Wednesday, May 19, 2004

Voting against capitalism?

Insults Unpunished excerpts from a terrific editorial from about the recent win of Sonia Gandhi's Congress party in national elections in India.

The Indian election upset that has unseated Prime Minister Atal Bihari Vajpayee may have one unintended victim: John Kerry. After making the loss of American jobs from outsourcing to countries like India a key part of his presidential campaign, the Democratic challenger may no longer have an easy scapegoat to rail against. Now, his suspicion of tech-savvy Indians who are speeding up their country’s global integration will be shared by the new government in Delhi.

The world’s largest democracy has given an astonishing verdict in an election whose outcome was thought to be a foregone conclusion. The voters rejected the Bharatiya Janata Party-led alliance that had governed since 1998. The winner was a combination of the Congress Party led by the Italian-born Sonia Gandhi, a doctrinaire Marxist bloc, and a motley group of regional outfits that have come together to assemble an alternative government.

It is easy to believe that American politicians would campaign for change by saying that tens of thousands of good jobs are going to India. It's bad economics, but it's easy to understand why a politician would say these things.

The really difficult thing to understand is why an Indian politician would campaign for change by pointing to the very same phenomenon. Wow. But that's what happened, and the really interesting thing is that the vote against the ruling BJP party (who had brought home all those high-tech jobs) was heaviest in the very regions where all those jobs were created. Big Dan Drezner points out a Salman Rushdie editorial saying this is because people with low-tech jobs have been getting poorer:

It's no accident that the ruling alliance lost heavily in Andhra Pradesh and in Tamil Nadu, precisely the states that wooed information technology giants such as Microsoft to set up shop, turning sleepy "second cities" such as Madras, Bangalore and Hyderabad into new-tech boom towns. That's because while the rich got richer, the fortunes of the poor, such as the farmers of Andhra, declined year by year. The gulf between India's rich and poor has never looked wider than it does today, and the government has fallen into that chasm.

I don't know much about India, and I only know a little bit about economics. (I plead with any economists among my imaginary readers to correct me if I am speaking lies here.) But it sure seems to me that all those high-tech jobs require a lot of other medium- and low-tech jobs for their support. My guess is that the poor have not been getting poorer, but that they have not been getting rich as fast as the folks answering phones for Dell or whatever. People on the bottom don't have to get poorer for the rich-poor gap to grow. That's one of the vicious things about the gap.

(Warning: ignorance-fueled opinionating ahead.) I also think that lots of the poor folks in India just don't believe in capitalism as a vehicle upward mobility. As the WSJ says: "Traditionally, capitalism in India has lacked political advocacy." A lot of Indians just don't trust the idea of capitalism. They would prefer a useless government sinecure to a job with a multinational corporation like, say, Heinz.

Too bad for the Indians, I guess. Their unique resource endowment gives them a real advantage in global markets, and they would be fools not to exploit it.

But someone will pick up the slack, I'm sure.


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