Transcript DEVELOPMENT WITH DIGNITY : No Utopia

DEVELOPMENT WITH DIGNITY :
A CASE FOR FULL EMPLOYMENT
Ⅰ.DEVELOPMENT WITH DIGNITY :
NO UTOPIA
(hyun-joon Huh · il-rae Kang)
□ The India became independent from British Colonial rule
after a mostly non-violent epic anti-colonial struggle
under the ideology of nationalism in 1947.
□ Indian nationalism had to be forged from a
bewildering diversity(religion, language, ethnicity)
○ Religion
- Hindus(80.5%)
- Muslims(11%)
- Christians(2.3%)
- Sikhs(1.9%)
- Buddhists(0.8%)
- Jains(0.4%)
※ Hindus are stratified by a "caste system". It still remains one of
the biggest source of injustice in India.
○ Language
- India has some sixteen major language, often with different
scripts, and over five hundred major dialects.
※ India chose the numerically dominant Hindi language as the
language of the Indian state. India continues rely on English
as the all-India link language for administrative
communication.
In turn, this has created a linguistic divide and inequality of
opportunities between those who know and those who do not
□ India is huge country has managed to consolidate itself
increasingly as a nation state focus of an anti-colonial
struggle acted as a binding force.
○ The hopes of a better economic and freer political life
which independence from foreign rule brought with it
acted as a further catalyst in this process.
□ India ; vast and poor country has managed to consolid-
ate ate gradually its democratic system over the last six
decades.
○ Countries of western Europe, the U.S, and Japan started
functioning at a minimum per capita income level of
roughly speaking US dollar2500, compared to Indias less
than dollar100.
□ India's many problems
○ Mass poverty and destitution
- The largest number of illiterates, millions of children crippled
or blinded due to mal nourishment.
- Roughly 1/4 of Indias population under the so-called 'poverty
line' (nearly 200 million are in rural areas and the rest in
urban areas)
- 1/3 Indians live in abject poverty, spending less than 1US
dollar in terms of purchasing power parity.
○ Failure of system
- India had the low rank of 127 among 175 countries on the
Human Development Index of the United Nations. Compared to
the rank of 95 in terms of per capita income in purchasing
power parity, this even lower rank of 27 suggests that
compared to income, access to health and education is
probably even worse for the poor in India.
※ India chose the numerically dominant Hindi language as the
language of the Indian state. India continues rely on English
as the all-India link language for administrative
communication.
In turn, this has created a linguistic divide and inequality of
opportunities between those who know and those who do not
□ India is huge country has managed to consolidate itself
increasingly as a nation state focus of an anti-colonial
struggle acted as a binding force.
○ Doubling of the growth rate in per capita income has
not made a corresponding dent on mass poverty.
○ Capita income is only about 1/3 the world average
incomes in terms of PPP. As already mentioned, India
has a low rank of 95 among the nations of the world in
terms of PPP calculation.
□ We need to need to know how total income or gross
domestic product (GDP) is distributed.
○ Irrespective of the unit in which it is measured, average
or per capita income is hardly an appropriate measure
of the well being of citizens of a nation.
○ To
dramatize the point , consider two societies
with extreme distribution.
○ The first has complete equality of income at say 23,000
rupees per person, and a population of 100.
Per capita income is a perfect measure of an average
person's income in this case.
○ Consider the second case of a slave society where 99
Slaves have an income of only 100 rupees each, and the
rest goes to a single slave owner.
○ slave owner's income : (100 × 23000) - (99×100) =
2,290,100 rupees
○ So that slave owner's income turns out to be 2,290,100
rupees , that is 22.9 thousand times higher than that
of a slave.
○ In the salve society example , we have an important
lesson to learn.
○ It shows that average income in this case hides more
than it reveals.
○ It obscures both the extreme poverty of slaves as well as
the vulgar richness of the slave owner.
○ Although somewhat more complex, these considerations
remain essentially the same in a high growth rate of GDP
that dose not alter the situation for poor.
○ To continue with the example, consider a 10 percent
growth in GDP yielding, (1.1)×(100×23000) while the
99 slaves continue to get exactly the same income of
rupees 100 each.
○ Only the owner is now even better off with an increased
income of something like 2,520,100—25.2 thousand times
higher than that of a slave.
○ All the gains of economic growth go in this example only
to the slave owner, but none to the slaves.
○ This type of growth increases the relative disparity in the
distribution of income or relative poverty, because the
slaves are now even poorer relative to the owner.
○ The above example is meant to illustrate the point that
growth alone need not be answer, especially in a country
with a lot of poor people. We have to know in addition
how the benefits of growth are being distributed.
○ Broadly speaking, at the overall growth rate of say 10%
growth would be pro-rich if income rate the rich increases
by more than 10%, while that of the poor by less than
10%. In this case the rich are certainly getting richer but
poor are getting poorer only in relative but not necessarily
in absolute terms.
○ In a poor country like India this result in increasing
relative, but not necessarily absolute poverty.
For that to happen, the growth rate of income of the
poor has to turn negative, it has to decrease.
○ In contrast, growth can also be pro-poor if their income
increases faster than that of the rich during the process
of economic growth. This would mean a reduction in
both absolute and relative poverty decreasing.
○ In India with so many poor people on the verge of
subsistence level, we always need to be especially sensitive
to the distributional implications of the growth process.
The reason is simple. Growth that worsens the distribution
for the poor will push them below subsistence.
○ A rate of growth, however high , is not good enough,
unless we also know how it affects the majority of the
population who are poor.
○ What is more, even our democratic political system
in which the poor have a voice, though only at the
time of election, seems to provide only a partial answer.
○ This is vividly illustrated by the recent Indian general
election (2004) results.
○ A booming stock market, and a richer and expanding
urban middle class made the BJP-led coalition government
in power to believe that the whole country was doing well.
○ One should not forget that even the previous Congressled coalition government, which also took great pride in
liberalising the economy, and ushering in a higher growth
regime, had a similar fate in the 1996 election.
○ It should be clear that there is a serious disconnection
somewhere between our economic and political system.
High growth dose not deliver what most poor Indian
expect it to, but they can register their dissatisfaction only
at the time of election with negative votes.
○ Our democratic polity has not shown us how to go
farther through policies that improve rapidly the
conditions
of the poor. This is the challenge : how to remove the
disconnection between our economy and our polity. India
can no longer avoid facing squarely this challenge.
○ One might ask in this context whether unequal distribution
of income alone can explain this sorry state of affairs.
The question can be partially answered in relative terms,
by comparing our situation with those of other developing
countries.
○ According to the same Human Developing Report (2004)
quoted earlier, India has a pattern of income distribution
which is unequal, but not extremely so by the standards
of other developing countries.
Richest 20%
Poorest 20%
India :
42%
9%
China :
50%
5%
Vietnam:
45%
8%
Brazil:
64%
2%
Mexico:
59%
3%
Zimbabwe:
56%
5%
Nigeria:
56%
4%
○ In our democratic set-up growth has to proceed along
with improving continuously the distribution of income in
favor of the poor, and access to basic health and education.
In short, high growth has to be pro-poor in its thrust.
□ India have three problems to solve
○ First, India needs to grow as fast as possible.
India remains a poor country with a low per capita income.
Since the size of the bread itself is small, unevenness in
distribution of income affects even more adversely the poor
○ Second, the process of growth itself must have an in-built
mechanism to improve rapidly the distribution of income
through the process of growth itself.
Viewed from this angle, we must cease to separate the
growth rate of GDP from its distributional implication for
the poor; instead we must learn to treat the two as
processes, which reinforce one another in formulating our
economic policies.
○ Finally, this interweaving of distribution and growth can`t
be effective in Indian context without facing the problems
of various structural inequalities rooted in caste, gender,
and religious discrimination. These social problems are
barriers especially to any process of pro-poor economic
growth.
○ It has to be viewed from a different perspective
altogether
in which growth and distribution are integrated into the
very same process, while breaking systematically the
social
barriers of discrimination and prejudices based on gender,
○caste,
This is
what 'Development
with Dignity' must mean for us
language,
religion or ethnicity.
in India. This is not Utopia. It is the only reasonable
economics that this country can pursue with the support
of majority of its citizens who are poor to varying degrees.
And, economic policies supported by the people lie in the
realm of feasible politics.
Ⅱ. THE MARKET SUCCEEDS AND FAILS
HOW, WHERE, WHEN?
(ji-eun Sun · hyang-sung chung)
political democracy : one-adult-one vote
market system : purchasing power
⇒the rich have more votes than the poor
Economy : purchasing power ⇒the poor have a feeble
voice
Politics: numerical strength ⇒ they have a stronger
political voice.
※ hiatus is open up between economy and politics.
□ Democracy in our market economy with widespread
poverty seems to behave like a two headed animal
○ The right : we are not moving towards the market system
fast enough
○ The left : the state is not paying attention to distributive
justice in the name of efficiency
□ wrong thinking on the economic growth
○ India could achieve considerably higher growth, only if we
allowed the market forces to take over more fully.
1. what is the purpose of economy growth?
2. The possibility the what kind of member of the society receiving
the benefit of growth mainly it is?
※ gandhi : higher growth is not worth much, unless it improves at
the same time the lot of the poor in india.
⇒ according to gandhi dictum, the purpose of economy growth is
the greater well being of a lager number of people.
○ Higher growth earns a poor nation greater international
respect, and on that count it must be considered desirable
○ From it pays what kind of price and must pursue an
altitude economic growth
ex) many jobs and livelihoods are lost, and few are gained
during the process of growth, and poverty becomes increasingly
wide spread => This would mean more people are losers, and
few are gainers.
⇒ The losers become almost voiceless, and marginalised from the
market due to their diminished purchasing power
3. Does market allocate the productive resources optimally and
produces efficiently?
4. producing mostly is non-essential goods from the point of view of
the majority of its citizens.
ex) bottled drinking water
private hospital
○ In short, there is a fundamental problem with the market
in an economy with widespread poverty.
- The market driven composition of domestic output need not
correspond to what the poor need and could afford.
○ This highlights a common error in economic thinking
greater efficiency alone is not a solution to this problem
unless the essential goods being produced correspond to
the requirements of the poor citizens that is why, certain
essential goods like basic health, education, and housing
for the must be provided for by the state.
⇒ Privatisation of basic and essential goods cannot be left to the
mercy of the market in a country within our democratic
system to increase its accountability, but privatisation is no
solution. and this raises the wider issue regarding what a
market solution can or cannot achieve.
□ This raises the wider issue regarding what a market
solution can or cannot achieve.
⇒ It can be shown that the 'perfect competition' market
would provide some sort of a solution.
But with after words same economic problem occurs
from here.
○ The main feature of market solution, it is efficient in
terms of production, but at the same time it is totally
unconcerned with distribution of income.
○ Even more strikingly, there is nothing in this branch of
economic theory to specify how long it might take for
even the perfectly competitive market to reach that efficient
solution, if it reaches that at all.
□ Theoretical economists usually consider the problem in
three analytically distinct steps.
ⓛ whether such an efficient and optimal market solution
exists at all.
next comes the 'stability property' of the market solution.
② Investigation in this second step are directed to find out
whether the system would reach such a solution, if the
market starts with some arbitrary set of prices.
③ we need to know the speed with which the market
solution would be reached. The main stream economic
theory confronts but hereupon and neither any information
is giving.
□ The market can always hold out a promise without
actually delivering.
○ hitch : Politicians are accountable for their performance
by the time of the next election.
Look for workable solution that might combine the market
with state action to meet the requirement.
however, our politicians and their economic advisors
seldom do that these days to pose it misleadingly as an
issue of the market versus the stats, naturally it is
convenient for a politician if can make the abstract
institution called 'the market' responsible for sorting out
our difficult economic problems.
○ However, because the politicians remain accountable for
their economic performance.
□ Focus problem of India economic : The core issue
instead is have to market the market system compatible
with the functioning of our political democracy. Instead
attempts should be made to devise policies through
which both these institutions of the state and the
market might reinforce one another for bringing our
political and economic democracy closer.
⇒ This is also the essence of following the path of
economic development with dignity for all our citizens,
and the real challenge to economic policy of our time.
□ The main attraction of the market system is that it has
built into it a degree of self-correction.
however, although this advantage of the market system
must be maintained to avoid the errors of bureaucratic
central planning, the advantage must not be exaggerated
to an extent where it becomes counterproductive.
ⓛ The pattern of demand is generated by a particular
distribution of income.
② The second reason is the speed with which a solution
has to be found.
They are usually wrong in their diagnosis ;
the economy doing well does not mean that the
people are also doing well.