India’s “Democratic
Capitalism”
By Jeff Harding
I think I’ve figured out why India has problems and
why economic growth is stagnating. I’ve been getting material from the World
Economic Forum which is a kind of leftist kumbayah think tank that sponsors a lot of forums dealing with
emerging economies. Their latest forum is on India, India Economic Summit 2011.
Here are some of the highlights of the Summit. I think
you will find it astonishing:
India Can Become a Model for a New “Democratic
Capitalism”
·
India should
deepen its democracy and strive to create a new model of “democratic
capitalism”
·
While India should
focus on pushing reforms, the government should remember that growth is
critical
·
Technology can be
used to enhance talent development, financial inclusion, transparency and good
governance
Mumbai, India, 14 November 2011 – As India
strives to achieve the vision of sustainable and equitable growth, it must
deepen its democracy, Arun Maira, a member of India’s Planning Commission, the
Cabinet-level agency that drafts the country’s Five-Year Plans, told
participants in the closing session of the World Economic Forum’s India
Economic Summit 2011. “We must have much faster inclusion along with growth,”
Maira said. “We celebrate India as a democracy. What Indians are saying is that
we want to participate in the decisions that affect our lives. We want to have
a more democratic market and democratic capitalism – business by the people, of
the people and for the people.” Noting the demonstrations around the world
against what protesters regard as the unfairness of capitalism, Maira
concluded: “India needs much more democratic capitalism. India could be an
emerging model of what can be done.”
In China, every 1% growth in GDP has reduced poverty
by 0.8%, explained Rajat M. Nag, Managing Director-General, Asian Development
Bank, Manila, whereas in India 1% growth has reduced poverty by only 0.3%.
“This is because our growth driver has only been services, not manufacturing,”
said Nag, adding that India’s manufacturing needs to shift from a
capital-intensive to a labour-intensive model.
Turning the policy into reality will need investment
in infrastructure, good governance and skills development. “If we can’t move a
box from A to B, nothing will happen,” cautioned Rudolf W. Hug, Chairman of the
Board of Directors, Panalpina World Transport Holding, Switzerland. Hug
complained that India’s logistics infrastructure is “overstretched and stalled
by high bureaucracy”. A truck taking goods from Gurgaon to Mumbai has
to pass through 36 checkpoints and takes up to 10 days to arrive. While 57%
of goods in India are transported by road – the most inefficient, expensive and
emissions-intensive mode of transport – the figure in China is 22%.
This is all pretty sad stuff. Any country that is
still drafting five-year plans is doomed. When you hear the words “democratic
capitalism” it means that a bunch of socialists want to gain more control over
the economy and dictate policy from the top down. When they say they “want to
participate in the decisions that affect our lives” they mean that the
government should control the economy. Unfortunately India tried that for
50 years and was mired in poverty. The modest liberalization of the Soviet
central planning economic model enacted by the Nehru family (Congress Party)
has finally allowed India to experience some of the power of capitalism to
raise the standard of living.
The call to shift from capital intensive models to
labor intensive models would put India back to to Stone Age. For millennia
it was the lack of capital in India and China, as well as all other poor
countries, that held back economic growth and social welfare. The very
suggestion is shocking and demonstrates an appalling lack of economic understanding.
With the remnants of the socialist bureaucracy still
politically very strong, India’s economic “miracle” could be jeopardized by “democratizing” capitalism.
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