Congratulations to Russian authorities including Dmitry Medvedev and Vladimir Putin, the Russian media and the Russian citizenry for such democratic and peaceful expression of discontent and dissatisfaction.

It appears that Putin after 12 years of leadership and tight control over the levers of power is beginning to evoke strong adverse feelings at least among some of the Russian citizenry.  There are several reasons for this.  First,  it is impossible not to lead the affairs of a county for 12 years, as Putin has done, and not evoke some level of adverse emotions.  Second, Putin has used some strong arm tactics over the years, and the cumulative resentment of those actions is coming to the fore now.  Third, there is resentment that Putin nudged Dmitry Medvedev and secured the nomination  of United Russia assuring his election as the President.  Fourth, there is a yearning for new leadership and ideas — the thought of Putin’s leadership for at least another six years is unappetising to Russian citizenry.  Finally, United Russia — the party that Putin created and leads — has become synonymous with corruption, incompetence and high-handedness.

While the Russians are appreciative of Putin’s steady and tough leadership and contributions to a stable economy and society — particularly after Boris Yeltsin’s erratic leadership, there is the general feeling of “enough is enough” and no stomach for Putin’s tough measures.

In public life, the greatest gift is to know when to exit the stage.

The electoral contest to choose the Republican Party’s nominee begins next month (i.e. in January) in Iowa, and then the contest moves to New Hampshire, South Carolina and Florida. Here is the surprise element.  With a month to go, the former speaker of the US House Representatives Newt Gingirch leads in all the polls — while most political analysts believed that Mitt Romney, the former Governor of Massachusetts, would be leader.  There is still some time, but increasingly Newt Gingrich’s front-runner status appears secure.

In any case, it is almost certain that President Barack Obama will face either Newt Gingrich or Mitt Romney in the general elections in November 2012.

At this point, President Barack Obama’s odds appear to be less than an even coin flip.  Only about 43% of the Americans approve Obama’s job performance.  Generally, as commonsense would advise, a candidate’s ceiling on the percentage of vote is at a point or more than the job approval rating.  So, given the current number we can expect Obama to get about 44% of the vote, and that would, of course, be a losing proposition.

However, accurate predictor is the average of all the job approal ratings beginning about one year prior to the elections until the election day — so we are just beginning that phase.

Having said this, who would be a tougher opponent — Romney or Gingrich — in the general elections?  That’s tough to respond.  Romney is, by both demeanor and past policy actions, more of a moderate, and therefore may have greater appeal to the independents who constitute about 20 percent of the American voters.  However, this is merely an assumption and there is not much data to support this.  Romney has some challenges — he does not enthuse the electorate, he is not received well by a significant fraction of the republican party, and he has generated wide-spread perception that he changes his policy position too-often (a flip-flopper). 

Newt Gingrich enthuses the conservatives, he is bold in his ideas, he is articulate, and he appears to be in command of the situation.  But he is biggest challenge is the perception (and to some degree based on facts) that he is wild, bombastic, and reckless.  The perception lingers from his speakership days in the 1990s.  As recently as yesterday, Gingrich engaged in dangerous rhetorical flourish. 

Newt Gingrich promised he would ask former U.N. Ambassador John Bolton “to be his secretary of state if he’s elected president next year,” the Washington Times reports.  Unfortunately, naming individuals you would appoint to office before the election is apparently illegal (Title 18, Part I, Chapter 29, Section 599 of the U.S. Code).   At the least, Gingrich has given a big stick to beat him with — all of Bolton’s flaws now become Gingrich’s flaws and testimony on Gingrich’s judgment.

Only this can be said for now:  the American presidential politics is in ferment, and there are too many imponderables.

Intellectuals including many economists have urged the government to stay the course, and not give in to political pressures.  The singular argument of the proponents is that the benefts of liberalized policy in retail (e.g., increased infusion of foreign capital, technology and managerial expertise in retail sector;  development of modern and sophisticated logistical technologies and attendant infrastructure including food warehousing and transportation approaches;  reduction in transit and other costs and hence lower price to consumers; and reduction in the power of intermediaries between farmers and the market) are well documented in many countries including Argentina, Brazil, Chile, China, Indonesia, Malaysia, Russia, Singapore, and Thailand. 

There are two issues with this argument.  First, analogies are limited in their usefulness.   Each society is different from the other.  In size and scope, China is the natural benchmark.  But China comparison is incorrect because the structure of China’s economy is very different from India’s.  In China, capital investment, consumer investment and export-import contribute roughly one-third each to the economy.  On the other hand, in India consumer spending contributes almost 60 percent to the economy, and the export-import less than 10 percent.  When the structures of the economy are so different, analogizing is not correct approach.  Further, India is different from China specifically in the retail sector in very specific and substantial manners.  For example, there are almost 15 million retailers in India, including hawkers and pavement vendors ii.e about one retailer for every 8 Indians.  In contrast, China has just 1.3 million retailers – one for 100 Chinese. In India, one retailer does not stock all needs of all customers, but the composite neighbourhood retailers – hawkers, roadside vendors, bunks and kirana shops – taken together meet the customers’ requirements. 

Seccond, the scholars apparently seem to wish away shorter-term dislocations and pains not only to million of retailers but also to suppliers and consumers — in general to the marketplace.  There are no efforts to quantify this, and to provide remedial solutions.

So, what is to be done?

Politically, most powerful (and populist) argument is that marginal farmers will benefit from the liberaliation policy because it will almost the middle intermediaries who hold sway over their financial and social life.   This fact must be repeated and repeated, and it will soon resonate.

Then, the Government must make an honest assessment of the nature and cost of shorter-term dislocations to individual retailers, suppliers and consumers — and the marketplace overall, and propose clear-cut solutions and actions to substanitally alleviate, if not completely eliminate, such shorter-term dislocations and pains.

Finally, the political process is working just fine.  In a democracy, all the constituencies get to speak, there is debate, there is argument, there is disagreement but over time a majority of the opinion will settle dowm in favor of or against this policy (most likely, in favor of this policy).  Such pulls and pressures of democratic polity refine and recalibrate such important policy decisions, and give time to pause and reflect.  There is much to be gained in this approach.

The wave of freedom quest in the Middle-East is too evident and obvious – we have called it the Arab Spring.

However, now the Arab Spring appears to be clouded.  Tunisia recently elected its constituent assembly.  A general election under the new constitution is expected to be held in late 2012 or early 2013.

The winners in the constituent assembly are candidates affiliated to Islamist party, Nahda, which is led by Rachid Ghannouchi.  Nahda secured 41 percent of the assembly seats.  The new prime minister is Hamadi Jebali of the Islamist party.

Jebali has spent substantial amount of time explaining to the western world that Ghannouchi is a moderate Islamist.  The inaugural session of the constituent assembly on November 22^nd was distinguished.  However, the jury is out about the nature of the constitution that the Islamists are likely to fashion for Tunisia.

And then there is Egypt.  In the recently concluded first phase of the elections to the People’s Assembly Muslim Brothers, Islamist party, have won 30 to 40 percent of the votes assuring them at least about 40 percent of the assembly seats.   Surprisingly, the Salafists, more ideological, puritanical and sometimes stringent Islamists party, have won almost 20% of the vote.  The next phases of voting are in the rural areas where Islamist parties are likely to better than their showing in the first phase which was largely confined to major cities.

The elections in Egypt were free, fair and dignified, but nobody is clear how the Islamist parties will govern.

There is uncertainty and the Arab Spring is a bit cloudy for now.

It all began in a small and almost pedestrian manner in Tunisia, a relatively small country in December 2010 when a street vendor protested against abuse from police authorities. Longtime President Zine Abidine Ben Ali was ousted in matter of 5-6 weeks in January 2011. There were about 80 deaths, a sorrowing matter. But the culmination was swift and decisive.

As if on a cue, the citizenry in Egypt rose in determined and sustained protest against longstanding authoritarianism, police brutality and political indifference. The first significant demonstration was on January 25, 2011, and by February 13 President Hosni Mubarak has stepped down. Again, it was very swift and decisive.

And then Libya’s President Muammar Gaddafi and his autocratic regime came under siege. The peaceful protests began about February 15^th, but since then the struggle became bloody and fitful because use of aggressive force by Gaddafi in an effort to ward off dissent and retain power. And then Gaddafi was removed.

And now the Syrian citizenry is pushing the despotic structure of its government to its limits. President Bashar Assad has been fighting his own citizens since March, and the life of autocratic dispensation is numbered in months.

Of course, Iraq has been trying to establish its own order for the last 6-7 years. For all the doom and gloom, Iraq conducted elections and is being governed by an elected body. There is reasonable measure of freedom and order, though the institutions are fragile.

This is remarkable. In a span of about 8-10 months the political landscape of the Middle-East has changed dramatically, and it continues to evolve. There is a wave of demand for a just, orderly, reasonable, and free life, though the future is a bit cloudy now.

To realize that all this began in a small and almost pedestrian manner in December 2010 in a small town in Tunisia is beyond daring imagination. Twenty-six years old Mohamed Bouazizi was a small street vendor in Sidi Bouzid, a small town in Tunisina. He was the sole income earner in his extended family of eight. He operated a purportedly unlicensed vegetable cart for seven years.

On December 17, 2010, a policewoman confiscated his cart and the produce. Bouazizi, who was used to such confiscation, tried to pay the stipulated 10-dinar fine. The policewoman was grossly abusive. She slapped him, spat in his face, and insulted his deceased father. A humiliated Bouazizi then went to the provincial headquarters in an attempt to complain to local municipality officials. The officials were indifferent and arrogant, and refused an audience.

Deeply anguished and frustrated at regular heap of abuse from the bureaucracy, Bouazizi returned to the headquarters, doused himself with a flammable liquid and set himself on fire. Public outrage quickly grew over the incident, leading to protests. This immolation and the subsequent heavy-handed response by the police to peaceful marchers caused riots the next day in Sidi Bouzid that went largely unnoticed in its first days, but then the protests spread like prairie fire. The rest is history, as they say.

The Middle-East revolutions of 2010 and 2011 continue to inform us about the power of citizenry, and the fundamental weaknesses of autocratic structures.

The proceedings of the Indian Parliament (Lok Sabha and Rajya Sabha) have been stalled, and there is a general strike that has been called by the traders’ association.

Unfortunately, an important policy decision is lost in lot of noise — both the proponents and the opponents of the proposal have merit in their arguments but all that is lost in the din.

The proponents argue that such FDI in retail business will lower the cost of many consumer goods, reduce the inflation, increase the productivity and lower wastage.  In sum, the investment will create large consumer surplus.  Additionally, there will be substantial investments in infrastructure, logistic and operational technologies, create millions of jobs, and reduce the rural-urban divide.

The opponents argue that the proposed policy will severely hurt and damage the small individual retail owners (Kiranas), suffocate the small-scale industries, suppliers and vendors, millions will lose jobs, and the unique identity of India’s landscape littered with Kiranas will forever be changed.

Both the proponents and opponents are at least partly right.  There are not definitive scientific studies (in India) to support or refute either posture.  The arguments, reasonable and reasoned, are based on analogies, studies in other countries and societies, forecasting and educated guess.  In any case, that’s what we can do — not much more.

While it is true that in the longer term FDI in retail business will be largely beneficial as advocated by the proponents, it is also true that in shorter term there will be substantial dislocation and disruption to the business model and economy as argued by the proponents.

Accordingly, there are two questions.  One, how long will be it before the benefits of such investment start manifesting in large scale?  There is no definitve answer to this.  It may be 2 years or 5 years before substantial benefits become evident.  Two, what has the goverment proposed to mitigate the short-term pain?  There is opportunity for clarity and improvement here,  At this point, there is only one element — 30 percent sourcing reserved for Indian small and medium scale entreprises.

In any case, it is a bit surprising that the Indian government made such an imporant policy decision in its cabinet meeting when the Parliament was in session and available for input and when various political leaders were available for consultations.

Examples of China, Vietnam  and Cuba are cited by the proponents as acceptance of FDI in retail business even by communists and societies focused on egalitarianism.  But this analogy is misleading.  Vietnam and Cuba are too small in size and scope, and are countries with special history and requirements.  China analogy is also misplaced.  The structure of China’s economy is dependent substantially (about one-third of GDP) on exports-imports, and that’s not the right prescription for long-term stability and mass prosperity.

It is is difficult to believe — and there is absolutely no reason for NATO to have done it — that NATO would have deliberately targeted Pakistan soldiers.  It is true that the United States and Western world have been somewhat disenchanted with Pakistan’s efforts to curb terrorist activities. 

Even given this disenchantment, the world needs Pakistann’s cooperation iin restraining and hopefully, even eliminating terrorist activities in Afghanistan.  Accordingly, Pakistan is fundamental to securing Afghanistan.  Of course, a secure Afghanistan is also critical for a strong and secure Pakistan. 

In this context, it is unfortunate that Pakistan has decided not to attend the international conference on Afghanistan security and development to be held in Bonn in the next week.  Almost 50 countries are scheduled to attend the conference.

While Pakistan’s decision is regrettable, the political and military leaders in Pakistan could not have pretended that the NATO airstrikes were irrelevant and try to move on.  The Pakistan citizenry would not tolerate that. 

The political and emotional imperatives have compelled Pakistan leaders to skip the Bonn conference.  The onus is on NATO to find a public way to empathize with the anger and confusion of Pakistan citizenry so that Pakistan’s political leaders can attend the Bonn conference without appearing to be subservient to western interests.

There have been many theories floated to explain this decline in preference measurement and job approval rating.  For example, some have argued that the President’s policy prescriptions are too liberal for the country.  Others have argued that the President’s agenda is too ambitious for the country to absorb in such a short time (Secretary Colin Powell was the most recent proponent of this possibility.)  Yet others have argued that the country is not supportive of President’s massive health care reform (though all the preference measurements suggest that a majority of Americans support and trust the President on the health care reform). Finally, some have even suggested that the nomination of Justice Sonia Sotomayor for the U.S. Supreme Court may not have been well received (though all the polls suggest that the facts are to the contrary).

However, all these theories appear to be misplaced.  The President’s  job approval rating simply appears to be tracking the state of the U.S. economy.  The initial hope of quicker recovery of the economy has now faded.  Americans are beginning to realize that the weakness in the economy will persist for sometime.  The high unemployment rate is also likely to persist and even increase some.

So as the Americans come to grip with this new but disapponting reality.  And that sentiment is closely reflected on President’s job approval rating.  Given the realities about the economy, the President’s job approval rating is likely to stagnate and even decline further.

That’s the business of leadership.  But the President should not forsake his ambitious agenda be it health care or immigration or budgetary reform.  Further, the President and his advisers have to examine if additional stimulus for the economy is necessary for a more expedited recovery.

Pollster.com has the best analysis of the direct and simple relationship between the President’s job approval rating and the state of the economy. Pollster.com link: Perceptions of President Obama and Economy

There are several provisions of the bill — some are bold and others modest, some progressive and others status quoist.    With respect to Global Warming and Carbon emission reduction, the Act mandates, “Starting in 2012, ACES establishes annual tonnage limits on emissions of carbon and other global warming pollutants from large U.S. sources like electric utilities and oil refiners. Under these limits, carbon pollution from large sources must be reduced by 17% below 2005 levels by 2020 and 83% below 2005 levels by 2050. To achieve these limits, ACES establishes a system of tradable permits called “emission allowances” modeled after the successful Clean Air Act program to prevent acid rain. This market-based approach provides economic incentives for industry to reduce carbon emissions at the lowest cost to the economy.”

So, per ACES Act, the United States is using 2005 as the benchmark, and hoping to reduce the carbon emissions by about 17 percent in 2020.

However, the benchmark for the world is the Kyoto Protocol which established legally binding commitment for the reduction of four greenhouse gases (carbon dioxide, methane, nitrous oxide, sulphur hexafluoride), and two groups of gases (hydrofluorocarbons and perfluorocarbons).  Per Kyoto Protocol, the U.S. was required to reduce the emissions by about 20 percent in 2012 using 1990 as the benchmark.  Since the U.S. has abandoned the Kyoto Protocol for the last 8 years or so, the goals set by the Waxman-Markey bill would reduce the emissions (produced in the U.S.) only about 4 percent in 2012.

Europe has been more aggressive in the reduction of carbon emissions.

The Greenhouse effect is the result of carbon and other emissions accumulated in the atmosphere for the last 100-150 years (the stock of emissions), and the current additions (flow) to those emissions.  The industrialized nations have contributed most to the stock of the carbon emissions.  The rate of current flow is the greatest from China and India, though the per capita emissions (from China and India) are still relatively modest.

While China and India are still at aspirational levels, the United States and other developed countries already have achieved a very respectable quality of life.  Further, the developed countries have far more financial, technological and innovation resources to be defray the short-term cost of efforts to reduce the emissions.

Therefore, it is not surprising that China and India are insisting on a global treaty that recognizes the differential contributions by the developed countries, and China and India:  the stock of carbon emissions already set in the atmosphere is large, and the current rate of emissions by China and India add only marginally to that stock.

Further, the world will have to establish a corpus global fund (similar to the IMF Fund)  to facilitate research, innovation and policy implementation.  The contributions to the fund should be based on some equitable formula.  The current level of funding and mechanism is limited.   What is needed is a predictable, sufficient and stable fund.

Therefore, given these facts India seeks an agreement that is comprehensive, balanced and equitable.

One provision of the ACEA that is not conducive to cooperative and coordinated action on this matter is the mandate to impose tariffs on imports from countries that do not make cuts as envisioned in the Act.  This provision ignores the fact that United States has abandoned the Kyoto Protocol for the last 8-9 years, and is punitive on countries like China and India. President Barack Obama, rightly, opposes the tariff mandate in the Act.

India has made a sincere and self-interested effort to reduce the carbon emissions.  Over the last five years, even as India has been growing at about 7-8 percent annually, the energy consumption has been increasing only at about 4 percent annually.  Prime Minister Manmohan Singh has repeatedly assured the world that  India’s per capita emission will be no larger than the per capita emission from the developed countries.  So far, India has lived up to its commitments.

(1)  While Ricci v. DeStefano decision by the U.S. Supreme Court to overturn the ruling of  Sotomayor and a majority of the 2nd U.S. Circuit Court of Appeals is a minor setback, one adverse case and ruling cannot and does not constitute evidence for commentary on Sotomayor’s intellect or integrity. There is not likely to be much traction for an argument based on the Ricci case alone

(2)  Besides Ricci case, there is no salient example of a decision/ruling by Judge Sotomayor that is discordant from the views held by majoirty of Americans on major social or political or economic issues.

(3)  That’s simply the point:  Justice Sotomayor appears to be in the middle of the American consensus.  Of course, the middle and the consensus is dynamic: they move over time.  For example, the views of Justice Robert Bork clearly struck a discordant note from the mjoirty of Americans in the late 1980s.  However, while U.S. Supreme Court Justices John Roberts and Samuel Alito hold views similar to Justice Robert Bork on large number of issues they (both Roberts and Alito) were confirmed easily because Justice Bork’s views have now become America’s middling opinion on large number of issues.

The Declaration was signed by 56 representatives.  Each one of those 56 individuals risked the wrath of British Empire.  Each one of them had sacrificed monumentally.

But, unfortunately, most of the 56 representatives died without any recognition.  Some died of war-injuries, some died in debt, some were harassed by the British Empire and were driven away from their homes.  Of course, a few such as Thomas Jefferson, John and Sam Adams, and Benjamin Franklin rose to highest offices in Government and are remembered by all of us.

Each one of the 56 representatives deserve our remembrance and gratitude.  We should celebrate the lives of each one of them.  Here is the complete list of the 56 representatives –

New Hampshire:  Josiah Bartlett, William Whipple, Matthew Thornton
Massachusetts:  John Hancock, Samual Adams, John Adams, Robert Treat Paine, Elbridge Gerry
Rhode Island: Stephen Hopkins, William Ellery
Connecticut: Roger Sherman, Samuel Huntington, William Williams, Oliver Wolcott
New York: William Floyd, Philip Livingston, Francis Lewis, Lewis Morris
New Jersey: Richard Stockton, John Witherspoon, Francis Hopkinson, John Hart, Abraham Clark
Pennsylvania: Robert Morris, Benjamin Rush, Benjamin Franklin, John Morton, George Clymer, James Smith, George Taylor, James Wilson, George Ross
Delaware: Caesar Rodney, George Read, Thomas McKean
Maryland: Samuel Chase, William Paca, Thomas Stone, Charles Carroll of Carrollton
Virginia: George Wythe, Richard Henry Lee, Thomas Jefferson, Benjamin Harrison, Thomas Nelson, Jr., Francis Lightfoot Lee, Carter Braxton
North Carolina: William Hooper, Joseph Hewes, John Penn
South Carolina: Edward Rutledge, Thomas Heyward, Jr., Thomas Lynch, Jr., Arthur Middleton
Georgia: Button Gwinnett, Lyman Hall, George Walton

Once again, experience and empirics tell us that fame and recognition are quite often product of  circumstances and happen-stance, and not always reflection of deeds, merits and contributions.  Life is unpredictable in too many ways.

Happy July 4th!  With gratitude and appreciation to each one of the 56 representatives.