Amit Varma, writing at promising new The Indian Economy blog, points to a much needed takedown of an anti-market, left-wing OpEd by a Dr. Utsa Patnaik.   As with many ideas of this sort, Dr. Patnaik starts with a rather broad, well-intentioned need / desire to save the poor –

THE ARGUMENTS for a universal, not targeted, National Rural Employment Guarantee Act as well as for a universal Public Distribution System (PDS) are far stronger than most people realise. Rural India is in deep and continuing distress.

National Employment Gaurantee?   Universal Public Distribution?  Eek.  Someone’s been lifting lines from Orwell, Marx, and Rand .  The fisking, authored by Aadisht Khanna, summarizes Dr Patnaik’s argument thusly –

* Rural India is facing an employment crisis
* This is because of the economic policies pursued in the past fifteen years.
* The proof of this is that people are eating much less grain.
* The assertion that people are eating less grain is borne out by data from the National Sample Survey, which measures consumption and expenditure across India.

Aadisht’s response?   An important lesson in economics & statistics – not all products rise monotonically in consumption or production given increasing incomes & productivity –

 There is a decline in rice and wheat consumption, and also in the consumption of dal… But at the same time, the consumption of other stuff has risen- milk, vegetables of all sorts, meat of all sorts (though fish has shown the most dramatic rise), and most notably eggs- the consumption of those has doubled.

And this suggests something that you would expect a Professor of Economics to know- the consumption pattern looks suspiciously like that of Giffen goods.

… What’s the classical example of Giffen goods used in economics textbooks? That when your income rises, you buy less bread and more meat- exactly what we see happening in rural India from 1988 to 2000.

Then again, I suppose that if your goal is to make the case for a “new deal for the rural poor” replete with a messianic role for left-wing econ professors, then perhaps statistical anomalies like Giffen goods are a bit of a godsend.  Too bad for the poor – the bureaucracy and tax burden will have to grow until they go back to the past & eat more dal.

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BusinessWeek just published a massive issue dedicated exclusively to India and China (via SAJA). I’m talkin’ huge.

… most economists figure China and India possess the fundamentals to keep growing in the 7%-to-8% range for decades. Barring cataclysm, within three decades India should have vaulted over Germany as the world’s third-biggest economy. By mid-century, China should have overtaken the U.S. as No. 1. By then, China and India could account for half of global output. Indeed, the troika of China, India, and the U.S. — the only industrialized nation with significant population growth — by most projections will dwarf every other economy…

The closest parallel to their emergence is the saga of 19th-century America, a huge continental economy with a young, driven workforce that grabbed the lead in agriculture, apparel, and the high technologies of the era, such as steam engines, the telegraph, and electric lights. But in a way, even America’s rise falls short in comparison to what’s happening now. Never has the world seen the simultaneous, sustained takeoffs of two nations that together account for one-third of the planet’s population. [Link]

India and China accounted for more than 50% of world gross domestic product in the 18th century and to my mind, there is no doubt this will be repeated. [Link]

Their sudsing machine is on hype cycle high:

Google… principal scientist Krishna Bharat is setting up a Bangalore lab complete with colorful furniture, exercise balls, and a Yamaha organ — like Google’s Mountain View (Calif.) headquarters — to work on core search-engine technology… “I find Bangalore to be one of the most exciting places in the world,” says Dan Scheinman, Cisco Systems Inc.’s senior vice-president for corporate development. “It is Silicon Valley in 1999.” [Link]

Today’s reality is more sobering:

Today, China and India account for a mere 6% of global gross domestic product — half that of Japan. [Link]

Taking a page from inane metro surveys in the U.S., India Today just published its third annual ranking of best Indian states to live in (thanks, Razib). Comparing cities would’ve been just as inaccurate, but much more entertaining. Subscription required, but here’s the raw data (XLS).

A big balle balle! for the breadbasket state, proving that tractors beat coders, at least for now. Gujarat is tops in economic freedom (XLS), Kerala in education (XLS), Bengal ranking surprisingly low.

Large States

1. Punjab
2. Kerala
3. Himachal Pradesh
4. Tamil Nadu
5. Haryana
6. Maharashtra
7. Gujarat
8. Karnataka
9. Uttaranchal
10. Jammu & Kashmir
11. Andhra Pradesh
12. Rajasthan
13. West Bengal
14. Madhya Pradesh
15. Chhattisgarh
16. Assam
17. Uttar Pradesh
18. Orissa
19. Jharkhand
20. Bihar

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