Transcript Source: AIDIS Data, Recent Trends in Wealth

Why Rethink Development
Praveen Singh
Sambhaavnaa, 2016
[email protected]
Let us start with a few questions…
Q1: Should there be development
or not?
Q2: Why do answers to this
question often differ?
Q3: What comes to mind when we use the
word ‘Development’?
On the one hand,
 A positive
connotation: a sense
of improvement, a
better life for all
 Brick & cement
houses, tar roads,
electricity, cars, trains
and planes, TV and
internet, white-collar
jobs: ‘Modern’ life and
lifestyles
On the other,
 Good life for a few, at
the cost of many others:
Rising Inequalities
 Resource grab and
dispossession - people
revolt, naxalism & wars!
 Climate change, natural
resource degradation:
Ecocide!
Q4: What makes us consider a
society/country as ‘developed’ today?
Higher GDP / Higher per capita
income
1.
2.
3.
4.
5.
Transition from an rural-agrarian society to
modern-industrial-urban society
Fossil fuels as the energy backbone
Use of modern science and technology
Higher consumption, and of goods
produced largely in big industrial setups
Q5: And how will this ‘development’
come about?

Via Economic growth

More investment, leading to more production of
goods and services, leading to a higher GDP
Q6: And if we were to step back and
ask a more basic question, as to,
Why do we need development?

The answer would be: to remove
poverty

This answer makes ‘development’
impossible to speak against – but we will
examine the truth behind this defense in
more detail later…
So, to summarise, ‘Development’ today is
predominantly understood as…



More income/consumption implies a betterhappier society/person
Western model of a consumer economy is the
best: every society ought to get there
Takes GDP to be a marker of well-being




GDP: leaves out many goods, counts many bads
An average number – mutes disparities
Are the goods that get produced what we need?
No upper limits to this ‘Development’

Unfortunately we live on a finite planet: Ecocide!
Q4: Do we then, need to rethink
development?

If yes, Why?
In one line we could say:
…because there is a huge discrepancy
between what it promises and what it
delivers
Some numbers:
See if you can reconcile them!
India: Food and Nutrition


Average normative food (energy) requirement
per capita (per WHO ): 2200 kcal/day
Availability via domestic production - ever since
the 1990s: ~2400 kcal/day
And yet

40% children malnourished: Double of sub-Saharan Africa

Global Hunger Index: India ranks 16th out of 120 countries

78 of 81 developing countries studied improved their
hunger situation between 1996-2011; India in remaining 3!!
Source GHI Report 2011
What do you think are the causes of hunger
in a country like India?
Would hunger, discrimination be a major
issue in the USA – a rich, developed country?


Total Population:
People below poverty line: (People

318 mn
48 mn (15%)

22.4%

26.1%

20%

who struggled to put food on their table)



% of Hispanic households BPL
% of African-American
households BPL
% of children who live in risk of
hunger
2014 Statistics,
Source: Bread for the World, a food policy and hunger strategy institute
In the American context…

The hunger and malnutrition goes
alongside




An obesity epidemic
Huge surplus in terms of food production
Huge wastage of food (some estimates say up to
40%)
Even those who eat three meals a day are
missing on important minerals and vitamins
(surplus of cheap calories)
The situation of the entire world is not very
different…

850 mn people undernourished (1 out of
every 8, or about, 12.5%)

World food availability today: 3000 k cal /
day / person:
Do we need any new scientific
breakthroughs to feed all the people on
earth!
Questions worth asking:
1. Why do we have abundant food
and
hungry people at the same time?
2. Is ‘GROWH’ a requirement?
3. Can ‘GROWTH’ be the
answer?

Food is a basic necessity.

But similar trends would be found for water,
housing, sanitation, electricity and many
other fundamental needs… both in India,
and across the world
Another example: Electricity in India
1992
2002
2012
2015
Generation Capacity (GW)
69
105
200
272
Per Capita consumption
(kwH)
348
560
957
1010
% of Households Electrified
(All India)
55.8
67.2
% of Households Electrified
(Rural)
43.6
55.3
69
85
92
96
% of Villages Electrified
81
Source: CEA, Min of Power data
Growth is carried out in the name of the poor – so
while we ‘hide behind the poor’, there
continues to be ‘darkness under light’ !!
Question worth asking:
Is the problem a problem of production,
or is it a problem of distribution?
In any economic system, What
determines ‘Who gets what?’
India: Income distribution

Indian GDP in 2014: Rs 115 lakh crores (approx.)
GDP per capita (population 1250 mn)= Rs 92000 / yr

Average Income for a family of 5 = Rs 38,500 / month

And yet

Poverty line (for a family of 5): Rural Rs 4080 / month,
Urban Rs 5000 / month

People below poverty line: 22% in 2012, i.e. 1 in 4 families
(With an abysmally low definition of poverty line, and the
serious under-reporting of poverty in government data)
Income Distribution in India
Popn. quintile
Monthly Household (hh)
Income
Per day hh
spend
Lowest 20%
Rs 100 – Rs 2,750
Rs 20-90
20-40%
40-60%
60-80%
Rs 2,751 – Rs 4,636
Rs 4,637 – Rs 7,400
Rs 7,401 – Rs 12,500
Rs 91-155
Rs 155-245
Rs 244-415
Top 20%
> Rs 12,500
> Rs 415
Top 0.001%
Rs 6,60,000 (Average)
Rs 22,000
(= 2.5 lakh families)
Source: The Hindu thne.ws/1ijR7sm accessed 21/5/14
IHDS survey , NCAER: using 2011-12 data
0.0001% Row: My estimate based on World Top Incomes Database, IE 13/5/14
(1.3%)
(13%)
(30%)
(56%)
Just a random thought experiment:


80% of families in India today live with less than
Rs 12,500 income per month
If we were to assume an inequality of 1:5
between the poorest 5th, and richest 5th families,
even today’s national income could be potentially
distributed as:
Lowest
20%
20-40%
40-60%
60-80%
80-100%
Income today*
2750
4636
7400
12500
>12500
Redistributed
Shares
X
2X
3X
4X
5X
Potential
Income
13000
26000
39000
52000
65000
As with income, so with wealth…
India: Wealth ownership by Population deciles
80%
74%
70%
60%
50%
40%
30%
20%
10%
5.70%
3.80%
2.60%
0.20% 0.40% 0.80% 1.30% 1.80%
9.40%
90-100%
80-90%
70-80%
60-70%
50-60%
40-50%
30-40%
20-30%
10-20%
0-10%
0%
Source: Credit Suisse Global Wealth Databook, 2014
India: Wealth Ownership Distribution



In the top 10% that owns 74% of all wealth,
the top 5% own 65.5% and the top 1%
owns 49%
5 billionaires in late 90’s, 53 in 2013
4th largest number (of billionaires) in any
country after US, Russia, Germany; ahead
of China, UK, Japan…

Wealth of Top 35 billionaires is more than the
combined wealth of bottom 800 mn people of
the country
Source: ET Oct 23, 2011 using IAMR Report
India: Trajectory of Wealth share
80
75
70
65
71
68
66
74
74
74
%Share of
Top 10%
60
55
50
45
49
49
48
45
%Share of
Top 1%
40
40
37
35
2014
2012
2009
2006
2003
2000
30
Source: Credit Suisse Global Wealth Databook, 2014

Show clip of ‘India’s incredible Inequalities’
What about the world’s
income and wealth
distribution?
The telling world income ‘Wine Glass’
Source: Data from Dikhanov, Y. (2005).
Trends in global income distribution, 1970–2000, Data for Year 2000
As with income, so with wealth…
Top 8% people own nearly 84% of the world’s wealth;
Bottom 70% own less than 4% !!
US, the epitome and the aspiration of the
rest of the world
Top 10% people own nearly 71% of the total wealth;
Bottom 60% own less than 5% !
Bottom 18% have zero or negative net worth!!
‘Middle class’ in India: Who? How many?


One definition says family consumption
expenditure of more than $10 per day: By
this estimate, top 5% of the population
Another estimate says $4-$10 per day:
then about 12% of the population (150 mn
people)
Is the term ‘middle class’ just a misnomer
for a small privileged elite of the country??
Middle class and above in the world: 29%
< $2
$2 - $10
$10 - $20
One of the things we often hear when we
talk of these problems is:
GDP growth is the cure to these ills.
‘Enlarge
the pie’ so that we can
have more for the poor
‘Wealth shall trickle down’
Distribution of additional income from
global GDP growth, 1990-2010
Source: UNCTAD Policy Brief Post 2015 – No.2, Nov 2013
Share of world labour income in world
gross output: 1980-2010 (in %)
Source: UNCTAD Policy Brief Post 2015 – No.2, Nov 2013
India – Jobless growth


‘Record breaking’ growth since 1991, esp since
2003
Formal Sector jobs

1991: 26.7 mn


2012: 29.58 mn
Govt jobs have decreased by about 1 mn in this
period, hence private sector has generated about
4 mn jobs
Workforce increase during the same period: from
250mn to 450mn approx.
On the one hand, there is a dearth of jobs - on
the other, many of those who have work are
working up to 12 hrs a day, 6 days a week!
India: Low Job Growth despite high GDP
growth (1999-00 to 2011-12)
Jobs in
% of
2011-12 total
225
48%
61
13%
51
11%
54
11%
% Yearly
growth
since
New Jobs
1999-00 by Sector
-0.001
0
4
23
17
43
4
20
% of
New
Jobs
0%
19%
36%
17%
Agriculture
Manufacturing
Construction
Trade, Hotel
Transport, Storage,
Communication
24
5%
6
12
10%
Other Services
54
11%
4
20
17%
TOTAL
468 100%
2.2
117
100%
Source: NSSO Reports 554(2011-12) and 458(1999-00)
New Jobs in 12 years
Number of new people entering workforce
119
150-180
Nature of ‘new’ jobs: Employment or
exploitation?

GDP growth: ~ 7-8%; Job growth: at a mere 2%

Most new jobs are in the so called ‘Services’ sector
 very low paying
 often seasonal
 mostly contractual
 with minimal facilities or benefits
 And, tough jobs!

Trade, Hotel includes all petty shop-keepers, hawkers,
roadside food sellers

Other services includes personal services like cooks,
maids, guards, washermen etc

While these people do not get counted in ‘unemployed’, but
their employment is barely subsistence level
Now,
Let us have a look at how the world
spends its money…
Global Spending Priorities,
1998 (in US$)
Cosmetics in US
8 bn
Ice cream in Europe
11 bn
Perfumes in Europe&US
12 bn
Compared to what was
estimated as additional
costs to achieve universal
access to basic social
services in all developing
countries:
(in US$)
Basic education for all
Pet foods in Europe&US
6 bn
17 bn
Water and sanitation for all 9 bn
Business Entt. (Japan)
35bn
Cigarettes in Europe
50 bn
Reproductive health for all women
12bn
Alcoholic drinks Europe
105 bn
Basic health and nutrition
Narcotics drugs (World)
400 bn
13 bn
Military spending (World) 780 bn
Source: UNHDR 1998, Ch1, pg 37
Website http://www.globalissues.org/article/26/poverty-facts-and-stats#src31
Another such paradox:
Military spending in the world today
Military spend: better uses?



World Population : 7.2 bn
World Military Expenditure (per day): $4.79 bn
World Population below $2 / day poverty line:
3.2 bn

Numerically speaking, switching military expenditure
to poverty allowance could wipe out world poverty
overnight…along with reducing ecological
devastation significantly!
Ever thought why we need to spend so
much on military?
US military spending: An enigma, or is it?
Why is 5% of the world population having to
spend 42% of the world military spend?
 Is it because they need to ensure their usage of
25% of the world’s resources?

To recap, mainstream development
theory says that GDP growth is the
answer to many of these ills…
...but we need to remember that
everything one does to make the
economy grow has an impact of the
environment
The state of the planet…some facts
Between 1970 and 2010, the number
Humanity
today
uses
the
equivalent
of
92%
of
live
inshortfall
places where
of
mammals,
birds,
reptiles,
Earth
is humans
facing
a
40%
in
1.6 planets!
air
pollution
exceeds
WHO
standards
amphibians
An
estimated
7.3
mn
ha
of
forest
are
lost
water
supply
by
2030
Most of the top 25 countries by per
and
fish
with
which
we
share
our
each
year
(about
0.2%
of
world
forests)
UNESCO,
FAO
capita
footprint
are
high
income
3 planet
million deaths (1/9) every year
are
has nations
fallen by half.
FAO
linked to outdoor
air
pollution
Living Planet Report 2014
We
dump
19.4
bn
lbs
of
WHO
Report,
Sept
The number ofArctic
nations whose
footprint
exceeds
September
sea ice
extent
is 2016
their
biocapacity
has
been
increasing
plastic
the
ocean
/ yr
declining
atinto
a
rate
ofsteadily
13.3%
per
with
each passing
year. As resources
become
Science,
13 Feb 2015
Climate
change-related
extreme
decadeis growing – which
constrained, competition
NASA, NSIDC
events,
plus population
could
have increasingly
devastating growth,
economic,
social
and political
implications.
could
increase
hunger
by up to
Living Planet Report 2014
20% by 2050
WFP
‘Development’: Unequal demands…
GHA/GHA per
capita
H I: 3.1 X
M I: 1.1 X
L I : 0.7X
Living Planet Report 2014
Bio-Diverstity Loss
…and unequal consequences !!
H I: 1.1 X
M I: 0.8 X
L I : 0.6 X
Low income countries have the smallest footprint
but suffer the greatest eco-system losses
*However, this masks large scale bio-diversity loss before 1970 in North America,
Europe and Australia
…more unequal consequences !!
Global concentrations of air pollutants,
WHO’s most detailed study ever, released Sept 2016
3 of 7 Planetary boundaries transgressed
More locally, we have

More epidemics and lifestyle disorders






Dengue, chikungunya etc: new strains
Diabetes, cancer, heart ailments rampant
Climate change impacts: droughts, floods, cyclones
Vanishing spaces for other living species, future
generations
Dispossession for resources: near civil war situation
in Chattisgarh
A mercedes owner and a rickshaw driver often live
across the same road: Rising sense of injustice,
crime, depression, …
Essentially,
the cost of this ‘development’ is being
borne by nature, by some of the humans,
however,
the benefits only accrue to a small few.
This phenomena is called
‘Externalisation of Costs’
Question worth asking:
Why does our Economic /Political System
allow this
‘Externalization of Costs’
on to some humans, and,
to rest of nature?
Equally importantly,
Why aren’t our leaders heeding to these
warnings of ecological catastrophe??
Is not a Democracy = Rule of the demos
Demos = the people
??
Do we elect our leaders…
…or do those who fund the political
parties elect the leaders?
One person one vote, or one dollar one
vote?
Is it easy to float a political party
today?
What is the state of ‘the balancing pillars
of democracy’, namely the ‘free’ press,
and the ‘independent’ judiciary ?
Is the press really a ‘free’ press, or is
it just another business driven by the
pursuit of profit?...
…and what about the state of the
judiciary today?
Are we witnessing a
‘Murder of Democracy’?
Are we living in a Democracy, or
is it a Corporatocracy?
If not, then how do you account for:
Governments needing to
Development:
benefits
some,
deploy
policetoand
the army
and costs
to others
against
their
own for
people
Dependence
on private
savings
Corporate
– Politics nexus
Investment
– Capitalists
hold
Suppression
of the
right
economies,
governments
to to
ransom
Election
funding:
one
man one
associate,
to dissent,
•Why does avote
fallright
inor
sensex
elicit
an express
one
dollar
one vote?
response
form theof
highest
powers, while much
freedom
speech
Corporate
Lobbying:
Institution
larger calamities
go unheard
of?
and Policy capture
Dispossession
without consent of
‘Free’
press ? Or another
people,
and without
adequate
business
with profit
pressures
–
compensation
/ rehabilitation
with the
need for power
and
megalomania thrown in
The key question then perhaps is:
Is GDP, or higher incomes what
we aspire for, or are they a means
to some other end?
Are we even measuring the right
thing, or have we confused the
means for the end?
What could be a right
measure for ‘development?
“A cartoon is worth five thousand words.”
– Yours Truly 
“I’ve got the bowl, the bone, the big yard. I know I should be happy.”
Isn’t human well-being what we should
be looking for?
What could be better, more holistic
measures of human well-being?
So why did we begin this discussion?
We are trying to understand ‘Development’,
and why it seems to come with…









Poverty, amidst plenty
Rising Inequality
Environmental Degradation
Unemployment, and overwork
Murder of Democracy
Financial Instability
Growing GDPs, decreasing Wellbeing
No limits to ‘How much is enough?’
War, naxalism, and terrorism
A slightly deeper look reveals that:
These problems are not isolated to India, or the
‘developing’ countries:


They occur in pretty much every country – with
slightly different flavors and intensity

Roots of these socio-economic problems of
today lie in current notion of ‘development’

But, why should our conception of
‘development’, or human well-being
cause severe problems for us?
Our hypothesis is twofold
1.
2.
We have a flawed notion of
‘Development’, i.e., of human well-being
This flawed notion of development stems
from the compulsions of a flawed
economic system, i.e. capitalism!
So how will we decrypt these systemic
problems, and explore the way out?
1
We will try and understand where
capitalism came from, and what are its
internal dynamics
2
We will then see how the current
notion of development is tethered to
capitalism..
3
Finally, though briefly, lay outlines of a
post capitalist economy, where
development would mean what it ought
to mean, i.e. true human well-being!
That’s all for now 
Videos

Short films (available on Youtube)
1.
2.
3.
4.
5.
6.
Does Growth equal progress? [5.44min]
GNH Explained [3.48 min]
Going Beyond GDP -3:18min [~TV report]
Mismeasuring the Economy [James Joyce
interview on RNN – very good, 9 min, but
requires careful listening ]
Global Wealth Inequality
India’s Incredible Inequalities
Backup Slides
Many of our grave problems today, like…
1.
2.
3.
4.
5.
6.
7.
8.
9.
Poverty, amidst plenty
Rising Inequality
Environmental Degradation
Unemployment, and overwork
Murder of Democracy
Financial Instability
Growing GDPs, decreasing Wellbeing
No limits to ‘How much is enough?’
Naxalism, Terrorism, War
… are systemic
In other words, these are ‘systemic
problems’
What is a systemic problem?
 It is not that we are not doing the thing
wrong…
 It is that we are doing the wrong thing!!
What is a systemic problem?

A systemic problem is one that arises from
the structure of the system and thus affects
the general behavior of the entire system.

If every dog at doggy daycare has fleas, it's a
systemic problem
What is a systemic problem?



A systemic problem is a problem due to issues
inherent in the design of the system itself, rather
than due to the behaviour of some specific
individual(s), isolated factor(s).
It is a not a problem that has occurred because of
some accident, malfunction or inefficiency in the
system – it is a necessary feature or corollary of
the system (yeh to hona hee tha!)
A change to the structure, organization or policies
in the system is thus essential to the alleviation of
the systemic problem
Why is this important?


Because, systemic problems can be solved only
by changing the structure of the system itself
I.e., Systemic problems require systemic
solutions.



Systemic solutions are solutions that aim to redesign,
reconfigure the system itself.
In other words, they understand the root causes of the
problem and aim to resolve the root causes themselves
And more importantly, they cannot be solved by
doing ‘more of the same’ – in fact, that would
worsen the situation!!
An example:
Systemic issue, symptomatic solution

A systemic issue of a high crime area could be
the high unemployment rate, low educational or
skill qualifications, low income of residents.
So, if your solution is to increase police presence
in a high crime area, that still won't solve the
issues driving people to do things out of
desperation.
In fact, such superficial fixes lead to shifting of
symptoms, and a worsening of the original
problem!

Not recognising a systemic problem, and
not addressing it via a system overhaul is
akin to…
“Putting off our date with reality”
The Diagnosis




Ill-effects are ‘systemic’: hence not easy to
fix in absence of a crisis
But the ignorance of this fact keeps us
embroiled with ‘symptoms’, rather than the
‘disease’
A whole new world-view / way of living
must evolve
The actual change however is likely to be in
steps – metaphor of rebuilding a moving
ship, plank by plank
Share in world GDP (1700-2000)
Share in world
GDP`
1700 1820 1900
1950 2000
India
24.5 16.1 8.6
4.2
4.0
China
22.3 33.0 11.1
21.8 22.9 34.2
4.6
26.2
7.0
Western Europe
~20
(estimated)
US, Canada, Aus, 0.2
NZ
1.9
17.6
30.7
~35
(estimated)
The paradox of ‘Project Utopia’
Will better people bring about a better
system?
Or
Will a better system help build better
people?
In either case, how do we begin in the
absence of the other?
Trends towards mechanisation



17: The number of days it took to build a 3D-printed office in
Dubai, in addition to two days to install it on site.
Why is it important? This is the world’s first functioning 3D-printed
office, which cost about $140,000. The technique used to build this
structure could cut down building time by 50-70% and labour costs
by 50-80% and a quarter of the buildings in Dubai would be printed
by 2030, according to a United Arab Emirates Minister. This could
well signal the beginning of a revolutionary change the construction
industry might undergo.
Tell me more: A 3D printer, which is 20-feet high, 120 feet long and
40-feet wide, was used to print the building with a floorspace of
about 2,700 sq.ft. using a special mixture of cement and a set of
building material (designed in the UAE and the US). It took 18
people to put up the structure - one to monitor the printer, seven to
install the building components and 10 to handle the electrical and
mechanical engineering aspects.
Wealth Ownership in India: Summary Statistics
Source: AIDIS Data, Recent Trends in Wealth Inequality in India, EPW , 10/12/16
All India, per capita, Asset holdings
Source: AIDIS Data, Recent Trends in Wealth Inequality in India, EPW , 10/12/16
Shares and Gini Coefficients by Wealth Deciles
Source: AIDIS Data, Recent Trends in Wealth Inequality in India, EPW , 10/12/16
Wealth shares of the top Percentiles
Source: AIDIS Data, Recent Trends in Wealth Inequality in India, EPW , 10/12/16