 5 trillion figure, a capitalist-turned-socialist-populist Modi could well have made India an equally attractive investment destination by drastically reducing taxes on companies. That would answer the question as to why ‘Make in India’ could not motivate the big names in industry like the Ambanis, Tatas, Birlas, etc to invest heavily in the country and generate millions of jobs. The one-man government went in the opposite direction, making its supporters plunge into despair to protect also the agenda of saffron communist lobbies like the Swadeshi Jagaran Manch.

Finally, however, while democracy is a game of numbers, the numbers determine state policy only when united. This works as much on the issue of education and employment quota as it does in government choosing between buyers and sellers to protect. Traders have strong, effective lobbies whereas consumers don’t. This is why India sorely misses a pro-consumer party that can throw up a formidable challenge to the BJP, Congress and other socialist parties in elections. It would be easier for the media to offer their platforms to free market advocates as it did in the 1990s when suddenly a nation whose coffers had run dry, like Greece’s in 2015, had to open up its market. Once that creates leaders like a PV Narasimha Rao and an Atal Bihari Vajpayee, it would be incumbent upon these statesmen to form groups of educators to spread out in pockets of poverty, the most populous section of the electorate, to convince them that if doles, freebies and subsidies could uplift them, seven decades of that policy would have turned them super-rich. Once this education is veritably accomplished, a government that chooses to protect consumers instead of traders wouldn’t meet the fate of 1996 or 2004.

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