The Economist recently speculated that the inflation rate could hit 10 percent, stated a CNN-IBN article that I came across yesterday. This is despite the fact that this year, India is all set to register a record growth rate. Those of us who commonly cite the Chinese model of economic growth might want to know that both India and China have suffered this paradoxical phenomenon- a high rate of growth going brothers-in-arms with increasing economic inequality among classes.
The problems of welfare and developmental economics are really deep and complex. Many (including me) cannot even get their dialectic parlance beyond commonalities like 'free-market economy', 'socialism', 'demand elasticity' or 'marginal utility'. And I couldn't disagree more with G. B. Shaw who insinuated that the economists were a group who if laid end-to-end, could not reach a conclusion. They are a set of people I have come to deeply respect for their ability and courage to articulate these problems so well. But I often wonder whether the ability to penetrate conventional wisdoms to disinter latent insights ever translates into good public policy.
I came across this article yesterday and it was one of the most deep and perceptive essays that I have read in recent times. Only after finishing the article did I find out that the author was an emeritus professor at JNU, Delhi (such thoroughness and erudition can come only from an academic) by the name of Amit Bhaduri. On the problem of China/India growth-inequality paradox, Bhaduri delineates:
The problems of welfare and developmental economics are really deep and complex. Many (including me) cannot even get their dialectic parlance beyond commonalities like 'free-market economy', 'socialism', 'demand elasticity' or 'marginal utility'. And I couldn't disagree more with G. B. Shaw who insinuated that the economists were a group who if laid end-to-end, could not reach a conclusion. They are a set of people I have come to deeply respect for their ability and courage to articulate these problems so well. But I often wonder whether the ability to penetrate conventional wisdoms to disinter latent insights ever translates into good public policy.
I came across this article yesterday and it was one of the most deep and perceptive essays that I have read in recent times. Only after finishing the article did I find out that the author was an emeritus professor at JNU, Delhi (such thoroughness and erudition can come only from an academic) by the name of Amit Bhaduri. On the problem of China/India growth-inequality paradox, Bhaduri delineates:
A central fact stands out. Despite vast differences in the political systems of the two countries, the common factor has been increasing inequality accompanying higher growth. What is not usually realized is that the growth in output and in inequality are not two isolated phenomena. One frequently comes across the platitude that high growth will soon be trickling down to the poor, or that redistributive action by the state through fiscal measures could decrease inequality while keeping up the growth rate. These statements are comfortable but unworkable, because they miss the main characteristic of the growth process underway. This pattern of growth is propelled by a powerful reinforcing mechanism, which the economist Gunner Myrdal had once described as ‘cumulative causation’. The mechanism by which growing inequality drives growth, and growth fuels further inequality has its origin in two different factors, both related to some extent to globalisation.I strongly recommend the article to anyone who, like me, has felt the paralysis from old cliches and the lack of fresh perspectives while discussing these issues. With the UPA brandishing the increasing growth rate as the natural panacea to all the socioeconomic inequalities that continue to affect nearly a quarter of our population, with evangelical platitudes like "high growth will soon be trickling down to the poor" being constantly mouthed, this article analyzes the apparent Indian economical dilemma- is product growth going to really solve the problems of inequality in India?
Bhaduri's critique of 'predatory growth' can be summarized by a quote forwarded to me by Anirudh Patil (who incidentally was responsible in leading me to this article) - Growth for the sake of growth is the ideology of a cancer cell.
3 comments:
ohh..wonderful quote to sum it up. The disparity between poor and rich is inevitably increasing. But let me also say that high growth rate is bringing in a lot of private investment which is also inevitably needed if India has to climb the step up and ultimately be at par with other developed countries. A negatively fed-back circle.
Thanks anon (though it would be much better if you introduce yourself :-) ); private investment is definitely needed but all economic and public policy need to be framed keeping the larger framework in mind. More than anything, to consider'high growth rate' as a metric of well being is highly specious. That, essentially was my take-home from this article.
Whats in a name :-P. Shakespeare's quote.
Agreed that it is not a metric but India cannot possibly do without it :-). I expect government to do the needful for poor to keep the larger framework in mind, but you know it doesn't happen in India
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