Best of BS Opinion: Iran conflict could trigger prolonged bear market

From US foreign policy risks and India's labour data changes to bear market fears and FCRA concerns, today's Best of BS Opinion brings together key insights shaping global and domestic debates

Hello, and welcome to Best of BS Opinion, our daily wrap of the Opinion page.  Bombing a sovereign nation "back to the Stone Age", as US President Donald Trump has threatened, cannot be considered an objective of any conflict, says our first editorial. What's more, there seems to be little introspection inside the Beltway over the US' inability to end a war that is wreaking havoc on the global economy. Trump's comments claiming that the Strait of Hormuz is no longer a US problem is an extraordinary abdication of responsibility. Not surprisingly, capitals around the world are looking to rewire the global security architecture to reduce reliance on an unpredictable superpower. These shifts may take time but, for now, America’s global standing has been irreparably weakened.  India recently changed the way the Periodic Labour Force Survey (PLFS) is conducted. The revised framework promises more timely and credible insights into the state of employment in the country, notes our second editorial. But, while the labour market appears stable, a closer look reveals that a majority of India’s workforce remains self-employed. Wage growth also remains largely stagnant, while the gender gap continues to be wide. The divergence between employment indicators and earnings is critical. Low unemployment suggests a compulsion to work, rather than the availability of productive jobs. India now must create more productive jobs, which will help support demand and growth.  Debashis Basu argues that global markets are looking at a prolonged bear phase, thanks to the current conflict in West Asia, rather than a shallow one that is typically quickly resolved. Given the uncertainty around the conflict's duration, there will be episodic shocks that continue to drive markets down. Higher oil prices are already altering the macroeconomic landscape. The second risk factor is the disruption to the supply chain, triggering a confidence problem that impacts growth. If the US ends the conflict, supply can adjust while policymakers work to offset shocks. But if it reopens the Strait of Hormuz by force, a prolonged bear market is likely to ensue  because of the complex and long-drawn conflict that will ensue.  The anxiety triggered by the proposed amendment to the Foreign Contribution Regulation Act (FCRA) among civil-society organisations is not unfounded, says M S Sriram, as he calls for a withdrawal of the Bill, pointing to feared overreach of the state. That fear stems from an amendment that empowers the state to take over assets created using foreign funds once the licence has been cancelled. The current clause has rules for violations, and a thorough scrutiny at the time of issuing the certificate and a regular filing of returns should be enough for the organisation to carry out its operations. The current amendment is like applying a bulldozer, irrespective of the magnitude of the transgression, since the nature of the violation is unknown in most cases. Given that there are robust laws to deal with transgression, this clause is unnecessary, argues Sriram.  Claire Rydell Arcenas calls The Making and Breaking of the American Constitution, by Yale historian Mark Peterson, a stunning and timely revisionist history that rewrites our understanding of the trajectory of American society, going all the way back to the conquest of England a thousand years ago. The US Constitution, Peterson shows, was forged in a crisis that came to a head following mounting resentment over how the British Empire interpreted its constitution. Ironically, however, the US Constitution’s purpose was to make it a country much like the one it had just broken off with. In effect, the Constitution was written as a hard-to-change state-making engine but it has been stretched and strained by crises and growing military powers instead of by a carefully formulated reimagining of the American constitutional order.