The 2011 film Margin Call, which depicts the events of the 2008 global financial crisis, has a scene where a board meeting is called at an investment bank at midnight. This happens when a junior company analyst uncovers sub-prime assets on the books. The CEO gives a talk that is a masterclass on business leadership. “I want to tell you something, Mr. Sullivan (junior analyst). Do you want to know why I’m in this chair with all of you? I mean, why do I make the big bucks… I’m here for one reason and one reason only. I’m here to speculate on what music might do a week, a month, a year from now. That’s it. Nothing more. And standing here tonight, I’m afraid I won’t hear a thing. That’s it… Silence.”, he says.
Countries are not companies. But national destiny cannot be built unless leaders have a vision of what ‘music’ can do years and decades from now.
At least four developments – the Space There are important lessons for India.
Let’s take a look at them one by one.
SpaceX is the most extreme case of Star Wars-Incorporated
The core business of Musk’s SpaceX is space launch and travel through satellite-based internet and its state-of-the-art rocket system at Starlink. SpaceX suffered a loss last year. Musk’s targeted $135 per share listing implies a price-to-revenue multiple of 93.7, more than five times that of Tesla, Reuters reports. For context, Adani Green Energy, one of India’s most expensive large company stocks, trades at a price-to-sales multiple of nearly 20. That number is less than half for most stocks on India’s benchmark indices. This underlines the enthusiasm premium that Musk is enjoying at the moment.
Now, one could argue that Musk is enjoying the proverbial techno-tulip tailwind in the US equity markets and that the bubble will burst one day. But it is also a fact that more and more people (those with money) believe that the future of profits lies in cutting-edge technology like never before. The Dotcom bubble burst, but the internet business went nowhere except up.
From a slightly longer-term perspective, Musk’s rocket flight net worth underlines the personal gains from technological advancements that have their origins in the US military industrial complex. At the height of its rivalry with the Soviet Union it pioneered both rocket science and the Internet. Now we have a group of monopolies that have grown so large that it is difficult to compete. Those interested in the longer version of this argument would do well to read Chris Miller’s excellent book Chip Wars, from which the quote below is taken.
“In the early 1960s, it was possible to claim that the Pentagon had created Silicon Valley. In the decade that followed, the situation had changed. The US military lost the war in Vietnam, but the chip industry won the peace, bringing the rest of Asia, from Singapore to Taiwan to Japan, closer to the US through rapidly growing investment links and supply chains… In contrast to the days of the Apollo program, by the 1980s more than 90 percent of semi-conductors were purchased by companies and Consumers, not the military It was difficult for the Pentagon to shape the industry because the Defense Department was no longer Silicon Valley’s most important customer.
There are now a handful of companies at this cutting edge outside the US such as chipmaker TSMC in Taiwan and photolithography systems maker ASML in the Netherlands, but the overwhelming majority is still American. The only country that can even pretend to compete with this technological edge of the US is China, which has made long-term investments to build such capabilities and companies. India doesn’t even come close. This will have a serious impact on India’s future global wealth creation or lack thereof.
AI will be the new geopolitical apartheid
The Economist described the US government’s decision to block access to Anthropic’s Mythos to all non-foreign people (including personnel of US companies) as “confounding America’s closest allies”. Certainly, there appears to be some negotiations taking place between Anthropic and the US government. Among other things, Mythos is an AI tool that can hack most secure systems. Its implications can only be compared to a country having an Electromagnetic Pulse (EMP) based weapon system capable of crippling the entire infrastructure of both the economy and the military. There is even a James Bond film about an EMP nightmare.
Legality and ethical debates aside – Anthropic and the Trump administration don’t exactly share the best of relations – The Economist compared the latest ban to US sanctions on nuclear weapons technology and cryptography techniques even with its closest allies. An earlier version of this was already visible in bipartisan US efforts to restrict the availability of cutting-edge technology to US rival China in areas such as chip manufacturing. Now the shoe is on the other foot.
The implications of the second become clear when read together with the first. The US is not backing down from its commitment to provide export markets or even capital to the rest of the world. It will also begin to roll back its promises to share technology in areas where it still has some advantage over others.
It doesn’t matter if you’re also America’s best friend or not. India has considered itself a friend of America for a long time and both are taking steps towards becoming best friends. America will have more to gain and less to gain from this friendship.
America’s allies are indispensable, their exposure to its misdeeds is permanent
Assuming a US-Iran deal goes through – nobody knows about Trump – the biggest loser in the region will be Israel. It has burned immense political capital around the world with its highly disproportionate and bizarre military campaign in Gaza causing massive humanitarian damage. He probably thought that a decisive victory over Iran in a military campaign with US participation would at least in strategic terms compensate for his diplomatic capital. Trump was naïve, but not for long.
Once it became clear that Iran’s military capabilities were not impaired following the assassination of its supreme leader and that it had successfully closed the Strait of Hormuz, it was Israel, not Iran, that stood idly by in the ongoing war until the US committed to deploying ground troops. Trump is now walking away from this mess, leaving Israel and its other West Asian allies to pick up the pieces. Due to the energy shock after the war, the rest of the world including India had to pay a heavy price.
America’s behavior toward its allies in West Asia – countries that were attacked because of having American military bases they felt had the best insurance against such attacks – made its brazen acts of shooting down an Iranian naval ship (not in combat) in Indian Ocean waters and then attacking a ship with an Indian crew, killing three Indian sailors, appear relatively benign.
The joke is on strategic pundits who thought that the Quad – a US-led security alliance to contain China in the Indo-Pacific – was the desired path for India’s geostrategic ambitions. China must be smiling. Even Pakistan, which is for all practical purposes a failed state, has something to do with getting its foot in the door of the peace process.
Some of India’s most eminent policymakers thought that a second Donald Trump presidency was clearly good for India when he took office in 2024. Contrary to what they now often assume, the world is not moving from unipolar to multi-polar. It increasingly resembles the law of the jungle: strength is the only authority and there are no lasting friendships.
Anti-immigrant riot in a semi-tax haven, with tech billionaires as agents instigators
Belfast is not untouched by violence and riots. But what happened a few days ago was similar as well as different. “Outside Belfast, mobs set fire to properties in Portadown, Dundonald and Newtownabbey. The fire service received 256 calls and attended 62 incidents. Similar scenes have played out in England, but the history of Northern Ireland echoes with this devastation. In 1969 mobs burned Catholic families on some of the same streets, setting a precedent”, The Guardian reported that Said in his reporting on anti-migrant riots that broke out in Ireland after a white man was stabbed by a Sudanese refugee. Man. “For the rioters who burned homes and vehicles, including a glider bus and a police car, this, in fact, made perfect sense. Their social media feeds, elected representatives, and far-right agitators like Elon Musk and Tommy Robinson assured them that it was all connected: immigrants and refugees were taking over homes, enforcing foreign customs and committing crimes, while police did nothing, thus requiring community action”, the The Guardian story says further.
Ireland today, unlike its turbulent past, is not a country of street fights and bombings. It is a quasi-tax haven that offers the lowest taxes to multinationals and is a global leader in high-end services. What happened in Belfast won’t stay in Belfast.
The multicultural, cosmopolitan experiment in the Western world now stands on pillars that are giving way. Migrants make perfect economic sense for societies that are in demographic decline and have made huge profits from being recipients of both skilled and unskilled labour. But this zero-sum game is increasingly being seen as non-zero sum in the rational world, where the original underclass has become economically vulnerable and has joined hands with the cultural and ethnic right to vent their anger against parasitic outsiders. The latent anger is being given kinetic energy by new age tech billionaires who are otherwise happy to demand exceptions to policies like the H1B visa program.
Now, one could say that Indians are mostly among the top earning immigrants in the West and would not be targeted as much as the average Arab or African. But it would be delusional to think of any significant exceptionalism for India when the West becomes generally anti-immigrant and discriminates on the basis of skin colour. The tendency of Indians to earn money for themselves while working in the West, which was welcoming rather than hostile, was probably already at its peak.
What does all this mean?
The ongoing euphemism about a changing world is the end of a rules-based system. Well, WTO and others mattered to some extent but they were far from perfect. What is happening in the world today is a fundamental resetting of the rules of accumulation, exchange of knowledge, its weaponization, and social attitudes in the Western world.
None of these changes resulted from action taken by India. But almost all of them will make life for India and Indians quite difficult in the future. I started this column with a Hollywood dialogue. I could end this with a fairy tale where the grasshopper has fun while the ants work for the winter. “I was so busy making music that before I knew it the summer was gone”, Grasshopper admits as he lies starving in the winter. Indian public discourse and discourse makers would do well to accept the coming winter.
