The trouble really is that our security & policy establishment have never thought strategically about trade, employment, growth & financing of deficits.

Nor do our economists understand that, given hegemony, trade can be used to wipe out local competition.

1/2 https://twitter.com/ndtv/status/1278677242290176000

It is worth recalling some history to remove the blinkers that some economists wear.

The Portuguese & English were very keen to find a sea route to trade with India circa 14th century.

Indian textiles, using natural dyes were in great demand in Europe & commanded premiums.

Note, both the European powers came as buyers of Indian textiles and not sellers. This was because spinning of yarn was still manually done back then & Indians have a huge cost advantage in cotton + spinning + weaving.

So our textiles exports flourished.

Sadly we lagged the west in innovation given our static society & caste bound culture. The west had its industrial revolution. Spinning began to be done on machines & then weaving as well.

We still had cotton but the cost advantage on spinning & weaving vanished.

In some 20 short years, we went from being exporters of textiles to the biggest importer of textiles from Britain. In the process millions & millions of our spinners & weavers were driven into poverty.

With full support of the British Govt in India.

It is the job of economists to explain how & why this happened. They will also gloss over millions driven into destitution & tell you trade benefited both India and the UK. and as economic theory goes, they are right.

But is that all to it?

What should have then Indian Govt’s response to the developing reversal in fortunes in the textile industry to help local weavers & spinners?

The leftists have their own rubbish remedies for which I have no use. But let’s take a bit about Russia in a similar predicament.

I gorget the name, but Russia had no fleet - none - till early 19th century & all its trade was carried in foreign bottoms.

So a Russian monarch with some 300 people went underground in disguise to UK, learned ship building in British yards. Without being detected.

Lived in the UK for 3 years & then in the next 7, using British knowhow, built the most powerful fleet in the black Sea.

Peter the Great actually even learned to built jetties in the UK to overcome shallow waters in the Black sea.

Peter the Great wasn’t an economist but he solved the problem for Russia.

India didn’t wake up to what Indian tycoons could do to counter British imports of textiles for another 30 years. Yet technology was available for the asking in the UK to any one.

Even Peter the Great’s subterfuge was unnecessary. Moral of the story. When trade threatens local jobs & businesses you don’t pull out your text book on free trade to lecture to people.

You look to how you may counter the threat. And of that economists have no clue.

Same goes China. We have a threat. We have lost millions of jobs to Chinese imports - often of low value added stuff that could easily be made here. How Chinese wiped out local small firms is story by itself.

We must find solutions to the problem actively.

The solution is not dogma taught in text books. It lies with our businesses. We need to listen to them. Find out why they can’t compete. Look to creating competitive advantage. Look to settling internal disputes that debilitate us. Many other things.

I end this with 2 points. Overall, there is no way China can beat us in the textile industry. Yet it does. Why? B/c we are very poor in resolving internal conflicts and issues that bedevil the entire textile industry. We need to do a better job of reconciling internal conflicts.

Second, we cannot leave such issues to the invisible hands of the market to resolve. Why?

Because over last 70 years we have tied down everybody with so much micro-regulation, that without Govt. intervention, almost nothing can be done in India.

Yet problems must be resolved.

So please tell the erudite economists to shove their textbooks wherever they can & turn over the problems for resolution to practical businessmen. Economists can help but they are extremely poor in organising & running successful firms.

Don’r let them dictate policy.