Indian atma biswas and the positive sum economics of trade

By Brian Micklethwait | 24 January 2006

Goh Chok Tong is the Former Prime Minister of Singapore, and is now Senior Minister, and he made a speech at a conference in Kolkata last Friday, urging India in particular to maintain the globalisation momentum. India, he said, has enough atma biswas (meaning self-confidence) to do this. India must, Goh said, press on with its reforms.

"To realise its full potential, India needs to press on with and even accelerate the pace of reforms" he said and welcomed some of the latest measures of the UPA government to simplify procedures for foreign investors. In a globally integrated economy, the former Prime Minister of Singapore maintained, 'a globalised mindset' is essential.

Arguing that the old mindset opposed to competition on the plea of foreign economic colonisation and the theory of protectionism would only breed complacency and inefficiency. He said "competition drives economic growth; you lose some but you win more," and urged the Indian government to remove impediments to healthy competition.

That only a few lose from trade but that most gain is an idea of immense importance.

If the idea of the mutually beneficial nature of trade is rejected, and if instead it is assumed that trade can only be a contest to get the biggest slice of a cake which is fixed in total size, then trade becomes a battle, and so do trade negotiations. Whatever the other guy wants must be bad for you! The foreigners are all out to trick us! And we must trick them in self-defence! And if you believe that the world is inevitably an arena of conflict, it inevitably becomes one.

But embrace the idea of trade making the total amount of wealth to be shared greater, and both trade and trade negotiations become, at least potentially, cooperative exercises for mutual gain.

Goh Chok Tong is quite right to include this deceptively simple idea in his speech, for it has profound and profoundly beneficial implications. It is a safe bet that this is not the first time he has given it an airing, and that it will not be the last.