The Iran war drags on, while US President Donald Trump continues to say things that first rattle the market and then provide hope of early resolution of the war, causing markets to yo-yo.

Whether members of Trump’s inner circle make money from such market movements caused by presidential pronouncements remains a matter of speculation. However, American banks have made substantial trading profits from increased market volatility, as the results of JP Morgan, Goldman Sachs, Morgan Stanley and Bank of America make clear, beating estimates.

Big finance rakes it in, but global growth shudders. The IMF and the World Bank have held their Spring annual meetings and published their growth forecasts for the world and for individual economies. If the war ends now, growth would still be lower than earlier estimates, and if the war sustains and oil prices stay above $110 a barrel, growth would shrink to 2.5% for the world. India will grow well above 6%, however.

The IMF’s revised ranking of the world’s largest economies ejects India from the top five, which are the US, China, Germany, Japan and Britain. India comes in at No 6. China is relatively insulated from any direct oil shock, thanks to the seven months’ worth or so of reserves it has built up, but its growth prospects stand damaged, thanks to the hit to global growth from the war and the reduced demand this implies for China’s exports.

However, when reconstruction begins after the war ends, whether in Gaza, Iran, Lebanon or Ukraine, China will be a major beneficiary.

US Leads In Space Race

The US has taken an early lead in the new space race, with NASA’s Artemis 2 mission successfully circling the moon and coming back to earth, carrying a four-member crew. This is conceived as the preliminary step required to land humans on the moon in 2028. China’s target is to land one of its taikonauts on the moon in 2030. Some doubts remain over NASA being able to meet its 2028 deadline.

American private companies’ march into space continues. Amazon’s Blue Origin launch service is maturing, and Amazon has recently acquired a satellite company, Globalstar, for $11.57 billion. This gives Jeff Bezos a couple of dozen satellites at one go, but then, Elon Musk’s Starlink has some 10,000 satellites already up and whizzing.

TCS Under Scanner

Indian tech is making news of a different kind. The Nashik office of TCS is being investigated for sexual exploitation and forcible religious conversion of young women employees, as a result of collusive, coordinated action by a number of executives, including some at mid-seniority level.

The company has every reason to cooperate fully with the authorities and overhaul its oversight and employee welfare operations. The company should probably make innovative use of Artificial Intelligence tools for improving employee management and empowerment.

Noida Pay Penury

In Noida, a thriving conurbation of Uttar Pradesh that adjoins Delhi, factory workers and domestic help staged violent protests, damaging property and blocking traffic, demanding better wages.

The trigger was news of notification, in neighbouring Haryana, of higher minimum wages, causing resentment among workers at the Noida plants of the same company, whose Haryana employees now receive higher wages, and the affordability crisis triggered by the increase in cooking gas prices.

The company managements have not allowed their workers to form unions, and so there have been few organised demands and wage bargains. Workers’ resentment expressed itself as chaotic protests, some of which took a violent turn. It turns out that the striking Noida workers draw salaries of Rs 10,000-12,000 a month.

The Uttar Pradesh state government, to its credit, immediately revised its minimum wages for unskilled, semi-skilled and skilled workers. However, after increasing the minimum wage at different rates for different urban clusters of the state, the revised rates for the three classes of workers in Noida stand at meagre Rs 13,690, Rs 15,059 and Rs 18,868 per month.

With this much, workers are expected to pay for rent, clothing, food, cooking fuel, transport, out-of-pocket healthcare expenses and their children’s educational expenses. Enlightened self-interest should persuade India’s employers to pay their workers decent wages and give them sufficient periods of leisure, instead of keeping them in penury.

One enterprise’s wage bill is purchasing power for the rest of the economy. If every enterprise depresses its wage bill to the barest minimum level needed for its workers to subsist, the result would be sharply curtailed effective demand for the economy’s output at large.

Lessons from Henry Ford

Higher wages will make for higher levels of demand in the economy. Tardy creation of new towns drives up the cost of existing urban spaces and of housing. The higher the outlay on housing, the lower the funds available for discretionary spending.

When real estate advertises elite residences priced at several crore rupees per unit, it advertises an economy-wide squeeze on consumption, compared to what would obtain were India to have more towns housing its economic activity.

When Henry Ford, founder of the Ford Motor Company, paid his assembly-line workers wages high enough to allow them to buy the cars they made, he paved the way for the whole economy to experience a consumption boom. Instead of being crushed by a heavy wage burden, Ford thrived. Indian industry would do well to draw the right lesson from Ford’s so-called magnanimity.

Delimitation Deception

The government has introduced three bills that seek to amend the Constitution to increase the number of seats in Parliament and state legislatures, reserve one-third the seats for women, and create a new Delimitation Commission that would allocate the revised number of seats among the different states and Union Territories based on the most recent Census available at the time of notifying the Commission, and draw the borders of each new constituency created.

The move is disingenuous on two counts. One, the government claims it is necessary to increase the number of seats to reserve one-third of the seats for women. Clearly, that is not the case.

Two, the government holds out the verbal assurance that the proportion of each state in the total number of Parliament seats would remain unchanged after fresh delimitation, which is incompatible with the Bill’s requirement that the population figures of the latest Census be made the basis for allocating the number of seats from each state.

According to an estimate by Dr Santosh Mehrotra, the proportion of Parliament seats held by the states of South India would come down from 40% to 20%, with proportionate gains for North Indian states. Regional parties of the South, leaving aside the ones in alliance with the ruling coalition at the Centre, vocally oppose the move.

The Congress faces a Catch-22. If it sides with its ally, the DMK in Tamil Nadu, in opposing the proportionate reduction of seats for the South, it runs the risk of being branded anti-North and faring worse than it already does in North Indian states. If it does not side with the DMK, that weakens its candidates in the forthcoming Tamil Nadu assembly elections.

The move might seem clever politics by the ruling party at the Centre, but it would weaken national cohesion, especially if the bills are rushed through Parliament.