Wednesday, August 15, 2007

The inherent dumbness of Indian Economic Right is in display again

We all know that right wingers (whether it is social or economic) have an inherent dumbness. Well, why else are they going to be on the right anyway!! Today, I saw this post on IEB that claims that income inequality is not so bad anyway. This is yet another instance of managing to kick ones own ass. Let us dig a bit more on their stupidity.

Take a look at Gini Index from 1951 onwards all the way to 2000.

If you take the period from 1951 to 1990, it has come down from 35+ in 1951 to a low of 29.6 in 1990. This is a clear evidence that the inequality has steadily climbed down during the so called Socialist era. If you take the period of 1990 to 2000, the so called Liberalization era, the Gini Index has risen from 29.6 to a historic high of 37.8 in 1997 to 32.5 in 2000. This information is from another post at IEB by the saner Dweep I was talking about few days back. We are clearly seeing a increase in Gini Index during the Liberalization period. This doesn’t include the last 6 years when farmers were committing suicide and an India shining party was thrown away by a more populist congress party. We could see a correlation between economic liberalization and increase in Gini Index.

Let us now consider the case of what is happening with Gini Index in USA. In 1974, the Gini Index of USA was 39.5. It has steadily increased to 46.9 in 2005. What does this data imply. From 1974 to 1992, the economic philosophy of USA was one of deregulation. Starting from Richard Nixon to Ronald Reagan, US saw a period of deregulation of the markets. Even after Ronald Reagan, the deregulation continued at full speed. Even the democratic president Bill Clinton couldn’t avoid deregulation (he is the one who handed over public media corporations to private entities through his Telecommunication Act). George Bush accelerated the deregulation process to a much faster rate. His “accomplishments” also includes converting 850000 federal jobs into private jobs. From 1974 to the present day, we have seen a continued process of deregulation in USA. With this, we are also seeing a continued increase in the Gini Coefficient.

Anyone with little bit of thinking capacity can see the correlation between privatization (or economic liberalization) and increase in income inequality. Under such a scenario, if someone takes the increasing Gini Index after liberalization in India, and compares with the highly increased Gini Index from a highly deregulated country, and still claim that the income inequality is not so bad in India, what else can we call them other than a right wing dumb head? This only goes on to confirm my theory that Indian education needs a complete revamp with emphasis on critical thinking. Else we will have more and more such economic professors propping up. For brewity, I am going to call this school of thought dumbness among the free market fundamentalists as AD school of thought dumbness, for obvious reasons.

Post written by Krish

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