Tags:
Journalism of Courage
The prime minister quotes Keynes 8212; we carry an edited version of his speech at the CII conference on our op-ed page 8212; to argue that Indian capitalism right now lacks the socially productive spirit that guided 19th-century European business barons. This is an interesting take on India from a thinking prime minister. We understand where he is coming from, both from the point of view of party politics and his own intellectual position, but we think he8217;s going the wrong way. To begin with, there seems to be a confusion between moral judgments and social policy. Granted, most 8216;sensible8217; people are uncomfortable with what the PM calls 8220;vulgar display8221; of wealth. But there8217;s still the crucial question who decides what is vulgar. In any case, to ask the wealthy to be less 8220;ostentatious8221; is pointless 8212; they have no obligation to listen in a free country. As for the threat of social unrest that may follow from income disparities, are we to assume the PM is hinting that the Indian democratic and institutional system is acutely vulnerable? That8217;s news for everyone. May we also point out that when India8217;s poor get angry they know who to blame 8212; not the rich but the political and administrative class. It8217;s politicians and some comfortably-off intellectuals who reflexively blame the wealthy.
Now for the prime ministerial exhortation about saving more. Of course, saving more is good. Simple economics tells us this, we don8217;t necessarily need 19th-century morality tales. But the thing is, India8217;s savings rate is rather high; corporate saving has also gone up sharply. There are thriftier people than us, in China and East Asia, for example. But wealthy and middle-class Indians are anything but wildly spendthrift. Indeed, when one considers that household participation in stock markets is still low, it is possible, if one is so inclined, to ascribe a warm moral glow to Indians8217; thriftiness. The point is that billionaires buying expensive toys doesn8217;t indicate less investible surplus for industry. Capital expenditure, incidentally, is also showing a secular rise. True, employment generation isn8217;t keeping pace. But that8217;s because mass manufacturing is not expanding, thanks in part to land use problems and labour laws. The PM rightly argues for mass manufacturing. But he offers a red herring when he says industry must treat its workers better if labour laws are to relaxed. The fact is the organised industry already treats its employees well. It is the labour aristocracy, not the poor unemployed, who fear liberal labour laws.
What do the poor, unemployed need? The prime minister knows the answer. They don8217;t need the rich to feel fearful. They need the sarkar to deliver.
