China got much richer than India in the last 50 years. What’s Modi’s plan?

[Torie]

https://www.nytimes.com/2023/04/19/world/asia/india-china-population.html

Fascinating article behind the paywall. India is just about to pass China in population, and has a young work force, while China’s is aging. The future would seem to be India’s in that sense, right? Well, not so fast.  India and China had similar per capita incomes in 1990. Now China is 5 times as rich. Quite an eye catching stat that, no? Why the divergence? Yes, infrastructure development on steroids was a big component, that Modi is trying to emulate, but still there are just not enough private sector jobs to employ India’s educated workforce. It’s still either a government job (some 650,000 young people in one Indian state focus monomaniacally via education to try to snag 650 government jobs, lottery ticket like odds*) or bust. Infrastructure alone is not enough.

*"Dhananjay Kumar, who runs a coaching center in Bihar, India’s poorest state and its youngest, with a median age of 22, estimated that 650,000 students will apply for just 600 or 700 jobs in the national civil service this year. The civil service is a tiny part of the work force, but it is prestigious — in part because it comes with job security for life. Most applicants spend years, and a big chunk of their family’s savings, and still fail to make the cut."

What is then? The article gets close to tagging China’s authoritarian approach as the key to emulating Croesus. Decision making in India was and is too fragmented and chaotic and thus inefficient when it comes to making the trains run on time.

On the other hand, now that the West is concerned and rather frightened about China, the relatively more democratic India might be a relatively attractive substitute, giving India a competitive advantage at last (along with English being more of a lingua franca there). Yet, Modi is moving India in a more authoritarian direction given his frustration with the inefficiency of democracy, potentially undermining that advantage. Ethical issues aside, just what amount of authoritarianism is just right for India when it comes to getting richer the most expeditiously? 

And then the article ends. Perhaps some questions are best left unanswered.

[Kahane's Grave Is A Gender-Neutral Bathroom]

IMO two things helped China-

1) Maoism/Civil War/etc completely destroyed the economy, allowing a blank slate, so to speak
2) A leader (Deng) who was competent enough to capitalize on that opportunity.

[Meclazine for Israel]

I know this is left field, but one thing that harms India's reputation is scams and lies.

I have Indian friends in Australia who cannot get jobs answering phones in call centres because people think it's a scam.

The Indian Government does not do enough to fix the image of the iNdian scam call.

[Clarko95 📚💰📈]

I'm not actually that familiar with the specifics of China's development, but one thing that greatly holds India back is overregulation, protectionism, and a total lack of coordination between the states and the federal government.

The License Raj still exists, and India still has relatively high levels of protectionism and state direction of the economy. I remember that one of the big problems that the GST reform was supposed to tackle was that different states taxed different goods at different levels, and had very dated and inefficient tax compliance systems. On highways along state borders, there would be massive traffic jams of trucks carrying goods because the truck drivers would have to stop, get out of their trucks, hand over paperwork or do the paperwork themselves, and pay any tax differences on the spot before they could continue.

One of the first points of economic liberalism is that internal trade should be as free and frictionless as possible; in fact, that the United Kingdom abolished internal taxes and levies centuries ago is cited as a foundational reason why the UK started its economic rise. India has still to learn and embrace this, and it's not just taxes, this License Raj still applies to everything.

I find the internal bureaucracy in Germany to be crippling compared to what I experienced in Sweden and the United States; I cannot begin to imagine how it is in India. India is fundamentally extremely hostile to anyone doing business (unless you pay major bribes), and is also deeply hostile and unhelpful to foreign investment. China has its problems with mandatory Chinese participation in foreign investments, and IP theft is faciliated by the government, but China also has a whole government agency whose jobs are to walk foreigners through the registration process and get their factories and offices up and running. India tried copying this, but that office is still frustrated by the entrenched interests in the federal, state, and local governments.

China shares a lot of issues with India, such as corruption, a heavy-handed state, protectionism, etc. but China has taken bigger strides to correct some of these (at least, in a way that promotes development). India for some reason is deeply wedded to the old way of doing things.

[Blue3]

I'd rather be India, with no only better human rights and more democracy, and so many more cultures, but China has a demographic time-bomb that will help it go the way of Japan while India is still young and growing. China might have done it faster, but at what cost? Better to go the slightly slower and more uneven, but more democratic and organic and sustainable, approach.

[Libertas Vel Mors]

I'd rather be India, with no only better human rights and more democracy, and so many more cultures, but China has a demographic time-bomb that will help it go the way of Japan while India is still young and growing. China might have done it faster, but at what cost? Better to go the slightly slower and more uneven, but more democratic and organic and sustainable, approach.

India may not be growing much longer. It has a fertility rate of 2.05. It's still growing now because of generational turnover, but it is already below replacement level.

[Tintrlvr]

I'm not actually that familiar with the specifics of China's development, but one thing that greatly holds India back is overregulation, protectionism, and a total lack of coordination between the states and the federal government.

The License Raj still exists, and India still has relatively high levels of protectionism and state direction of the economy. I remember that one of the big problems that the GST reform was supposed to tackle was that different states taxed different goods at different levels, and had very dated and inefficient tax compliance systems. On highways along state borders, there would be massive traffic jams of trucks carrying goods because the truck drivers would have to stop, get out of their trucks, hand over paperwork or do the paperwork themselves, and pay any tax differences on the spot before they could continue.

One of the first points of economic liberalism is that internal trade should be as free and frictionless as possible; in fact, that the United Kingdom abolished internal taxes and levies centuries ago is cited as a foundational reason why the UK started its economic rise. India has still to learn and embrace this, and it's not just taxes, this License Raj still applies to everything.

I find the internal bureaucracy in Germany to be crippling compared to what I experienced in Sweden and the United States; I cannot begin to imagine how it is in India. India is fundamentally extremely hostile to anyone doing business (unless you pay major bribes), and is also deeply hostile and unhelpful to foreign investment. China has its problems with mandatory Chinese participation in foreign investments, and IP theft is faciliated by the government, but China also has a whole government agency whose jobs are to walk foreigners through the registration process and get their factories and offices up and running. India tried copying this, but that office is still frustrated by the entrenched interests in the federal, state, and local governments.

China shares a lot of issues with India, such as corruption, a heavy-handed state, protectionism, etc. but China has taken bigger strides to correct some of these (at least, in a way that promotes development). India for some reason is deeply wedded to the old way of doing things.

I completely agree. I think to the extent foreign observers support Modi, they do so because they believe that he and the BJP are committed to liberalization and dismantling the License Raj. I do agree generally that the BJP has indicated slightly more commitment to liberalization than the INC when it was last in power, but the point remains that both parties are firstly, fundamentally incrementalist, fearful of being too disruptive and paying the political price for it, and, furthermore, too focused on issues that are unrelated to economic strength (in particular constant ethno-religious and caste-based factionalism and agitation) to achieve much on liberalization. As a result, I can't really see India achieving anything like China's rise any time soon. While Modi's authoritarian turn could theoretically pave the way for liberalization similar to China's economic policies of the 90s and 00s if he implemented radical changes to India's regulatory structures, he seems too devoted to other ideological concerns to focus on the issues that matter to economic growth in India.

India has made great strides in certain basics of infrastructure recently, though (such as sanitation), and those have gone far to reduce deep poverty even if they don't have direct economic effects.

[Filuwaúrdjan]

There are some obvious longue durée arguments that explain a lot of this, even down to the License Raj (both in its historical form and its present mildly reduced one). I'll go into more detail later, but the main thing to note is that these two countries are not as comparable as often assumed.

[Torie]

I have never heard of the term License Raj before. I want to read up on it. It sounds like the guild system on steroids that Adam Smith discussed perhaps.

[Filuwaúrdjan]

I have never heard of the term License Raj before. I want to read up on it. It sounds like the guild system on steroids that Adam Smith discussed perhaps.

Indian English (which, like American English, is absolutely a real thing) has some of the richest descriptive terms of any language, it's honestly glorious.

[Torie]

I have never heard of the term License Raj before. I want to read up on it. It sounds like the guild system on steroids that Adam Smith discussed perhaps.

Indian English (which, like American English, is absolutely a real thing) has some of the richest descriptive terms of any language, it's honestly glorious.

It also is a preservation venue for archaic English, e.g., "timepiece."

It also has with certain of their citizens at least a glorious archaic politeness. One Indian call center lady at the end of the call said, "may you have a splendid day going forward." Wow. I am a sucker for that sort of thing.

[SInNYC]

IMO two things helped China-

1) Maoism/Civil War/etc completely destroyed the economy, allowing a blank slate, so to speak
2) A leader (Deng) who was competent enough to capitalize on that opportunity.

Not just the economy. It also wiped out the old culture. China's economy is driven by manufacturing, starting with cheap junk and eventually evolving to more advanced products. A significant chunk of this manufacturing happens in company towns, including labor from the hinterlands living in company dorms.

Whether that is a good thing or not, it is just not happening in India, especially when the labor is young females. I dont know enough about pre-Mao Chinese culture really, but I wonder if rural Chinese would have been willing to send their daughters off the farm if the old culture hadnt been destroyed.

India has a low female work rate, so the larger population does not lead to a larger workforce, unless India somehow achieves their goal of transitioning from agriculture to advanced without going through an intermediate manufacturing phase.

[Filuwaúrdjan]

No, I don't think you do, in fact, 'have to hand it' to Mao.

[ملكة كرينجيتوك]

Not just the economy. It also wiped out the old culture. China's economy is driven by manufacturing, starting with cheap junk and eventually evolving to more advanced products. A significant chunk of this manufacturing happens in company towns, including labor from the hinterlands living in company dorms.

Whether that is a good thing or not, it is just not happening in India, especially when the labor is young females. I dont know enough about pre-Mao Chinese culture really, but I wonder if rural Chinese would have been willing to send their daughters off the farm if the old culture hadnt been destroyed.

India has a low female work rate, so the larger population does not lead to a larger workforce, unless India somehow achieves their goal of transitioning from agriculture to advanced without going through an intermediate manufacturing phase.

My spidey senses tell me this cultural difference predates Communism and independence.

Relevant and fascinating (if lengthy) historical discussion of gender relations across different cultures- Ten Thousand Years of Patriarchy. Would like to read the whole thing sometime

Patriarchy has persisted for at least ten millennia. Cereal-cultivation, the plough and irrigation increased agricultural yields, enabling a taxable surplus, state-formation and social stratification across much of Eurasia. Land and herds were inherited by men, who maintained lineage purity by guarding women.

Eurasia then underwent an important divergence. South Asia and the Middle East saw tightening endogamy (caste and cousin marriage), alongside religious authoritarianism. The more visible the woman, the greater the suspicion and moral ambiguity. By preventing rumour, men preserved piety, honour, and inclusion within vital kinship networks. East Asia remained exogamous, while Europe became increasingly nuclear, democratic, and scientific. But as long as women laboured on family farms (lacking both economic independence and their own social organisations), this global variation in kinship, institutions and religion may not have made an enormous difference.

East Asian women were certainly oppressed and unfree, but they had a latent advantage which would prove important under industrialisation a thousand years later. Marrying patrilineal relatives was sternly punished under the Song Code. Exogamy weakened clans and -  in comparison to the Middle East and South Asia - lessened their preference for female seclusion.