Quality of Life: India vs. China

http://www.nybooks.com/articles/archives/2011/may/12/quality-life-india-vs-china/?pagination=false

By Amartya Sen

1.

The steadily rising rate of economic growth in India has recently been around 8 percent per year (it is expected to be 9 percent this year), and there is much speculation about whether and when India may catch up with and surpass China’s over 10 percent growth rate. Despite the evident excitement that this subject seems to cause in India and abroad, it is surely rather silly to be obsessed about India’s overtaking China in the rate of growth of GNP, while not comparing India with China in other respects, like education, basic health, or life expectancy. Economic growth can, of course, be enormously helpful in advancing living standards and in battling poverty. But there is little cause for taking the growth of GNP to be an end in itself, rather than seeing it as an important means for achieving things we value.

Dinodia/Stock Connection/Aurora Photos

Girls in a classroom in the Indian model village of Ralegan Siddhi, northeast of Pune, Maharashtra, 2006

It could, however, be asked why this distinction should make much difference, since economic growth does enhance our ability to improve living standards. The central point to appreciate here is that while economic growth is important for enhancing living conditions, its reach and impact depend greatly on what we do with the increased income. The relation between economic growth and the advancement of living standards depends on many factors, including economic and social inequality and, no less importantly, on what the government does with the public revenue that is generated by economic growth.

Some statistics about China and India, drawn mainly from the World Bank and the United Nations, are relevant here. Life expectancy at birth in China is 73.5 years; in India it is 64.4 years. The infant mortality rate is fifty per thousand in India, compared with just seventeen in China; the mortality rate for children under five is sixty-six per thousand for Indians and nineteen for the Chinese; and the maternal mortality rate is 230 per 100,000 live births in India and thirty-eight in China. The mean years of schooling in India were estimated to be 4.4 years, compared with 7.5 years in China. China’s adult literacy rate is 94 percent, compared with India’s 74 percent according to the preliminary tables of the 2011 census.

As a result of India’s effort to improve the schooling of girls, its literacy rate for women between the ages of fifteen and twenty-four has clearly risen; but that rate is still not much above 80 percent, whereas in China it is 99 percent. One of the serious failures of India is that a very substantial proportion of Indian children are, to varying degrees, undernourished (depending on the criteria used, the proportion can come close to half of all children), compared with a very small proportion in China. Only 66 percent of Indian children are immunized with triple vaccine (diphtheria/pertussis/tetanus), as opposed to 97 percent in China.

Comparing India with China according to such standards can be more useful for policy discussions in India than confining the comparison to GNP growth rates only. Those who are fearful that India’s growth performance would suffer if it paid more attention to “social objectives” such as education and health care should seriously consider that notwithstanding these “social” activities and achievements, China’s rate of GNP growth is still clearly higher than India’s.

2.

Higher GNP has certainly helped China to reduce various indicators of poverty and deprivation, and to expand different features of the quality of life. There is every reason to want to encourage sustainable economic growth in India in order to improve living standards today and in the future (including taking care of the environment in which we live). Sustainable economic growth is a very good thing in a way that “growth mania” is not.

GNP per capita is, however, not invariably a good predictor of valuable features of our lives, for those features depend also on other things that we do—or fail to do. Compare India with Bangladesh. In income, India has a huge lead over Bangladesh, with a GNP per capita of $1,170, compared with $590 in Bangladesh, in comparable units of purchasing power. This difference has expanded rapidly because of India’s faster rate of recent economic growth, and that, of course, is a point in India’s favor. India’s substantially higher rank than Bangladesh in the UN Human Development Index (HDI) is largely due to this particular achievement. But we must ask how well India’s income advantage is reflected in other things that also matter. I fear the answer is: not well at all.

Life expectancy in Bangladesh is 66.9 years compared with India’s 64.4. The proportion of underweight children in Bangladesh (41.3 percent) is lower than in India (43.5), and its fertility rate (2.3) is also lower than India’s (2.7). Mean years of schooling amount to 4.8 years in Bangladesh compared with India’s 4.4 years. While India is ahead of Bangladesh in the male literacy rate for the age group between fifteen and twenty-four, the female rate in Bangladesh is higher than in India. Interestingly, the female literacy rate among young Bangladeshis is actually higher than the male rate, whereas young women still have substantially lower rates than young males in India. There is much evidence to suggest that Bangladesh’s current progress has a great deal to do with the role that liberated Bangladeshi women are beginning to play in the country.

What about health? The mortality rate of children under five is sixty-six per thousand in India compared with fifty-two in Bangladesh. In infant mortality, Bangladesh has a similar advantage: it is fifty per thousand in India and forty-one in Bangladesh. While 94 percent of Bangladeshi children are immunized with DPTvaccine, only 66 percent of Indian children are. In each of these respects, Bangladesh does better than India, despite having only half of India’s per capita income.

Of course, Bangladesh’s living conditions will benefit greatly from higher economic growth, particularly if the country uses it as a means of doing good things, rather than treating economic growth and high per capita income as ends in themselves. It is to the huge credit of Bangladesh that despite the adversity of low income it has been able to do so much so quickly; the imaginative activism of Bangladeshi NGOs (such as the Grameen Bank, the pioneering microcredit institution, and BRAC, a large-scale initiative aimed at removing poverty) as well as the committed public policies of the government have both contributed to the results. But higher income, including larger public resources, will obviously enhance Bangladesh’s ability to achieve better lives for its people.

3.

One of the positive things about economic growth is that it generates public resources that the government can devote to its priorities. In fact, public resources very often grow faster than the GNP. The gross tax revenue, for example, of the government of India (corrected for price rise) is now more than four times what it was just twenty years ago, in 1990–1991. This is a substantially bigger jump than the price-corrected GNP.

Expenditure on what is somewhat misleadingly called the “social sector”—health, education, nutrition, etc.—has certainly gone up in India. And yet India is still well behind China in many of these fields. For example, government expenditure on health care in China is nearly five times that in India. China does, of course, have a larger population and a higher per capita income than India, but even in relative terms, while the Chinese government spends nearly 2 percent of GDP (1.9 percent) on health care, the proportion is only a little above one percent (1.1 percent) in India.

One result of the relatively low allocation of funds to public health care in India is that large numbers of poor people across the country rely on private doctors, many of whom have little medical training. Since health is also a typical example of “asymmetric information,” in which the patients may know very little about what the doctors (or “supposed doctors”) are giving them, even the possibility of fraud and deceit is very large. In a study conducted by the Pratichi Trust—a public interest trust I set up in 1999—we found cases in which the ignorance of poor patients about their condition was exploited so as to make them pay for treatment they didn’t get. This is the result not only of shameful exploitation, but ultimately of the sheer unavailability of public health care in many parts of India. The benefit that we can expect to get from economic growth depends very much on how the public revenue generated by economic growth is expended.

4.

When we consider the impact of economic growth on people’s lives, comparisons favor China over India. However, there are many fields in which a comparison between China and India is not related to economic growth in any obvious way. Most Indians are strongly appreciative of the democratic structure of the country, including its many political parties, systematic free elections, uncensored media, free speech, and the independent standing of the judiciary, among other characteristics of a lively democracy. Those Indians who are critical of serious flaws in these arrangements (and I am certainly one of them) can also take account of what India has already achieved in sustaining democracy, in contrast to many other countries, including China.

Not only is access to the Internet and world opinion uncensored and unrestricted in India, a multitude of media present widely different points of view, often very critical of the government in office. India has a larger circulation of newspapers each day than any other country in the world. And the newspapers reflect contrasting political perspectives. Economic growth has helped—and this has certainly been a substantial gain—to expand the availability of radios and televisions across the country, including in rural areas, which very often are shared among many users. There are at least 360 independent television stations (and many are being established right now, judging from the licenses already issued) and their broadcasts reflect a remarkable variety of points of view. More than two hundred of these TV stations concentrate substantially or mainly on news, many of them around the clock. There is a sharp contrast here with the monolithic system of newscasting permitted by the state in China, with little variation of political perspectives on different channels.

Freedom of expression has its own value as a potentially important instrument for democratic politics, but also as something that people enjoy and treasure. Even the poorest parts of the population want to participate in social and political life, and in India they can do so. There is a contrast as well in the use of trial and punishment, including capital punishment. China often executes more people in a week than India has executed since independence in 1947. If our focus is on a comprehensive comparison of the quality of life in India and China, we have to look well beyond the traditional social indicators, and many of these comparisons are not to China’s advantage.

Could it be that India’s democratic system is somehow a barrier to using the benefits of economic growth in order to enhance health, education, and other social conditions? Clearly not, as I shall presently discuss. It is worth recalling that when India had a very low rate of economic growth, as was the case until the 1980s, a common argument was that democracy was hostile to fast economic growth. It was hard to convince those opposed to democracy that fast economic growth depends on an economic climate congenial to development rather than on fierce political control, and that a political system that protects democratic rights need not impede economic growth. That debate has now ended, not least because of the high economic growth rates of democratic India. We can now ask: How should we assess the alleged conflict between democracy and the use of the fruits of economic growth for social advancement?

5.

What a democratic system achieves depends greatly on which social conditions become political issues. Some conditions become politically important issues quickly, such as the calamity of a famine (thus famines tend not to occur at all when there is a functioning democracy), while other problems—less spectacular and less immediate—provide a much harder challenge. It is much more difficult to use democratic politics to remedy undernourishment that is not extreme, or persistent gender inequality, or the absence of regular medical care for all. Success or failure here depends on the range and vigor of democratic practice.¹ In recent years Indian democracy has made considerable progress in dealing with some of these conditions, such as gender inequality, lack of schools, and widespread undernourishment. Public protests, court decisions, and the use of the recently passed “Right to Information” Act have had telling effects. But India still has a long way to go in remedying these conditions.

In China, by contrast, the process of decision-making depends largely on decisions made by the top Party leaders, with relatively little democratic pressure from below. The Chinese leaders, despite their skepticism about the values of multiparty democracy and personal and political liberty, are strongly committed to eliminating poverty, undernourishment, illiteracy, and lack of health care; and this has greatly helped in China’s advancement. There is, however, a serious fragility in any authoritarian system of governance, since there is little recourse or remedy when the government leaders alter their goals or suppress their failures.

The reality of that danger revealed itself in a catastrophic form in the Chinese famine of 1959–1962, which killed more than 30 million people, when there was no public pressure against the regime’s policies, as would have arisen in a functioning democracy. Mistakes in policy continued for three years while tens of millions died. To take another example, the economic reforms of 1979 greatly improved the working and efficiency of Chinese agriculture and industry; but the Chinese government also eliminated, at the same time, the entitlement of all to public medical care (which was often administered through the communes). Most people were then required to buy their own health insurance, drastically reducing the proportion of the population with guaranteed health care.

In a functioning democracy an established right to social assistance could not have been so easily—and so swiftly—dropped. The change sharply reduced the progress of longevity in China. Its large lead over India in life expectancy dwindled during the following two decades—falling from a fourteen-year lead to one of just seven years.

The Chinese authorities, however, eventually realized what had been lost, and from 2004 they rapidly started reintroducing the right to medical care. China now has a considerably higher proportion of people with guaranteed health care than does India. The gap in life expectancy in China’s favor has been rising again, and it is now around nine years; and the degree of coverage is clearly central to the difference.² Whether India’s democratic political system can effectively remedy neglected public services such as health care is one of the most urgent questions facing the country.³

6.

For a minority of the Indian population—but still very large in actual numbers—economic growth alone has been very advantageous, since they are already comparatively privileged and need no social assistance to benefit from economic growth. The limited prosperity of recent years has helped to support a remarkable variety of lifestyles as well as globally acclaimed developments of Indian literature, music, cinema, theater, painting, and the culinary arts, among other cultural activities.

Yet an exaggerated concentration on the lives of the relatively prosperous, exacerbated by the Indian media, gives an unrealistically rosy picture of the lives of Indians in general. Since the fortunate group includes not only business leaders and the professional classes but also many of the country’s intellectuals, the story of unusual national advancement is widely and persistently heard. More worryingly, relatively privileged Indians can easily fall for the temptation to focus just on economic growth as a grand social benefactor for all.

Some critics of the huge social inequalities in India find something callous and uncouth in the self-centered lives and inward-looking preoccupations of a relatively prosperous minority. My primary concern, however, is that the illusions generated by those distorted perceptions of prosperity may prevent India from bringing social deprivations into political focus, which is essential for achieving what needs to be done for Indians at large through its democratic system. A fuller understanding of the real conditions of the mass of neglected Indians and what can be done to improve their lives through public policy should be a central issue in the politics of India.

This is exactly where the exclusive concentration on the rate of GNP growth has the most damaging effect. Economic growth can make a very large contribution to improving people’s lives; but single-minded emphasis on growth has limitations that need to be clearly understood.

1. 1

   I have discussed this issue more fully in " How Is India Doing? ," The New York Review , December 16, 1982; in (jointly with Jean Drèze) Hunger and Public Action(Clarendon Press/Oxford University Press, 1989); and in Development as Freedom(Knopf, 1999). ↩

2. 2

   I discuss this in "The Art of Medicine: Learning from Others," The Lancet , January 15, 2011. ↩

3. 3

   I am grateful to Lincoln Chen, Jean Drèze, and A.K. Shiva Kumar for helpful discussion of this and related issues. ↩

Huge price of street politics - AMARTYA SEN ON THE SINGUR SITUATION

http://www.telegraphindia.com/1080920/jsp/frontpage/story_9861298.jsp

Nobel laureate Amartya Sen, in a letter emailed to The Telegraph editor Aveek Sarkar, assesses the Singur situation and warns of the consequences if the “attraction of street activism” persists and the Tatas pull out. Thank you for asking me about my assessment of the Singur situation. I have, in fact, been trying to follow the events as closely as possible, and I must confess I am greatly concerned about what is going on. It is a complex subject, and we have to consider many different issues together. First, as I argued in my two Telegraph essays on December 29 and 30 last year, unlike the Nandigram decision, which was (I believe) significantly mistaken, the Singur project with the Tatas was basically sound. West Bengal badly needs industries and new employment and income earning opportunities, and Tatas with the ancillary enterprises would help in that greatly, and also encourage a new image of West Bengal as being no longer hostile to industrial investment. Second, it is a pity that the plot that the Tatas wanted for the factory, based on their concerns (including closeness to Kolkata), is not only well suited for their project but also fertile for agriculture. It would have been easier if the location were different, but that is no longer a possibility. I am not concerned here so much about the aggregate loss of agricultural land, since that is relatively small, and the income and employment gain from economic expansion in the Singur region would be incomparably larger. What is not, however, small is the loss for those owners of land who did not want to part with their plots, and that is a serious issue. Third, I argued in my Telegraph essays that (1) it would have been much better to buy the land involved without any compulsion, rather than acquiring it (acquirement has to be the last resort, not the first move), and (2) even with acquirement, giving a 40% higher price than the existing market price was not adequate, since with the entry of industries the land prices would rise much more than that. Of course, if Tatas move out now (as seems likely), the land prices in and around Singur would drop dramatically as Singur returns to its old economic state. That should be a big concern right now for the political protesters, but on the part of the Government of West Bengal, there was a strong case for offering a higher price originally as part of the Singur project, since — with the Tatas there — land price in Singur would be much higher than what the government initially offered and paid. Fourth, the new compensation offer made by the government is much more reasonable. The higher land prices now offered (combined with the other facilities that have also been offered, including employment arrangements) make it a good compromise. Fifth, the protesters might be persuaded by their political leadership that their interests would be best served by getting back their old piece of land. Attachment to particular plots is certainly an understandable desire. But the world in which all this will happen will be very different. The Tatas have made clear that they will move out if they get less land than they have been given (they judge that they need that land for the viability of their project). Not just Maharashtra, but also Karnataka and Uttaranchal, among other states, seem to be ready with alternative offers much more favourable to the Tatas. Indeed, there is good reason to expect that the Tatas are very much in the process of relocating, unless there is a fairly immediate breakthrough (which now seems unlikely). With their departure from West Bengal will come a huge fall in land prices all around Singur, and also loss of job opportunities that will affect the local population. I am not sure how much the leaders of the protest movements have thought through these issues. Sixth, for West Bengal as a whole, it would be a huge economic setback, if the Tatas do move out. Its impact would not be confined only to the economic loss from the withdrawal of investments of the Tatas and the ancillary producers, but also from the general sense across India that the politics of West Bengal makes it nearly impossible to base any new economic move in the state, and that the single-minded politics of the street can drive out any new enterprise. That politics might change over time once the terrible consequences of industrial and economic stagnation are more widely appreciated and understood. But for the moment the political attraction of street activism seems dominant, supplemented intellectually by the old physiocratic illusion of prosperity grounded only on agriculture. The latter piece of romantic thought cannot but fade over time with the influence of realism (no country has ever achieved much prosperity on the basis of agriculture alone). But at this moment realism looks like a distant dream.

Stiglitz and Sen profit and pain

http://www.hardnewsmedia.com/2008/08/2301

ASEEM SHRIVASTAVA/ Hardnews/ DELHI

An economic transaction is a solved political problem. Economics has gained the title of queen of the social sciences by choosing solved political problems as its domain - Abba Lerner

NOBEL ECONOMIST JOSEPH Stiglitz has recently expressed his views on the ongoing food crisis around the world. Given his pre-eminence in the profession and his vast experience as an advisor to governments, his views deserve to be scrutinised carefully.

The Stiglitz diagnosis
Stiglitz traces the problem of inflation in food and energy prices around the world to the policies that have been enacted in the US and elsewhere during the past few decades. He finds fault with the massive financial deregulation and generous tax cuts for the rich in the Anglo-Saxon world since the Thatcher-Reagan years, attributing to them rightly the "huge increase in inequalities in most countries," the dramatic fall in household savings rate in the US, significant declines in employment prospects for most people everywhere and most worryingly, threats to nutrition standards even in the so-called developed world. A less flattering catalogue of global failures would be hard to summon.
The proliferation of opaque financial products in the wake of deregulation didn't so much manage risk as enhance it, converting the world economy into a gambler's paradise (since most countries were made to choose similar policies of deregulation - by the IMF and the World Bank), which has been systematically transferring wealth and real income from the poor to the rich globally, relying on the unerring precision of market forces.
Additionally, Stiglitz points to two significant policies of the Bush administration that have exacerbated food and energy crises in recent years. He points to Washington's war on Iraq. Bush's foolish policies have made the connection between food and energy markets tight, thanks to a misguided biofuels programme during the past few years.
Stiglitz makes it a point to underscore how Third World agriculture has been put in severe jeopardy not just because of benign neglect by governments, international financial institutions and aid agencies, but also because of unfair competition from a systematically and heavily susbsidised agriculture in the rich world. This last is a criminal hypocrisy (the West being at the forefront of the messianic crusade for ‘free' markets) too banal to belabour. The powerful World Bank is once again waking up slowly to the resilient truth that there is simply no way to reduce (let alone eliminate) poverty in the world without paying special attention to agriculture.

The Stiglitz remedy
What according to Stiglitz is the solution?
"Rich countries must reduce, if not eliminate, distortional agriculture and energy policies, and help those in the poorest countries improve their capacity to produce food. But this is just a start: we have treated our most precious resources - clean air and water - as if they were free. Only new patterns of consumption and production - a new economic model - can address that most fundamental resource problem."
Other than a euphemistc argot all too familiar in Orwellian times and the habit-bound economist's search for the universally right ‘model' to implement everywhere, a technocratically enlightened formula for guaranteed success, the above words could have come from Jesus Christ himself.
So where does Stiglitz fall short?
Stiglitz wants rich countries to "reduce, if not eliminate distortional agriculture and energy policies". But don't we already know they will never do this? Stiglitz keeps appealing to a constituency he already knows has long been morally deaf. For someone sacked by the US Treasury from his plum position near the top of the World Bank not so long ago, Stiglitz certainly knows this. Under the revolving door system the Americans have between their highest public and corporate offices, it is a sure wager that it was precisely the annoyance at Stiglitz on the part of the global investor class that prompted his sacking. Then why does he pretend otherwise?
"The world" he appeals to for merciful economic policies in the future is in actual fact the world's tiny and shrinking class of corporate captains, precisely the bunch which sponsors the lobbies and policy elites which have led the relentless, decades-long campaign for financial deregulation, the very phenomenon Stiglitz holds responsible for the mess around us. This band of global corporate czars lives better than the royalty of other ages of humanity. It takes a dozen flights on private jets every week and dines every evening on wine and caviar which have been flown half way around the world especially for their banquets. Why should they listen to mad men like Stiglitz?
For at least half a generation many have been trying to persuade the governments of the rich nations to remove the unjust agricultural subsidies that harm Third World agriculture. Why have the governments of the rich nations not followed this morally impeccable advice? Is it not because they are influenced by transnational businesses maximising profits globally? Is it not because they are cynically Machiavellian?

The real world
The latter hypotheses can hardly be dismissed. Consider what US Senator Hubert Humphrey said 50 years ago: "I have heard that people may become dependent on us for food. To me that is good news because before people can do anything, they have got to eat. And if you are looking for a way to get people to lean on you and be dependent on you, in terms of their own cooperation with you, it seems to me that food dependence would be terrific."
So the idea, far from helping "those in the poorest countries improve their capacities to produce food" (as Stiglitz continues to wish in vain) is to keep them permanently locked into a state of fundamental economic dependence on the West. (Did we ever get done with colonialism?) If Stiglitz and his panglossian followers think that times have changed (and the West is more civilised after all these decades of folly upon culpable folly), they should listen to President Richard Nixon's chilling words from a more recent decade: "Let us remember that the main purpose of aid is not to help other nations but to help ourselves."
More recently, in 1986, John Block, the US Agriculture Secretary said: "The push by some developing countries to become more self-sufficient in food may be reminiscent of a bygone era. These countries could save money by importing more food from the US."
If Stiglitz thinks such an opinion is unusual, he might ask himself if it is fundamentally different from the following view: "Food self-sufficiency is a peculiarly obtuse way of thinking about food security. There is no particular problem, even without self-sufficiency, in achieving nutritional security through the elimination of poverty (so that people can buy food) and through the availability of food in the world market (so that countries can import food if there is not an adequate stock at home)...The focus has to be on income and entitlement, and the ability to command food rather than on any fetishist concern about food self-sufficiency..."
The words belong to Stiglitz's illustrious colleague and fellow-Nobel laureate Amartya Sen. He gave an interview on the topic of world hunger to The Guardian in 2002.
Sen writes as though trade, income and entitlement were there just for the asking! He surely knows enough history to know that food has always been a weapon of warfare. He writes: "There are situations in which self-sufficiency is important, such as during wars. At one stage in the Second World War, there was a real danger of Britain not being able to get enough food into the country. But that is a very peculiar situation, and we are not in one like that now, nor are we likely to be in the near future."
Iraq was invaded by Washington, London and Canberra within a year of Sen's interview.
Sen's "trade fetish" is symptomatic of a global pandemic among academic economists. It only indicates his deep-seated conditioning by the economics profession as it has been shaped by a decadent intellectual culture in the western world after World War II. The intellectuals of the ex-colonies have never considered decolonising their minds. Sen is the leading example. They might do well to read Tagore and Gandhi once more.

State of the dismal science
This sums up the professional consensus within "the dismal science". The real world for most hungry people (we know for sure after recent food price inflation) is very different from what economists imagine it to be. In the latter's world, poor nations, on the verge of industrial breakthroughs and massive transfers
of labour away from agriculture to more "productive" and lucrative occupations (events which have not transpired yet in countries like India and China), can feed themselves much like Belgium or the Netherlands do - by importing food from abroad (from rich countries which do not even have to have a comparative advantage in the production of food, but have profligate treasuries and ignorant, gullible taxpayers to fund the subsidies and can thus let their agribusinesses sell cheaper than anyone else in the world market).
From the real world where the poor and the powerless live under hegemonies of forced production and consumption along lines dictated by the megcorps, the latter's ‘international' financial institutions, and also their State patrons, things couldn't look more different. Global markets could never seem so innocent to hungry, suicide-prone farmers in India or Africa, as they do to technocratic dreamers in the seminar rooms of Columbia or Cambridge.

Why economists perpetuate misunderstanding
In times as transparently and confidently unjust as ours, it's either dim-witted naivete or outright knavery for economists to continue to keep their technocratic heads buried in the "innocent" sands of social "science". They keep pretending that economics and politics belong to different planets.
Economists are dispassionate thinkers practising disinterested science. Economics is on its way to becoming a pure science. Society and human communities are irrelevant. In any case, "there is no such thing as society". Governments are a nuisance. They ought to stay away from markets. Markets are omniscient. They know everything that needs to be known (and not just about prices). Markets are free of politics. (What have they got to do with corporate power and influence?) They are the repositories of the best virtues in human nature. Therein rules liberal utopia.
Thou shalt not doubt these time-tested verities.
These are the kernels of truth that adorn the seminar rooms of the economics profession around the world today. America's imperial conquests are more obvious in the ‘intellectual' realm than in any other, with an obviously unscientific bubble economics (suitably insulated from facts) always leading the charge. Give or take a little here, some there, and you get the spectrum of opinions within the economics profession. They all must have not human communities --but the ‘free' market at the heart of their conformist meditations.
Every economist - and Stiglitz and Sen are iconic iconoclasts within the tribe - is career-habit-and-hide-bound to pay his homage to the wisdom of market forces, even when he is critical of them (as both Sen and Stiglitz are in measurable degree). Such are the touchstones of the theology that today provides the primary justification for the widespread ecological and social ruin being precipitated by globalised growth around the planet.
The world has been "liberalised, privatised and globalised" with a messianic passion over the past few decades in the name of this putatively omniscient economics. It teaches the ancient virtue of patience. A little pain for some now, so that everyone can gain more tomorrow. As long as the masters of the universe are allowed a free hand to invest anywhere from the Mariana Trench to the moon. Trickle-down truths. Stale air. They all have faith in it, even if they are Sen or Stiglitz.
But as always, the cash-strapped housewife or the woman slaving at the construction site (or the one waiting in queue for one of those employed to break an arm) knows better than the pundits.
Time was when writers lampooned economists for "knowing the price of everything but the value of nothing". Today, they seem to be unaware even of the price of things! They are desperate to rescue their fading conscience after having long back traded it away for professional success and career advancement. Moral failure was always on the cards. Now the writing is all over the wall for anyone with eyes to read.

The writer is an economist and independent researcher

See Also:

http://www.guardian.co.uk/commentisfree/2008/jun/15/economics.food

Singur: CM, Mamata Banerjee, Amartya Sen

The Statesman

Tatas are here to stay, says Buddha

http://thestatesman.org/page.news.php?clid=1&theme=&usrsess=1&id=217096

Statesman News Service
KOLKATA, Aug. 5: Taking the fight over the Tata Motors small car project at Singur to the Opposition camp, chief minister Mr Buddhadeb Bhattacharjee today asserted that “neither the Tatas nor the state government would back out of the project.”
In the same breath he ruled out returning 400 acres of land to the unwilling land-losers as is being demanded by the Trinamul Congress and its allies. Speaking at a party function, the chief minister said for the past few days “new and strange things are being said” and asked why and wherefrom the 400 acres of land would be returned. “Have we acquired 997 acres of land for the project just for the sake of it? The Maruti car project with the same targeted capacity as the Tatas' was set up on 1,200 acres of land.* Work at Singur is now in full swing. Don't worry, the factory will come up followed by more such automobile factories apart from other industrial units,” he said. The chief minister said if the 400 acres of land were to be returned, then the project would have to be scrapped. “In that event what would we tell the 6,000 people who would get jobs at Singur?”
The chief minister appealed to the Opposition to decide whether it wants to engage in “positive dialogue with the state government without harming the state's interests and bringing in irrelevant questions.”Mr Bhattacharjee added that the Opposition was shedding “false” tears for farmers. “Leave it to us to worry about the farmers,” he said.
Former chief minister Mr Jyoti Basu in a written speech accused the Trinamul-led Opposition of trying to resist the state government's industrialisation drive and create chaos. “The state's people won't tolerate it,” he said.
Industries minister Mr Nirupam Sen earlier said cars from Singur are expected to roll out before Pujas. Home secretary Mr AM Chakrabarti also said Tata officials had expressed confidence about completing the project on schedule.
He and the Director General of Police, Mr AB Vohra visited the Tata Motors project site during the day and took stock of security arrangements there.
The Tata Motors authorities were asked to beef up their own existing private security system.Besides, there would be additional deployment of security around the plant, while breaches at various points of the 14 km long wall would be repaired and barbed wire put up. Action would be taken against those intimidating the workers at the construction site, he said.
In the meantime, the Trinamul chief Miss Mamata Banerjee said : “We don't want anyone to move out of our state, but our people should not be pushed out of the state for their (Tatas’) sake.''
Speaking at a function today, Nobel laureate, Prof. Amartya Sen, has also said there was need for discussion on the project.

The Telegraph

Security beefed up in Singur, Amartya Sen stands behind the Singur plant once again

http://www.telegraphindia.com/1080806/jsp/frontpage/story_9653635.jsp

Mamata: Tatas can stay if… Trinamul sets terms, CM rules out pullout

OUR BUREAU

Calcutta, Aug. 5: Mamata Banerjee has declared she does not want the Tatas to leave Singur, tying her first-ever gesture of accommodation to familiar conditions the government said could not be fulfilled. “I am not opposed to industrialisation. That is why I don’t want the Tatas to leave Singur. Instead, I am offering a solution…. Let the Tatas negotiate with the state government to return 400 acres forcibly acquired from unwilling poor farmers,” she told a news conference. “We have already identified a patch of land opposite the automobile plant where ancillary units can easily be shifted,” she added. The government ruled out returning the land but chief minister Buddhadeb Bhattacharjee sought to calm rising fears that the Tatas’ patience was wearing thin following violence and the threat of an indefinite siege from August 24. “Rest assured. Neither the Tatas… nor the state government will withdraw from there. For the sake of the jobless youth of the state… there will be not only one Singur but many Singurs to host more automobile and other manufacturing units,” Bhattacharjee told a party event. The statements from the two ends of the political spectrum need not mean that the storm clouds over the Singur project have lifted. Mamata’s seemingly placatory comment could be an attempt to appear reasonable in the face of criticism that she is against industrialisation and bent on sabotaging the small-car project on which the future of Bengal’s re-industrialisation has come to rest. By making an unequivocal public commitment, the chief minister is also building a case that the government is doing everything possible to keep the project on track. However, the fact that this is the first time Mamata has said she does not want the Tatas to leave “Singur” has prompted some officials to spy a thin window of reconciliation. As of now, Mamata will not talk unless the 400 acres are returned — a condition that, the government insists, will kill the Singur project. “The psuedo-champions of the farmers’ cause are now demanding the return of 400 acres. It’s not possible. The small-car project would have to be abandoned if the portion of the land is to be given back,” the chief minister said. Bhattacharjee said he was ready to hold discussions but not on “unrealistic demands”. “We are ready to honour the Opposition. But don’t close the path to dialogue by making illogical and unacceptable demands. We want discussion on realistic demands.’’ In response, Mamata said later: “The Trinamul Congress always plays its role as a responsible Opposition and our demand for the return of 400 acres is quite justified.” Industries minister Nirupam Sen said he had not received “any communication” from the Tatas that they were thinking of pulling out. “Work is progressing in full swing and 75 per cent of it is over in Singur. The remaining work will be completed and the small car will roll out as per schedule. I haven’t got any communication or intimation from the Tatas that they will leave,” Sen said. The state government also despatched the home secretary to Singur — which is being interpreted as a gesture of reassurance to the Tatas and warning to potential trouble-makers. Asked if her party workers would prevent employees from entering the site during the indefinite dharna, Mamata avoided a direct response. “Our purpose is to lodge a silent protest. We are not bothered if employees are able to enter the factory site or not,” she said.

Pullout cost on Buddha lips
- Delhi warned against brake

http://www.telegraphindia.com/1080806/jsp/bengal/story_9653425.jsp

OUR SPECIAL CORRESPONDENT

Calcutta, Aug. 5: Buddhadeb Bhattacharjee has for the first time spoken about the possibility of the Centre “dragging its feet” on Bengal projects, warning that such retribution would harm the country. “If the Centre now drags its feet over these projects, let them do harm to the country’s interests,” the chief minister told a party event this evening, referring to the deep-sea port and a new airport for Calcutta. The deep-sea port is crucial for drawing big-ticket investors to Bengal. But ever since relations between the Left and the UPA government soured over the nuclear deal, there have been fears that the Centre would not show eagerness to cut the red tape around the project. Speaking out for the first time since the Left withdrew support to the Centre, the chief minister asked: “Are these the demands of the state only? Will it not help the entire region and the country as a whole? Did not the Prime Minister himself announce his Look East policy?” Bhattacharjee sought to downplay suggestions that the Left’s pullout would harm the state’s interests. “Some of our advisers are arguing that we harmed the state’s interests by withdrawing support (to the UPA). We didn’t give priority to the state’s narrow interests when it came to considering national interests,” he said. “We are not running a government at the mercy of the Congress or the Centre. Both the Centre and the state government are elected governments. We came to power defeating the Congress. We expect relations with the Centre in tune with the democratic and federal structure of the country. So why does the question of harming the state’s interest arise?” he asked. Referring to the nuclear deal with America, Bhattacharjee called the Manmohan Singh government a “betrayer”. “The government betrayed national interests by moving ahead with the nuclear deal, part of its plan to be the strategic partner of the US,” the chief minister said. Today, CPM patriarch Jyoti Basu, who till now had been silent on the Left pullout, endorsed the withdrawal in a statement read out by state CPM secretary Biman Bose. “We withdrew our support and voted against the government in the trust vote in Parliament as it was not possible to accept the UPA government’s pro-US policy at the cost of national interests,’’ Bose quoted Basu as saying. *See Also: Maruti acquires more land for fourth plant, plans gearbox unit Singur Revisited Maruti launches 4th car plant Maruti may set up gear box plant in India Reports from The Telegraph: Clouds darken business horizon : Plea to save Nano plant Security beef-up to tackle siege More police and watchtowers at Tata Motors site in Singur August 24: Singur siege date- Plan to surround Tata Motors site and keep away ‘outsiders’

Work for Everyone and Amartya Sen

http://sanhati.com/articles/611/

By Dipanjan Rai Chaudhuri. Translated by Kuver Sinha, Sanhati

Amartya Sen has written an article in two parts ( Developments in West Bengal, The Telegraph, 28-29 December, 2007) on industrialisation in West Bengal. He has supported the general direction of the method of industrialisation. Even then, it is heartening to see that he has put caveats in place – “My support for the general economic strategy of industrialization of the government of West Bengal cannot but be combined with questions about the importance of democratic values. I believe I am right in claiming that more practice of “government by discussion” would have not only enriched and improved the process of economic decision-making, it would have actually led to better economic plans and better translation of the general strategy of industrializing - or re-industrializing - West Bengal.” Sen has also said that these caveats are relevant not only for past policies, but for the future as well. He is to be thanked for at least such an implicit criticism of the state government.

Further, Sen feels that “very serious consideration” is required for the following points: “the possibility that taking land from agriculture would impoverish the agriculturalists who live on that land, no matter how large an income the new enterprises may actually produce for other people.” and “concerns about entitlement failures of specific occupation groups and the effects that this might have on starvation of those groups (no matter what happens to the totality of incomes).”

Of course, in terms of solutions, he asks “is it really essential for the government to acquire the land that is needed, rather than allowing the industrial firm involved to buy it?” It is not clear to us how this would make a difference to erosion of the basic capabilities of the people who depend on the land for livelihood without being owners themselves (10,000 in Singur).

Even then, his concern for the lives and livelihoods of displaced people can only be welcome.

On the issue of SEZs too, his stance, while not that of an opponent, is at least that of a critic. He says “the wholesale forgoing of public revenue in SEZs as a general policy certainly demands much closer examination and more critical scrutiny.”

On the whole, Sen has distanced his support from the West Bengal government’s disregard for peoples’ suffering and the protest that has emerged in its wake, its shameless espousal of SEZs and its brokering of land for big business. At a time when people of the state are registering their dissatisfaction and protest in the face of daily harrassment from the biggest party of the government, even such indirect criticism from Sen is helpful.

But the fact remains that Amartya Sen is a supporter of the West Bengal government’s basic industrial policy. If we strip away all the embellishment, the logic is “to remove poverty, we must increase income”. This “income”, however, is the neo-liberal economist’s “income” – comprising, in the example of the Singur factory, the Tatas’ profits, bank interest, government revenue, and, only as a fourth component, the wages of the employees. In an unequal society like India, an increase in this “income” may leave poverty unaffected or even in an enhanced state (an idea of the magnitude of inequality can be gleaned from the UN’s 2004 Human Development Report: 42 % of India’s national income is enjoyed by the richest 20 %, while the poorest 20 % get only 9 %).

Amit Bhaduri has constructed an example of a society with an annual “income” of Rs.23,000 per head, composed of 99 slaves earning Rs.100 annually per head, and 1 owner whose annual income is Rs.2,290,100. Now, if the net income of the slaves does not increase at all, but the owner’s income increases to Rs.2,520,100, then the annual increase of GDP will be recorded as 10% ! So, in an unequal society, an increase of “income” or GDP does not automatically mean a decrease in poverty.

Sen knows that there will be criticism along these lines. He anticipates this with the remark “It is often said that the country is not getting anything substantial, because of the inequality of the generated income, from India’s high rate of growth of gross domestic product.” Very true. What do Singur’s residents and the common man in West Bengal have to gain from Tata’s huge profits and the respectable wages of a handful of employees?

Sen mentions this criticism, but does not offer answers. He speaks instead of other benefits of increasing “income” . “…Public revenue is going up much faster than even the GDP growth that is generating this revenue expansion”, which thus “creates a wonderful opportunity to make much larger investments in public education, healthcare, public transport, environmental protection, and other public goods.”

Really? The opportunity may be there, does that necessarily lead to investment? Or investment to correct targets? Won’t a government with a neo-liberal mindset see what it is that the market wants? Market looks at purchasing power. People who do not purchase are outside the market. If the government has money, it will make malls and flyovers. Let’s see what it won’t make.

In 2002, 31% of the people between 15 and 35 in this state were illiterate. All these people have lived under the Left Front government’s thirty year rule, since, at most, the age of ten. In the Left Front government’s 24th year of rule, 12,085 primary schools had two classrooms, 12,054 had one, and 1384 had none. (In a primary school, there are 4 grades.) Let’s not judge education by quantity. Let’s examine quality. Sample surveys have revealed that among third and fourth graders, only 7% of those who do not have private tutors (outside school) can spell their names correctly. The corresponding figure among those who have private tutors is 80%.

Let us look at a sample survey in the field of healthcare, from 2002-2003. On the day of the survey, 7 of 18 health sub-centers were not working. Of 3 Block level health centers, one did not have facilities for testing blood, urine, or stool. 29% of the patients spoke of being treated by quacks. In Birbhum district, only 45% infants had been completely vaccinated, and 53% births had taken place outside any healthcare institution. The back cover of the survey has a telling summary: “Even our survey’s limited scope carries the message that the government’s health system needs massive overhauling…the failure of the government’s healthcare system and the paucity of its services have resulted in the growth of private healthcare. Even extremely poor people have no alternative but to fall back on private healthcare…the root of the problem lies in the scarcity of government centers and their dysfunctional nature.”

Who said this after 25 years of the Left Front’s rule? Amartya Sen himself. Both education and health surveys were conducted by the Pratichi Trust he created.

(Source: (1) The Pratichi Education report : a study in West Bengal. New Delhi: TLM Books, 2002. Introduction by Amartya Sen. (2) Pratichi (India) Trust (2005), Pratichi Health Report, TLM Books, New Delhi.)

Public transport? The state government has adopted a scheme of restructuring publicly-owned enterprises. “Restructuring” means the right of the government to divest up to 74% of the shareholding to private investors. In the second phase of this scheme, the State Electricity Board and the state transport agencies are due for “restructuring”.

“To reduce poverty, income has to be increased” – correct, provided that, along with the increase in income, its distribution benefits the poor. Not through charity, but through employment. Since it is not hugely incorrect to view GDP as a product of the number of working people and the productivity per worker, it can increase if employment increases without reducing productivity. In fact, if distribution is to benefit the working people, this is the best way to increase GDP.

Why is there opposition to “industrialization” based on investment by big capitalists, national and international? Sen views the issue in the context of a debate over “communism” and “anti-capitalist high theory against private investment”. So, he has found it necessary to compare Cuba, with its preference for the public sector, and the newly privatization-loving China. In actual fact, however, the reason for the opposition is not theoretical but rooted eminently in reality. Big private capital (especially in its concern over foreign markets) wants continuously to reduce wages to remain competitive. Thus, it wants a contraction of employment, not creation of employment. Investment by big capital will increase GDP by increasing unemployment, with a distribution skewed against the poor. It thus becomes necessary to look for alternatives to this kind of big capital based “industrialization”.

And what comes of the comparison between China and Cuba? Before the “reforms”, China had assured healthcare for all. Afterwards, almost 20% of the population has no such assurance. On the other hand, Cuba’s healthcare system is so good that the life expectancy of Cubans is almost equal to that of Americans. School education for all has been a success in Cuba. Amartya Sen has himself written all this. Besides, the UN Human Development Report of 2005 places Cuba at number 51 (human development index value 0.838), China at 81 (0.777) and India at 118 (0.619). It is from the work of Amartya Sen and Mahbub ul Haq that we have learnt the importance of the Human Development Index (HDI). What has Cuba to learn from China’s way of increasing GDP at the cost of human development? Or has Amartya Sen revised himself: GDP is more important than HDI?

If we set aside conservative neo-classical / neo-liberal fundamentalism and stare at the reality confronting our country today, it will be evident that the unemployment problem will not be solved in this way.

What is the annual increase in the number of people capable of work?

If we take people between 15 and 59 to be capable of work, then we have to calculate the annual increase of population in this bracket. According to the 2001 census, there were 4,81,84,000 people in West Bengal in this age bracket. According to a Planning Commission report, in 1998-1999, there were 51.9 crores of people in India in that category, and the projected figure in 20 years stands at 80 crores. Taking this compound rate of increase (2.187%), the number of such people in West Bengal in 2007 is 5,48,62,646. Thus, in 2007, an estimate of the yearly increase in this bracket is 11,99,846. We are looking at around 12 lakh new job-seekers every year in West Bengal.

The Tatas have promised 10,000 jobs (in an unmentioned number of years) and the Haldia Petrochemical Company (already realized) has provided 670 jobs (+ 1200 jobs for contract labourers in the company + 3200 in five years in the Haldia complex + 8-10 thousand in five years in the downstream plastic industry). [Source: Haldia Petrochemicals – a lesson in (non)-development, www.sanhati.com, and the 2007 report of the WB Vidhan Sabha Select Committee on Industry and Commerce.] The stark reality of the unemployment problem is 60 lakh workers in five years, a figure beside which the previous figures for employment generation by big capital are insignificant.

What is needed is a different path of development which will ensure that nobody remains unemployed. We want jobs. If not today, then tomorrow, or at least next year. Not in ten years. Because people cannot survive without food for ten years.

Amit Bhaduri has proposals about an industrialization which will create jobs (Development with Dignity, and a series of articles). At the core of his thesis is full employment through the construction of infrastructure (not relief work – but productive work in keeping with real needs) and labour-intensive industrialization overseen by local self-governing bodies (like Panchayets). Let big capital invest as it will. But let the government pay attention to methods of building employment-generating industries.

We want the state government to consider alternative modes of industrialization which will ensure adequate job creation. We are sad to note that Amartya Sen has instead encouraged them to continue along the path of virtually jobless big investment .