OK...like many countries with big population...there is significant income inequality. 400 of the richest americans have more wealth than 150 million americans.
Getting back to your point ->
So how should that affect the fact that India is about to be the 3rd largest economy?
Per capita income is extremely low in India. But things are improving.
India's growth is mainly because of growth of service industry, manufacturing and modern agriculture techniques. The countries that you have mentioned have higher per capita income because of huge natural resources and less population.
Iraq -> Huge Oil reserves / Small population
Mongolia -> Huge mineral resources / tiny population
I'm not sure what it means to be a large economy anymore. If you roam around any of the cities in India, you see nothing but a third world nation, with rampant poverty and horrific infrastructure. And of course in the villages, it's even worse.
And businesses apparently have had difficulty dealing with the corruption in the Indian government.
The country has such a long way to go before it can stand on the same footing as the US or even some of the European countries whose economies it is supposedly surpassing.
Large doesn't necessarily mean a lot for standard of living, because India's population is also very large, so the amount of economy per person is a lot smaller.
India's GDP might make it 4th (by Purchasing Power Parity) or 10th (nominally), but per person it's down at 129th.
I grew up in India. I can confirm whatever you said is true and is a euphemism. Few people talk about the poverty in India (it is almost similar to quite a bit of Africa) and how India was a socialist country where you required license to conduct almost any business. But even fewer people talk about how, culturally speaking, seniority has always been more important than the merits of what is being said and the fact how in practice everything - the law, police services, elections, etc. - falls under the government and aren't independent bodies. The main ruling party for most of history (called Congress) has always been run by one family alone. Nepotism?
E.g.: Facebook did not have to go get approval from the government that they could run Facebook. And since there was no license involved, there was no limit, on say the number of users, etc. Pretty different from pre-liberalization India.
People are voting me down, but I was not making a loaded statement, I'm honestly interested in knowing the difference how it differs from state licensing agencies in the U.S.
For instance, since Facebook is a Delaware corporation, here is the state of Delaware's Business Registration and Licensing:
Its difficult to understand if you haven't lived it. I did,thankfully for a short time before I escaped. So let me try to explain. Facebook had to incorporate so they could pay taxes etc and be "legal". This is a LICENSE to operate. OK.
But lets say some govmint wizard decided that the US economy needed only one social networking company. Back in 2004 that would be myspace. So Mark Z would have applied for a license to become the next social networking company, would have waited 10 years to get it, wouldn't have gotten it, and would've eventually leaped off the Golden gate bridge.
That's what socialism is. What the tea-partiers are calling socialism is nowhere near what real, oppressive, mind-bending, government control is.
There is no more "License Raj" in India. But its still quite crazy, not that different.
India has structural problems in its' economy that will inhibit its' growth going forward. Japan has been stagnating for decades now and has shown no signs that they've figured out what the problem is. They've become the most indebted industrialized nation in the world paying for stimulus after stimulus while at the same time the Keynesians are telling them they haven't done anything to stimulate the economy.
Ohh modern economy... It's fun when Nobel prizes go for those that insist in doing what is clearly not working... And just some weeks ago, a notorious Japanese economist says in a interview they figured out how to deal with the stagnation.... (Permanent stimulus!)... Don't they think the japanese are ever going to retire and need a large chunk of this money borrowed to the government? Without positive demographics it's impossible to keep postponing the balance sheet correction forever...
So even though the country at large is poor, 130 million people could become your potential customers, spending on par with other wealthy nations in the west.
From what I read you're accurate. You could also make the argument that you could replace the word "India" with "China" and not be too far off in describing another huge economy.
This may be true on the outskirts, but in the cities, China has made huge advances, especially with infrastructure, roads, railway, etc.
Of course, this is not true for all of China.
Tell that to all my co-workers in China where I make 3x what they make. They can barely pay for rent. I'm just lucky that as a foreigner, I had leverage to max out the pay scale (and still getting paid only Chinese-level salary). The economic divide between the rich and poor is just as huge and just a big a concern, especially with the crazy real estate prices in the cities. Common to see 7 university-graduated kids sharing a 40 square metre apartment. I have friends like that.
The bottom 5% of households in the US still earn about the same amount as the top 5% of households in China. If we were talking about the top 1% it would be totally different, but still China is overall much poorer than the US - even in the cities.
EDIT: Also contrast it with Brazil, where the bottom 5% make about the same as the bottom 5% of China, while the top 5% make almost what the top 5% in the US make.
In absolute amounts sure, but that's irrelevant to spending power or quality of life.
The bottom 5% of households in the US make nominally more than the top 5% of households in China, but I'm willing to be the bottom 5% in the US lives far worse than the top 5% in China.
Scratch this image deep enough and you will realize top local officials in China are always under tremendous pressure to increase GDP growth to further their own position and careers and that the easiest way will be build 'anything'/'something' within their jurisdiction.
If anything, go ahead and Google for China's empty cities. Frankly, I would not want to be anywhere near that bubble when it bursts. The only point of consolation is that the Chinese still have a tight control over all aspects of their society, so they might be in a better shape to recover when their banks go bust.
There are huge differences between the two. China has far, far better infrastructure for starters, and the amount of absolute poverty is far lower in China.
I agree. The term 'large economy,' when applied to the average person is an irrelevant term. For the average billionaire it means something, but to the average person (in our case, the average internet/mobile user) it means nothing. These old economic indicators do not measure the actual economic conditions in localities. Local economies have to be robust - that's the true sign of a progress.
The problem is in the distribution of wealth. The nation is growing at 7-8% a year compared to 0-2% growth in US, but most of the wealth in India is in the hands of 5% of the population. The middle class is slowly growing, but not at the rate to close the disparity.
Democracy in its core is the reason for the slow infrastructure, government and social reforms because its like moving a big elephant. China on the other hand is able to be quite nimble with communism. Its interesting. I dont advocate communism because it sounds great in theory but rarely works practically, but it is working for China.
Moreover, I remember listening to one of The Economist podcasts where someone had done audited Chinese firms more strictly where they don't write off the cheap (free) land government provides, or other give aways. Turns out on a whole Chinese firms are destroyers of capital and not creators. Crudely speaking, they take land and convert it to output X. The value of X tends to be lower than the value of the land.
to topple: verb
[ no obj. ] overbalance or become unsteady and fall slowly
[ with obj. ] cause to fall in such a way
india rising does not cause japan to fall, in any way.
also, there's a certain triumphalism in such headlines that is, i contend, unworthy of a confident nation and of HN.
last but not least, the measure used is highly flawed, given that the headline seems to aim at india's rising "standing" in world affairs. when you do that, the actual exchange rate counts, not PPP. and there, the picture looks a little different.
just to be clear: none of which is to detract from india's great progress in the last 10 or 20 years, or from its talented population. it's just that this article/headline strikes me as cheap.
I am sure India has improved a lot! But India has lot of other problems,
1. India has a family centric society , where welfare of the family gets priority than the welfare of the nation, which is one of the factor for rampant corruption (IMO).
2. The infrastructure is poor.
3. The divide between rich and poor is high! (income inequality)
4. The Public sector is very slow to respond to the growing needs of infrastructure! They have no clue at all!
5. There is still caste system in rural India, where they don't respect fellow country men as a human being.
6. The politics is only for the rich and heirs of powerful politicians (the parliament is filled with sons and daughters of old politicians read:family business)
I agree with most of your points, but I don't think #1 (family-centric society) is the problem, or even a direct driver of corruption. If you were referring to nepotism, then I think that exists all over the world. An overall corrupt climate just makes it easier to practice nepotism.
I know nothing about India but the "family-centric" stuff is easier to understand as a problem if you phrase it "clannish". And that is actually a huge problem in some areas.
Its a problem because if you don't ask for a bribe, you're selfishly throwing away money you could you use help out your cousin just out of fear of getting punished. And in India you probably do have some cousin who needs the money because their car broke down/their child is getting married/whatever.
Triumphalism without much actual substance. The Japanese have an amazing standard of living, superb infrastructure, world beating products and awesome tech.
If you wander around a big city in India you'll see wild dogs and malnourished children, enormous shanty towns and slums. How this nationalistic rag called the india times can proclaim "victory" as having "toppled" Japan is beyond me.
Also - claiming that Russia and India are coming to the aid of European countries is completely ridiculous. India currently receives £1billion + in aid from the UK.
Having a "big" economy because there are 1 billion citizens within that economy doesn't mean anything in itself.
I see lots of comments about income inequality in India. I find them very amusing.
Refer http://en.wikipedia.org/wiki/List_of_countries_by_income_equ....
You would see that India's income inequality is less than Switzerland, France and the Netherlands. The pressing problem in India right now is not income inequality. Its the lack of income, really. At this stage of development all India should worry about is earning wealth. Trying to redistribute that is a 'premature optimization'. :)
This is an oversimplified perspective, though it does have some underlying truth. The issue of poverty reduction is a complex one. I reccomend anyone truly interested to read this World Bank comparison report from a couple years ago(pdf):
“China clearly scores well on the pro-poor growth side of the card, but neither Brazil nor India do; in Brazil’s case for lack of growth and in India’s case for lack of poverty-reducing growth. Brazil scores well on the social policies side, but China and India do not; in China’s case progress has been slow in implementing new social policies more relevant to the new market economy (despite historical advantages in this area, inherited from the past regime) and in India’s case the bigger problems are the extent of capture of the many existing policies by non-poor groups and the weak capabilities of the state for delivering better basic public services.”
Not true. If you look at the GINI index (which is probably the most accurate measure for high inequality) India is quite higher than all those countries. And almost every country higher than India has significant economic problems. The only exception is Hong Kong and that is because its income inequality is obviously caused by capital flight from mainland China.
The other indexes do not capture the true nature if income inequality in these modern times. Comparing the top 10% of income earners with the bottom 10% washes things out because the truly rich are a very small group. They are a mere fraction of the top 1%.
Well comparing GINI across similar sized countries: India (36.8), Russia (39.9), US (40.8), China (46.9), Brazil (49.3), India is the lowest of the group.
While its true that most european countries have slightly lower GINI, they also have a higher 10% ratio (highest to lowest) than India.
So it's pretty hard to argue from the actual statistics that inequality is the outstanding problem of India as it is often made out to be.
But it's perhaps true that the contrast is more visible in India than elsewhere - with slums next to high rises.
I think the reason for this is that growth is relatively narrowly focussed around a few metros, which then attracts a big influx of job seeking rural population. The other big countries never had such a big rural population to begin with.
It is actually in the interest of the government to redistribute wealth, so that the next revolution never comes. :)
Despite what embittered historians say, the rich and powerful learnt plenty of lessons from the French Revolution. The only reason why some people remain obstinate about it is that they can't really be bothered to see beyond their lifetimes.
>It is actually in the interest of the government to redistribute wealth, so that the next revolution never comes.
I'm not convinced revolutions have much to do with income inequality, but rather the absolute level of poverty among the poor, the opportunities they have to improve their lot, and the input the average person has into the political process.
PPP (Purchasing Power Parity) is a measure which adjusts the $1.377 trillion for what you can actually buy in India with those US dollars.
It's calculated based on prices paid in India and in Japan or the goods needed to live on; for this reason it's most useful as a measure when looking at per capita incomes to see what a typical person's share of adjusted GDP will buy them. PPP adjusting in theory shows that an Indian in India can enjoy the lifestyle of someone earning three times as much in Japan (provided he buys Indian goods at Indian prices). On the other hand, as soon as you start looking at GDP per capita [adjusted or not] it becomes obvious that Japanese people are on average much, much richer than Indians because Japan's similar level national income is shared between far fewer people.
As an aggregate measure of the economic output PPP adjusted GDP is not entirely useless either as a crude adjustment for labour costs: India can build a lot more skyscrapers for $1.377 trillion (or $1 billion) than Japan could and Indian output is arguably undervalued by raw GDP measures which simply looking at the prices paid. But effectively it's saying that India as a country produces more value than Japan if people were prepared to buy Indian goods at their Japanese value. As there's plenty of opportunity for trade between India and Japan, it's probably fair to say that Indian output probably isn't worth three times it's Indian value to the Japanese, otherwise they'd be buying it all up. Therefore the true value of India's economic output lies somewhere between the $1.4bn at low Indian domestic prices and $4bn at inflated Japanese domestic prices (trade isn't perfectly efficient), still behind Japan.
PPP tends to undervalue infrastructure as it ignores things like subway system when comparing the cost of two condos. Unfortunately it's really hard to value infrastructure as a farmhouse can gain a lot of value from a bridge built 40 miles away. Still, at some level a house is a house is a house even if it’s in a ghetto.
To put it really simplistically : From the perspective of everything within India - PPP is what matters; because it takes into consideration the cost of living. But from the perspective of everything outside India - the absolute figure is what matters.
If we are talking of things from the perspective within India, then it doesn't make sense to compare to Japan? If I'm comparing to Japan, then I'm going outside and I should use the nominal GDP, right?
PPP is only relevant if your typical purchase is similar to that of the basket of goods used to calculate PPP. An iPod or a Toyota will still cost the same - irrespective of PPP - since they are global goods. (In fact due to India's laws they become much costlier in India with around ~30% increase if you convert money.)
True if you consider global goods. But for things that are produced within India PPP is relevant. Then again - it doesn't make sense comparing PPP when you are trying to rank economies on size.
The PPP figure is irrelevant in this case. Purchasing Power Parity GDP figures adjusts the GDP to the cost of living. It has most contextual value when comparing the GDP per capita. PPP GDP per Capita is effectively a metric of the mean wealth relative to cost of living in the country.
To compare total GDP figures on a PPP basis for two countries, and when one country has 10x as many people doesn't really make sense.
What this comparison says is:
(Total GDP of Japan/Cost of Living in Japan) < (Total GDP of India/Cost of Living in India).
The Japanese economy is still 3x bigger (in terms of total GDP), and has 10x higher PPP GDP per capita, or about 30x the GDP per capita.
Yes the country is plainly less rich than Japan and the first world, and it shows in big cities. Even comparing big cities in China to India there is a big gap.
But here is what you are missing: as total wealth in India is growing there are indeed some places (which the casual tourist driving around will not see) centered in Mumbai, Bangalore, Delhi that are super rich. One way to spy on it is visit one of the "five star" hotels like JW Marriots etc -- they are numerous, massive, and full of quite rich people with loads of servants and fancy places to live.
By the way, you can find loads of disgustingly miserable poor places in the rich USA too. Maybe they all have sewers and electricity but that's about all that separates parts of the rural US (deep south) or bad urban poverty (right nearby me in NYC) and some villages in India.
By the way, you can find loads of disgustingly miserable poor places in the rich USA too. Maybe they all have sewers and electricity but that's about all that separates parts of the rural US (deep south) or bad urban poverty (right nearby me in NYC) and some villages in India.
Please, just stop. You have no clue. I've lived most of my life in poor parts of the US. Now I live in a posh area of Pune and jog through slums fairly regularly. There is no comparison.
Just one stat for comparison. In the US, 70% of poor people own a car, and 25% own two cars. In India, 1.5% (as of 2006, it's probably more like 2-3% now) of all people have a car, and marginally more own a scooter.
This is one of my favorite topics, discussing poverty in India and the US.
In India (maybe every developing country), as you mentioned, poverty is lack of stuff. You literally don't have enough to eat.
In US (maybe every developed country), poverty is the lack of HOPE.
Its very very weird. I cannot understand why some "poor" person in USA feels poor when they get to eat, have shelter, drive a car, get to rant at their Congressman/woman etc.
By the way, you can find loads of disgustingly miserable poor places in the rich USA too. Maybe they all have sewers and electricity but that's about all that separates parts of the rural US (deep south) or bad urban poverty (right nearby me in NYC) and some villages in India.
Even the poorest place in the US has access to electricity, clean water, sewage disposal, trash disposal, law enforcement, emergency response, phone service, broadcast television, postal service, and the list goes on. This is definitely not true in India or China, and there is a long way to go before they reach that level.
You are right about most of that being available in the US (except emergency response - but I don't know how quickly you will get rescued in rural US places, or even parts of NYC if you read the papers)
But you are wrong about most of this not being available in most places in India. Maybe sewage isn't great and emergency response sucks, and phone is wireless not landline. But there is definitely postal service and TV! You must be kidding.
But the main point --> a few bits of infrastructure like what you list does not make people happy, comfortable or rich. You can be very poor and miserable here in the US and many millions of people would be much better off if they lived in Mumbai, where at least stuff is cheaper to buy
First, you are absolutely right, though you may have access to the same basic set of services whether you are in rural Mississippi or New York, the quality of those services are different. I'd rather be rushed to the hospital in New York than in Mississippi. But it is far better to have those services than not.
Second, I wasn't suggesting that only the US has all of these services, and cities in India do not. I was saying that every city (even the poorest) in the US has all of these services, whereas there are many cities and villages in India and China who are lacking some or most of these services. Outside of the major cities in India, would most small villages have these services? I don't think so. I have driven across the United States, and seen towns of 1000 people that have all of the services I have in Los Angeles.
colonias built on land that was never zoned for residential uses
And
Many homes, built without regard for indoor bathrooms or plumbing, are treated as substandard or dilapidated by housing inspectors. These homes cannot pass inspection to qualify for hook up to water lines
It is not that these services are not available because the government is unable to provide them. In these cases, the government will provide these services in areas zoned for residential use, and where buildings have passed inspection. Ironically, the fact that these people do not have access to certain infrastructure is a sign of how modernized the US is...not only do we provide the infrastructure, we also have a system in place to ensure its safety and quality.
Thanks for those links, I didn't know about colonias. You can go to some unincorporated areas around LA and find similar surprising backwardness -- like people living in unheated garages without running water.
Nothing like India, though, where you don't have to go out of your way to find really exceptional poverty and deprivation.
You can go to some unincorporated areas around LA and find similar surprising backwardness -- like people living in unheated garages without running water
I think you are confusing the availability of infrastructure with the ability to pay for it. Anywhere in the US that is zoned for residential use will have access to clean water, sewage, trash pickup, mail, broadcast television, landline phone, police, fire, etc. So this garage, if it is in a residential area, and is up to code, will have access to these services, assuming the owners or occupants are willing and able to pay for it. I could go live in the garage at the Playboy Mansion, and I wouldn't have running water or heat their either. That says more about my personal living conditions than the infrastructure the government provides.
OK, I guess I don't see such a clear distinction between the two concepts ("available, but can't afford it" and "not available").
As I tried to say above, I agree that it's a denial of reality to equate India with the U.S. along the "poor infrastructure" axis -- based on some particularly bad examples. I believe we're in agreement about that.
In the USA, poverty leads to obesity. In India, poverty leads to starvation. There's a huge difference when a government's concern for the poor is getting them to eat "healthier".
Have you ever seen a desperately thin homeless person in the US?
Yes I have, but that is because many (probably most) of the homeless in the US are alcoholics or suffering some mental disorder, which often causes bad nutrition - from lack of appetite to self-starvation. More to your point, I think, I have also seen seriously overweight ones too.
Sitting in India, and looking at that headline makes me feel journalism is absolutely wrong here, or at least in India Times.
There is no doubt India will become one of the richest economies, but right now we have so many problems we must fix. This headline gives the illusion that everything is just about perfect.
HPI = (Self-reported happiness + Life Expectancy) / (Eco-footprint) ?
Yeah, no. The HPI is not a measure of the happiness of a nation, it's a measure of self-reported happiness per unit of "imposition on nature." And according to that index, we should all strive to be like the Dominican Republic, Vietnam, Columbia, and Cuba. No thanks.
Nor should it try, because it's an objective measure, whereas HPI is completely subjective measure. Apples and oranges.
I'm also not convinced self-reported happiness is accurate across cultures. How do you control for cultural variations in the question "are you happy?" Diverse cultures have deep differences of understanding when approaching that question.
What's subjective to you is pretty objective to me - the health impact of unhappiness, for example, will reflect in healthcare costs. Which btw makes up 15% of US GDP. Now is that even real GDP or just a manufactured problem - with doctors and lawers and insurance guys all making money off of health problems of consumers.
For the same baseline level of internal well-being, people will respond to the question "how happy are you?" differently depending on their culture. Do you understand how this presents a problem when measuring happiness across cultures? That is why I refer to it as subjective. Cultures change over time, so a change in the HPI might simply be a reflection of that.
That being said, I do not believe that just because a measure is subjective, it is useless. Of course it's useful. It's just important to understand what exactly you're measuring.
Or Mongolia for the 133rd position, depends upon who's list you look at.
Don't forget the huge income inequality.