McMedia & Market Jihad
By P. Sainath
01 June, 2004
The HinduSo maybe it's safe now to speak about the market without its leaping off a cliff, screaming. (Or maybe not quite. By close on Monday, share prices recovered nearly half the losses they logged soon after opening.)
The hysteria around the May 17 `meltdown' was more scary. The Times of India front page recalled 9/11. It splashed the figure 2340000000000 across the page, just beneath its masthead. A strap shrieked that 2.34 lakh crore of "investor wealth" had been "wiped out." The loss of this paper wealth was declared in eight column headlines as "Ground Zero." The accompanying graphic mimicked the attack on the WTC in New York. An image of the stock exchange building in Dalal Street exploding in flames. And, yes, the hijacked aircraft ploughing into it had the Communist hammer and sickle on its tail.)
Within two days, the Sensex showed what The Times now called "instant recovery." A response to the `good news.' No Sonia Gandhi. As the extent of the irrational behaviour sank in, there was a sheepish plea to the markets to behave. This time the paper warned: "That markets should play such a role, by design or default, in the formation of government bodes ill both for our democracy and the future of free enterprise." (They're still at it, though. Friday's Sensex wrote us an editorial on the Common Minimum Programme of the United Progressive Alliance.)
Actually, some in the financial world were slightly more balanced than the media. Through the chaos, they stressed that there were several reasons, external and internal, behind the `meltdown.' Other markets too, had been affected. Hot money had a role. But complexity confuses a media that needs a simple plot. A villain, a hero and a happy ending. In the Left, Manmohan Singh and a partial bounce-back, it found two and a half of these three.
Dr. Singh seems a reluctant hero. Take his gentlemanly defence of the villains: "I believe the members of the Left Front are just as patriotic as anybody else... "
Unless I got it wrong, this is new. Will patriotism now be measured by your allegiance to the markets? Maybe its time for a new anthem as well. (The Abba hit from the `70s, for choice: "Money, Money, Money. Think it's funny. It's a rich man's world.")
Here's a useful exercise: Check out the newspapers for three days after the polls. And for three days after the `meltdown.' Compare the coverage and, importantly, the passion. You'll know which mandate the media see as more important. That of the masses — or the one from the market.
In three days, the big media gave the `suffering' in the stock market more space than they had to thousands of farmers' suicides in the past few years. Never mind that two-thirds of our people depend on agriculture. Or that just 1.15 per cent of India's 180 million households invest in stocks.
Some economists point to the puffed up role ascribed to the market. As Prof. Jayati Ghosh writes: "In the Indian stock market... a few large investors such as the financial institutions, big corporates and foreign institutional investors dominate. Only a small proportion of the stocks are available for trading. All the gains and losses are simply on paper and do not imply any erosion of the country's real wealth... It has been clear for some time now that the markets are very poor pointers to real economic performance."
Behind the stock market is the larger notion of `The Market,' a much wider political concept. And the conflict between that and democracy is very real.
The Wall Street Journal knows this. "Democracy is perverse," it whined about the poll results on May 19. "Although it is natural for the U.S. to suggest that all countries should embrace democracy, the lesson from India is that Western countries cannot be dogmatic about elections."
"As India's election will testify, democracy is not always supportive of coherent economic policy and prosperity." (Read: the voters are too dumb to know what's good for them.) On countries not yet at India's level, the Journal has some advice. The West "should be more hesitant about promoting political competition... " For alas, that "could destroy the leadership" that pursues vital economic change.
Maybe the Journal worries about post-June Baghdad? An elected government that might grumble when Dick Cheney's cabal plunders Iraq's oil? The Journal's dilemma is a classic one. Market fundamentalism versus mass democracy.
It's a dilemma that has our own market jihadis seeking martyrdom. They go a step ahead of the Journal. With them, it's death to the infidels. "In 2004," writes a leading editor, "no government that the markets see as hostile can survive." The rhetoric of the rabble "has to be tempered to provide for the sensitivities of Dalal Street."
"The markets have spoken," declared another top Indian newspaper. But God is a bit edgy. "The markets are jittery," explained one business editor on television. "We need to soothe their nerves." (Hush now, the markets are asleep. Don't start off something by speaking aloud).
So, did 400 million citizens and voters queue in blistering heat of 40-plus to soothe the fretful nerves of the market? Some of us thought they were asserting their sovereignty. To demand the reforms they really needed. And to pass judgment on the market-driven reforms governments have followed. So what happens when poll verdict clashes with market edict?
The Wall Street Journal's answer: Don't waste time on the electorate. "The lesson of the past week is that if India truly wants to become an economic power it has to pay heed to the global voters known as investors, in addition to its own voters at home." We can listen to our people, says the Journal (gee, thanks guys) so long as they vote the way the investors want them to.
Surely, this is a regression? For years, the WSJ and others have argued that not only are markets intrinsic to democracy, they are democracy.
There is no miracle The Market cannot perform. Market forces, as Swaminathan Aiyer argued long ago, are great for the environment. Time magazine's Charles Krauthammer sees the market as the lifeline for `previously starving Third World peasants.'
Hunger is a function of anti-market systems. Want more jobs? Free the market. The crisis in agriculture is best dealt with by not dealing with it at all. Leave it to the market. Given its all-knowing wisdom, maybe the `The Market' ought to go out and seek a popular mandate.
One result of the `meltdown' was the return of the small investor to media limelight. It's hard for people to weep over some nasty Croesus losing a couple of million. The Little Guy jerks the tears better. In the United States, this little guy is the mythical small farmer. In his name, tens of billions of dollars are doled out each year by Congress to huge agribusiness corporations. Not to the Little Guy.
No citizen wants to make Rockefeller richer than he is. But if you get the public heart to bleed for the small farmer, you get the public purse to bleed for giant farm corporations. In India's corporate media, the Little Guy is the Small Investor.
Small investors are to markets at crunch time what the giant shoals of sardines are to the sea at lunchtime. A floating restaurant. Marauding sharks and dolphins corral the sardines into tight herds from which they can eat them in their millions. But the seas of the Indian stock market, though turbulent, are shallow. The shoals have been stagnant for a decade.
When that other, real small investor suffered due to an interest rate crash, many in the media applauded. When retired people saw their lifetime's savings crumble. When those with fixed deposits in banks or with NSC certificates took a beating, there were few teary pictures in the media.
There is, though, yet another kind of small guy who can get hurt. The volatility now structured into the market can, at some point, affect the real economy. Then it would hit, as Prof. C. P. Chandrashekhar writes, poor people. Even though "they do not participate in, or often are not even conscious of the workings of financial markets."
Meanwhile, the media assured us all these years that the Indian Left is irrelevant. Unless it can learn from China. (China's CEO is our CEO?) Yet, the same pundits tell us that a couple of sentences from the irrelevant Left was enough to trigger "Bloody Monday." There you are. Revealed — the secret of how to make the markets dance up and down in a frenzy.
Maybe the markets will settle down as they realise that even if they dance the Swan Lake on one toe, the BJP isn't coming back. Not just now anyway.
Market-worship is not novel. But the insane primacy it now gets is relatively new. Among other things, it reflects the ever-growing corporate links of the media. Links that spur them to mislead the public for their own profit.
"Markets are all about sentiment and confidence," gushed one TV anchor. "We must give them the confidence that governments will listen, that their interests will be honoured."
Voters, too have sentiments. Often very anti-market ones. They too wish to have confidence that governments will honour their interests. Whose interests do we give priority to? Voters? Or `The Market'? The corporate media have given their response to that question. The new Government still has time to find its answer.