Notes on the Atrocities
Like a 100-watt radio station, broadcasting to the dozens...

Friday, November 28, 2003  

Maybe we can all put down our swords long enough to regard Krugman's column today neutrally. Digging around for economic positives, he pointed at the growth of developing economies as a result of globalization. It's not a position a lot of lefties are that comfortable with, but I strongly agree with his main thesis. As we know, I'm no ecomonist, but I do have some personal experience with developing economies. Between 1988 and 1999, I spent about two years over four visits in India (studying not econ, but religion and language). From personal experience, I've seen the benefits of free markets.

As an undergraduate I spent six months studying in India, over the winter and spring of 1988-'89. India then had a strongly protectionist economic policy: it was all right for foreign countries to come set up shop, but they had to sell 51% of managing ownership to Indian investors. This had several results. The first, superficial, was that India had a kind of shadow economy. Some companies flatly refused to come to the country, so in their place sprang knock-offs (Campa Cola, white cursive on a red background, instead of Coca Cola). Others came and did sell 51%. When I was there, the hot car was a Maruti Suzuki. But more profoundly, it meant that India resisted the forces that turned Japan and South Korea into economic powers and what was turning Southeast Asia into the "Asian Tigers."

And so, in 1989, India looked a whole lot like it had in 1969. Very little was computerized--they still went with the ancient ledger model of accounting. To place a telephone call, you had to go to particular centers and wait in line for hours to get a horrible connection that went dead with no warning after exactly three minutes. Listening to loved ones over those lines was the sound of 1935. Roads were festooned with chickens and cows and bikes, all competing with lorries and rickshaws and cars. They were often unpaved. I could go on and on. Anyone who visited India before the 90s will tell you similar stories.

But then somewhere around '91, India liberalized its economy. It was still protectionist, but the markets were open. I visited again in '92 and already the signs were visible. Now computers were not the rare exception, but the slight norm. Telephones and telephone lines were being laid at a furious pace. Coca Cola was on the shelves (all right, maybe that wasn't progress). The changes were quite subtle, but something was afoot.

I went back again for a fellowship in 1994-'95, and the change was remarkable (but perhaps only to eyes who had seen pre-liberalization India). Telephones were everywhere and no longer cost $7 a minute. Much of India had become computerized. There were internet cafes. We took a trip South to visit Mysore (always one of India's most beautiful towns), and were shocked to see Bangalore. In 1988, I had stopped through the city long enough to catch a screening of The Good, the Bad and the Ugly while I waited for a train to Kerala. It was the usual chaotic Indian city. In 1994, we beheld its paved streets and clean air with wonder: it looked like South Korea.

In 1991, the year of liberalization, India's GDP growth was a meager 1% (thoughout the 80s, agriculture netted India 5% GPD growth). Since liberalization, India's economy hasn't grown by less than 5% in any year, and averaged almost 7% growth--even while agriculture declined. There are still many, many problems with India's economy--the benefits still do not affect many Indians, and it remains a very poor country. But it's headed in the right direction.

The new millennium may well be remembered in America as the beginning of the decline. But in may places on the globe, it might represent the opposite. It's hard to tell that from the United States, particularly when you know your own job may now be held by one of those Bangalorians. But if you'd seen the country fifteen years ago, and seen the pervasive level of poverty and complete hopelessness about finding a good job (there were so few), you couldn't begrudge India those jobs now. Krugman's right, it is good news. "We are not, it turns out, condemned to live forever on a planet where only a small minority of the global population has a decent standard of living."

posted by Jeff | 11:01 AM |
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