Friday, July 04, 2008

It takes various iterations....

.. to force alien concepts upon reluctant minds. I am understanding the real meaning of this statement that Pete makes all the time. The past few weeks in India, I have managed to increase my Blood Pressure every time I engage in any kind of conversation with anyone on any topic or issue that is even remotely connected to Economics. I have managed to get a sore throat, a head ache and a general sinking feeling. I am willing to argue my points of view with intelligent people who hold valid criticisms and questions about the efficacy of markets. In such instances all I need to do is point out that governments also suffer from the same problems and they accept my point and we have an enjoyable discussion, each holding out own position, while disagreeing with the other's. The problem is with those that are sure they and the government are always right. The problem is that academics (barring a few) are also very heavily left leaning and hence discussions are always about market failure. 

I cannot understand how people can support an anti-market stance even after they observe how much more richer we are since liberalization in the early 90s. For close to 50 years most people of the country were poor. Now there are fewer poor people, sure there are inequalities, those are observed in all transitioning countries. The only reason the poor of India seem very poor is because there are more richer people now, while in the past there were probably a handful rich ones. I do not deny that the ground realities are still such that there are millions of poor people in India. People seem to think that blocking private enterprise will make more money available to the poor. What they do not see is that private industry and competition have increased per capita income in spite of the population being over a billion and that several people have successfully transitioned out of poverty or lower class to at least middle class.  

2 comments:

\kp said...

"The only reason the poor of India seem very poor is because there are more richer people now" -- ouch! We should try telling that to the guy on the pavement who very likely can no longer eke out even that one meal a day because his one rupee got way more puny. Free markets are great because they expand general well-being, but they have this bad side-effect of creating a purchasing frenzy by the new rich making everything more expensive for everyone. So the losers and those who cannot even afford to play in the first place are pretty much damned. A social safety net that catches those who slip through the cracks should therefore be pretty much a prerequisite to open markets -- which unfortunately most emerging market countries including India completely ignored. IMHO it doesn't just seem like India's poor are very poor, they are in fact, getting poorer.

Btw, its great that you are sharing your thoughts. They do in turn provoke more thought.

effay said...

What I find amazing is that I encounter people all the time who, unknowingly, are very good at using the principles and rules of economics for their benefit. Yet if anyone attempts to explain the principles that have allowed their success, they often have the hardest time accepting them.