Well-written snapshots

Legendary economist Stephen Roach’s new book on Asia is wide-ranging, but offers few new insights on India.

Stephen Roach has been with the Brookings Institution and the Federal Reserve Board, but he is identified more with Morgan Stanley, where he has been Chief Economist for many years, and is currently Chairman of Morgan Stanley’s Asia operations. This may be his first book, but Roach is a familiar face. The jacket has praise from assorted people, including our own Montek Singh Ahluwalia.

The Deputy Chairman of the Planning Commission states: “Based as he is in Asia, he has produced a must-read volume for anyone wanting to get a flavour of a mega trend that is already evident and one that is expected to continue.” That Roach knows Asia exceedingly well is undeniable. But what are these mega trends and why has Stephen Roach decided to publish this “lazy” volume now? The adjective “lazy” needs explaining. This isn’t a fresh volume. It is a reproduction of 29 essays, mostly published as newspaper articles, with some speeches thrown in.

These essays haven’t always been easily accessible, and there is some merit in publishing them together. However, because it is a collection, it isn’t quite a volume in the sense of a continuous chain of thought, though some underlying trends characterise all essays. Therefore, this isn’t a book that one reads continuously. It is one that you flip through at random. And there is no denying the essays are written well.

The 29 essays are grouped into five “chapters”, though “sections” might have been more appropriate—A World in Crisis, The Globalization Debate, Chinese Rebalancing, Pan-Asian Challenges and US-China Tensions, with a concentration on the first. Roach has been described as an eternal bear, because his forecasts have generally been pessimistic, including those on an economic Armageddon in the US because of current account and government deficits.

He has also flagged central bank-driven low interest rate regimes that drive asset price bubbles. In a sense, therefore, Roach warned of a global financial crisis before 2007 and has been vindicated. That’s probably the explanation for the volume’s timing. It’s likely to be read much more now and even if green shoots are sprouting, some underlying trends described are more than transient. Having said this, the book is mostly about the US and China, and tensions between the two.

There are only three essays that are Indiaspecific: a 2006 A Tale of Two Asias with the inevitable China-India comparison; a 2007 India on the Move and a 2009 India’s Virtuous Cycle. The 2009 essay states: “The new government needs to seize this moment—moving aggressively on four fronts: public sector deficit reduction; infrastructure support; privatisation; and deregulation of pension funds, retail and banking.”

Why didn’t this “new” government do this between 2004 and 2009? Because of ‘the politics of coalition management over the past few years”. The 2007 essay states: “Driven by reform-minded ministers who have remained steadfast in the face of political opposition, both India’s rail system and the civil aviation sector are likely to benefit significantly from a major acceleration of investment in the years ahead.”

Most Indians will contest such assertions and all Indians will agree such stuff offers little value addition for India. But one can understand why Montek Singh Ahluwalia approves, because this is the party line. The 2009 essay, Same Old, Same Old is about a G8 meeting, not about Indian policy-making. Moving away from India, there is little in the book that is of value or characterised by deep insights. However, that was probably not the intention. Nor is that the reason for reading this book. This book will be read because it offers well-written, convenient snapshots in one place.