Do the Indian people ever in their lives think about using birth control so that there are enough resources and space to go around for all the people in India. When I was in high school in the mid to late sixties, the population of India was approximately 450 million. In 2017, the population of India was 1,341 million, or 1.341 BILLION. I don't feel sorry for them , nor should anybody. They have done it to themselves.
2
"Lately, he just piles up bales at a loading dock, waiting for better days. The price for his exports is now too low to cover his costs, he says."
Don't take that to the bank. Probably cries poverty to pressure the seller with 1 acre, who's crop failed last year, and who has only half a crop this year, to accept much less. Ah capitalism.
3
As a farmer, I appear to have read this article differently than nearly every commenter.
Here in agriculture, whether a vegetable farmer like me or a grain, cotton or coffee farmer, profitability has dropped dramatically whether in India, Brazil, Turkey or the USA and is negative for vast numbers of us across the world. Why? Many reasons, but as much as our president's actions have mightily contributed to this situation, the biggest reason is the drop in prices and rise in costs where farmers buy more expensive inputs and sell for lower or barely rising prices.
India is still a primarily agricultural country. China has removed the vast majority of the people who could leave the countryside and agriculture from that area. Many other countries (such as the US) have huge labor shortages in agriculture.
While I could in theory write a whole book about the subject, this article's central and most important point is that there is a great deal of suffering because of the cost-price squeeze in agriculture that is not exclusive to India. If you were to visit with a Cotton grower in California, the picture financially would be similar but mostly different in the scale of number of dollars involved.
One last point. There were three biggest reasons for the Great Depression. 1) Greed and Speculation, 2) Blind belief in what is best for Oligarchs is best for Society, 3) Agriculture and Natural Resources economies losing profitability in the 1920s.
Think about it.
17
Troubled companies in India, indeed everywhere, would do wise to heed this advice of old, " they forget to ask 2 basic yet deep and important questions which are very crucial in making them successful. The 1st question is “what is our real expertise? “, the 2nd question is “why don’t we just change the product? “.
11
Basically, globalization, in its present form, exported corporate exploitation and poverty more than prosperity. The (temporary) prosperity that policy makers and corporate lobbyists advertise was due to the extent of exploitation of natural and human resources, which exploded to an unprecedented scale due to massive scaling-up of corporate operations.
Now every $4 profit made, $3 goes to the top 1-10% (depending on the country) of population. That left out $1 is basically doing all the heavy lifting for so-called poverty alleviation, infrastructure development, and so on. Now each and every Govt is busy to increase that $1 part of the economy by allowing more and more exploitation of its natural (mainly non-renewable ones) and human resources. In the process, (natural) wealth used to generate that money is growing bigger and bigger with increasing consequences in terms of keeping such wealth for future generations to use. That process is also making worsening social mobility, wealth and income inequality far more acute. Apart from financial cost, it does have serious sociopolitical consequences too.
Globalization would not succeed much if WTO and other relevant international organizations can not ensure some basic rules in terms of protecting human rights, labor interest, ensuring minimum "living" wage (which must be linked to working condition), and environmental protection to name a few.
6
All due to a global debt binge. The US Federal Reserve is one of the few sane bankers left trying to dial back speculation. Take the hit now, or take a bigger hit later.
42
Just as the 2nd Bush Administration oversaw and helped to initiate the Great Recession and enormous drop in the stock market in 2008, just so is the Trump regime initiating and causing the coming recession. The president's stupid trade war approach to international trade; his tax giveaway to the wealthy that has caused the deficit to explode; his idiotic capriciousness with our long-term allies in the world; and his daily demonstrations that he does not know what he is doing are all pushing us to economic (as well as other) disaster. Face it: Republicans cannot govern sanely or effectively. They ruin everything that others have built before them. And the American people will pay the price.
19
As long as population growth is unconstrained, people will turn to Capitalism, the greatest Ponzi scheme ever promulgated, and will always be losers.
There is no perpetual motion machine in this universe.
4
America has the largest Informal Economy in the West!
2
People keep acting like business isn't cyclical. It rains, it shines. It rains, it shines. You will adjust accordingly. It's the way of the business world, the way of the world, period. Why people seek to blame "the system," per se, is beyond me. A course should be taught dubbed "The Economy Will Catch The Flu...Sooner Or Later!"
5
More damning evidence that the economists that have been aggressively promoting hyper-globalization based on ridiculously simplistic concepts from the 18th and 19th century "giants of economics" with fundamentally flawed assumptions underlying their "elegant econometric models" really didn't think this globalization of finance thing through.
They managed to build an inherently unstable system that directly affects the lives of every single human being on this planet, at global scale.
So now the global economy is poised for yet another economic cataclysm.
Nicely done, economists.
3
Excuse me, are you saying that India IS one of poorest countries? I thought that India was the competitor of China. If China is not in the list of poorest countries, then India should have been long out of the list.
The photos of life for the poor in Ahmedabad and the countryside in Gujarat, India's reputedly best run state and the basis for Modi's claim as a good leader, are sobering. Where's the growth for the non-Maybach owning, non-crony capitalist $100m wedding splurge class?
2
The Rupee has weathered prior falls of 10% or more. Between May 2014 and Feb 2016, the rupee fell more than 15%. Today, it's at about the same level as in Feb 2016.
Nearly all of India's problems are a result of two seismic government policies ushered in by the Modi government. The demonetization action, which turned all cash into worthless paper overnight and brought in strict controls for cash transactions, eliminated the informal economy. India is a heavy cash-based economy. The government wants to control corruption but it ended up hurting the common folk featured in this article.
The Goods and Services Tax act was also a massive power grab by the government. It computerized all trade in an economy where cash is still king.
Modi's rule is a classic reminder that good intentions alone are not sufficient to retain popularity. Corruption is a problem, but income inequity and unemployment are bigger problems.
India is not used to big brother government where every common action is watched and tracked, but the ultra-rich are not under the same scrutiny. There is inequity in governance and this is what will probably bring down the Modi government in the coming general elections.
5
The corollary of this article is that for ten years, the Federal Reserve has been printing U.S. dollars and giving them to global banks who invest in other countries, building factories and infrastructure, and creating jobs elsewhere.
Then the neoliberals wring their hands and wonder why their establishment candidates are all losing.
If the Fed is Central Bank to the world, the U.S. has no central bank.
But, isn't it good that we are investing in the developing world? Not the way global banks do it. They finance low wage factory jobs with no benefits and they finance the extraction of natural resources. Then they change their minds and pull out, destabilizing the local economies and the world economy with it.
Throwing cash at global corporations is not good for the economy. Supply Side Economics is a destructive lie. Demand drives supply not the other way around. Markets that are free for global corporations but lower human pay are not free. They are begging manipulated.
The Fed needs to stop giving money to global banks and start giving it directly to the citizens of the USA, because We the People own new money, not banks, and because We know how to spend it better than them, to create demand.
The Fed should decide exactly how much it wants to increase the US money supply, divide that equally among all citizens, and disburse it through the IRS or Social Security Administration.
This would increase demand here which would increase demand for emerging markets too.
7
No Indian Businessman will ever say he ever makes money unless he is running a listed company. Which is why the macroeconomic indicators of Indian Economy can never be trusted. Ideally if the bigger companies grow there must be a pull through effect. The biggest ones in India, the Tata's and Reliance are growing at a pretty decent rate and creating employment. So that's that.
5
You need structural reforms to pull a country out of poverty. Riding the ups and downs of foreign capital flows does little to create permanent, widespread wealth.
China over the past 20 years has managed to turn around its economy (not without side effects, it has to be said). Countries like India haven’t.
5
Yet another example of why capitalism is not the cure-all libertarians like to claim it is.
7
"Laxman Gohel, a 38-year-old father of two, saved enough from ragpicking to open a tea shop. He boils water over a charcoal fire, making sales of about 1,500 rupees a day (about $21)."
But then there are people with enough disposable income to afford a half-a-million-dollar Mercedes. Mr. Gohel has to work 63 years to put together that much money. Income inequality. This is the growing problem faced both by poor and rich societies around the world, and this is why nationalist (and racist) people like Modi in India, Putin in Russia, Erdogan in Turkey, Orban in Hungary, Maduro in Venezuela, and Trump in the US are coming to power--they're selling snake oil that will allegedly cure the society's ills. They actually exacerbate the problem by making themselves and the people around them richer at the expense of their respective "base."
15
@JB
Agree with your point. Pardon an unimportant mathematical quibble. Mr. Gohel only makes a profit of about $4.20 per day, so he'd need to work roughly 326 years to afford a half-a-million Mercedes. Since in my guess at best he can save 20% of that $4.20 a day (and that is even doubtful) he would need about 1,631 years of laboring 365 days a year to get that car.
7
Excuse me but the FED should never have put the interest at near zero.... ruining the bond market and inciting huge amounts of cash to flow into the gamblers' den aka the Stock Market. Rates should have been raised under genius Obama!!
Perhaps, the currencies of the afore mentioned countries were overvalued -- this is a correction? (Also who aren't the super wealthy super-taxed world wide? They buy their 400 Million dollar Leonardo da Vincis conceivably not paying a penny in tax-- the Federal Luxury Tax was done away with by Bill Clinton.)
Currency traders making the right bets are making lots of $$…. and maybe I will be able to afford a vacation again?? Since it's inception the dollar has gone from parity with the Euro to being worth as much as 30% less!
This is a boo hoo hoo opinion piece. Is the writer afraid he is going to lose his stock market gains?
The Marxist question is always about a decent standard of living for the many -- and laissez -faire capitalism does not seem to be a good answer.
Governments could stop making/buying weapons of war -- even if there are good jobs there.... and population control must be discussed.....
American corporations could also reduce the costs of goods instead of always having record profits - e.g. a 20% increase in the cost of Amazon Prime his year.
8
@Make America Sane
I don't know enough about Central Banks and the FED to comment on some of the substance of your post. However, the President does not control the FED. So your "genius Obama" aside was valuable only because it clearly shows your partisan bias. I ain't a huge Obama fan, but even I can recognize that he is highly intelligent. Much as I can also say that Trump has a kind of genius--a narcissistic, selfish, con-man type evil genius, but a smarty pants nonetheless.
2
@Make America Sane
I agree with you, laissez-faire economics does not float all boats; there are victims. Perhaps we should have a separate investors market. I’m an investor, and the events of the past few months don’t worry me overmuch. But the stock markets are driven by traders who seek to gain profits quickly by making astute trades; it’s also traders who panic and make the market rise and fall so precipitously (and sometimes make a killing; the word is accurate—when one makes a killing in the market, most likely people are dying somewhere). My investments (oh, how I wish the Times would give us italics) have lost .61% compared to the S&P 500 1.58%. I’ll make it back, and then some, in about 3 years time. Our capital is people, we don’t invest enough in them.
You cannot enjoy partying all night and day when your party depends on someone else's money and policy, and you fail to take almost any responsibility for your actions. Days of cheap money supply and whimsical public policies can not sustain such parties for long.
Most of Indian banks, including RBI, are at the mercy of politicians & corrupt businesses. That make them very inefficient in almost every front- starting from recruitment at almost every level, bowing down to populist political agendas, colluding with corrupt businesses & businessmen. The problems grow exponentially when almost all ultra-rich & rich Indians do not pay their due tax (and publicly boast about it). Big companies deduct income tax from the salaries of its employees but never give that to the Govt. Most business transactions are are kept away from paying tax either (you can buy almost anything without getting due receipt that allow the seller to evade tax). Now Indian Govt give 3 times more tax payer paid subsidy to rich Indians than for poor & middle class combined. Corruption & inefficiency is socially acceptable there. Bad loans & NPA (non performing assets) for public banks touched about $100 billion (most of it gone to big businesses and rich people).
There are so many reasons why almost every Indian Govt did not allow its institutions to develop or grow in terms of autonomy and professionalism.
14
It’s amazing how far The NY Times will go to indirectly critique the Trump Administration. Do any economists even agree with this? Or are lay people just supposed to feel bad because it involves Indians, a minority group in America?
4
@Johnny
They said nothing about Trump. They were talking about Fed policy. Trump is said interest rates should stay low.
Printing words in people's mouths is rude and doesn't win arguments.
The fact that you don't care what goes on in the rest of the world or how U.S. policy affects them and their policies affect us, shows why you are defending Trump against a non-existent attack.
7
The main problem with India is- successive Indian central Govt do not allow its core institutions to develop & function as any autonomous and professional institution. Such institutions include various investigative agencies (including Central Bureau of Investigation (CBI)- the counterpart of FBI in India; law enforcement agencies (mainly Police); corporate governance (hardly exist in India); various public Banks (always work under huge political pressure and massive collusion/fraud with various business houses that routinely orchestrate massive accumulation of bad loans and non-performing assets), and most importantly Reserve Bank of India (RBI).
Indian government is always very corrupt & waste more tax payers' money to help ultra-rich Indians & big corporations in form of state subsidies. Data indicate that Indian Govt give about 3 times more subsidy to rich Indians than poor & middle class combined, even though Indian media & "intellectuals" scream about subsidies to poor & middle class. https://goo.gl/d1sji3
A vast majority of ultra-rich Indians, politicians included, pay almost no tax & publicly boast about it. That set the social standard there. Even most "highly educated" middle class Indians (u see them in US/EU etc.) are equally desperate to be behave like those "elites" whenever they get slightest opportunity. This disgusting tendency of Indian society exploded after ill planned with worst execution of globalization in 1991.
9
what a twisted article. besides the fact that it contains voodoo math (constantly mixing %'s and $rupees and not telling us the change in oil prices which actually fell much further than the rupee did from 2017-2018 thus creating a net positive change) since when is it our primary responsibility to worry about India and turkey and other countries who are unable to develop sustainable economies to the detriment of our own? is the fed suppose to not raise the rate to adjust our economy because the voodoo math says it will hurt poorer countries? that logic will make our economy just like their economy. India's central bank is refusing to do what the Indian gov't asked, to spend $ to invest in india. well, if they don't care enough about their own country... with a population of 1.3 billion, whose major industries are fossil fuel based (plastics), maybe trying to address those 2 items would make a good place for them to start.
8
@bored critic You do realize if these so called developing economies "fail" - EU and USA will feel the impact too? China and India are two of the top 5 economies in the world now.
6
@Justin
Whew! thank you Justin for the reminder about interdependency. "America Firsters" need to realize that the global economy is already a tightly woven web of complex symbiotic relationships. Like it or not.
2
One thing you seldom hear about these days is the corrosive long-term effects or low interest rates on many people, especially older Americans with fixed incomes. With interest rates for CDs hovering near zero for years, they've had no choice but to put their money into riskier investments just to keep up with inflation.
The market has had a good run for the past 10 years. Many people in the US are about to get poorer as their main savings vehicle--the stock market--cools.
Not everyone wins when rates are low.
9
Cheap money led investors to look for higher return on their money. Causing India's economy to boom. Now the Fed raises rates and that causes inflation to spike in India. To get out of the Recession in 2008 Obama and Bernanke started Quantitative easing which allowed the US to get out of recession. To deficit hawk austerity promoting Republicans opposed any effort to stimulate the economy. Now that the GOP manages the economy and they have massively stimulated and already growing economy. Now what once was good for India has made the US dollar very expensive and India's economy has been adversely effected.
2
@c harris
Quantitative easing gave away about $3 trillion in NET free money to global banks. That comes to about $9,000 for each citizen of the USA, or $36,000 for a family of four. For some families that is a years pay.
That money doesn't belong to global banks. It belongs to the citizens of the USA.
If that $3 trillion, and all new money created by the Fed was distributed equally between all citizens of the USA, it would have a) been is to pay down a lot of debt which would have been good for banks, and b) used to buy a lot of stuff which would increase demand for products made here and abroad.
There was a time when the only way to put new money into the economy was through banks. That is no longer the case, so Quantitative Easing and other Fed give aways to global banks is essentially theft. And it is also inefficient, because the interests of global banks is not aligned with Fed Policy or the interests of We the People.
Throwing money at banks and hooping they invest where they need to meant it took ten years to get the economy back to where it was in 2007.
Imagine how far it would have grown if every one of 300,000,000 citizens had an extra $9,000 to spend.
Instead they gave it to global corporations that destabilized the world economy and eked out mediocre performance.
2
The sad part about India is that nobody wants to highlight the threat posed by climate change and a growing population currently at 1.3 billion.
32
@JP
I think they mentioned the one fellow that wanted to go to Canada. Punjabis make up a very large proportion of immigrants to the US. Many go to Europe as well. As their population grows this flow of migrants will increase so that the more overpopulated parts of the world can equilibrate with the less populated parts.
The Fed raised rates all throughout 2017 too and this was fine. In fact, 2017 was an excellent year for growth in poor countries; the media called it synchronized global growth. The trade war, not the Fed, is to blame for this year’s emerging markets crises, such as when Trump’s announcement of tariffs on Turkey caused an almost-10% drop in their currency in a day.
15
Nothing new; for a detailed explanation of how the USG exploits the rest of the world on behalf of its corporate patrons see the book "Confessions of an Economic Hitman."
10
Thank you Mr. Goodman. Your article will hopefully awaken financial institutions,both public and private, to the realities of highly leveraged economies. It seems each generation must learn this lesson anew.
22
Having witnessed China lift millions of its citizens out of poverty in25 years. more than ever in terms of history, one has to question why democracies such as India still have hundreds of millions of their population living in abject poverty. Could the Chinese model be applied here or other so called democracies?
27
@Pepperman China did it under unique circumstances unlikely to be replicated elsewhere. The entire West decided to fund the growth of China imagining that as China grew richer, it would join the global model established by the West. In other words, the growth of China was at huge cost to the West. China of course never disagreed with this pipe dream of the West. They had their plans all along! To pull this off required continuity of leadership, an agreed upon plan over decades and an ability to make your people do what you want. Only China has all of these attributes.
20
@Pepperman China did not lift anyone out of poverty. The average US consumer was responsible whilst shopping at WalMart
21
@Pepperman As the article described, there is a class of people in India who drive Mercedes, ie their servant drive Mercedes. Contrary to China which spends billions on infrastructure, roads, hospitals and scientific institutions from the rewards of recent economic growth, the cash from new growth in India goes into the pockets of a few.
33
Global investing declined by two thirds. Invest here in America please. There are many poor and hungry in our nation as well.
10
@Shakinspear
I am dumbstruck by the stupidity. America is already roiled by by the wealth gap and raising interest rates will benefit the investor class and punish those already struggling to survive.
It is time for big government and high taxes to get back into balance after 50 years of voodoo.
America has way too much money that does absolutely no good for anybody. Interest rate hikes will not put money into circulation it will simply make it more concentrated.
It is time for government to invest in education , health and welfare and put dead money back to work.
America needs good government and higher taxes the exact opposite of what the GOP is offering.
17
@Montreal Moe
Yes we had higher average growth under stagflation with a 70% top rate and 50% corporate rate than we do under Supply Side Economics.
They transfer the wealth from the consumers to the rich, theiy claim growth is slow because the economy is mature or some such nonsense.
Growth is slow because the wrong people have the money.
1
@Shakinspear
Hmm? Your reply is somewhat ambiguous. Do you think I'm stupid? I was referring to the Wall Street financial industry that is the majority of global investors.
Logic in article doesn't make sense, claim raising oil price cut profits while rupee fell 10%. Yet, oil was 64.37 in December 2017 and 56.34 now. That is a drop much more than your fall in the Rupee.
7