Everybody quotes it, but can it be true?
Regarding the cynicism expressed about India by Peter Ziehan (see previous post), I was pondering the real-life probabilities of India actually making economic progress beyond the mean of its previous performance. The so-called ‘Hindu rate of growth’ of barely above 1% – often the historical norm under the socialist state planning of the classic Congress/Gandhi-dynasty years –hopefully has disappeared forever. A better rate was jump-started back in the 1990s by the PV Narasimha Rao administration, and then continued by the BJP until they were ousted in 2004. By 2013 Congress had managed to put the brakes back on, but India is now pootling along at +7% growth per annum according to GDP. Granted, GDP’s a terrible measurement as it only counts economic activity, not profitability or productivity. But India’s is the best rate in a bad neighbourhood – the neighbourhood being this planet right now.
Continue reading “That ‘7/10 businesses go broke’ statistic …”
For savvy investors, that can actually be a good opportunity
I recommend everybody to watch Peter Zeihan here as he delivers a barnstorming illustrated speech on the future of the world. He is a geopolitical analyst who for years worked at Stratfor, known as the ‘private sector CIA’ and has since struck out on his own. He is a great speaker, very funny, knowledgeable, engaging and stimulating.
I should warn that it is very much a Texan’s-eye view, and I am mentioning Zeihan mostly because he mentions India, at 47 minutes in, thusly:
‘The short version on India is that if you’re happy with it today, it’s not going to change a whole lot, the reason being that the Ganges basin is the most productive agricultural zone on the planet in terms of calories per acre per year. That gives you endless population growth. However, there is not a single navigable river in the country. So high populations, no capital. That’s abstract [sic: abject?], total, unending poverty. But India’s looked like this since the fifth century. So if this is an India you can operate in, an India you know and like – great! They are not a major player in Bretton Woods, never have been. They’re not going to change, but if you think India’s about to turn the corner, the whole ‘Shining India’ concept, I’m sorry. It’s looked like this for 1500 years; it’s not about to change.’
Continue reading “India underestimated (again)”
What’s behind India’s new-found assertiveness?
First it was Facebook. India’s potentially enormous, and as yet largely untapped, internet and mobile phone market will see about half a billion people come online over the next few years (I hope soon to write at some length about its implications). And this in the country that will enjoy the world’s best economic growth for the next two decades.
Mark Zuckerberg was salivating over this juicy prospect and launched a portal called ‘Free Basics’ that tied the user to Facebook’s domain in exchange for free online access. Except of course it wasn’t free because Facebook decided what sites could be accessed and would eventually have its own access to the most valuable of all commodities: the users’ saleable metrics and private information, the bread and butter of Facebook’s business.
Continue reading “Bye-bye Facebook, Monsanto!”
India is finally waking from its slumber
Soon enough I hope to remove the question-mark from this series of posts even though that might appear optimistic given India’s track-record of (self-imposed) failures. I’m no Aunt Sally: I am not trying to look on the bright side, nor to poke around for morsels of good news among the gristly stuff. I’m not a Trümmerfrau either, picking among the wreckage and piling up the bricks and masonry strewn around the bombsite to start building an impossible future. I am in fact a hopeful skeptic rather than a pessimist.
For pessimism is an aspect of nihilism and nihilism is an aspect of narcissism, which is itself an aspect of solipsism. India has been subjected to quite enough of that.
India has also been the victim of skewed perceptions since Independence, and has mostly believed what it has been told.
For example, it is difficult to grasp the economic potential and promise of India, partly because in geographic terms it is relatively insignificant, covering much less than half the land mass of the USA or China – which are almost identical in size, at 3,805,927 and 3,705,407 square miles respectively – and only one fifth of the territory of Russia, which is 6,592,800 square miles excluding the Crimea.
Continue reading “Why India? #2”
Call me an optimist, but I am betting I am right about India.
I am making a bet on India prospering disproportionately in the future compared to its past and I am inviting visitors to this website to engage with and object to my theory (‘theory’ because it could turn out wrong). After all, why should I believe that I am correct? There appears to be far more evidence from history that India will inevitably sink back into its old habits of futility, corruption and wishful thinking about an idealised past.
A friend of mine, a businessman from Mumbai, says to me, ‘India can make things 90% of the way but there’s no finish! Where is the last 10%?’ He thinks that Indians always run out of application and interest towards the end of a task. There is no polish to what they do and that everything – products and services – remains frustratingly second-rate, droopy and half-hearted. This has obvious implications for any Indian future.
Continue reading “Why India? #1”
Modi’s making India ‘anti-fragile’
This was Black Swan author Nassim Nicholas Taleb – who incidentally is Lebanese Greek Orthodox, not Muslim – being interviewed in Finland last summer. He was discussing the way in which ‘anti-fragile’ entities, those which benefit from untoward events instead of being damaged and diminished by them, are superior to larger, conventional, top-down or traditional ones.
In this interview the thrust of Taleb’s critique of current structures, of government, economics and education, is precisely that they are fragile. Paradoxically ‘fragile’ for Taleb means strong and robust – but only up to a point, beyond which a single blow can destroy them, like a china cup. Taleb was criticising top-down structures for their lack of adaptability and decentralisation/dispersion.
Continue reading “Nassim Taleb: ‘Modi gets it!’”
It’s crunch time for China … or for the hedge funds betting against it
2016 is the year when China bites the bullet, the experts say. One way or another the debt is now so large it has to be addressed, no choice – deleveraging, rebalancing of the economy (and much lower growth), or a reckless dash for even more debt-for-growth. The question is, which way will China decide to break?
This matters for India. China is its heavyweight neighbour, used to throwing its weight around. It is a trading rival and a political-strategic competitor, a partner in balancing power – the very definition of a frenemy. India in the old days of fresh independence under Nehru naively believed that China was its best friend: ‘Hindi-Chini bhai bhai’ (India-China best brothers!) was the slogan as the 1960s opened. Then in 1962 Chairman Mao bitch-slapped India when Chinese forces invaded the north-east territories and shredded India’s brave but ill-equipped troops. The country suffered a nervous breakdown it has perhaps never quite recovered from. India even today is still ginger and over-accommodating not only in its dealings with China but Pakistan, too.
Continue reading “China Crisis?”
Looking at China’s experience can give us clues about what India should produce in the future
It’s interesting that the more I think about India, the more I find myself reading about China. Bharatiyata! is supposed to be comparative in spirit, so I guess it is natural for me to compare; it certainly provokes many thoughts.
In fact a very thoughtful piece over at Andrew Batson’s China blog concerns itself with the mystery that, for all its export volume, over the years China hasn’t really specialised in any area but continues to make and sell everything to everyone. Why? Or why not?
Most countries specialise by choice or necessity to partake of what economists call ‘comparative advantage’. It means that you can make or do something more efficiently than somebody else or some other country. (Batson quotes Carsten Holz who refers to Taiwan speedily adapting to supply niche markets globally, and South Korea, which aimed for a broad industrial base but quickly specialised). By each party concentrating on what it does best, everybody makes more money.
Continue reading “Loo seats and asparagus”
Aiming to get consumption up and savings down is a step in the right direction
Perhaps more of a footnote, or a doggy-bag.
Spending is up on infrastructure, farms and rural sector. Irrigation – Modi’s big innovation in Gujarat and the thing that, tied to electrification, transformed the state’s economic fortunes, is now a major element of the national Big Plan. Good.
The income of farmers is supposed to double over the next five years, providing a feel-good factor into the next general election, but more importantly giving more of the economic pie to households – increasing consumption at the expense of savings. This is also good and needs to happen because India has too many poor people, and at the same time absolutely massive potential internal markets. If spending goes up then India can become rich; that’s not going to happen if the mass of people has no money to spend.
Continue reading “Budget – second helping”
Rajan knows that all accelerated growth always leads to dangerous economic imbalances.
Revealing a despair that I shared, Elaine Meinel Supkis wrote in 2007 that,
‘There are very, very few fiscal conservatives around. We like reduced debts, sober analysis of economic facts and building for the future coupled with real capitalism, not predatory, debt-fueled speculation.’
Debt-fuelled speculation, aided by the venality of bad-faith politicians and academic central bankers, has ruined the economies of the West. We live in hope that India will resist mammon-obsessed financial quants, and follow a line of genuine value creation, unleashing prosperity across society and nurturing aggregate demand not asset-price bubbles, generating healthy rather than piratical profits. As Hyman Minsky eloquently put it , ‘The primary aim is a humane economy as a first step toward a humane society.’
Continue reading “Indian budget takeaway”