Pesek on Asia: Indonesia's Fat Subsidies, India’s Middle Class

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By William Pesek

May 7 (Bloomberg View) -- Good morning. Here's my take on some of the stories
driving the debate in politics, finance and social issues across Asia today:

Get ready for fresh chaos in Bangkok.

Riot police are gearing up for fresh chaos in Bangkok after Prime Minister
Yingluck Shinawatra was ousted by Thailand's Constitutional Court, the second
member of her family to be removed from office since 2006. Yingluck never did
shake the perception she was a mere placeholder for her brother, former Prime
Minister Thaksin Shinawatra, who was tossed out in a 2006 coup and fled the
country to avoid corruption charges. Expect a powerful, and potentially
violent, response from Yingluck’s mainly rural supporters called the Red
Shirts in the days ahead. As the nation descends into another about of
political uncertainty, its economy and markets will be caught in the crossfire
as rarely before. If you thought things couldn't get any crazier in Bangkok,
think again.

Indonesia's presidential frontrunner makes a bold proposal.

Jakarta's Mr. Fix-It is already giving investors around the globe reason to
cheer. Joko Widodo, governor of the Indonesian capital and presidential
frontrunner, is putting his popularity to the test with a call to cut fuel
subsidies. It's a hugely controversial step in the fourth most-populous
nation, one struggling to lift tens of millions out of poverty. But it's the
right move from a fiscal-responsibility standpoint. It's also a welcome sign
that a leader with a reputation for getting things done and forward-looking
leadership isn’t losing his nerve on the national stage.

Whither India's middle-class revolution?

"India’s Bourgeois Revolution." That's how United Nations diplomat turned
politician Shashi Tharoor describes a dynamic changing the face of Indian
economics and politics. The sheer number of non-elites running for office in
this election cycle is a game changer all its own. "If the current trend
continues," he argues in this Project Syndicate op-ed, "India’s middle-class
voters will have more representatives with whom they can identify, rather than
having to pay allegiance to politicians for whom they constantly need to make
excuses. That will be Indian democracy’s salvation."

Why China will remain a top-down nation.

When political scientists and pundits ponder China's future, they tend do so
through the lens of the American experience. The focus isn't on whether China
will embrace U.S.-style representative democracy and its federalist model of
governing, but when. This item from TheGlobalist.com challenges these notions,
explaining why Beijing will be much slower to loosen control over regional
governments than the U.S. or Australia. This go-slow approach would be a
mistake for a Communist Party that will face any number of existential crises
in the future -- not least its waning legitimacy among the masses far from the
Chinese capital.

Abenomics sales pitch goes on tour.

Shinzo Abe took his shock therapy program on the road, proclaiming in Paris
that the "Japanese economy is back." Back home, though, evidence to the
contrary continues to mount, including growing expectations for a stronger yen
as the U.S. withdraws liquidity from global markets. Any success Abenomics has
had in boosting stocks and corporate profits is a product of a more
competitive exchange rate. That benefit is about to go away. Perhaps Prime
Minister Abe should spend more time at home implementing structural reforms
than touting them overseas.

Hats off to Beijing amid emissions trading.

China tends to drag its feet on its global responsibility as the No. 1
generator of greenhouse gases -- a line of criticism that's well deserved. But
Beijing's move to build an emissions-trading market is an intriguing and
potentially important step. CGN Wind Energy unveiled plans to introduce
China’s first structured notes linked to the price of carbon offsets. Should
this fledgling market take off it would necessitate a huge pool of data and
produce reams of new statistics about the magnitude of China's pollution
challenge. A small step toward greater carbon-emissions transparency, yes. But
hats off to China for trying. That's progress in and of itself.

(William Pesek is a Bloomberg View columnist. Follow him on Twitter at
@williampesek.)

To contact the writer of this article: William Pesek at  wpesek@bloomberg.net.

To contact the editor responsible for this article: Mark Gilbert at
magilbert@bloomberg.net.