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Friday, May 07, 2004

Trickle-down or Triumph in India?

Amy Waldman, in a NY Times Article titled "Low-Tech or High, Jobs Are Scarce in India's Boom," reports some disturbing news,

India's economy is spawning a growing middle class, a host of international companies, a booming stock market and a new image for this nation of more than one billion people.

But those very reforms and conditions are also reducing the prospects of some of its citizens. India may be "shining," in the description of a controversial and expensive government publicity campaign, but it is also struggling to generate jobs
For many Indians, then, the dismantling of a quasi-socialist economy that began in 1991, and the growing globalization of the past five years, have meant only the trickle-down of raised expectations and lowered opportunity.

Labor blogger Nathan Newman, apparently much disturbed, comments,
Many free traders tell a story that it's sad that some Americans are losing jobs to "free trade", but we should not be greedy, since it benefits workers in developing nations.

But the current regime of outsourcing, privatization and the race to the bottom is hurting workers throughout the world, with corporate profits the only beneficiary.

What evidence does the Times article provide for all this angst? Two anecdotes about workers losing jobs: a government street sweeper who's had his job privatized, and some concrete mixers replaced by ready-mix concrete. Also, the article says public sector employment has fallen and unemployment is 8% (although this last figure is at best highly misleading).

But what, I ask you, does any of this have to do with globalization and free trade? Was the street sweeper replaced by teleoperated robots controlled from London? Perhaps the ready-mix concrete was imported (although the article doesn't say that), but surely Newman and Waldman don't mean to call for a ban on ready-mix concrete? In any economy that's not totally moribund, large numbers of jobs are created and destroyed every year, so you can always find a few anecdotes about people losing their jobs.

The real story in India is tremendous progress. India's success has been pretty much the most hopeful news in the world in the last decade, since it means a billion mostly very poor people are becoming less poor. Although Waldman and Newman would have you believe that the rich in India are gaining at the expense of the poor, it just ain't so. The truth is, since India began opening up its economy, not only has the economy boomed (GDP growth rates of about 6% for the last few decades), but the poor have benefited tremendously.

Poverty has fallen (35% to 26% from 1994 to 2000), wages are up, fewer children are malnourished (53 to 47% from 1994 to 1999), more kids are in school (51 to 77% over the same 5 years), and unemployment is about the same.

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