Lately it seems like everywhere you look people are starting to move up as fast as George and Weezy. Prices on typically expensive goods are coming down so that companies can make a play for the disposable income of the world’s vast middle class. Monday’s L.A. Times brought us word of a ridiculously priced car out of India:

Tata Motors Ltd. is set to unveil the world’s cheapest car as early as January as it takes the growing interest in low-cost vehicles to a new extreme.

The Indian carmaker will launch its $2,467 vehicle by the third quarter of 2008 and may unveil it at January’s Auto Expo in New Delhi, Managing Director Ravi Kant said.

Separately, Tata Motors is developing a line of small hatchbacks and mid-size sedans to be introduced next year. India produces 1.3 million cars a year. With the market growing at 10% to 12% per year, this could reach 3 million within a decade.

The four-door car — a pet project of Tata Group Chairman Ratan Tata — would be the cheapest by far in its class. The current cheapest, the Maruti 800 produced by Suzuki Motor Corp., sells for more than $4,000. [Link]

Just to clarify, I don’t think that a really cheap car is ridiculous. No. What I find crazy is the exact price. Somewhere there was a room full of marketers that decided that $2,467 was the exactly right price for this car! I mean, why not $2,499? But this is going to be a hooptie right?

Competitors are skeptical about the price and quality of the car, which the group says will have a 600-cubic-centimeter engine and come in a range of models.

However, [Managing Director Ravi ] Kant said: “It will be a good-looking car which you will want to purchase…” [Link]

Well, okay then. The Christian Science Monitor had an article last week that hinted at how owners of such a cheap car might immediately seek to pimp their ride:

While its materialistic glamour revolution is still in its infancy, the new capitalist India is all about keeping up with the Kumars. At all socioeconomic levels, Indian shoppers are becoming more “aspirational,” using their new wealth to buy status in a country where social cachet is a vital commodity.

Continue reading →

A great OpEd quoted (in full?) at the IndianEconomy blog talks about the “Unknown Education Revolution” in India –

Ain’t IIT But It Gets the Job Done

Walking around the hot summer streets of Sangam Vihar–Delhi’s largest slum colony sprawled over 150 acres and home to 4 lakh people–in 2005, Aditi Bhargava noticed that almost every street had a school…These schools were often just holes in the wall or a room with a few benches populated by eager children.

And in case you’re wondering if these schools are any good –

Studies carried out in India all share the common conclusion that private-school students outperform their government-school counterparts. For example, in a 2005 Delhi study [11], James Tooley found that children in low-budget unrecognized private schools did 246% better than government school children on a standardized English test, with around 80% higher average marks in mathematics and Hindi…more than 80% of government-school teachers send their own children to a private school…

As noted in an earlier post about private education in India, when it comes to capitalism the poor often have much to teach the rich. In this particular case, the lessons from the piece seem directly targeted at some of the biggest dogmas which dominate education reform debates here in the US. Continue reading →

Prashant points us at yet another interesting, Desi economic history piece by Gautam Bastian. In it, Gautam quotes a provocative Telegraph OpEd that discusses a surprising diversity in the Desi Intellegentsia’s attitudes towards the market. Instead of the uniform, Pavlovian rejection Uncle Milt experienced, the Telegraph’s Ramachandra Guha points at a specific braindrain of Guju econ knowledge –

Back in the Sixties, it used to be said that India’s most successful export were economists. Our economy was resolutely insulated from the rest of the world, but our economists occupied high posts in famous universities in Europe and America. Later, the joke was amended to say that the reason India’s economy was mediocre was because its economists were world-class. No South Korean was a professor of political economy at Cambridge; no Malaysian had been awarded the Nobel Prize. But their economies grew at an impressive 8 per cent, whereas ours stayed stuck at 3.5 per cent, also known as the “Hindu” rate of growth.

My own theory about Indian economists is more specific and hopefully less facetious. It runs as follows; Gujarati economists place faith in the market, while Bengali economists are prone to trust the state. In the Fifties, when P.C. Mahalonobis drafted the Soviet-inspired second five year plan, A.D. Shroff responded by starting the Forum of Free Enterprise. In the Sixties and the Seventies, about the only economist of pedigree advocating Indian integration with the world economy was the Gujarati, Jagdish Bhagwati. He was opposed by an array of Marxists, many of whom (naturally) were Bengali.

As Gautam notes, several prominent thinkers have attacked the the broad question of “if intellectuals are so smart, how come so many have been so wrong about markets?” (Heck, little old me, in my blogging youth tried to add on to Nozick). But by slicing and dicing across socio-cultural lines within India, Guha takes the question in a different direction. While I’d heard the stereotype of Bengali Marxists (keep in mind that my homestate – Kerala – has its fair share as well) I wasn’t aware that Guju’s were responsible for the counter pole. Biz friendly Gujus, eh? I suppose many stereotypes start with a grain of truth somewhere….

Continue reading →