The new India.

This is an article that appeared in today's Statesman. Worth a read.

The mansions of the blest

Manmohan Singh’s exhortations to the rich of India not to flaunt “a vulgar display of wealth” are puzzling, since as an economist, no one should be more acutely aware than he that the relationship between the free market and social justice is scarcely one of intimate friendship. If he had listened a little more attentively to his mentors on the US and UK, he would know that the model of development, of which he is so enthusiastic an exponent, insists that no limits should be placed on the creation of wealth, the dynamic energy of entrepreneurs, the go-getters and adventurers of capitalism. George Bush has famously advantaged the very rich in tax breaks: between 2001 and 2010 the richest one percent of the population will have benefited by half a trillion dollars; while Tony Blair said he has no desire to cap the earnings of David Beckham or other of the megarich in Britain. As a consequence, London has now become a playground for the international jet-set, the first on-shore tax haven, where people can live with every ostentatious amenity that human imagination can devise, while choosing to have their money taxed elsewhere.
Adjustment to the inescapable reality, that free markets and social justice are mortal enemies, has been difficult enough even in the West, where a majority of the people are beneficiaries of globalisation. To sell this idea in a country like India, with its unnumbered poor and excluded, is a quite different story. It requires powers of salesmanship which exceed even the considerable accomplishments of Manmohan Singh and talents of his government.
For no matter what compensatory efforts governments make to redress the imbalance between rich and poor, the free market continues to distribute its rewards with intemperate and arbitrary promiscuity. The pace and scale of wealth-creation in the private sector leaps, nimble and agile, out-distancing even the most worthy efforts at redistribution by governments, whose cumbersome activities come limping far behind them. This is why policies designed to raise up the poorest – Minimum Employment Guarantee Scheme, aid to stricken farmers, increases in expenditure on education and health care, efforts to create greater equality of opportunity for those disadvantaged by age-old disabilities of caste or faith – can never keep pace with the market.
This means that, in effect, there is a two-tier economy at work. While the government anxiously seeks to limit the suffering of those deprived even of the basic necessities of existence, the very rich are cutting global deals, which enhance their wealth with far greater speed than the woes of the poor can be addressed. In reality, the spectacular opulence in India is supposed to be the instrument whereby the poorest will benefit. This used to be called “trickle-down”, a theory described by JK Galbraith in 1992 as “the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for sparrows.” The ineffectiveness of this has not, however, been allowed to interfere with its majestic workings, since it is the only theory which permits the more or less peaceful co-existence of rich with poor. The reasoning goes that if the rich are allowed to become much richer, the poor may become a little less poor. The high growth-rate is the expression of this: the figures are to have a magical effect upon the poor, and uplift them by association with the major player that India has become in the global economy. They are supposed to bathe in the refulgence of the wealth of others. Their patriotic hearts should beat faster, as they see India admitted to the councils of the world, gaining a seat at the top table, even though their own fare may remain the miserable scraps that fall from it. This was the error of the NDA government. It has necessarily been repeated by the UPA, despite the rhetoric to the contrary.
As a social model in the rich countries it works, because the poor are not in the state of absolute want that millions are in India; but even there, inequality continues to grow. In 2006 in Britain the thousand richest individuals saw their wealth grow by more than 20% to some 700 billion dollars. The murmurings against it remain faint, because the general level of prosperity is high.
In India, the discrepancy between poor and rich requires more drastic action than the generation of wealth by the rich and the small palliatives offered by government to the poor. Rich and poor live with a growing apartheid, which replicates the divisions which produced older inequalities of an untranscended Indian past.
Manmohan Singh’s response is to place faith in the power of moral suasion. “India has made us. We must make Bharat... vulgar display insults the poverty of the less privileged.” Less privileged? The child labourers (recently yet again legislated out of existence), landless share-croppers, debt-bondage, the dead of Nandigram and Kalinganagar, the disappeared girl-children of the most prosperous states, indebted farmers, unemployed youth in urban slums? These people are not
less-privileged, they have no privileges at all, not, in many cases, even that of survival. It is vain work to moralise the amoral process of wealth-creation.
Perhaps the most telling riposte to the high-minded calls of Manmohan Singh was the announcement that India’s richest man is building a tower-block in Mumbai for his family – six people and the six hundred staff required to service them. Mukesh Ambani’s construction of his private fortress is already worth one billion dollars. It will no doubt provide amenities which his present far from humble 14-storey dwelling is unable to furnish. This grandiose folly has all the makings of the delusions of megalomaniac monarchs and absolute rulers of pre-revolutionary Europe; and is an example of the kind of thing which appalls Dr Manmohan Singh. It is like the place my grandmother thought she might go to after death, where she confidently expected to be accommodated in the mansions of the blest.
Dr Manmohan Singh casts his project in terms of India Inc; that is to say, he now sees the culture and civilisation of India in terms of a single business enterprise. “In a country with extreme poverty”, he said sternly, “industry needs to be moderate in the emolument levels it adopts. Rising income and wealth inequalities, if not matched by a corresponding rise of incomes across the nation, can led to social unrest... Such vulgarity... is socially wasteful and it plants seeds of resentment in the minds of the have-nots.”
There we have it. It has nothing to do with justice, equality or the redressing of ancient wrongs: it is because resentment might breed disaffection, and disaffection might give rise to violence. As indeed it does. Just a year ago, Manmohan Singh stated that the greatest internal threat to India came from Naxalism. Naxalism is not a war declared by evil people on the Indian State: it is a direct result of the same social injustice which Manmohan Singh half defends, half attacks, in his efforts to reconcile the irreconcilable. No doubt, he will have his reward; it is fervently to be hoped that this will be confined to the electoral nemesis that awaits him in less than two years time.