Thursday, August 13, 2009

Nuggets of Economic Wisdom

I am constantly amazed at the wonderful grasp of economics the common Indian citizen has. In another wonderful conversation with my flatmate's parents, his mother demonstrated a keen grasp of the importance of incentives. We were talking about the construction boom in India and uncle told us how difficult it was to get labor to meet the demand for construction in their city Nagpur. I wondered why there was no migrant labor from North Indian states! Labor migration is common in India, and its not surprising either cause most migrants are from some of the poorest districts of the country. So it was surprising that even migrant labor was scarce these days. That is when aunty dropped this wonderful piece of information and tied it all economically. She said that the unemployed in those regions were now being awarded unemployment compensation. Thus if they were going to get money and food just to sit at home why would they migrate in search of work. I was totally amazed. Here was someone who had not had a single course in economics, who had been a house-wife all her life and yet understood economics so well!! If only the policy makers had half her economic wisdom India would become an advanced country in no time.

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