Tuesday, June 27, 2006

All That Glitters is not Gold Pt. 2

This definitely seems like a comparison that has far exceeded a reasonably valid scope - Chennai being a threat to Detroit. The article talks about the infrastructural revolution taking place in Chennai and how it is fast becoming a center for automotive and manufacturing excellence, how government has reformed policy to make all this happen and how the doors are opening but not open yet amd how ever increasing international recognition is transforming the manufacturing landscape in Chennai.It is here that this comparison (with Detroit's might) takes flight. The tone and the comparison with Detroit and the suggestion that Detroit's auto manufacturers are shaking in their boots because Chennai exports engine valves seems a little far fetched (though I am not excluding this future possibility) and designed just to fill the Indian balloon with more hot air. As always, a comparison with China follows suit.

[Warning! ONLY interested readers and insomniacs proceed]
In September 2005, I had linked to a tangible statistical comparison between China and India vis a vis their trade volumes as percentage of GDP, sectors that contribute most to trade (export and import) and finally a look at social indices such as literacy rate (adult and more importantly, women), poverty rates etc. The numbers speak for themselves.
[Link] to my earlier post and to save you, my assiduous reader, the trouble of an extra mouse click I will reproduce all the relevant links in this post. [Link] article by Shankar Acharya, the Chief Economic Advisor to the Govt. of India. He rules this as a no contest in favor of China. Not to worry though, James Waterton says the future is indeed colored saffron. His a case against China is [here] and one for India is [here]. As the adage goes, "A picture is worth a thousand words" comes to mind as these numbers are visually pie charted in this [report] by Deutsche Bank. [hat tip: New Economist]. I urge the reader to take some time out to carefully read these documents and as a thought experiment, introspect on the state of India's society and economy. Read this Deutsche Bank [report] on their thoughts on India becoming a major economic powerhouse. Though all this reading is quite involved, it will lend some form and structure to the opinions you may have formed while going through Shankar Acharya's column and Deutsche Bank's visual comparison of the two economies.

The sad state of the much lauded "world's largest democracy" is on full display - The hindu [reports] that the DMK government in Tamil Nadu is actually making good on its poll promise of dishing out free color TVs. The "beneficiaries" have also been identified. I cant think of which is worse - the DMK actually fulfilling their promise or that the next time around the shrewd public will want more thereby raising the ante for electorate sellouts. Since this largesse comes at the expense of tax payers, maybe I should be thankful that the AIADMK wasnt elected - they had free computers as part of their electoral bribe, I mean promise. The immaturity of our democracy is reminiscent of cargo cults in the Pacific says Atanu Dey. To learn more, visit these links [1] and [2]

[Update: Atanu's blog seems to acting all of a sudden, will let you know when it behaves]

[Update 07/05/06: Atanu informs us that his blog is back up!]


Smitha said...

Haha. good read. But trust me Chennai is so much better in terms of traffic when compared to hyderabad/Bangalore. People actually follow rules and I haven't seen any crazy driver and was surprised at the smooth traffic during my stay!

Emperor Frost said...

you stayed for a few hours and saw exactly how much of Chennai? A couple of important roads maybe. Gemini flyover is hardly a model for sound traffic management. I am not defending Bangalore (traffic is admittedly horrendous) and I know nothing of Hyderabad but all I am saying is that we dont know enough of Chennai to say that its better when our sample is so small.

Nandini said...

I followed most of the links in your posts (1) and (2) and it took me quite a while to chew the cud. Regarding Mishra and Tripati's game of intellectual volleyball, I have to say I found more about India and China's historical economic approach rather than any substantial arguement for or against India's current brand imaging. Thanks to your other factual links, the arguements got more meaty, if I may( don't forget I was chewing ;)). Be that as it may, here are a few points I want to make -
1. All of us agree about the Gini index and the mass consumerism of the Indian middle class. My question is, what else can the middle class do if the FDI continues to increase at the rate it is? Statistics show FDI in just the last one year is almost 20% of the total FDI since 1991. Add to the fact the growth in media( see http://www.indiantelevision.com/headlines/y2k6/mar/mar157.htm ) and employers getting ready to pay more and more (although I personally find this REALLY hard to believe, yesterday's Economic Times shows otherwise - see http://economictimes.indiatimes.com/articleshow/1682840.cms ). So, the average Indian middle class has "apparently" more money than he cares to save, is constantly bombarded with images of material comfort from the growing media, which are in turn propelled by increased FDI and no one to even show them a warning sign where to stop their relentless quest in search of a Western outlook ( which they believe will aid their personal image in society). Whose responsibility is it to show the warning signals now? Yes, we might say that this is what Atanu Dey and Pankaj Mishra are trying to do, I'd like to know exactly how many middle class Indians read these blogs before they click on icicidirect.com to invest on penny stocks. While the media tries to look sexy by selling the upper crest of Indian society to the West in the name of globalisation, I think it is also cheating the gullible middle class by not sharing everything it knows. I think it comes down to the point of educating (I'm not even taking about mainstream education)..it's about educating the educated. About things they should know before it's all too late.
2. My second point or question, actually, is this - since it is finally the Government who should take responsibility of the aftermath of any unequal growth( although they only take the credit for the good part), why can't the Government bring in a policy like this - Every person who is considered to be above a certain economic level(after considering all his assets and liabilities) HAS to contribute to society by sharing some of his serendipity with the not-so-fortunate? I mean, after a point, make it mandatory for people on the higher plane to try level the ground. Ofcourse, I'm loosely speaking here, obviously from my heart, and I'm not sure if this, in principle, defeats the basis of democratic rights. But, with the right tax benefits, this could be a win-win situation, maybe?( Argh! how I hate to use these cliches!). Just thoughts..maybe someone with a better understanding of the laws of the land can throw some light on this.
Before the comment gets longer than the post itself, let me stop rambling here(too!). Excellent post by the way, the best I've seen from you. Keep it up!

Emperor Frost said...

1. regarding your observation on Mishra's conversation with Tripathi, it was my impression that the driving point was that a comparison between China and India cannot be perspectively accurate on account of their totally different economic paths (the consequences of which impacted their growth enormously but in a totally independent sphere). It was Mishra's contention that they were always on different economic planes and the paths that were and continue to be taken ensure that the two countries will not compete head to head. It was also his contention that the economy of each country is tied to its moral fabric and the relentless pursuit to become recognized by the west as an "economic power" will result only in more strife - strife resulting from the fact the western economic model consumes vast resources and these resources are becoming a premium. These imperitive resource wars are not something the two countries ought to be waging, in his perspective. In this sense, I guess, he calls this the "self assuring myth".

2.w.r.t your points of the middle class getting richer and spending their money on western symbols that in their opinion enhances their social stature - I will point you to another excellent article the author of which opines that the government heeding the call for reform (finally!) only made sure it took the easiest way out and considered reforming sectors that were not only crying out to be reformed but also were the easiest to reform - stock market, telecom sector etc. Sectors such as education, health, labor etc are still being swept under the carpet. These are the reasons that the most visible of these sectors (constituting a small portion of the entire economy) is making all the money and the government is trying to redistribute this wealth rather than support revenue creating measures for the afore mentioned sick sectors.

3. legislated, government mandated donations to the poor? no way I am supporting that though I empathise with the poor and wish do a lot to improve their lot. Firstly, the liberal in me screams out loud that the government has no business in mandating what individuals do with their money. That is a complete no-no. If it (the government) so desires that the rich contribute to schemes for the poor then the only way it can do so is by incentivizing such initiatives. With incentives are created, to use your expression, "win-win" situations. The government can and should, in my opinion, dabble only in macro economic roles. And taking stock of the multitudes of the poor and damned in India, I can safely say that the government's regulatory and licencing roles have not only created poverty but also ensured it. The government can do more to alleviate poverty than all the money that can be thrown at it by getting its act together and framing policies that ensure growth (both socially and economically) of all sections through equal access to growth and wealth. Part 1 has a little more on such policies.