Every time I read about Confucius or his teachings, I am fascinated by the dichotomy of his teachings.
Each time, I walk away with a sense of appreciation as well as a new set of doubts of when his teachings would help solve a problem.
I have been watching the meltdown of the Indian rupee over the past few weeks. Each day and each week, it seems to be setting a new record all-time low. The Indian rupee is one of the worst-performing currencies in the world in the past month. While some of it can be attributed to the global fear psychosis and the rise of the U.S. dollar, the rupee has been singled out for the harshest of the punishment.
Going back to Confucius, his basic fundamental teaching was that the persona of a leader wasn't as important as the Central Party and the goals of the group of leaders. Back in the older days, China never adopted the rule of law in a formal sense. What the Chinese substituted for formal checks on power was a bureaucracy bound by rules and customs that made its behavior reasonably predictable, and a Confucian moral system that educated leaders to look to public interests rather than their own aggrandizement.
The challenge with India is that it did create (thanks to the British Raj, the British rule in the Indian subcontinent between 1858 and 1947) a legal system, but then bureaucracy tied it up and weighed it down to make it tedious and relatively ineffective.
Personal charisma and individual super-inflated egotistical leaders still drive Indian politics. The central leadership has almost never been about what is good for the nation, but rather what is good for the leader and how it benefits the party in power. The average Indian is forgotten as soon as elections are over.
The cause of the current downfall of the Indian rupee is many. The primary causes are the utter failure of effective leadership and the courage to govern the nation with a clear sense of direction. Let us not forget the ever-haunting presence of unethical ministers who want to pocket India’s wealth for personal gains. The lack of morality or a code of ethics is a grave concern for the long-term well-being of India.
Confucian code of conduct was fairly clear in terms of what he wanted to get done. Loosely translated, his words were: "If the people be led by laws, and uniformity sought to be given them by punishments, they will try to avoid the punishment, but have no sense of shame. If they be led by virtue, and uniformity sought to be given them by the rules of propriety, they will have the sense of the shame, and moreover will become good."
Sadly but true, virtuous leaders are almost non-existent in India today. We sorely need some fresh injection of morality, virtues and sincerity through new faces in the leadership of India.
Until then, I am closely watching the movements in India and will resist investing further into Indian stocks and the Indian rupee. It is fraught with much higher risks for now and I need to see some clarity in the future leadership of India before I regain my enthusiasm for India as a destination of my investment dollars.
By the way, note to the Indian Reserve Bank – It is high time you used your operating tools to regain some semblance of sanity in the rupee exchange rate.
At this rate, intervention (while I do not believe it for a long term solution, in the short run it could stop the bleeding) may be a good stop-gap measure.
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