India Still Rising (c)

One of the economists I follow is Rathin Roy [member of the Prime Minister’s Economic Advisory Council.] India has several major long term growth challenges. One is geographic inequality in growth. South and West India are growing much faster and have much lower population growth rates than the rest of India, causing them to pay far higher taxes than they recieve in government spending benefits. Some believe this could cause long term Indian instability. My view is that the poor parts of India are likely to grow rapidly in the future. When measured in terms of human population I think STs, SCs, OBCs and poor conservative Sunni (non Sufi) Indians are likely to experience rapid economic growth, causing this issue to take care of itself over time.

Rathin Roy is optimistic about short term Indian economic growth but worries about India’s long term economic growth.  He worries that India could enter the upper middle income country trap, similar to Brazil. Let us assume that income or Y depends on three inputs, K (Capital = tools or the sum total of all previous investments minus depreciation), L (Labor = total hours worked),  A (technology, product development and process innovation, total factor productivity):

Y = F(AL, K)

dY/dL = marginal product of Labor = long term real wages on average

dY/dK = marginal product of Capital = long term real rate of return on investment

India has a reasonable savings rate which finances investment.

India has a long term challenge with A or technology. What are these challenges?:

  • Long term security
    • Rathin Roy is worried that Indian ordinary crime and organized crime rates might rise, lowering Indian A. This is one of the reasons that Latin America is stuck in the upper middle income trap.
    • I would add the long term danger of Islamism.
  • India has a long term challenge with respect to merit, capacity and competence. Specifically with respect to physical health (Bahu Balam), mental health (broadly defined or Chitta Shuddhi), and deep intelligence (Buddhi). My ideas for improving these three include:
    • promoting sports, exercise, stretching (including Yoga, Tai Chi, Qui Gong), breathing (Pranayama)
    • encouraging meditation or brain electro therapy, including assisted by neuroscience designed devices and applications.
      • promoting brain sound therapy or music (naad, mantra, shabda)
    • Spending tens of billions of dollars per year on R&D with respect to the intersection of science and spirituality/religion.
    • Note that IQ–which I believe to be only a partial estimate of G, a subset within the superset of deep intelligence, is strongly correlated with socio-economic outcomes around the world. Increasing deep intelligence is likely to sharply boost material living standards.
    • increasing preventive health care spending with high rates of return on investment (see the next part)
  • Invest in the Indian commons or investments with high external rates of return:
    • Improving the Indian education system.
      • improve the quality of secondary and tertiary K-12 and post 12th standard education
      • de emphasize rote memorizion, encourage creativity, thinking outside the box, originality, logic, intuition
      • push back with respect to post modernism and cultural marxism.
      • More on this planned.
    • increasing preventive health care spending with high rates of return on investment (see previous section)
      • Invest in improving air, water, land pollution
      • Invest in improving water tables and water irrigation around India
      • Invest in providing free or inexpensive quality drinking water across India. [Free drinking water should only be for personal consumption and not for agriculture, bathing or industrial uses. Free taps and wells are enough. No need to provide free bottles and containers.]
      • Invest in free immunization
      • Invest in free Yoga/Pranayama/Gymn classes
      • Invest in tele-medicine across India. Where poor people can over skype be instructed by doctors on diagnosis and how to administer medicine
      • Use nurses versus doctors as much as possible–assisted by tablets and tele-medicine
    •  R&D to lower the cost of broadband across India to facilitate outsourcing of business across India
      • subsidize high ROI business conferences which are online as well as in person
    • encourage Gig economy and entrepreneurship and personal contractors
  • Encourage immigration from abroad

Many of the above ideas need to be fleshed out in much more detail. I want to write a long articles on:

  • reforming the Indian health system and the Indian health education system.
  • reforming the Indian education system
  • investing R&D on the intersection of science and spirituality/religion


India Still Rising (b)

India Still Rising

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4 thoughts on “India Still Rising (c)”

  1. Razib, perhaps upper middle income country needs to be defined.

    I am defining OECD member equivalent 1st world developed countries to include Chile and richer per capita. The top 56-58 countries:

    China and Thailand are likely on a pathway to break out of the upper middle income country trap and soon join the first world . . . although this has not yet happened.

    No country in Africa has broken out of the upper middle income trap:

    Equatorial Guinea and Seychelles are tiny resource rich countries that have not yet sustainably increased their education capital, physical health, mental health and intelligence to reliably have high long term per capita income over the long run.

    In Latin America the only sizable country on the pathway to escaping the upper middle income trap is Chile. The only small countries larger than a small city that might have are Panama and Trinidad and Tobago. Of these three countries Panama has the largest probability of being in a upper middle income country trap.

    India is very likely to have a per capita income similar to Mexico based on current trends and flows in the medium term (unless Mexico breaks out of the upper middle income trap).

    India does not want to become another Mexico. Mexico has astronomically higher organized crime, ordinary crime, murder, rape, violent assault and armed robbery than India. Mexico has corruption, dysfunction and negative cultural trends–including many flowing from post modernism and the caucasian intelligentsia:
    67% of Mexicans are born out of wedlock.

    Mexico has massive physical health challenges, including the highest obesity rate in the world. Mexico has major challenges with mental health broadly defined and with deep intelligence (I would argue that deep intelligence is correlated with physical health and mental health broadly defined.) Mexico’s average IQ has been stable around 87 for a long time.

    Mexico does not have a competent military and survives as a de facto American protectorate. America will not allow Mexico to fail. India does not have a foreign patron to bail India out.

    India has her own major challenges with physical health, mental health and deep intelligence. But easier pathways out of it. India has ancient cultural and civilization norms that can help ameliorate these challenges. India’s culture is a potential growth multiplier. In my view, it is necessary but insufficient to increase India’s average IQ to avoid the upper middle income trap.

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