“India Shining:” 49 Billionaires, 475 Million+ in Poverty
posted by Frank Pasquale
Mary Albino reports on India’s many economic triumphs (often branded as “India Shining”), and its remaining challenges:
The average Indian takes home $1,017 (U.S.) a year. Not much, but that’s nearly double the average five years ago and triple the annual income at independence, in 1947. . . .The poverty rate is down to 42 per cent from 60 per cent in 1981.
[But] [w]ith a population as big as India’s, 42 per cent means there are some 475 million Indians living on less than $1.25 per day. . . . [O]ne of every three people in the world living without basic necessities is an Indian national. The real number is probably even larger. The recently launched Multidimensional Poverty Index (MPI), a more comprehensive measure of deprivation than the current “poverty line” of $1.25 per day, uses 10 markers of well-being, including education, health and standard of living. The MPI, developed by the Poverty & Human Development Initiative at Oxford University, puts the Indian poverty rate at 55 per cent. That’s 645 million people — double the population of the United States and nearly 20 times the population of Canada. By this measure, India’s eight poorest states have more people living in poverty than Africa’s 26 poorest nations.
As trends toward global inequality continue, it’s worth considering the type of social order that arises amidst vast differences in opportunity and access to resources. In part of India, a resource war has developed. Called “India’s Hidden War,” it now only affects an isolated region of the country (Chhattisgarh). But the commodification of force and violence encouraged by extreme disparities may have larger lessons. Discussing the conflict, Jason Miklian and Scott Carney explain:
Economic liberalization has not even nudged the lives of the country’s bottom 200 million people. India is now one of the most economically stratified societies on the planet; its judicial system remains byzantine, its political institutions corrupt, its public education and health-care infrastructure anemic. The percentage of people going hungry in India hasn’t budged in 20 years, according to this year’s U.N. Millennium Development Goals report. New Delhi, Mumbai, and Bangalore now boast gleaming glass-and-steel IT centers and huge engineering projects. But India’s vast hinterland remains dirt poor — nowhere more so than the mining region of India’s eastern interior, the part of the country that produces the iron for the buildings and cars, the coal that keeps the lights on in faraway metropolises, and the exotic minerals that go into everything from wind turbines to electric cars to iPads.
One might trace those iPads from Indian mines, to FoxConn workers, to what some have called the “overdeveloped world.” One of my favorite passages in Adam Haslett’s novel Union Atlantic traces such a chain, in the musings of a Federal Reserve official contemplating an air conditioner:
T]he steel smelted from ore mined on some island of the Indonesian archipelago; forged into sheets on the hydraulic presses of a foundry outside Seoul; shipped across the Pacific to sit in a warehouse in Long Beach where it showed up in the Commerce Department’s numbers on inventory; ordered, packaged, trucked over the plains to an Atlanta wholesaler; bought by a contractor in Miami, who stood with a foreman directing workers riveting the vents together, operating the crane that raised into place the engine, itself assembled with parts from ten countries or more at a Maytag plant out in Iowa or perhaps Mexico, calibrated to the precise wattage to pump cooled air into the hundreds of sleeping chambers . . . . And allowing each step form the miner’s lowly wage to the construction buy: loans, lines of credit, borrowed money–the vast creationary incentive of compound interest, blind artificer of the modern world. (63)
Unlike the usual literary paean to the invisible hand (“no one knows how to make a pencil!”), Haslett’s evocation reminds us that the hand is connected to a brain (finance). Governments are the ultimate source of money and its value; they bear much responsibility for the fickle judgments of markets. I would be very interested to hear an argument that any of India’s 49 billionaires has contributed 10 million times more to the economy than any one of its impoverished millions (assuming, charitably, a $100 net worth for each poor person, and the minimal billion for each billionaire). But my general sense is that critical to each fortune was, at the very least, access to the capital markets so subsidized and regulated by governments.
I make these points just to lead up to a recommendation of Thomas Pogge’s latest effort to demonstrate that something more than pure market forces shapes opportunity today. Pogge observes that “the stunning growth of global inequality” has recently been “driven by rapid intra-national polarization” (4), which, as Pierson and Hacker show, is very closely tied to government action. Pogge offers, in the words of one reviewer, a “long and numbing list of acute deprivations and disparities in levels of living (and, indeed, in levels of dying), as reflected in global statistics on – among other things – the distribution of income and wealth, health and literacy outcomes, access to water and sanitation, morbidities and mortalities, and the casualties of commerce, climate change, environmental degradation and war.” Pogge notes that “the bottom half of humankind has seen its share of global private wealth shrink to 1.1 percent and its share of global household income to 3 percent, while the corresponding shares of the top tenth of humankind have risen to 85.1 and 71.1 percent, respectively.” Pogge argues that, “had the design of global institutional arrangements involved a little more concern for poverty avoidance, the share of the poorest half in global household income might well have sunk to no lower than 5 percent–high enough to avoid life-threatening poverty.”
I have not yet read all of Pogge’s book Politics as Usual, but the startling disparities in India seem to confirm his essential points. There are extraordinary levels of unnecessary suffering and deprivation in the world today. It would be Panglossian in the extreme to assume that the institutional arrangements that reliably replicate this suffering are the best human minds can devise.
Image: $1 billion house built for a family of 5 in Mumbai.
November 5, 2010 at 9:53 pm
Posted in: Law and Inequality, Uncategorized
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Responses (8)
Patrick S. O'Donnell - November 6, 2010 at 8:00 am
While it is of course true that “access to the capital markets [is] subsidized and regulated by governments,” any change on that score by these governments toward the relief of poverty and in a more egalitarian direction will have to take place as part of a coordinated and concerted otherwise non-participatory governments (and firms) will exploit the cross-national disparities much the way they exploit cheap labor markets today. Similarly, without such concerted transnational action, say, by the G-8 or, better, G-20 major economies (19 countries and the EU), we’ll be left with the “islands of socialism” syndrome in which those willing to dissent and innovate will be operating in a largely hostile surrounding environment, with few prospects for success, perhaps even creating perverse backlash and blowback effects. I thus suspect if we are going to reform and design regulations and institutions for poverty avoidance then it will have to be of the concerted cosmopolitan variety and, alas, at present, there seems little likelihood of that happening. I hope I’m wrong.
Patrick S. O'Donnell - November 6, 2010 at 8:02 am
erratum: “…take place as part of a coordinated and concerted campaign, otherwise non-participatory governments….”
Frank Pasquale - November 6, 2010 at 9:42 am
Patrick, I think that’s right. Capital flight is just too easy an option given globalized financial systems. I think we can interpret the European “shakedown” as the first step in a long series of capital strikes against egalitarian social order. Perhaps only Canada’s and Norway’s systems (with large oil stocks to support them) can survive that pressure.
As Abdelal notes, the key question is “How and why did the world shift from an orthodoxy of free capital movements in 1914 to an orthodoxy of capital controls in 1944 and then back again by 1994?”
(at http://www.hup.harvard.edu/catalog.php?isbn=9780674034556)
I’ve been reading Mirowski’s edited volume on the Mt. Pelerin neoliberal thought collective, and I believe its shrewd alliances with (along with a willingness to be co-opted by) a vanguard of socially irresponsible businesses has driven a surprisingly wide series of steps in this ongoing race to the bottom. The hope at the bottom of this Pandora’s box? Ideas matter.
Frank Pasquale - November 6, 2010 at 9:43 am
Oops, URL should have been
http://www.hup.harvard.edu/catalog.php?isbn=9780674034556
Patrick S. O'Donnell - November 6, 2010 at 11:02 am
Frank,
Thanks so much for the link to the Abdelal book, which I wasn’t aware of and very much look forward to reading. I suspect David Harvey has some things to say about this question as well.
m.mahmood - November 8, 2010 at 4:39 am
Very incisive commentary on mass poverty in India. The establishment downplays the poverty rate by putting it at 22 per cent though a government appointed committee puts it at 77 per cent. All paliotive measures undertaken are politically motivated and are subverted by corrupt hangers on.
Ramesh shah - December 5, 2010 at 8:41 pm
Sir,
SUB-’EVERY 1000 YEARS MAKE SOMETHING EXTRA ORDINARY WORK’
like- INDIA’S 50 BILLIONAIRES AND 500 MILLIONAIRES.
I am really proud of there brilliant work ‘GOD BLESS YOU’
HISTORY-’SHER SHAH SURI MADE GRANT TRUNK ROAD[GT ROAD].
MY DESIRE- ‘MUMBRA TO HOWRAH HOUSING PROJECT’
if 50 Billionaires and 500 Millionaires help me we can make
MUMBRA TO HOWRAH HOUSING PROJECT’
THANK YOU
SHAH-1-5516891784 USA
Ramesh shah - December 5, 2010 at 8:51 pm
SIR
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1]-’Rescue 3rd world from DHARAVI’- Cast Anil amb+10000000.
artist those are working since 1947.
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3]-Participate IN 5th ‘KBC’ PROGRAM WITH MR AMITABH BACHCHAN
4]-’RELEASE 99% PRISONER ON CONDITION
5]-’DOG DAY’
PLEASE help for ‘Mumbra to Howrah Housing Project’
Thank You
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