The puzzle of Argentina's decline

A post on FT.com blogs "beyondbrics" wonders, "What happenned to Argentina?", which is based on this NBER paper. It notes that, as late as 1914, Argentina was a very rich country, with per-capita GDP about 70-80% of the advanced industrialized countries.

I do not pretend to understand everything, or even most of the things in the paper, but here is my understanding. The explanation is twofold:

a) Argentina was quite open to world trade in 1914, but during the World Wars and the Depression, the loss in world trade due to protectionist policies of the world hit the economy quite hard. It forced Argentina to use autarkic policies (trying to be self-sufficient), in the short term. This was continued even in the post war period.

b) The second explanation is the low marginal product of capital, which in turn means that capital accumulation and investment is low in Argentina, and Argentina finds it hard to mobilize capital.

Now, what is the reason for the autarkic policies and the low investment and capital accumulation? It is an economics paper, and not a politics paper, though it does make some guesses about the political situation. It dismisses "empire" as a factor since it only considers the pre-1914 colonial interferences.

But surely, any serious discussion of the post WW2 era must include a reference to the military coups, often supported by the US. There was the Dirty War in Argentina during with many thousands were killed, which was a part of a larger operation in Latin America - Operation Condor.

These factors are not mentioned in the paper, but surely they are relevant. It would seem to be a simpler explanation for the puzzle of Argentina: turning from a rich to a relatively poor nation.

The Maruti Suzuki workers dispute

On 27 June, 2013, the International Commission for Labor Rights (ICLR) released the report entitled, “Merchants of Menace: Repressing workers in India’s new industrial belt, Violations of workers’ and trade union rights at Maruti Suzuki India Ltd.”

Here is the press release.

Here is an article by Tehelka covering the report. It contains a version of the events at odds with the official Maruti version. Which version is correct, I have no way of knowing. I just want to highlight a couple of points which are probably not in dispute:

One year on, charges are yet to be framed, but the arrested workers’ application for bail has been rejected by the High Court in Chandigarh in May.

I don't know how it is possible to keep people in jail for a year without charges. Related, but different is this report in the Times of India, which notes that two-thirds of prison population in India consists of under-trials and only one-third is convicts.

"Indiscriminate arrest by police, ignorance of legal rights, delay in trial, reluctance of the court to grant bail and inability of the accused, particularly from weaker sections of society, to provide sureties are some of the reasons for incarceration of large number of people as undertrial prisoners," the official said.

 The second point I want to highlight is the role of contract labour in the dispute.

The Federation of Indian Chambers of Commerce and Industry brought out a report on Industrial Relations and Contract Labour In India written by its Senior Director, B P Pant. It holds the shift towards contract labour in India as a “key reason for labour unrest in India.” 

 Here is a link to the report by FICCI. Of course FICCI blames the "the archaic and rigid Indian labour laws" for the situation.

Pakistan's elections

EPW has a good article on the Pakistani election, subtitled: "More rejection, less election".

It details the various ills that plague Pakistan, for example the major power cuts which last for 18 hours or more, but concludes that:

But has any party articulated a vision of how to get out of this mess? The answer, sadly, is a resounding no.

 The election was basically an anti-incumbency vote, kicking out the massively corrupt PPP.

Civil Liberties groups' statements on Afzal Guru's hanging

Here is a list of statements by various civil liberties groups.

Abandoning the Right to Food

EPW has a important article by (co-authored by Harsh Mander, a member of the National Advisory Council) on the "Abandoning the Right to Food" by the Parliamentary Standing Committee.

Just one quote:

According to media reports, the government plans to pass the National Food Security Bill in the coming budget session of Parliament after incorporating most of the recommendations of the standing committee. If this is allowed to happen, India will lose a historic opportunity to end hunger and malnutrition in the country. If a state like Chhattisgarh can legislate a comprehensive Food Security Act, there is no reason why the central government – which has far greater resources at its disposal – cannot do the same for the entire country.

Press Freedom in India - a caveat

A few days ago, I posted the press freedom in India rankings by Reporters Without Borders (RSF). A caveat follows.

Of course the whole rankings issue involves weighing of many factors, but one can sometimes detect some glaring biases.

The following article (via Angry Arab) makes a good case that the press freedom index is politically biased, at least in case of the Middle East. Pro-US and pro-western governments are consistently given higher ranking and conversely.

However, anti-Americanism is hardly raging in India, nor is anti-Indianism (whatever those terms mean) in the US, nor in Europe, so India cannot find any excuses for its abysmal ranking through this route.

State entry into media?

The TRAI has introduced recommendations against the entry of state and central government entering the broadcast sector.

According to this EPW article, TRAI bases its recommendation on a questionable premise:

Quoting from a 1995 Supreme Court judgment, when the media scene was vastly different from what it is today, TRAI suggests that allowing government bodies into the business of broadcasting is not conducive to a healthy media environment.

 It discusses various questions, such as the Tamil Nadu govt. getting into distribution and conflicting with private distributors by offering a cheaper package.

In today's media scene with a huge number of private channels, does it pass the laugh test that it would be a threat to freedom if the govt. entered broadcasting in a bigger way?

The whole article is worth a read.

Press freedom in India

Reporters without borders (RSF) has put out a list of countries ranked by press freedoms: India is ranked 131 (down from last year), between Burundi and Angola.

Income inequality

Below is the chart of Gini coefficient of income inequality of various countries (higher is more unequal). Note the position of South Africa. That is why John Pilger made a documentary called "Apartheid Did Not Die". (via Angry Arab)

US subversion in Central and South America

You might have heard of the term "Satellite State", that is states under the de-facto control of a neighbouring powerful state (like the Soviet Union). It is roughly synonymous with a puppet state.

We can do a similar analysis of the neighbourhood of the most powerful state in the world, the US. For many decades, centuries even, Latin America has been thought of as United States' "backyard". Military coups backed by the US were common and many of the states had top military officers trained by the US in the infamous "School of the Americas" (also called the "School of the Assassins"), in Fort Benning (it has since changed its name).

Here is a very nice map of US activities in Central and South America under 11 US presidents, starting from Eisenhower.

This is old stuff, to be sure, you might already know this. But the US is a global power and it carries out often similar policies elsewhere in its domain. They are of course modified to local circumstances. You can immediately see links between US and Pakistan military in this framework.

Here are a couple of links (via The Angry Arab News Service) on the background on a topical event, the French strikes in Mali and the hostage crisis in Algeria.

Putting growth in its place

A somewhat old but still massively relevant article by Jean Dreze and Amartya Sen in Outlook on India's socio-economic performance since 1990.

The point of the article is that both the "massive success" (GDP growth) and the "massive failure" (poor social outcomes) of Indian economy since 1990 are true. To see the second point, they give stats on India's performance in South Asia (it has deteriorated, relatively, even below Nepal and Bangladesh and is only above Pakistan).

The key point they make is to distinguish between "unaimed opulence" and "growth-mediated development" (as introduced in their 1989 book, Hunger and Public Action, one of the best books I have ever read).

Unaimed opulence (they give the example of Brazil before Lula) is concentrating on economic growth without complementing social programs. It is in large part (they give exceptions in TN for example) what has happenned in India, with an extremely miserly spending on health and education.

Growth-mediated social programs would use the extra revenue generated by high growth (India has 4 times more revenue than 1990) in an active way, as Brazil has done after Lula came to power.

This is not just a theoretical difference, it requires politics of confronting power, like the biscuit lobby in Mid Day Meal program and corporate power in India.

As an aside, the Mid Day Meal program by itself has reduced effective poverty by a significant amount, so it is important to preserve it.

The whole article is worth a read.

Villagers in Jharkhand allegedly used as "human shields" by security forces

While there has been much outraged commentary about the (despicable) Maoist act of using a dead body as an IED, there have been reports of security forces forcing the villagers to come with them to look for the body and to use them as human shields. Even more disturbingly, the Indian Express has an interview with the police chief who said that it was standard procedure:

Local villagers are taken to search and carry the bodies all the time, mainly because the security personnel are carrying weapons

PUDR has a statement on the matter.

RIL is once again a darling of Dalal Street

Dalal Street relies on RIL again, cites 4G, KG basin gas price revision.

The KG basin gas price revision was recommended by the Rangarajan committe, which doubled the gas price from 4.2 to 8 per mmBtu and favoured deregulation. RIL wanted to triple the price to 14 but Jaipal Reddy had said no. He has been since replaced, of course, to much noise created by the opposition and Arvind Kejriwal.

India-Pakistan relations

(I might be updating this post)

Frontline has a review by A.G. Noorani about a 10 volume work on India-Pakistan relations by Avtar Singh Bhasin who "served in the Ministry of External Affairs for three decades in various capacities". It contains an enormous amount of material displayed for the first time.

 Some of the quotes are eye-popping.

Deputy Prime Minister Vallabhbhai Patel demanded territory from Pakistan “to enable us to settle” the refugees from that country. Given his outlook, it is not surprising that President Rajendra Prasad agreed with him.

Nehru described Mohammad Ali’s [Pakistan's foreign minister] ‘approach as intriguing’. Ali had blamed India for Pakistan’s military alliances and alignment with the West, to which India had taken exception. Mohammad Ali said, since India had failed to resolve the issues between them to Pakistan’s satisfaction, he had to enter into a military alliance.
...
The Soviet Ambassador in New Delhi, reporting to Nehru on the meeting of his colleague in Karachi with Noon, told the Indian Prime Minister that Noon had offered to walk out of the Baghdad Pact, ‘provided the Soviet Union gave assurances to support Pakistan in the United Nations on the Kashmir issue and further assurances to give military aid to Pakistan if attacked by India’.”

Moscow exerted itself strongly to persuade New Delhi to stiffen its policy towards Beijing through a Treaty of Alliance with the USSR—and burn its bridges with China; the USSR remaining free, of course, to make up with China, as it did in 1986-89, leaving India high and dry very much like the U.S’ policy today. 

 Particularly useful is the record of the Swaran Singh-Z.A. Bhutto talks on Kashmir. Bhasin does a service in reproducing full texts of the rival proposals made on January 19, 1963. They prove that by 1963 Pakistan had discarded a plebiscite in favour of a partition. It wanted all of the State minus Kathua. India was prepared to concede 3,500 square miles

Links

Harold Laswell (wikipedia entry) on The Theory of Political Propaganda

"Propaganda is the manage-
ment of collective attitudes by the manipulation of significant symbols"

S Anand (not me - Siriyavan Anand) - I will write a longer entry on him

A Case for Bhim Rajya (On Ambedkar's legacy)
Eating with Our Fingers, Watching Hindi Cinema and Consuming Cricket  (on Lagaan/cricket/Dalits and much else)

Officials hope that social and infrastructure spending is lower

This is literally true. In an article upbeat on meeting the fiscal deficit target of 5.3%, there is a line saying that

"Besides, officials said, hopes are high about huge savings on the Plan expenditure front, where a number of departments and other ministries have not been able to utilize allocations for social and infrastructure sectors" 

Not utilizing allocations on social and infrastructure sectors is a good thing? Even the business leaders and respected economic commentators (quoting the RBI) identify infrastructure as a key focus area.

Not to mention that social sectors require a lot of attention in India with spending on health and education among the lowest in the world as a percentage of GDP.

This is a case of deficit-fetishism. Fiscal deficit is not an end in itself. There is nothing good in this story.

Links

Plan for corporate India , by C P Chandrashekhar in Frontline

Investment climate may improve moderately in FY 2013: Survey in ET

Hawking the Deficit by C P Chandrashekhar and Jayati Ghosh in Macroscan

India's Growth Story: A Comparative View by C P Chandrashekhar and Jayati Ghosh in Macroscan

Why do people think economists are charlatans by Noah Smith on his blog, based on this paper. The graph here highlighting the disconnect between the general public and the economists (via the Economist) is also very funny. Note particularly the 100% agreement across economists of the hardness of predicting stock prices.