Saturday, May 24, 2014

India vs. China: A Clash of Cultures

Who decides?

Is the direction of history decided by pundits in debating halls? Is it decided in the media where we all measure which ideas are better?

Or is the direction of history decided by competition between different nations, different cultures and different civilizations? If America used to be the beacon against which other nations judged themselves, was it because America was a great idea or because America achieved great material success?

Today, the competition between free enterprise and socialism is being played out in the world arena.

On the one side, representing free enterprise… is China. On the other side, representing democratic socialism… is India.

The two largest nations in the world are competing: one is a dictatorship that practices free market capitalism; the other is a democracy that practices government regulation and bureaucratic sclerosis.

To those who believe that free enterprise cannot exist without liberal democracy, it’s a sobering spectacle indeed.

The most important story is, of course, China. The Economist opens an article about India with this important statement:

THE most important change in the world over the past 30 years has been the rise of China. The increase in its average annual GDP per head from around $300 to $6,750 over the period has not just brought previously unimagined prosperity to hundreds of millions of people, but has also remade the world economy and geopolitics.

India’s GDP per head was the same as China’s three decades ago. It is now less than a quarter of the size. Despite a couple of bouts of reform and spurts of growth, India’s economy has never achieved the momentum that has dragged much of East Asia out of poverty. The human cost, in terms of frustrated, underemployed, ill-educated, unhealthy, hungry people, has been immense.

Of course, you will be thinking that China has paid for prosperity with an environmental calamity. Air pollution in Beijing, we all know, is the worst of the worst.

Well, that is not quite true. The New York Times reported that, when it comes to air pollution, New Delhi is worse than Beijing:

In mid-January, air pollution in Beijing was so bad that the government issued urgent health warnings and closed four major highways, prompting the panicked buying of air filters and donning of face masks. But in New Delhi, where pea-soup smog created what was by some measurements even more dangerous air, there were few signs of alarm in the country’s boisterous news media, or on its effervescent Twittersphere.

Despite Beijing’s widespread reputation of having some of the most polluted air of any major city in the world, an examination of daily pollution figures collected from both cities suggests that New Delhi’s air is more laden with dangerous small particles of pollution, more often, than Beijing’s. Lately, a very bad air day in Beijing is about an average one in New Delhi.

What effect does this have on public health?

A recent study showed that Indians have the world’s weakest lungs, with far less capacity than Chinese lungs. Researchers are beginning to suspect that India’s unusual mix of polluted air, poor sanitation and contaminated water may make the country among the most dangerous in the world for lungs.

Just when you thought that in free democratic nations where governments guarantee the right to free expression, or a semblance thereof, people are more likely to protest, it turns out that India’s citizens have nothing to say about air pollution.

So much for liberal values.

What’s wrong with India?

The Economist explains the daunting problems, like a bloated bureaucracy, out-of-control government spending and a central bank that is hellbent on inflating the currency:

[Incoming prime minister Narendra Modi] must clean out the banks (bad loans are preventing a recovery), sort out the government’s own finances (chronic deficits are at the root of India’s inflation), cut subsidies, widen the tax base and allow the central bank to pursue a tougher anti-inflation policy.

And, that’s not all:

Labour laws are rigid, land for factories often impossible to acquire at any price, and electricity patchy. Mr Modi must launch sweeping land reforms, crack heads in the misfiring coal and electricity industries and make India more of a single market not just by improving roads, ports and the like, but also by cutting the red tape that Balkanises the economy. 

As some commenters have pointed out on this blog, for democracy to prevail, it has to be shown to work. And it has to be shown to work in concrete terms, with practical results.

Now that the people in the world’s largest democracy have voted, it’s up to them and their leaders to show that democracy can produce.


Ares Olympus said...

China, land of the one-child policy is free-market?

China the land of 23 trillion dollars credit bubble created in 8 years?!

May you live in interesting times they say, but you might also want to get out of the way when the giants fall.

I'm sure all the newly minted billionaires of China are planning their escape when the bubble pops.

Dennis said...

I am not too sure I am going to worry about China especially if its Yuan becomes the reserve currency for the world.

Along those lines:
Note how China is beginning to fill the vacuum being left by our glorious leader.

What will be interesting is to see how this government handles the loss of having the world's reserve currency and the losses that come with that? If one doesn't stay in the arena one losses their say about what happens in that arena.