Atanu Dey On India's Development

A few quotes from “Transforming India”

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My friend JP recently sent me a list of quotes from my book “Transforming India: Big Ideas for a Developed Nation.” I thought I would put them on the blog for the benefit of those who have not read the book. Just BTW, you can download a (free) PDF copy of the book at the book site (linked above.)

The first part of the book is presented as an imaginary speech to the graduating class of 2040 of some college. The context is of a transformed India. So the following quotes have to be read as if you are looking back and comparing how India used to be before 2014 and how it is around 2040.

You and I are not struggling like the vast majority of Indians. So why should we care?

… even if we are not altruistically inclined, we must act for pragmatic and selfish reasons: our position near the top of the economic pyramid is precarious because the base of the pyramid is so weak. We have to care because our fate is inextricably tied to the fate of the desperately poor of India. (p12)

. . . governments can be classified into “roving bandits” or “stationary bandits” (p15)

Our parents and grandparents struggled for a decent living. We don’t want our children to face the hardships they faced. We have to be the ones to transform India and we have to do it now. Think of a time in the future when your child asks you, “You saw what dire straights the country was in. You knew what needed to be done. Did you do anything?” And you will be able to look that child in the eye and answer, “Yes, I did my best. I did it for you.” (p25)

“Material things are not to be despised – without them there can be no manifestation in the material world.” – Sri Aurobindo

The people were not really free and what was worse, people thought that they were free when in fact they were not. As Ram Dass pointed out, “If you think you’re free, there’s no escape possible.” The illusion of freedom is as good a prison as ever constructed. (p34)

Free people do not have to seek permission from their government. (p34)

Poverty in the 21st century is not a natural state of any economy. It has to be engineered. (p41)

The government decided who was allowed to run educational institutions what was to be the capacity, what was to be taught, who could be employed to teach and how much they were to be paid, how many students of particular segments of the population could attend, how much tuition fees could be charged, what was going to be in the examination, when the examinations would be held, what was considered appropriate passing grade for whom. (p44)

Kids like yourself had to needlessly spend years during their high school years just preparing for entance exams, which as we noted before did nothing but select a very small percentage from the applicants and reject even quite well-qualified and able students. (p45)

. . . old Hindi saying, “jab Raja vyapari, toh praja bhikari” – which loosely translated means that the citizens are reduced to begging when the government gets into business. (p48)

The opportunity to amass wealth (for criminals) is directly related to how much control the government has over the economy. (p58)

The labor released from agriculture was employed in the more productive manufacturing and services sector. That shift of labor away from agriculture increased average incomes all through the economy. (p62)

The answer to rural development – lay in urban planning and urban development. This is not at all a counter-intuitive idea once you study the problems of rural populations.

The single most important material constraint for economic growth is energy. Without sufficient energy, development is impossible since energy is required for every economic activity. (p69)

Ideas are what economists calls “public goods”, as opposed to “private goods” which are things that you can grab with hands. Private goods are “rival in consumption”, meaning if you consume it, the total stock goes down. (p85)

Ideas are public goods and when used, the stock of ideas does not go down. The stock of ideas keeps growing. If you have an idea and I have an idea, we can share the ideas and both of us have two ideas. The stocks of both ideas and material goods have been increasing in the world. The thing is that once a good idea is created, it persists and is available for anyone to adopt and use it. (p86)

.. being late on the scene allows one to learn from others’ experience and avoid the mistakes they had made. It allows the late comers to “leapfrog” certain intermediate steps. (p86)

That ends part 1 and the context shifts back to the present.

[On Education]

The quantity appears reasonable until one recalls that only about one out of four engineers is employable. This creates the paradoxical situation of vast numbers of unemployed engineers on the one hand, and on the other employers desperately seeking skilled engineers. (p97)

[On Energy]

.. energy rests at the core of all human advancement and energy growth. The story human civilization is principally that of an increasing ability to find and exploit energy sources. (p105)

.. animals and humans were the principle sources of energy. Slavery was an unfortunate consequence of that need for energy. Coal later powered the industrial revolution. The discovery of petroleum oil about 150 years ago literally fueled such phenomenal growth that is increased human population six-fold to its present 6 billion. (p105)

The greatest constraint that developing countries face is that of energy availability. Energy is the primary resource in that sense that all other resources – land, water – can be substituted to a considerable degree by energy. (p105)

[On Cities and Urbanization]

… cities are disproportionately productive. Today around 1.2 billion people living in 40 mega regions of the world produce two-thirds of the world’s output of goods and services. They also produce more than 85 percent of all global innovation. A person living in a mega-region compared to a person not living in a mega-region is eight times as productive in terms of goods and services, and in terms of innovations is about 24 times as productive. (p110)

Cities “manufacture” wealth.

[On Transportation]

A bit of arithmetic is all that is needed to expose the underlying reality that India does not have the option of having road or air as the backbone of India’s transportation system. We not only cannot afford the fuel (source constraint), but we cannot also afford the fuel (sink constraint) of 700 million cars and 20,000 airlines spewing exhaust – as would be required to match the US on a per capita basis. India needs what can be termed an “integrated rail transportation system.” (p116)

Current per mile infrastructure for high speed rail is around $10 million per km. To build the backbone links outlined above would require 10,000 kms of high speed rail. So the cost will be around $100 billion.

It looks like a very large sum but it is not actually. First, it is a capital investment, not expenditure. What the IRTS will do is to increase the efficiency of the economy, which means that it will produce more stuff than it takes to build it. Second, building it will give a boost to the economy. (p118)

From part 3.

The world is constantly reminded that India is the largest democracy. That it is a democracy appears to be the highest accolade India has any claim to. Paradoxically, this same badge is used as a shield for deflecting all criticism directed against India for its failure to develop. (p130)

Indian leaders and policymakers have a seemingly schizophrenic attitude towards the people. The people are assumed sophisticated enough to figure out who should rule the nation, but they are not smart enough to make simple day to day decisions; for the latter, they have to have a patronizing government official in charge. (p131)

I am working on another book which as I mentioned before on this blog will provide a foundation for understanding the economics of economic growth and development. I expect it to be done by mid 2013.