Malvika’s Ramblings

These days I am studying Economics and in doing so, I am getting a large picture of the world how it is. From Delhi to Toronto, I can see the differences between a developing nation and a developed nation.

The developing nation- India is full of spirit and energy because they need that optimism to grow. Victories like the recent 20-20 cricket World Cup are such Boosters! The nation goes mad. Its frenzy as we burst firecrackers, dance shirtless on cars and gedi around India gate!

In a developed nation like Canada, I can see people living their lives without just making ends meet. There is more extra-curricular life, if you know what I mean. The issues they address are not even given much thought to in India right now. For example, my college Ryerson, in Toronto, sent an email to students informing them about a gay-lesbian support meeting for students and faculty. There are advertisements on TV to participate in programs to remove poverty. A few programs are concerned with poor Canadians but some of them are about sponsoring a poor child living in Ethiopia or Haiti.

Such environmental differences make me think about economic inequality in the world and my Economics classes are very useful in forming a perspective.

Here is a rough idea of what the world has been doing.

In 1950s – 60s, the focus was on the relentless pursuit of increasing GDP.

GDP is the Gross Domestic Product of a nation or all the money it makes in 1 year.

In 1970s, nations had increased their GDP but it was seen that unemployment, economic inequality and poverty still existed. All the money was going to the rich. It wasn’t distributed in the entire population and hence the discrepancy. 1970s meant the dethronement of GDP.

Today the focus is on Economic growth, income distribution and reducing absolute poverty. Absolute poverty is when a person does not have the absolute essentials. About 2.8 billion people are absolutely poor today.

Relative poverty is when I look at Imelda Marcos and call myself poor.

So, focus on GDP did not help. Measuring per capita income (or GDP divided by no. of people in the country) was not useful as everyone did not really have an equal share of the country’s wealth. It became important to see the difference between the rich and poor, and reduce this difference without

1 Resorting to Communism where personal incentive dies

2 Becoming Capitalistic where small enterprises and businesses suffer

The point about Communism reminds me of Ayn rand’s book ‘We – The Living’ which is about a young girl’s struggle with communism. The point about Capitalism crushing small players reminds me of Rohinton Mistry’s ‘A Fine Balance’ where a nice family man has a grocery store in a small hill station. His shop’s main attraction is a soft drink that his family makes and serves. As the years go by, carbonated aerated drinks by MNCs make their way into the hill station with glossy posters, giving free drink dispensers with refrigeration to shopkeepers. The local business goes kaput and somehow this is very emotional and sad in the book.

Coming back to the point, India’s GDP is growing at a rate of 9%.

Of this, 6% goes to the rich (44 million people)

2% goes to the middle class (250 million people)

And only 1 % is shared by 850 million people that make up the poor population

The idea that was generally believed in the 50s and 60s was that if the rich prosper, the money will trickle down and everyone will benefit. Apart from the fact that a rich man will pay his chauffeur better, his money will go into savings which will go into investments that will bring about the growth of the country and will benefit the poor. But that is not what happened, at least in India.

So, should rapid economic progress be made at the risk of acute economic differences?

Should the rich be taxed heavily or not?

What to do when the rich people invest outside their country in richer countries?

Should India invest so much in higher education like IT while primary education for the masses in unavailable?

If you have read the book ‘Rich Dad Poor Dad’ you would know that wealth multiplies, that money makes money even if you just put a huge sum in the bank and leave it to accumulate compound interest. The chapters on corporations owning money instead of individuals would give you an idea on how to cut down on taxable income. Obviously if I am rich, I don’t want huge chunks of my money being cut off by the Government.

So, that’s that. Knowing all this, one can sit down and think over all of it to solve the problem of poverty in the world like Amartya Sen or you can just donate old clothes or fund primary education for poor children.

This article did not start for any social good, but now that we seem to have reached this bend in the road, here are three links to start with -

For donating clothes - www.goonj.info

For funding basic education - http://www.indiaschoolhousefund.com/

To prevent Child Abuse- Prerana, Mumbai
C-603, Eden III
Hiranandani Gardens
Powai
Mumbai - 400076
Contact Ms. Priti Patkar
Tel: 91 022 25700684
Fax: 25700684
Website: http://www.preranaatc.com/
Category: Children
Notes: Prerana works for the development and re-integration of women and child victims of commercial sexual exploitation. To eliminate Second Generation Trafficking of the children Victims of Commercial Sexual Exploitation & Trafficking (VOCSET). To prevent Commercial Sexual Exploitation (CSE) of children, minor, under aged girls and young women. To provide and Optional Dignified Life to the children of women VOCSET through comprehensive social intervention in their situation. More particularly, to give inputs like education, shelter, health, nutrition, recreation, vocational training, personality development, value education, counseling, etc. Aims & Objectives: To work on women’s related issues.

Watch this totally fuckall video which somehow makes development economics totally riveting!

[youtube]http://www.youtube.com/watch?v=hVimVzgtD6w[/youtube]

This entry was posted on Friday, September 28th, 2007 at 9:42 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.