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Two strikes: one in China, the other in Kerala

We have all become used to little homilies on how India should learn from China. See how the Chinese have converted their land into a virtual paradise for their workers, they tell us. See how cleverly they have orchestrated the greatest economic buildup ever seen by man, we hear. Look at the shiny new skyscrapers in Shanghai, we are told. In the wake of Jaswant Singh's trip to China, the hosannas from the usual suspects are practically deafening.

You might be amazed to hear that I agree with them. Well, partly: there is one thing India can learn from China. That is how to deal with your difficult workers: something India really needs to learn. In fact there is another thing: how to cook the books and make up those brilliant macroeconomic statistics Americans salivate over, but that is a topic for a future column.

There was a recent strike in India's Kerala state that ended with the ignominious withdrawal of the strikers; and a demonstration by laid-off workers is going on in China's Daqing oil field, long eulogised in Maoist hagiography as a symbol of the proletariat's power. I find these curiously intertwined. Besides, what is going on in Daqing points to the larger issues of globalisation and the real weaknesses of the Chinese economy, shorn of its excellent propaganda.

The Kerala strike was short and sharp. It was a strike called by government employees, including schoolteachers, because the government, being penurious, asked them to not convert vacation time into cash; and reduced pension benefits. While the strike did inconvenience the public, it was really quite amazing, I am told, how little anybody noticed it. It brought home to the strikers themselves how little they mattered; or to put it another way, how little they actually do.

After decades of Marxist (allegedly Chinese-inspired) coddling, the trade union movement in Kerala has become parasitic. Kerala already boasts among the nation's highest wages, pensions and benefits (at purchasing power parity) for agricultural and industrial workers, so much so that it has become in many cases economically unviable to plant crops or run factories. Paddy fields lie fallow; factories stay locked. Which means Kerala survives on goods, including rice and vegetables, imported from Tamil Nadu with its docile work force.

Not surprisingly, because revenues have been depressed based on minimal economic activity in the state, the Kerala government is in dire financial straits. The Congress government led by A K Antony blames the profligacy of the most recent Marxist government, but quite honestly it is a systemic problem. According to an expert from the Indian Institute of Management in Bangalore, so much of the budget goes towards staff salaries that there is no money left over for implementing any projects, even assuming generously that the staff would actually wish to implement any!

The government workers decided to strike work on relatively trivial issues. They were combative, with the usual Marxist rhetoric of power to the people. They were secure in the knowledge that for decades the negotiated end of a strike has always included a clause that would pay them their salaries even during the time they were on strike.

But this time things turned out differently. The government considered dismissing all the striking employees, but unlike in the case of Reagan and the air traffic controllers, they must have decided that it was not worth risking the havoc on life and public property the babus might have wreaked (many are Marxists and some have been practising by killing Hindus in Malabar). Instead, the government simply held out and was quite clear that there would be no pay for no work.

Embarrassed by the clear public hostility, and hurting a bit after losing a month's salary, the employees had no option but to sneak back to work with brave face-saving slogans about how they had defeated the government. Even though it is a Congress government, I have to give credit where it is due: kudos to Antony. This strike was well handled.

The contrast with the strike in China couldn't have been more stark. Claude Arpi mentioned this in his column. Tens of thousands of workers have been gathering since March 1 outside the headquarters of the Daqing oil field company in the far northeast of China. This field, interestingly enough, has been eulogised in official Chinese history as a great triumph of the worker's indomitable spirit. There are huge Soviet-style statues of heroic oil drillers in this freezing sub-arctic city.

For 50 years, the Daqing worker was held up as a national hero, per Mao. These were people who had been shipped to this cold wasteland to help fuel China's industrial growth by producing oil. And they did produce, faithfully; and they had what they thought was a lifetime contract with their employer.

Now, however, the oil field produces more water than oil, and there is no more need for the 280,000 employees there. Accordingly, about 50,000 of them were coerced and pressured by their managers into accepting an early retirement scheme. They received about $500 for each year of service, according to The New York Times. However, they found out when the company also turned off their medical coverage and subsidy for heating bills that this amount pushes them below the poverty line.

This is a consequence of China's acceding to the World Trade Organisation and having to follow generally accepted norms of accounting. The fact of the matter is that, as I have discussed before, China's mammoth white elephant state-owned enterprises have swallowed some $300 billion; which makes the state-owned banks perilously close to insolvency, as they have been forced to lend to these firms. This is what allows China to ship low-cost electrical goods and toys everywhere: capital is free; not to mention free labour from the gulags. But now the cost of inputs will have to be accounted for more carefully.

Daqing is not alone, although the labour unrest there is probably the most spectacular in recent Chinese history. An estimated 50,000 workers have been gathering here daily to protest against what they claim are instances of corruption, dissimulation and betrayal by the officials. The Economist estimated that there are 100 million permanently unemployable people in China, who have been uprooted from villages and who have no place in an efficient industrial system. This is the true nature of the beast. The Kerala workers don't realise how good they have it: these Chinese will never again be employed.

Oil workers, coal-field workers, textile workers: the list is endless; their inefficiencies and government subsidies are being exposed to the cold light of the WTO's principles. There is a delicious irony here: the Chinese who bulldozed their way into manufacturing prominence using these very workers are now having to properly account for the price distortions that are the inevitable consequence of over-planning.

The tragedy for India is that it is precisely this interfering state that the Nehruvian Stalinists copied from the Soviets and Chinese: the omniscient state that manipulates and distorts prices, costs, etc. In India, we have had the additional burden, thanks to Jawaharlal Nehru, of the government interfering in and distorting religion as well. This is what has led to Godhra, and Ahmedabad. The predatory British State followed by the predatory Marxist State, a deadly combination.

But one by one, the fetters are falling off in India. Here lies the Administrative Pricing Mechanism for petroleum products, RIP. And there lies the monopoly of the state in long-distance telephony, Amen! Not that capitalism is by any means perfect, but let the entrepreneurial skills of the Indian people flourish. Yea, let a hundred flowers bloom!

Kerala's recalcitrant workers need to take a long, hard look at their counterparts in Daqing; they should think seriously of shaping up. I love it: exactly how is the 'secular' 'progressive' going to rationalise away the fact that in his 'homeland' they are laying off millions from government jobs?

With its oil running out (thus making it vulnerable to an embargo enforced in the Straits of Malacca, potentially by India), its restive ex-workers threatening violence (in one case they were planning to cut the railway line to Beijing), and its 'economic miracle' exposed for a sham (see recent articles in Businessweek, MSNBC, CNN), China isn't the world-beater the Nehruvian Stalinists always project it to be, is it? And we should rejoice, because China is our natural foe.

Rajeev Srinivasan