Thursday, August 25, 2011

Randoms Thoughts from India

A story about America's startling and growing inequality on the PBS Newshour some ten days ago had the reporter showing people in the street a series of pie charts representing the percentage of a country's wealth owned by the richest and the poorest people. The first represented perfect equality, the second showed the top 20% owning 36% of national wealth, and the bottom 20% 11%. The third showed the top 20 with 84%, the bottom 40 with 0.3.% The reporter was asking them which countries they thought these represented.
The first gentleman to answer said the perfectly equal society was the U.S. Most said the U.S. was the country with middling inequality, with top 20% owning 36% and bottom 20 owning 11. Turns out this profile belongs to one among the most "egalitarian" socities in the rich world -- Sweden. The one set of people who guessed, correctly, that the U.S. was the third country, with 84% wealth for the top fifth and 0.3% for the bottom 40%,consisted of, coincidentally perhaps, one black and one Hispanic individual.
But this is all by the way. What caught my attention was a man's observation about the country in the third chart. He said, "Oh, that is some Third World country, like India." Now I have not lived in India for ten years now and things have changed a bit since then, so I decided to check things out. The first thing to note: the Bible of economic data in India, The Economic Survey of India, did not see fit to list the income distribution, while addressing all sorts of "equity" initiatives by the govenrment in a country where the national health budget is 3% of GDP to over 18% for defense. So I am sad to say that despite some diligence, I was unable to procure income distribution data for the country. I did glean however that 35 Indian FAMILIES were worth a total of about $200 bn in 2008, representing more than 1/7th of the national wealth in an economy that was $1.38 trillion in 2009.
More anecdotally but more enlighteningly, I think, found myself paying between 5 and 10 U.S. DOLLARS in local currency, the rupee, for an ice cream sundae. Needless to say, I would not pay that sum in the street here, but since I was treating family, I did not demur. At the airport, a tomato-cheese or ham 'n' cheese sandwich made with soggy whitebread can set you back by the same sums. For a perfectly disgusting and basic lunch in an uptown Delhi shopping district, I paid $15: most of my lunches in downtown Burlington do not exceed $10-12. For perspective, The Economic Times, Asia's largest financial daily for which I worked in a previous incarnation, was delighted to report that some time between 2010 and 2011, the per capita income of Indians would pass $1,000 a year. Such are the joys of this newfound prosperity that the Indian earning average income can expect to eat between 100-200 ice cream sundaes a year if she does nothing else with her income.
How do businesses get away with such obscene pricing of FOOD which for most people is not an optional expenditure? Easy, as we know now in America. With more than $150 million people in the Indian middle class who not only do not mind paying these sums, but can self-identify as "privileged" for the princely sum of $15 even if they can't afford that Lexus just yet, why should they care?

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