The 2011 film Margin Call, which recounts the events leading up to the 2008 global financial crisis, has a scene where a board meeting is held at an investment bank in the middle of the night. This happens after one of the company’s junior analysts discovers subprime assets on the books. The CEO delivers a dialogue that serves as a masterclass in business leadership. “Let me tell you something, Mr. Sullivan. Care to know why I’m in this chair with all of you? I mean, why am I making so much money… I’m here for one reason and one reason only. I’m here to guess what music might do a week, a month, a year from now. That’s it. Nothing more. Standing here tonight, I’m afraid I’m hearing nothing. Just… silence.” He says.
States are not corporations. But national fortunes can only be built if leaders have a vision of what “music” can do years and decades from now.
At least four developments – Space
Let’s look at them one by one.
Space X is the most extreme case of Star Wars-Incorporated
Musk’s Space Space Reuters reported that Musk’s listing target of $135 per share would mean a price-to-revenue multiple of 93.7, more than five times what Tesla was. For context, Adani Green Energy, one of the most expensive large-cap stocks in India, trades at a price-to-sales multiple of about 20. This figure is less than half for most stocks in the Indian benchmark index. This emphasizes the distinct abundance that musk enjoys at the present time.
Now, one could argue that Musk is enjoying the tailwind in the US stock markets, and that the bubble will burst one day. But the truth is also that more and more people (with money) believe that the future of profits is tied to cutting-edge technology like never before. The dot-com bubble also burst, but the Internet business wasn’t going anywhere but up.
From a somewhat longer-term perspective, Musk’s net rocket ride underscores the private gains from technological progress that has its origins in the US military-industrial complex. It was a pioneer in rocket science and the Internet at the height of its rivalry with the Soviet Union. What we have now is a set of monopolies that have become so large that they cannot even be overcome. Those interested in a longer version of this argument would do well to read Chris Miller’s excellent book Chip Wars, from which this quote below is taken.
“In the early 1960s, it could be claimed that the Pentagon had created Silicon Valley. In the decade that followed, the tables had turned. The U.S. military lost the war in Vietnam, but the chip industry won the peace that followed, linking the rest of Asia, from Singapore to Taiwan to Japan, more closely to the United States through investment links and rapidly expanding supply chains… In contrast to the days of the Apollo program, by the 1980s, more than 90 percent of semiconductors were manufactured. They were bought by companies and consumers, not The military has been difficult for the Pentagon to shape the industry because the Department of Defense is no longer Silicon Valley’s most important client.
Now a few companies in this evolving frontier are based outside the United States, such as chipmaker TSMC in Taiwan and optical lithography systems manufacturer ASML in the Netherlands, but the overwhelming majority are still American. The only country that can even pretend to compete with this technological superiority of the United States is China, which has made long-term investments to build such capabilities and companies. India doesn’t even come close. This has serious implications for India’s ability to create future wealth, or lack thereof, on a global scale.
AI will be the new geopolitical apartheid
“America’s closest allies were shocked,” is how The Economist described the US government’s decision to deny access to the Anthropic Mythos to all non-foreign persons (including workers at US companies). Certainly some negotiations appear to be taking place between the anthropological government and the American government. Among other things, Mythos is an artificial intelligence tool that can hack even the most secure systems. The implications of this can only be compared to a country possessing an electromagnetic pulse (EMP) based weapons system capable of crippling the entire infrastructure of both economies and militaries. There’s even a James Bond movie about the nightmare of an electromagnetic pulse.
Leaving aside the legal aspects and ethical debates – the humanitarian administration and the Trump administration don’t really share the best relationship – The Economist rightly compares the latest ban to the US ban on nuclear weapons technology and encryption techniques even among its closest allies. An earlier version of it was already visible in bipartisan US efforts to restrict the availability of cutting-edge technology to US-rival China in sectors such as chipmaking. Now, the shoe is on the other foot.
The implications of the second are clear when read with the first. The United States is not just backing down from its commitment to providing export markets or even capital to the rest of the world. It will also begin to back away from its promise to share technology in sectors where it still has some advantage over others.
It doesn’t matter whether you are a friend of the United States or even its best friend. India has considered itself a friend of America for a long time, and the two have taken steps toward becoming best friends. Friendship will have less to give and more to the advantage of the United States.
The United States’ allies are indispensable, and their exposure to its failed adventures is permanent
If we assume that the agreement between the United States and Iran has been implemented – and no one knows this with Trump – it will turn out that the biggest loser in the region is Israel. It has burned enormous political capital around the world thanks to its disproportionate and largely hideous military campaign in Gaza that has taken a massive humanitarian toll. It may have imagined that achieving a decisive victory over Iran in a military campaign involving the United States would, at least strategically, compensate for its loss in diplomatic capital. Trump was naive, but not for long.
Once it became clear that Iran’s military capabilities had not declined in the wake of the Supreme Leader’s assassination and had succeeded in closing the Strait of Hormuz, it was Israel, not Iran, that became the winning duck in the ongoing war unless the United States committed to deploying ground forces. Now Trump is walking away from the chaos, leaving it to Israel and its other allies in West Asia to pick up the pieces. The rest of the world, including India, incurred huge costs thanks to the post-war energy shock.
The behavior of the United States toward its allies in West Asia—countries that were attacked because of the presence of American military bases that it believed were the best insurance it could provide against such attacks—makes its brazen actions of firing on an Iranian naval ship (not in combat) in the waters of Indian Ocean and then attacking a ship with an Indian crew, killing three Indian sailors, appears relatively benign.
The joke is about strategists who imagined that the Quad – a US-led security alliance to contain China in the Indo-Pacific – was the desired path for India’s geostrategic ambitions. China will definitely smile. Even Pakistan, a failed state by all practical standards, has something to be proud of thanks to its foothold in the peace process.
Some Indian policymakers believe that Donald Trump’s second presidency has been unambiguously beneficial for India when he takes office in 2024. The world, contrary to the utopian positions they often take now, will not shift from unipolar to multipolar. It increasingly resembles the law of the jungle: might is the only right, and no friendships are permanent.
Anti-immigrant riots in quasi-tax haven with tech billionaires as instigators
Belfast is no stranger to violence and riots. But what happened a few days ago was similar but different at the same time. In its report on the anti-immigrant riots that broke out in Ireland after a Sudanese refugee stabbed a white man, the Guardian said: “Outside Belfast, mobs set fire to targets in Portadown, Dundonald and Newtownabbey. The fire service received 256 calls and attended 62 incidents. Similar scenes occurred in England, but Northern Ireland’s history resonated through the chaos. In 1969, a mob burned down families “Catholic from some of the same streets, setting a precedent.” man. The Guardian story adds: “For the rioters who burned homes and vehicles, including a glider bus and a police car, it actually made perfect sense. Social media, their elected representatives and far-right agitators like Elon Musk and Tommy Robinson assured them it was all connected: immigrants and refugees taking over homes, imposing strange customs and committing crimes while the police did nothing, requiring community action.”
Ireland today, in contrast to its turbulent past, is not a country of street battles and exploding bombs. It is a quasi-tax haven that offers the lowest taxes for multinational citizens and is a world leader in cutting-edge services. What happened in Belfast will not stay in Belfast.
The global multicultural experience in the Western world now stands on crumbling pillars. Immigrants make perfect economic sense for societies in demographic decline that have gained enormously from being recipients of skilled and unskilled labor. But this zero-sum game in a rational world is increasingly seen as non-zero-sum in a world where the indigenous underclass has been economically emaciated and has collaborated with the cultural and racial right to turn its rage against the parasitic intruder. The kinetic energy of latent anger is provided by new-age tech billionaires who are happy to request exceptions in policies like the H1B visa program.
Now, one could say that Indians are mostly among the highest-income immigrants in the West and would not be targeted to the same extent as the average Arab or African citizen. But it would also be an illusion to think of some important exceptions for India when the West turns generally anti-immigrant and discriminates on the basis of skin colour. The trend of Indians making a fortune for themselves while working in a West that was welcoming rather than hostile may have already peaked.
What does it all mean?
The constant euphemism for the changing world has been the demise of the rules-based order. Well, the WTO and others were somewhat important, but they were far from perfect. What is happening today in the world is a fundamental reset of the rules of accumulation and sharing of knowledge, its weapons, and social attitudes in the Western world.
None of these changes resulted from actions taken by India. But almost all of these challenges will make life more difficult for India and Indians in the future. I started this column with an interview in Hollywood. I could end with a fairy tale where the grasshopper rejoices while the ants work for the winter. “I’ve been so busy making music that summer was over before I knew it,” admits the grasshopper when he’s starving in the winter. It would be better for Indian public discourse and the authors of the speech to acknowledge that winter is coming.
