I don't have an opinion on the Shilpa Shetty episode or a hypothesis to offer. Was she a victim of genuine racist barbs or was it yet another complex media ploy to shore up a television programme's ratings? Is a hundred-thousand-pound compensation enough for putting up with the humiliation that she allegedly did? I honestly don't know. Nor do I care. My chest didn't quite swell with pride as an Indian when she won the contest or whatever it was. However, I do confess to following the saga quite closely as did most people I know.
In fact, I would claim that the episode did more to raise awareness among Indians about the phenomenon of racism than anything else that I can think of. The medium clearly remains the message.
Sifting the overflow of commentaries in our local press, I noticed that each commentator has put her own spin on the concept of racism. I work with a simple definition. Racism, to me, essentially refers to discrimination based on the colour of skin and associated cultural differences. To be more exact, whites discriminating against non-whites.
Its most extreme manifestation in the last century has of course been the apartheid regime in South Africa and segregation among white and black Americans in the US. 'Official' racism came to an end with the end of the white regime in South Africa in the nineties. 'Unofficial' Apartheid continues to flourish.
Events of the last six years have added a new dimension to the problem. September 11 and the conflict in Iraq have led to a deep sense of distrust among Muslims and non-Muslims.
In the West, this had led to escalating tension between the white majority and immigrant non-white populations. The victims of this conflict have not been Muslims alone.
From what I read in media reports or hear from friends living in the West, almost all non-Caucasian ethnic groups in the West have seen a rise in racial tension. Thus, despite emerging nuances, the divide between whites and non-whites has remained the core of racism.
The problem with racism is that it cannot entirely be explained by economic logic. The hostility to non-white immigrant groups in Europe and the US is about much more than the threat of job loss.
Ask yourself this question. Why does Turkey have such a problem getting into the European Union when East European countries have had easy entry? Both entail increased competition in the existing members' labour markets.
Unfortunately, while the roots of racism are not 'economic', racism can have serious economic consequences. In fact, I would argue that racist or racial conflict could be the biggest challenge for economic global growth and prosperity going forward.
Let me put this in context. The first wave of globalisation that we saw over the last two decades was essentially about the expansion of trade and capital mobility. Most economies including India that opened their doors to these forces saw a significant rise in growth and prosperity.
Clearly the agenda of greater integration of the goods and capital markets needs to be carried forward. My sense is that the current impasse in WTO negotiations notwithstanding, policy-makers will realise that the gains from greater openness outweigh the losses.
The bigger challenge for globalisation, in my scheme of things, is to integrate labour markets. Given current demographic trends, greater cross-border mobility of workers is imperative in ensuring that global production remains efficient. Most Western economies have ageing populations, where the median age is continuously rising.
The flip-side is a decline in their labour force as a fraction of population. The converse is happening in the emerging economies, where populations are getting younger. The OECD estimates that between 2004 and 2010, the world as a whole would add about 375 million workers to the labour force.
The UK, Japan and the US put together would add about 11 million. India and Africa put together are expected to add 156 million.
In the absence of barriers to free labour movement, one should see large movements of labour from the labour-surplus economies to the labour-deficient ones, particularly in service industries. The outcome would be the best allocation of resources and, by definition, most efficient production. (Those interested in a more rigorous exposition of this idea should see an IMF working paper "Global Aging and Fiscal Policy with International Labour Mobility".)
This is, however, unlikely to happen in a hurry. The barriers that protect labour markets are much harder to bring down than barriers to trade in goods.
Unlike trade protection, the basic premise of labour market protection is racial discrimination. This could have two kinds of manifestations.
The politics of racial bias will ensure that explicit protection of labour markets such as severe restrictions on work permits will continue. Those economies that open up their markets will restrict mobility to high-end niche jobs. Second, even if there is greater mobility de jure, racist hostility will mean that immigrant workers might de facto find it impossible to actually work in these markets.
Is the segregation of labour markets likely to finally come to an end? Economic determinists would argue that the rise in wages in ageing economies would in future be acute enough to force these economies to open up and create a more conducive environment for migrants. I remain a sceptic.
The author is chief economist, ABN Amro. The views here are personal.
