Friday, May 13, 2005

How to destroy affluence and create poverty: a case study of West Bengal vs. Maharashtra

may 13th

thanks to reader amrish for forwarding this excellent paper.

as amrish says, west bengal had the worst of all possible worlds: a nehruvian stalinist regime at the center, and a maoist regime in the state. no wonder they're seriously screwed. this is the nehruvian penalty, doubled.

here is the summary of the lahiri paper: the authors (economists with the federal reserve) compared the trajectories of the economies of maharashtra and west bengal, the two wealthiest states at independence, with roughly equal per capita income. between 1960 and 1995, west bengal managed to reduce its per capita income to only 60% of maharashtra's level! the authors show that a) low productivity, b) poorly functioning labor markets and sectoral misallocations are to blame. also, they show high correlation between factors a) and b) and the rise of the marxist vote share! this is a damning indictment.

quote: "west bengal experienced de-industrialization during this period." so much for the rights of the proletariat.

i suggest that this paper should be read in conjunction with the Survey of Chinese Peasants that has been banned in china, and which shows that almost a billion peasants have been enslaved and severely oppressed to provide the funds for the glittering coastal cities in that country. a google search will bring up a number of reviews, if not the text of the book itself.

simple conclusion: nehruvian stalinist/maoist voodoo economics will perpetuate poverty.

prediction: thanks to the nehruvian stalinists in power at the center now, we can expect india's GDP growth rate to head towards their comfortable 'nehruvian rate of growth' of 3% again soon.


Amit C said...

It is either juvenile tendency, plain blind opposition or lack of better understanding of "history" to call the current Manmohan Singh government Stalinist or Manmohan Singh's earlier record.

I do believe in the main item of the blog post of impact on West Bengal of the communist policies, just not on what you are piling on top it.

Amit C (

Anonymous said...

The Wiki entry on Manmohan Singh is probably written by Manmohan Singh.

The entry on Stalin is probably written by some wild right-wing American.

These by themselves don't prove anything.

This is not exactly the same as the Nehruvian form of Stalinism practised in India. In India's case, it was not gulags, but mass starvation that killed off millions. But the personality cult is the same.

Amit C. said...

Aha, but to remind as one as of patiently, it was Manmohan Singh and Rajiv Gandhi of The Congress party who kicked off the economic reforms.

But these facts are often ignored and often ignored in the spirit of 'everyone one has right to their own facts'.

Anonymous said...

Note that it was the same Congress Party that presided over economic ruin for 45 years from 1947 to 1991. They maintained the 3% rate of growth. They know how to maintain the 3% rate of growth. Any reform is a temporary aberration, and they eventually go back to the 3% rate.

san said...

Amit, I find your comments to be juvenile, blind and uninformed. Manmohan may have implemented the technical policies to start economic reform in the early 90s, but what technical decisions needed to be made have never been a great mystery or obstacle. It was always the great matter of how to garner political support to implement the obvious technical decisions that was the great obstacle. And here it was Narasimha Rao who was the great contributor to starting the economic reforms, because he was the one who masterfully utilized his political capital to generate the necessary motion on economic reform. Manmohan simply did the obvious. Likewise, as soon as Rao govt fell -- because of the obvious problem of backlash against the pain of reform -- Manmohan's successor Chidambaram was the next new darling to get the praise. At that point they were praising him so much that Manmohan was reduced to a mere footnote. Again, none of these finance ministers have been particularly brilliant, because any fool can generate high growth numbers when you're pushing off of rock-bottom. It's always been obtaining and maintaining political support and stability which have been the herculean tasks. As you saw, Rao the political leader was the one who paid the price for the reforms and died a bitter victim, while the finance minister escaped unscathed. Because the burdens were never on the finance minister's shoulders in the first place. Manmohan is not known to be an able administrator or manager, and you can see this from some of the political crises that have emerged during his term in the PM's Office. It's pathetic that you get your knowledge from glancing at headlines and gulping down the surface images created by sycophants rather than digesting the real dynamics of the situation.

Anonymous said...

British used "divide & rule" & screwed us for a century.
Commies use "devoid & rule" & god knows how long they will screw around.

jai hind said...

Excellent study. Specially the fact that the %age of graduates in west bengal reduced owing to "deindustrialization".(indirect relation)

Here's another article which might interest the readers.It is somewhat related , but since it comes from a Congressman, needs to be taken with a pinch of salt.

jairam conviniently lays blame on centre (when he wrote this, his party was out of power) & does an over-simplified analysis of the situation.Though i must confess i liked the term EOK.

jai hind

san said...

Colonials and Communists have the common compulsion of resorting to Divide-and-Rule because both have the common deficiency of inability to generate economic growth and improvements in quality of life. When you cannot deliver improvements to the masses, then you have to resort to Divide-and-Rule in order to maintain control.