Stating facts as they are
Days after Swadeshi Jagran Manch’s objection to the WalmartFlipkart deal, because it will affect small retailers negatively, Niti Aayog Vice-Chairman Rajiv Kumar asked Swadeshi Jagran Manch to look at the definition of ‘swadeshi economics’ in the light of two critical objectives — generating more jobs and high growth.
In The Growth Delusion, author David Pilling explores how economists and their cult of growth have hijacked our policy-making and infiltrated our thinking about what makes societies work. He says our policies are geared relentlessly towards increasing our standard measure of growth, Gross Domestic Product. Further, the book gives example of Holland, where prostitution is legal and hence the income generated through it is part of GDP. When Eurostat, the statistical arm of the European Union, which wanted EU nations to standardised how they calculated national income, economist in many countries where prostitution is not legal had tough time calculating the income generated through prostitution. (To know how they did it, read the book). I am sure Niti Ayog Vice Chairman did not have this option in mind, but there are similar pitfalls when one runs blindly after high growth and the book describes these pitfalls beautifully.
The book has 14 chapters split into three sections. The first part not only covers how and why GDP calculation is needed and calculated but also explains the moral dilemmas. Kuznets who is considered the father of GDP wanted to exclude illegal activities, socially harmful industries, all expenses on armament etc., but he lost. The chapter ‘The Internet Stole My GDP’ is mindboggling. It describes how internet has affected the business and GDP calculations. The impact of technology on GDP is not always directly proportional. Naturally, developed countries have seen maximum impact of technology and they are covered in the first section of the book.
Second section covers Africa, India and China. Few have attempted to measure the economic activity using light intensity data from satellites and the book explains the method has its own flaws. It also explains how difficult it is to collect data in various countries and demonstrates how the economics of many nations are dependent on cow. The author says, “One might even count the cow dung used to line the walls of the hut as selfproduced building material.” In many African nations, Cows are walking bank accounts. It might give great pain to cow haters in India that in Kenya in the Maa language, one of the public greeting is ‘I hope your cows are well’. This chapter should be of immense interest to Niti Ayog, as far as GDP calculation and rural policy making is concerned.
The psychological impact of talking positive about their own nation is reflected in Nigerian economy. Indians not only need to learn but also realise how much damage has been done to the country who keep talking negative about India for political and religious gains.
And yes, there are countries who do not want to share their high GDP data and present lower figures and they have valid reasons for the same. There is a chapter on India and it says: “In 1972 Prime Minister Indira Gandhi, Nehru’s daughter, lashed out at what she called growthmanship. Giving undivided attention to the maximisation of GNP can be dangerous, she said in a speech, ‘for the results are almost always social and political unrest’.” While writing about India, the author’s lack of research becomes evident. He only mentions death of Muslims in Gujarat riots without mentioning the fact that 56 kids, old, women were burnt alive by a Muslim mob which was the cause of riots and hundreds of Hindus were killed in that riot.
Following chapter is on China and it might come as revelation to many that China started measuring GDP only in 1992. The chapter on China covers the growth of China in details along with its issues of communism, population and pollution. It comes across as a fair analysis of China’s problems and their attempt to solve it. The chapter makes one important point that is, the countries that are richer today had passed their polluting industries to China, is China doing the same with Africa today?
The last section talks about way forward and ponders over the methods to measure national income. The author makes a statement and a relevant one, “There’s been no innovation in national accounts.” This section talks about environment and its impact on future in details.
The beauty of the book is that it does not argue that GDP should be scrapped. It says it is the best tool available as of now to measure the growth. But it also says take the GDP growth with salt and beware of its drawbacks. The book merits attention of all those who are interested in economics and GDP.