I'm sure the neocons would probably write this off as India being in the early stages of of Kuznets Curve (1), but it's probably a case of what Piketty found when writing 'Capital in the Twenty-First Century'. Ie, in developed nations, the rate of return on capital greater exceeds the rate of economic growth, which creates an increasing gap between rich and poor.
It's difficult to see how they will mobilise these people to become consumers, when nothing suggests a disruption of Indian wealth becoming increasingly concentrated.
One of the big problems in Indian economic statistics is that a lot of wealth and income if the "middle class" and the rich actually doesn't show up in official statistics. Their income is in what's known as "black money". There are a lot more rich ajd middle class families in India than show up in official statistics. That's precisely why socio economic classes in India used by economists and marketers are defined by a combination of education, occupation and device ownership rather than income.
Source: Am a Market researcher and analyst who segmented Indian market for a major corporate
I’m far from expert on this but how long can India be considered a “developing” nation. It’s starting to feel like continuing to call Dropbox a “startup”
I think that at this point we classify countries as developed mostly by IHDI/HDI: (Inequality adjusted) Human Development Index. I'm from Romania, which I would classify as developing:
Romanian HDI: 0.802, IHDI: 0.714.
Indian HDI: 0.624, IHDI: 0.454
I think India still has a long way to go. So does China, in my opinion.
The problem with India seems to be that it's ultra polarized - you got the parts that have been launching rockets into space since 1975 (one even going to Mars), built nuclear weapons, use nuclear power... and you have the parts that have no roads, no sewage system, no nothing and which regularly make global headlines whenever a journalist goes off the big cities and travels into the deep rural areas and sees stuff that's unbelievable for him.
You don't have to even leave the big cities. In Gurgaon, India's "cyber city" next to Delhi, home to lots of shiny skyscrapers and glitzy shopping malls, you can drive along the main drag MG Road and see women squatting by the roadside manually pounding bricks to rubble, 8-year-olds operating food stalls next to the No Child Labor Certified factory, beggars with babies so sick they're turning blue and shitting themselves (amount of fucks given by passersby: zero), emaciated cows wandering on four-lane freeways, a naked swami doing his thing in a freeway offramp, families of construction workers living in shelters built from concrete barriers and a dusty tarp, etc.
This isn't something unique to India. I seem to remember reading an article somewhere that rural black communities in Alabama face similar issues. Granted, that seems to be more of an exception.
But what I took away from it is that communities that participate in the economic system do well for themselves and generate prosperity for themselves whereas those that don't (including most rural Indian villages) will continue to suffer from these issues.
North Korea now has ICBMs and nuclear weapons. This just shows what a committed state can achieve once it has it's priorities in order.
In India the classes are just looking out for themselves and keep looting each other when they have the opportunity to do so.
Take Bangalore now. The congress government here, has been openly siphoning money from the treasury for election funds or whatever. Now the state elections are going to be held in a few months, they are repairing roads, paying municipal workers and doing things they should have been doing throughout their term.
Now people here take exception to some European/American saying, why the hell does India have a space program etc when you have so many basic problems to fix. I take offense to that as well. Mainly because saving a small amount of money on that isn't automatically going to uplift hundreds of millions of impoverished Indians. It's hardly a drop in the bucket. Also because so many young people here graduate with engineering degrees, and they need something to look forward to.
The problem is that the people in charge realize that organizations like ISRO have to be shielded from the very system they govern and nurtured. They are OK with the same system perpetuating itself and hamstringing everything else. And it's not in their list of priorities to stop and reform this.
What, you don’t think India is developing? Cause it sure as hell isn’t developed. Malnutrition is increasing in India as people have more opportunity to eat tasty but not particularly nutritious food. Open defecation is common over very large parts of the country. If you go to Mumbai there are migrant workers sleeping on the street all over the place. It’s getting better but there’s no way in hell it’s developed.
The classification as "developing" depends on what is being tracked. If measuring human development is a criteria to be evaluated, the UNDP tracks and computes since 1990 [0] the Human Development Index (HDI)[1] for several countries including India. India's HDI [2] is low relative to a country like Brazil [3].
The notion of considering a country “developing” or “developed” is quite outdated. It made some sense fifty or forty years ago but today most countries are somewhere in between and it’s not really possible to group countries into two groups “developed” and “developing” anymore.
Hans Rosling has made some interesting talks on this. Worth watching.
It is surely a bad name, that imply that things are improving. But there is a distinguished set of countries that are not developed, and not undeveloped either.
India's wealth gap is absolutely jarring. There are beautiful fenced mansions with manicured lawns and just outside the fence homeless kids setting up fires for the night.
Very much not the same. In the United States sleeping on the street is associated with addiction and mental illness, or in teenagers with abuse. In India it is commonplace for high-functioning people to sleep on the streets on in illegally constructed shacks with no water or sanitation, for purely economic reasons.
There are a lot of articles published saying half of New Yorkers are a single paycheck away from homelessness, 60% of Americans are a single emergency expense from homelessness, etc., but every month lots of those people lose their jobs and have emergency expenses, and they aren't flooding onto the street or into emergency shelters. Those alarming-sounding numbers come with really important caveats like "without relying on family" and "without relying on friends" or even "without going into debt." Having access to those resources is a really important aspect of social class. Even the people shitting in the sidewalk in San Francisco, a lot of them have friends and family who have money and would love to help them if they could figure out how. The difference when you're homeless in India is that everybody you know is either in the same circumstances as you or knows so many people who are that it doesn't make sense to single you out for help.
There is a safety net here, if for example you get homeless after working or are disabled. There is no such thing in India. Sure you can have an employee contributed benefits plan(if you are lucky to have one of those employers). If you became poor after 20 years of working you are in the same boat as some poor kid teen who was born on the street.
That's a mental health issue in the US. Every city has shelters, food kitchens, etc so if you are mentally stable, clean of drugs, and not too proud to take charity you don't need to be on the streets for long.
Where the US system fails is with mentally unstable people and drug addicts. This is nowhere near the same thing as an entire lower class of 10s of millions willing to work that are still homeless.
Places like India have a much wider spectrum of extremes between incredible poverty and incredible wealth. North America has a subset of that spectrum.
If you don't believe this, I challenge you to drop yourself into 0-star in any place like India and see how it stretches you.
Almost every economics discussion at these very high levels suffer from sweeping all-encompassing generalizations (about an entire country) that happen to fit perfectly neatly into their political worldview.
Especially for India, which is notorious for having a government economic regulations that fluctuate wildly depending on what province/city you're in. Where you can drive a truck across the country and require 5 different licences/paperwork just to appease each local arrangement. Not a good country to generalize.
What is the problem of wealth being concentrated? Common people do not need wealth to earn money, they earn money from jobs. Gradually business will see it needs consumers to grow further and some measures will be taken to make these people more productive to be able to earn and spend, as rich don't exist in a vacuum.
Besides the scientifically proven downsides for society and general human wellbeing that inequality is known to cause, why should people’s lives be improved or not at the whim of “business” and the “non-common”, most of whom are the beneficiaries of inherited wealth or a gamed system? What gives people the right to live a parasitic, non-contributory existence at the expense of the labour of other humans? You seem to be systematising and forgetting that you are talking about billions of real lives?
> Besides the scientifically proven downsides for society and general human wellbeing that inequality is known to cause .
(Honest question) do you have some citations where this has been studied, specifically in cases where the low-end of the inequality spectrum isn't poor? (i.e., to demonstrate the inequality and not the absolute state is the culprit)
>What is the problem of wealth being concentrated?
The first problem is that wealth means control (e.g. from how VCs control opportunities to create businesses through their funding, to how the rich can buy politicians and laws).
So concentrated wealth = less democratic country (not in electing government, in actual control of what's to be done and opportunities).
Second problem is that concentrated wealth is not used in directly buying, so it sits out of circulation. A rich person can have 95% of its income sit in idle investments, land, etc, and still live like king with 5% of his earnings per year, while a middle class/working class person will spend most (say 70%-100%) of what they earn, thus keeping the economy going.
And when that 95% the rich keep is much much bigger than the aggregated 70% of what the majority of working people spend (e.g. because 1% of the people control 80% of the wealth), then you have a stifled economy and a dwindling middle class.
And lots of other issues, but those are quite major...
Land could be real estate, which, if not just sitting idle, it's still the epitome of rent-seeking.
Plus, land rented to farmers is productive because of the farmers, not because of the land -- and would still be a sinkhole of money from the middle class (the farmers) to the rich person doing the renting, not entering circulation like the money a farmer would make (to buy animal food, seeds, whatever, and to live their family).
i could actually respect libertarians if you guys would stop pretending that trickle down is a thing and embraced that a society with .1% superrich, 19-20% well off experts and 80% serfs is the natural endgame of your ideology
Don't blame libertarianism for the state having broken the market so badly that wealth inevitably gets funneled to the few. Crony capitalism is not libertarian, rabidly competitive markets are.
The natural end of that is generally going to be prosperity across the board, and hopefully a government financially solvent enough to actually pay for those in need and essential services, all of which should be lower as a result of a better market doing much of that naturally.
I have never seen even a simple argument for why your second paragraph should be true.
On the other hand I understand the principle that money makes more money (the principle of investment and ROI), and I don't see how "competitive market" tackles this.
It basically feels like the capitalism starts off from fairly-level playing field, but over time becomes more and more unstable, the gap ever-widening. We have already seen it fall (at the beginning of communist regimes), and I'm afraid we'll see it fall again.
That's a pessimist view, which I hope won't turn out to be true, but I'd be interested in exploring alternatives.
> the principle that money makes more money (the principle of investment and ROI), and I don't see how "competitive market" tackles this.
It doesn't address that because it doesn't make that argument, in that way. One of its starting axioms is that economy is a positive sum game. In the case of your statement, it might argue that (in the very general sense) money makes more money in a positive sum way -- more total wealth in the economy. Then to the latter it merely says that business that are better at making money (and generally, wealth) get to out compete those that don't. Its premise is it optimizes for wealth creation of the entire economy. I think that's the place to take the argument -- either that you fundamentally disagree with that premise or some outcome of it.
> It basically feels like the capitalism starts off from fairly-level playing field
Historically I don't think so. I"m not expert but read a lot and I'm currently under the impression that economies were historically locked down by government or tightly coupled government / mercantile entities.
WWII was a great leveling of the playing field. There are many times in history when Gini coefficients dropped precipitously. All the evidence points to the fact that wealth tends to accumulate in capitalist economies until crises or government intervention prevents it.
Look at insane bull markets last couple of years. Rich people don’t have their money just parked in bank accounts. They own real estate, land, stocks so they benefit greatly while majority of population benefits very little from ever higher highs in the stock market. Basically rich people control most of the stuff which generates passive income without the need of labour which causes ever widending gap between the rich and everybody else and shrinking of middle class.
>Don't blame libertarianism for the state having broken the market so badly that wealth inevitably gets funneled to the few.
It's not a market problem. Even in a perfect market, a rich person would have most of its assets sitting or slowly moving, whereas a middle/working class person would spend their income.
So one gets the economy moving, while too much concentrated wealth stifles it.
A rich person would have most of their assets invested, existing in the form of factory equipment, buildingsin active use, truck fleets, etc. That is, pretty much moving.
>A rich person would have most of their assets invested, existing in the form of factory equipment, buildings in active use, truck fleets, etc. That is, pretty much moving.
Only if they're so inclined and even only part (they'll keep large parts in less risky form, including land etc -- also not sure how "investing" in "buildings in active use" is not rentierism and how it helps the economy. Whereas the middle/working class have no other option but to put the majority of their income directly in the economy again (buy things to live).
And that's not even taking into account the fact that the rich could very well invest elsewhere, or hide their money in tax havens, invest in foreign housing markets, and such, in which case the society they live in, and which they make their money, gets zilch of those money. Again, not the case for middle/working class people.
But assuming that the rich did invest most of their money, that would still have the problem of the rich calling the shots (through their investments and wealth), which is less of a problem in a less unequal society.
I don't think you have any idea what "libertarianism" is, as most of your post describes a well-functioning social democracy, which is the exact opposite of libertarianism.
the term "trickle down economics" is to the right as "political correctness" is to the left. both terms were created as strawmen to smear the other side's position.
Without the rent seeking enabled by government-enforced ownership of natural resources, inequality would be greatly diminished. My biggest problem with most libertarians is that they act as if the government's largest and most pervasive intervention in free markets is just a natural law and then claim that any intervention to mitigate the effects of that intervention is a horrible infringement on freedom.
> Gradually business will see it needs consumers to grow further and some measures will be taken to make these people more productive to be able to earn and spend
To rephrase:
You're saying that the "common" people are just not working hard enough and the rich need to take measures to make them work harder so that they can be better consumers.
It's the "common peoples" fault that there is no middle class because they don't work hard enough.
According to you...India has a half billion lazy people.
It's difficult to see how they will mobilise these people to become consumers, when nothing suggests a disruption of Indian wealth becoming increasingly concentrated.
(1) https://en.wikipedia.org/wiki/Kuznets_curve