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India And The World
#61
<b>LOW BIRTHRATES, UNFUNDED PENSIONS & IMMIGRATION</b>

Guest Column-by Gaurang Bhatt

Birthrates in much of the EU, but particularly in Italy, Spain and Germany are below the replacement rate of slightly above two. Russia and Japan are having the same problem. America and Canada are hovering on the brink. The projection of future fall in population raises a number of problems including weakening of power projection, falling rate of GDP growth and increasing retirees and decreasing workers to support their un-funded social security retirement benefits. The options available are to reduce future benefits or permit increasing immigration of young and working, to continue paying current pensions from the payroll taxes of the working or utilize both options. The arguments against taking in new immigrants are xenophobia and racism for non-white immigrants and the fear of terrorism for Muslim immigrants. Excess populations keen on immigrating are to be found mainly in Asian, African and South American countries. Another solution is to fund the present retiree pensions from the general budget at the cost of running larger deficits and setting up individual benefit accounts for part of the payroll to provide partially privatized individual social security benefits supplemented by general retirement accounts. Below is an analysis on a country and/ or strategy basis.

<b>CHILE & AUSTRALIA</b>

These two countries have partially privatized and segregated social security retirement by removing the intake and payout from the budget and putting the funds under management by a quasi-governmental body. Australia in addition, is encouraging immigration from Asian countries to increase the ratio between workers and retirees. It has the advantage of a large landmass and sparse population.

<b>CANADA & NEW ZEALAND </b>

Both of them are encouraging immigration. Canada has the landmass, a sparse population and promotes multiculturalism, making it a very attractive destination. New Zealand has a limited land area and a very slow rate of growth but often fails to provide upward mobility or even jobs commensurate with the skills and education of immigrants. Asian immigrants are not unknown to return to their country of origin after failing to obtain other than menial or hard labor jobs, despite having college degrees and white collar skills.

<b>JAPAN & SOUTH KOREA </b>

Japan has an aging workforce and falling population. South Korea has a fast growing economy with a stable population and labor shortage. Japan is a creditor nation with holdings of over a trillion dollars, bulk of it in US dollars and assets. While it currently supports the dollar at great loss to stem the rise of the yen and preserve its trade surplus and jobs, it is not likely to do so in the future. Japan has already announced a moratorium on supporting the dollar and driving down the yen and may alter its policy in the coming fiscal year starting April 1, 2004. It is currently content to seek shelter under the American military might and nuclear umbrella. America is seriously wary of a re-armed nuclear Japan and so is China. A nuclear North Korea, a militarily strengthening China and unrest across the Taiwan Straits are all likely to feed and swell the rising tide of militarism in Japan. It also has a huge national debt to GDP ratio and an un-funded social security system, which will require calling in its IOUs from America, seriously threatening America’s low interest rates and the current value of the dollar. The xenophobia and ethnic pride of Japan has prevented it from allowing increased immigration or more equal treatment of migrant labor. South Korea has opted for a detestable form of indentured labor by issuing apprentice work permits to Thai, Philippino, Nepali, Bangladeshi and other workers. These workers are often at the mercy of their employers and severely restricted from changing jobs or bargaining for better wages. Their fear of being deported makes them captive labor. Some American employers have used H and L visas or illegal immigrants similarly.

<b>GULF STATES</b>

Oil rich Arab countries in the Persian Gulf routinely use South and Southeast Asians for routine and menial jobs with labor contracts. The workers never acquire permanent residency or citizenship but pay no taxes or finance any government benefits. Incidents of maltreatment including intimidation, physical punishment and even rape have been reported but are not frequent. The reasons here are not low birthrates or funding pensions, but sheer laziness, ineptitude and exclusion of women from the labor force on grounds of custom and religion. Falling per capita GDP and a school system which provides no useful marketable skills and a radical Islamic education leads to unemployed and unemployable youth susceptible to terrorist indoctrination due to lack of a political or economic future. The non-oil exports and GDP of all Arab countries combined is less than that of Spain. Sooner or later, due to economic and political instability, the need for and the remittance of South and Southeast Asian workers will decrease severely and a source of employment and foreign exchange earnings for India may vanish.

<b>EUROPEAN UNION</b>

Falling birthrates and un-funded government pension liabilities are forcing the old EU countries to difficult choices. Europe has tried to take in workers from prior colonies, as they would be assimilated quickly because of fluency in the colonizers language. France and Belgium took in Algerians, Moroccans and Africans. Spain took in Moroccans and Britain did the same with South Asians, West Indies and some Africans. Germany opted for guest workers from Turkey but restricted citizenship more than other countries. Netherlands accepted Indonesians and Surinamese. The post industrial service economies and some discrimination has reduced the job opportunities of those immigrants who did not vigorously pursue education because of economic, intellectual or religious reasons. The differential economic status of Indian immigrants in Britain compared to Pakistani and Bangladeshi immigrants stands out despite similar experience with discrimination. The jobless youth riots in Bradford and Islamic terrorism has caused considerable problems to the EU countries. The UK riots, capture of British born terrorists of Pakistani origin, anti-Semitic violence in France and the recent Madrid train bombings raise serious doubts about the assimilation of Muslim immigrants into a secular EU based on the rule of law. One option they have used is to enlarge the union and accept surplus labor from Eastern Europe and Baltic states. Spain has opened doors for Central and South Americans who are Christians and speak Spanish and tried to clamp down on Moroccan Muslims. There is much less tolerance in old Europe for a multi-ethnic and multicultural nation state. This has spawned anti-immigrant parties and racist violence in many of the countries. France and Britain have tried to reduce social security benefits and Germany is mulling over the idea. The rising Euro, stagnant economies and high unemployment resulted in recent restrictions on free movement of labor in the EU and a marked reduction of farm and other subsidies to the ten new EU members. Their farmers and workers are likely to suffer the same devastating consequences as Mexico and India due to high farm subsidies for France and old EU members and the better machinery and worker training of Germany. The fear of being flooded with Muslim workers from Turkey causes the EU to deny it membership.

<b>USA</b>

America has always been a multicultural society because the original inhabitants were American Indians and the white immigrants from many European countries after the first British ones. The large importation of African slaves and subsequent absorption of Mexicans, imported Chinese laborers and opening doors to Asians in the nineteen seventies created the melting pot. It has nevertheless kept the white population as the dominant power by laws, economics, wealth or numbers. Its un-funded liabilities and shrinking workforce is usually overcome by open immigration or temporary work permits under migrant labor laws or H-1B and L-1 visa programs. More work permits for Mexicans are under consideration. It is now following a policy of further enriching the rich and dismantling the safety net to create a two-tiered society. A trial balloon to cut benefits has been floated by the un-elected Federal Reserve Chairman who is a point man for the Republicans. In the last twenty-five years all Presidents and Congresses, be they Democrats or Republicans have tilted towards the rich. The stage is now set to leave the rich and the corporations in power and have increasing immigration of the working poor who have been politically emasculated or brainwashed by fear, religion or race. The electorate is bamboozled with trappings of democracy. They are allowed to vote but the candidates are chosen by the powerful. America is to become an insect society where the worker bees will toil ceaselessly at mundane chores to let the royals live in gated luxury. To give due credit, the path to riches in America is open to superior talent irrespective of ethnic background. The path to power is generally not. Recent attempts by Congress to eliminate overtime pay and the irresponsible trade, current account and budget deficits are bound to lead to curtailment of government services and benefits. The younger working population will rebel against necessary tax and social security contribution increases, thus forcing the legislative and executive branches to eviscerate further the social safety net without accepting blame and transferring it to the shoulders of the rebellious younger generation. Thus there will be a generational conflict added to the class, race and religious conflicts. The certain unraveling of Afghanistan, Iraq, Palestinian West Bank and Possibly Pakistan is sure to add to the travails of America.

<b>REPERCUSSIONS FOR INDIA </b>

Its excess of educated manpower has a great opportunity to immigrate to developed countries. The Hindu is not perceived as a terrorist threat. There is a real possibility of being mistaken as Muslim terrorists on the basis of color, as the recent arrests of two Indians in Madrid showed. It is unlikely that two white Spaniards who sold cell phones or cards would have gotten the same treatment. Having said that, it is important to stress that the legal system is generally fair and honest, as the later release of the two Indians in Madrid proves. Many Indians have prospered and some bountifully so in America, Britain and Canada. Until India offers its own citizens opportunities to succeed without nepotism and bribery, it is destined to suffer a loss of talent through immigration. If it cannot get rid of bureaucratic red tape, it may even lose the benefit that some of its successful scions have to offer from nostalgic love. India has one thing to be thankful about, Indian diaspora did not leave the nation because of political or religious persecution, like some Cubans, Iranians and Vietnamese did. They thus bear no enmity towards their motherland or its leaders. On the contrary, there is a large reservoir of goodwill and affection, but it will not last very long after the first generation Indian Americans die out.
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