It is disturbing to read that the Indian government has raided the local offices of the BBC on the grounds of potential tax irregularities, just after the airing of a documentary critical of the Modi admininstration. This to me, as a close observer of Russia post 1990, is blatantly out of Putin’s play book.
There is increasing evidence and narrative that the governments of larger emerging countries are becoming more totalitarian, more Orwellian. Furthermore, a nation with literally thousands of years of respecting the codified law as inviolable, Israel, is facing up to politicians wanting to diminish or even stifle the judiciary so as to give more power to the executive.
When I was writing papers about English law as a student in the 1980s. I noted the advent of something new – enabling legislation, where as Act of Parliament gave a very wide range of powers to executive organisations (at that time it was the Health and Safety at Work Act) with limited access to the Courts for citizens or businesses on the end of enforcement actions, even when they were being very unfairly treated.
The ever increasing power of the elite elements and in some cases even an individual member of the political class and its executive bureaucracy and enforcement units is a worry that might make one hesitate to allocate a lot of money to emerging markets. That is part of what we automatically think is the political risk dimension that is a significant negative for investors in those countries and regions.
It occurs to me that the same sort of political interference risk has been there for some time in the developed world, most notably in the the USA and UK where the power of lobbying and the ‘light grey’ corruption actually play out to protect businesses, so a sort of mirror image situation.
We can see most of what Orwell predicted in 1984 and Animal Farm in Russian, China, many smaller stares in the emerging world (most obviously North Korea) and possibly now India, albeit in many cases with a cosy wrapping of capitalism and what is taken to be an improvement in living standards.
We may not think that the behind the scenes events at the likes of the Davos ‘economic’ forum, or the VIP tendering line for politicians mates, just to give 2 obvious examples, is what Orwell had in mind, but in my view, it is much the same thing. A very few people in power are able to manipulate society so as to acquire power and wealth and supress their opponents.
In the ‘Western’ model, our freedom is restrained so much more subtly, thanks to the operations of the media and advertising industries. The Orwellian TV in the corner with its ever watching camera is actually called Google or Facebook or ChatGPT and comes everywhere with us.
We investors do have one big advantage over the poor protaginists of Orwell’s imagination: as investors we can join in the game on the winning side. We just need to know what businesses have best stacked the odds in their favour. I suspect you have some ideas!
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