Calcutta Notebook


Indian Diplomat Devyani Khobragade had been arrested in United States on charges of paying less than minimum wages as per US law to her Indian maid. Khobragade had secured US visa for the maid as a personal domestic help. The maid jumped the visa, absconded from Khobragade's home and lodged complaint with the authorities that she was being paid less than minimum wages prescribed under US law. The US Government took serious cognizance of the complaint. It went far to pursue the case. The US Embassy bought tickets for the family of the maid, gave them Visa and flew them out of India before Khobragade was arrested. This was done, it appears, to preempt any attempt by the Indian Government to pressurize the family that was still living in India. Khobragade was arrested despite the fact that she had reported to the police about disappearance and contravention of visa conditions by the maid. The Indian diplomatic establishment has been taken aback. Such perks were routine for them. Now the US law is catching up with them.

The basic principle established by Khobragade's arrest is that a diplomat must adhere to local laws scrupulously. Following this principle, the Indian diplomatic establishment has retaliated by removing police barricades from the US embassy. Various privileges such as duty-free imports have been withdrawn. The American Center in New Delhi was screening movies without a license to do so. This has been stopped now. The Indian Government has sought details of wages paid to Indian workers working in the US Embassy. Technically, the Embassy is US territory hence it is contended by the diplomats that Indian nationals working in Embassy should be paid wages according to US Laws. The US Government is standing firm though and plans to launch prosecution shortly.

The reason for US's aggressive stance seems to lie in the widespread anger against cheap labour from India which is rendering many Americans unemployed. There is sympathy for the maid in the US because she symbolizes the pain of large number of Americans who have been similarly hit by cheap Indian labour. Now the US is telling India: Here is the proof that you are exploiting poor workers! Stop it!

The problem of falling wages in the US is inherent in globalization which is inexorably leading towards global equalization of wages. Manufacturing migrated to China in the first wave in the eighties. Textile mills, for example, have completely disappeared from the American landscape. The US is now manufacturing only goods for domestic consumption, a handful of high-tech goods for exports. This loss of jobs did not bring forth such violent reaction, however, in the US for three reasons. One, the loss of jobs came along with availability of cheap goods such as garments and toys from China. The pain of losing job was thus partly compensated by the joy of getting cheap toys. Two, the migration of manufacturing took place when the services sector was rising in the US. The personal computer and internet were just being invented. Microsoft and CISCO were doing good. The loss of jobs in manufacturing was compensated by gain of jobs in the services sector. In fact, the UNDP had welcomed the migration of manufacturing with the observation that blue collar jobs were being shipped overseas while high-wage white collar jobs were being created in the developed countries. Three, the confrontation with cheap Chinese labour was not direct and personal. These workers were located in faraway China. This was a war, so to say, fought by drones.

The migration of manufacturing was followed by migration of services to India in the last decade. This had a qualitatively different impact on the American people. One, the cheaper services provided by call centers came through American corporations. The benefit from cheap services provided by Indian call center accrued to the Corporation. The American customer did not feel the consequent reduction in price. Two, there was no sunrise sector to compensate for the job loss. There are three major sectors of the economy. Agriculture is already constricted with less than one percent workers employed here. The loss of jobs in manufacturing came along with gain of jobs in services. But loss of job in services is a dead end. The loss is permanent and complete. Three, the competition from cheap Indian labour is personal and direct. The American engineer who sees his job being taken away by an Indian feels the anger personally and directly. For these reasons there is a deep sense of anger against Indians. The American psyche has picked upon the low wages paid by Khobragade as a revenge. They want to hit back at India for the pain inflicted by Indians on them.

President Obama has highlighted this concern: "Billions of people from countries like India and China are striving hard to 'out-educate' Americans in mathematics and technology... In previous generations, America's standing economically was so much higher than everybody else's that we did not have a lot of competition... Now you have got billions of people from Beijing to Bangalore to Moscow, all of whom are competing with you directly. And those countries are working everyday to out-educate and out-compete us... And every year brings more research showing them pulling ahead, especially in some of the subject matter that this school specializes in—math and science and technology... We live in a 21st century global economy. And in a global economy, jobs can go anywhere."

It is this fear of India that is behind the aggressive stance taken by American authorities against Khobragade.

Vol. 46, No. 31, Feb 9 - 15, 2014