Sunday Posts

An infographic in Indian media India's unemployment rate has reached a historical high and the government is panicking. It has rejected and suppressed the report and committed itself to inventing a new set of numbers. Members of the national statistical body have resigned, and the bad job numbers have become one of the worst kept secrets in its modern history.  As the government went down the road of obfuscation, it had also fooled itself believing that everything was fine. Once the statistical reports were questioned, the best explanation that the Head of the apex economic policy-making body could come up with was that Uber and other taxi-hailing companies have created millions of jobs in India. But then, the crisis is anything but hidden - walk on any street in any neighbourhood in any Indian city, and it is likely that you will see a few working-age people loitering, waiting or playing cards or carom in the middle of the day. IMF has recently warned that youth inactivi...

I wrote a post yesterday on the 'crisis' of the Indian IT industry . My essential point in this was that while the Indian media sees a sudden crisis in the Indian IT sector and summarily blaming it on Trump, the problems were simmering for a long time and blaming it on Trump Administration's current or intended policies would be mistaken. And, besides, while a number of observers - Rajat Gupta, formerly of McKinsey fame (and Galleon infamy), being the latest - blame the leadership of Indian IT companies for lack of vision and inaction, I thought this was unfair, it was hard to change business models for mammoth publicly listed companies: In fact, this is exactly what these companies are trying to do, triggering all the crisis talk. However, all this don't point to a solution, which some reading the post pointed out. To this, I do not think there is any silver bullet. Many, Rajat Gupta included, have spoken about educational change, but that is neither short term n...

To me, democracy, of late, has been a disappointment. Or, to be precise, I have been on losing side of the argument all too often in the last couple of years. For example, the Indian electorate in 2014 voted overwhelming to bring in a Hindu Nationalist government: This was due to a combination of voter fatigue with the previous administration, which proved to be inept and corrupt at the same time, but I did not want a Fascist leader, which Mr Modi most certainly is, to be India's Prime Minister. Also, I was on the losing side of Britain's EU referendum, where the British electorate apparently voted for a closed economy and inward-looking society. And, indeed, like everyone else, I am now bracing for Trump victory in US Presidential election; whether or not that eventually happens, I wouldn't, like many US voters who will vote against Trump, feel elated about a Hillary Clinton presidency either, as she is only the lesser of the two hard-to-like candidates. Despite thes...

It is commonplace to talk about education for economic growth, but our ideas about what leads to  economic growth somehow defines what kind of education we may want.  As Joel Mokyr highlights in his eminently readable 'Lever of the Riches', there are four 'ways' to economic growth that the standard economic history brings forth.  First, what he calls the 'Solovian Growth', after Robert Solow, the doyen of economic growth theorists, which hinges of capital formation. In this model, the entity, the country in the standard formulation, saves more than it produces, and build capital stock in terms of infrastructure, human capability and investible capital. Second, what Professor Mokyr calls 'Smithian Growth', this alternative route to growth hinges on trade, either within the country, between the villages and cities, or between regions. The more trade there is, greater the rate of growth. Third, there is a theory that population growth itse...

We live in an exceptional time. Though this isn't a quote from the excellent Foreign Affairs essay written by Erik Brynjolfsson, Andrew McAfee and Michael Spence ( read it here ) but somewhat its central message: That automation is now reaching a certain tipping point in capability, and with it, it is changing the dynamic of globalisation, ending the party for low cost labour and instead creating a Power Law economy, where a creative elite reap most of the rewards and most other lose out even more completely. Indeed, the authors argue that this is already happening: They report that China may have lost over 30 million manufacturing jobs, 25% of the total, since 1996 (though, the authors note, the data is unreliable because of a change in the way it was gathered) , though at the same time, manufacturing output has expanded at an exponential rate. Foxconn's (and of others) automation projects appear to be the obvious reason. This also bears out on anecdotal observation: Joshua ...

India used to be known as a sickly economy, known for its 'Hindu Rate of Growth'. A term originally coined by Economist Raj Krishna, to explain India's lowly rate of growth of 3.5% annually between 1950s and 1980s, the 'Hindu Rate of Growth' was to mean what the Economists call the Secular Rate of Growth, which means just the trend level of growth - the rate at which nothing really changes. India somewhat escaped the Hindu rate of Growth starting 1990s, when freeing up of the entrepreneurial energies of Indians allowed the economy to progress, and some changes did indeed happen, particularly in the Middle Class life and in the Cities. However, lately, this faltered and India returned to an anorexic growth rate.  So, the primary job of the newly elected Hindu Nationalist government in New Delhi is to prevent India going back to its 'Hindu rate of Growth'. But we can introduce another term in the same vain, the 'Hindu Rate of Education', whic...

Hope has made a comeback in India. The grand yet sombre swearing in of the new Prime Minister yesterday made an impression; at least one Western commentator, John Eliot, wondered whether Mr Modi will become a transformational leader like Nehru ( see here ). The assemblage of South Asian leaders, specially invited for the occasion, also ignited hope of peace, stability and freedom of movement in South Asia, which will, in turn, make India's prosperity stronger and sustainable. Besides, the spectacle itself, that a new Prime Minister from outside the ruling elite is being sworn in, is a sign of how strongly embedded democracy has become in India (though as I argued elsewhere , it should never be taken for granted). The hope for India's prospects rests primarily upon the electoral fact that first time in thirty years, India has a majority government. The successive coalition governments, held at ransom by India's regional parties, struggled to move forward and respond to...

Indian election is quickly turning into a battle between democracy and development. Underlying this tension, there is a thesis that democracy is only a luxury and can wait. Despite India's pride in being a democracy, this idea is as old as the country itself. Many people thought it was madness to have democracy in India, a poor and illiterate country at the time of Independence, in the first place. The privileged, the upper caste Hindus, the landlords, the princes, the educated, almost always thought this was a disaster. Indira Gandhi's brief adventure in authoritarianism was cheered on by many of these people: This was perhaps the reason why she was so wrong-footed eventually - everyone around her told her that this was great idea until the voters threw her out. Wealthy Indians nowadays point to China's development and blame their own democracy for failing to catch up, and this has become well accepted among the rich, powerful and the non-residents. Middle Class Indians ...

It is fashionable to think that vocational education is something every developing country needs. The economic logic is simple: Since the only model of economic growth we are comfortable with is the Anglo-Saxon model based on consolidation of land holdings, mechanisation of agriculture leading to a significant displacement of rural labour into urban and industrial activities, vocational education is seen as the catalyst that makes such transition possible. It is that secret potion that can take the farm hands into urban technicians and industrial labour, smoothing out the problems of land acquisition of large-scale farming, resource extraction and industrialisation, raising 'productivity' by moving people from low-yield small-holder agriculture to large industries and urban professions, and allowing urbanisation which is supposed to raise the standards of living. It really does not matter that this model of development is about two hundred years old. Besides, based on the...