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

Tags: krish, politics, economics, indian economy blog, gini co-efficient, india, liberalization, income, inequality

ADB report highlights widening gap between Asia’s rich & poor

New Delhi, Aug 8: Inequality is rising in most Asian countries, endangering the prospects of sustained growth and weakening social cohesion in these nations, the Asian Development Bank (ADB) said on Wednesday in its Key Indicators 2007 report. In India, too, the rich experienced faster growth in consumption expenditure than the poor since 1993, the time when pro-market reforms were initiated.

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Indian Express Newspaper Economic Times

Both relative and absolute inequalities have increased in most parts of developing Asia. While relative inequality is concerned with proportionate differences in incomes, absolute inequality is concerned with actual dollar differences in incomes.

In India’s case, the top ten percentile of the population tended to see the fastest growth in expenditure. The report states that if adequate data on income distribution in India were available, the increase in income inequality would have been much sharper than the expenditure inequality. However, it said the overall “social welfare has improved over time despite increasing inequality” in India.

In China, too, inequality has risen sharply, with the Gini coefficient (a standard measure of income inequality), increasing to 47.3 in 2004 from 40.7 in 2003—a level more typical of Latin America, the bank said.

The gulf between rich and poor showed up in other ways, too. For instance, India has a lower Gini coefficient, of 36.2, compared to China, but among its poorest families, as many as 28% of children are severely underweight compared with 5% for the richest households.

Further, while wages for English-speaking graduates are rising rapidly in India, bolstered by increasing opportunities that globalisation and pro-market reforms have offered, pay for unskilled labour is stagnating.

“Widening differentials in earnings of the college-educated vis-à-vis less-educated individuals appear to be the single most important observable factor accounting for increasing inequality,” ADB said.

However, the Manila-based bank said its findings did not mean Asia should turn its back on integration into the world economy.

Indianexpress

Tags: ADB, inequality, india, statistics