China Vs India Debate…Overdone? Yes

Sometimes I do feel the way Prashant feels in this link  http://indianeconomy.org/2009/01/10/et-tu-gurcharan/.  Since I work in projects in both countries, I too get this question “India or China ?” comparison very often. But most of the time the question is from Indian partners, colleagues or friends.  The people who worked with me  in China don´t seem to take India as a competition. Sometimes they think Indians are “barbaric” because they eat with plain hands. On the other hand they think that Indian Technology and Service sectors are a lot more advanced than their own. They love Indian music. But think Indian movies are outdated and boring. But most Indians  associate China with cheap goods and definitely as a cut-throat competitor.  History of China when I studied was probably one chapter in one of  my school history classes while European history was a whole book. Even that focussed on only the building of the wall and thier conflict with Mongols. Culturally China doesn´t exist at all for Indians.

But in economy, can we say that China is going the better way and India not ?  I don´t think any of us have sufficient information. The time is too short to judge ( ..like Gurcharan Das states in his book..I totally beleive that indian woke up only early 90s and so comparison are valid only from that time onwards). Even comparison figures made by Ishant in the above site is based on notoriously  unreliable government dressed up statistical figures.   So what are we arguing about here? If we need to grow what have Chinese figures got to do with it? Chinese growth model is completely different from the Indian growth model and they cannot be interchanged. What works for the Chinese will not work for India and vice versa.

Gurcharan Das is one of my favourite Indian economics commentator and essayist. Normally his views are structurally organised and clearly put out. But in this article he seems  a bit exasperated by the questions from his Chinese friends. But he is very right in pointing out that if analysed on caste lines , the trader castes still score better in capital generation. This means even this generation is yet to break out of the mindset of the older generations (which were more stereo typed on caste lines).  How do you break generational mindsets ? One way is  by education and the other is media. I would say media is more balanced and for sure does not bank on caste or such divides (we don´t even have explicit politically biased newspaper like the west has ..like a Liberal newspaper or Conservative newspaper).  So the main culprit which is not doing its job properly is the education system. The education system is still not strong to reinforce modern ideas (or the necessary ideas to take us forward) and not equipped well enough to cultivate modern thinking among its students.

Well to the question  ”Is China Vs India Debate…Overdone? ” I would say. But if it brings out from  people to rethink inwards and look for solutions to  grow just by sense of competitions, I don´t mind another thousand of these discussions.

Nouriel Roubini..Guru …Who advises

If you read any newspaper or blog today you would find thousand analysis about why things went wrong. A year ago you could have seem most talking about why things are great now (inspite of the sub-prime issues). 2 years ago…things were even rosier.. At one point even Stephen Roach of Morgan Stanley stopped talking negative…(may be his new assignment did not allow him too). But Nouriel Roubini maintained his stance that the path that USA was following monetary and economic policy wise was not the right way and that they will pay for it. Well now his prediction (and that of Stephen Roach before he moved to Asia) has come true. But atleast Fortune magazine recognized him and selected him as one of the new gurus of modern thinking.  Hope that in the future people show more eagerness in diagnostics rather than in postmortems. But then greed never promoted rationality.

India Inc. will prosper..but not India

FT´s Hugh Young had this article to express his optimism on India Inc. http://www.ft.com/cms/s/0/4f8ebac2-3108-11dd-bc93-000077b07658.html. As the article heading itself makes clear positive view while looking at India Inc. But can India also share the same future as the India Inc. Well I doubt. There is a big disconnect between India Inc. and India. (BJP party knows it well from the last election and in all probability the present government is also aware of this. In this article http://www.ft.com/cms/s/0/256c9760-2c0c-11dd-9861-000077b07658,dwp_uuid=89fe9472-9c7f-11da-8762-0000779e2340.html Satyam´s head  is so much pleased with a weaker Rupee. I am not sure whether he gave a single thought about the link between the Global Oil Prices and the Indian Currency. Of course he is not paid to think about India. So who is going to think about India. Not the political parties. Since the loss of the PV Narisimha Rao´s governement nobody stood one their own and often had to bank on third parties whose interest is more to protect themselves and gain political milage rather than get things done. And now all the inflation (partly imported along with the the fall in dollar to protect the few cyber coolie companys) is going to make sure that economy is one in  the spotlight. For the spiralling wage inflation, global credit crunch  are going to force India Inc. to use all their competence and then they are going to realise India also needs to prosper and not just India Inc.  Probably Hugh Young needs to be reminded that inspite of their earning surprises, India Inc. still has very high P/E and India has the highest deficit.  

 

 

Science Study(or the lack of it) in India and its long term implication

I was trying to look for an equivalent study of the PISA Study for Indian Education. All I could find was this study http://www.insaindia.org/India%20Science%20report-Main.pdf . It appears this was a study in response to an article written by Garg, K. C. and Gupta, B. M.,  in the Current Science .Vol 84,   2003, Pg 1198–1201 about the fall grass-root level decline in Science education. It appears the final report though does not refute the original paper it tries to maintain a bureaucratic balance  by saying..”yes..there is something..but it is not a big thing”. But the numbers when looked in depth show that there is definitely a drop in support and enthusiasm in Science once the job -secured engineering and medical profession splits out into a separate curriculum. Worse is in the tertiary level education. The fact that 62.8% of the post graduate science students are unemployed should be a reason enough for the loosing any interest in further education in this line.

Most agree that the innovation is the main driver for a country´s continuous growth. China has recognized it and has been trying hard to catch up with the developed countries in these areas. But there seem to be no sign of any action from the Indian government or Education Policy makers. Everybody seems to be content in being “the cyber coolies” and think that based on this fact alone  India will maintain its current growth rate and will catch with the bigger economy within the next generation. It takes a generation to bring about a change in mindset and to realise benefits on educational investments. But for English speaking countries  with low wages(like some in Africa) to catch up in the “cyber coolie” business they need very less time. Also service industry in which India excels does not need much investment and can be rapidly developed if a country decides to go into it. All Foreign Investors will directly jump up to support them. Also China , Russia and many Eastern Bloc countries are pushing English a lot and with that India can loose its competitive edge.   

Globalization Benefits-who definitely does not get

This was an article on New York Time about the working conditions in India http://www.nytimes.com/2007/11/26/nyregion/26manhole.html. The site requires login information for some article. I hope this does not apply to that particular article. Just to give the opening paragraphs 

“Eight thousand miles from Manhattan, barefoot, shirtless, whip-thin men rippled with muscle were forging prosaic pieces of the urban jigsaw puzzle: manhole covers. Seemingly impervious to the heat from the metal, the workers at one of West Bengal’s many foundries relied on strength and bare hands rather than machinery. Safety precautions were barely in evidence; just a few pairs of eye goggles were seen in use on a recent visit. The foundry, Shakti Industries in Haora, produces manhole covers for Con Edison and New York City’s Department of Environmental Protection, as well as for departments in New Orleans and Syracuse. The scene was as spectacular as it was anachronistic: flames, sweat and liquid iron mixing in the smoke like something from the Middle Ages. That’s what attracted the interest of a photographer who often works for The New York Times — images that practically radiate heat and illustrate where New York’s manhole covers are born.”

One would imagine that living and working conditions would improve atleast in a emerging economy like India. Seems not so.  Either the management levels and working levels including unions (West Bengal and in particular the areas mentioned Hoara near Calcutta are very union-stronghold) have failed to transfer  benefits to the workers. Or there is pricing pressure from the buyers.  US in general has been quite vocal about safety and child labour issues in relation to China and India where they  are suffering from competition (eg. textiles).In the other areas pricing pressure has been quite high. This is also mirrored in some of the comments of the Chinese suppliers who complained about pricing pressure  for drop in quality.

Theory of Social Change-Is it time for the change now?

With the issues of sub-prime mortgages failures, liquidity crunch, problems in the financial structure, I could not help remembering reading a book called ” the Great Depression of 1990  (http://www.amazon.com/Great-Depression-1990-Ravi-Batra/dp/0440201683 ) which was quite famous in 1987 and was one of the top economic books. It was one of the top sellers and was being published just at the time when the stock market was in trouble that year. As we all know now nothing of that sort happened. In fact the author, Dr.Ravi Batra an US economist and professor at Southern Methodist University,Dallas, Texas, had followed this book with another which advises people how to avoid these crashes. With this Dr.Batra went obscurity. He tried a come back with a another set of predictions called The Crash of the Millennium. But it failed of course even before prediction proved to be wrong. Well, considering the market situation and economics right now, may be his predictions could come true but with a delay.  But what really grabbed my attention in that book was the detailing of the Law of Social Change, a theory put forward by Prabhat Ranjan Sarkar.He brought forward this theory under very controversial circumstances and also it got mixed up in Indian politics and in a religious quagmire.  In fact he was arrested and spent a lot of time in prison.

To put it in simple form,  The Law of Social Change, basically states that the human society undergoes cyclical changes. The cycle consists of a period which is controlled by the workers, warriors, then a period by intellectuals and then by  money people.This cycle can be explained in a logical sense as follows.

The workers slowly build their world. They rule their world on their own in a collective sense. Slowly some go up the social hierarchy to become strong men. These power now shifts to these muscle men. As the  muscle power peaks,  some with brain power slowly gain control over them. The intellectuals then slowly acquire money. With this money power gains. At the peak of money power, the workers rebel to gain back their share and the cycle starts all over again.  This is just my interpretation of the idea. This is not just one cycle. It contains more smaller cycles inside. It could that in the period of the intellectuals, soldiers also take control in the second level.

 Generally many things in history could be explained in retrospective. But it gets more difficult to find out what cycle are we in now. It depends on very much whom you ask and how he or she perceives the current situation.   If I look at the power, power money holds many would say this is the cycle of money. The major intellectual growth being the period of twentieth  century. Within this cycle power of soldiers, workers and intellectual going up and done. What should happen now for the money guys to give up their power.? Will it be a depression causing havoc in the money and then the actual working hands get to do their jobs and rewarded as was before while the high and mighty CEO and executives be brought down to their knees.? Seems like a communist dream!!. Or is it that suddenly the ever shrinking armies suddenly faced with a crisis of nuclear armed rogue regimes start expanding some supported by bloodless or bloody coups!! Tech workers dream world handed over to the soldiers? 

   

Bastiat Prize for Journalism 2007 for India Uncut

Look who gets into the league of gentlemen satirists Amit Verma of India Uncut http://www.indiauncut.com/  . By winning the Bastiat Prize for Journalism 2007 Amit joins the likes of Undercover Economist ,Tim Harford( who won it for 2006). For the official announcement here is the link  http://www.policynetwork.net/main/press_release.php?pr_id=112.  Amit`s blog which focus on free market views with short and sweet statements to get his view points across is a delightful read particularly for Indians. Congrats Amit !!

Mr.Stephen S. Roach, Where are You?

Anybody who has been reading the Morgan Stanley ´s Global Economic Forum website http://www.morganstanley.com/views/gef/index.html must be finding it now like a reluctant student´s assignment. Gone are the days when there used to be lively debates between the perennial bear Mr.Stephen Roach and Mr. Dick Berner. I used to wait for the next post to read what these both have to say about the economics. But since Mr.Roach left to take his position as the chairman of Morgan Stanley´s Asia operation I missing what used to be my daily dose of “economics” thriller. I guess the same is for many ”hobby economist” who just like reading such ideas and information to brag about in a party or at the coffee machine in the morning. One thing I can say this forum also trained me to look out for more and more information about what is going around me in the economic sense.

 Mr.Berner is still in the forum. But he doesn´t write too often. Even when he writes the foil of  Mr.Roach is missing. Clearly there is a difference on the type of posts that I see there. Ok maybethe banks are not makingthe kind of profits they were making few months back. So they cannot provide the kind of free ”lectures and articles ” for folks like me.  On the other hand I should be grateful for immense satisfaction and joy of reading such excellent posts from such remarkable people at no cost. Thanks Mr.Roach,Thanks Morgan Stanley…