Thursday 16 September 2010

Sao chuhe khake billi haaj ko chali

I was quite liking this discussion (everyone’s corrupt, not just us) till the Nigerian investigator pointed out that China and India were now the new corruptors of Africa, even as governments in developed countries enforce anti-corruption drives. And the whites just started off.

Well, well, well… Anyone asking how much white money is invested in these Chinese and Indian companies, and in these evil economies? And where does the fruits of our evil eventually go?

China’s Head of Press & Public Affairs in the UK writes in today’s FT: “In 2009, foreign-funded enterprises in China accounted for 55.9 per cent of the country’s total exports, contributing almost two-thirds of China’s trade surplus… Take “Barbie dolls” as an example. A Chinese-made Barbie doll sells for $ 10 in the US, out of which the Chinese manufacturer gets only 35 cents.”

(The diplomat does not say whether the Americans are making nearly 2760% profits on dolls, or explain why they may not be doing so, but that’s another matter.) 

It reminded me of a wedding in a very rich family. The bridegroom was, most probably, a graduate from a western business school, and understood that as long as your books were ok, white people will willingly look the other way while doing deals with you. But he needed black money for his wedding expenses. Of course, in India there is no distinction between company and family money.

So he hit upon a bright idea: He made his suppliers do the shopping, and asked them to bill him. (I don’t remember how he adjusted the tax. Most probably he expected the suppliers to grin and bear it.) And you had ad agencies ordering a ton of flowers and chemical companies ordering jewels.

Look ma, my hands are clean! What rubbish.

Monday 6 September 2010

In 1947, India was ahead of China…

Almost every article on the Indian economy reminds us how far behind India is from China.

But how many articles have you seen that note how we lag France, Germany or the Czech Republic? The whole idea is absurd, given that historically (i.e., in the last 200 years) these countries have been so much ahead of India.

Why is comparing India and China ok? Well, both have over 1 billion people – and, far more importantly, India’s per capita income exceeded China’s in 1947 and 1948 when India became free and China became communist, respectively. Hence, the history of modern India begins from 1947; and that of China from 1948.

Do they?

Because drawing back a few decades shows a quite different picture, and shows just how much difference war can make, even to a colonised country. Why is it so easy to forget that, in relative terms the second world war (which began at least 10 years earlier in China than it did in Europe), hit China and India quite differently, and that was bound to reflect on macroeconomic indicators? (Relative is the operative word here; in absolute terms, India probably lost more people to war than the rest of the Commonwealth combined.)    

Hans Rosling’s TEDtalk Asia's rise -- how and when graphically shows exactly what I mean. What’s happening becomes clearer still if one notices how USA and Japan do during and just after the second world war. The former’s growth parallels India’s; the latter’s plight parallels China’s.

I am not suggesting that Indians should take any comfort from these figures. I am, however, suggesting that leads and aberrations do matter. And to deliberately leave them out is a travesty of both economics and history.

(Incidentally, how did Rosling estimate those numbers?)