How India's Caste System has Endured for 1900 Years

As a person with interest in social stratification in modern society, I have been particularly alert to explanations for the rise and persistence of the the caste system in India and other societies. In blog posts such as this and this, I have shown interest in understanding both the backward justifications and the visible and indirect economic and social consequences of India's enduring caste system. Predictably, my view has been that the value of the caste system in India is that it leads to some inefficiencies and also unjustly denies a large population of Indians of true dignity and opportunity for achievement. In essence, to my libertarian mind, caste systems, like other discriminatory structures exist to support aristocracies and justify the existence of inherently flawed hierarchies.

A legitimate question is to ask under what circumstances the caste system of India developed and why it has endured. Joshua Keating's piece in Slate Magazine summarizes  a recent article in the American Journal of Human Genetics which reports results of a genetic study to determine when various groups of people diverged from one another. The theory is that this divergence would be a marker for the commencement of the caste system and is dated at 1900 years. While I am not fully qualified to debate the exactness of this date, i am surprised that the article seems to suggest that the systematic social stratification based on arbitrary considerations has a "short history".

I disagree with this characterization of discrimination and enforced poverty because two millennia of systematic discrimination and prejudice proves that the biases were self-reinforcing and created the stability in that system. bear in mind that leading democracies in the world and related political institutions have existed for less than three centuries. Stratification based on castes has endured for too long and its effects will maintain for longer still. the length of this injustice, similar to slavery and other forms of discrimination should not be downplayed. 

India: The Bungling Democracy

I have argued on this blog here and other posts that India and China represent a natural experiment that will help to answer the question about the place of democracy and authoritarianism in longer term development. In short, my claim has been that in spite of a slower rate of growth and a smaller economy, India is bound to catch up soon and will over time become a large economy owing to its more open political system. In sum, the argument is that democracy is not necessarily a hindrance to India's long term growth and that China will of necessity have to go through bumps that may derail it substantially.

In spite of my being bullish about India, reading stories such as this in the NYT makes me really frustrated at India's political leadership. Granted that the Congress party has to navigate in order to keep its coalition in place, I cannot avoid the argument that India's growth is slowing and that it does not show any signs of catching up with China at all. Indeed, in spite of China's own domestic political and economic difficulties, India's leaders still have an inferior record of economic management. In many respects, the benefits that India gained from the bold economic reforms initiated under Manmohan Singh two decades ago are exhausted now and he lacks either the courage or the ability to make another long-overdue round of reforms to open up the economy. 

Given the state of affairs, it is just possible that India's catch up period will be unduly extended because of the delays in cutting back red tape and substantial regulatory and tax reforms. On the political side, India's bungling, in spite of the fact that it has an indubitably bright man as prime minister will embolden those who consider democracy as a liability for fast growth. Please get up and sprint!

 

Contrasting Income Growth for Africa and Asia

Keen observers of the growth trajectories of countries cannot help noticing that apart from the larger economies in Asia, sub-saharan africa has registered unprecedented growth levels in the last decade. The argument is relevant because one of the major problems that the latter region has had is the inability to hold on to an upward growth momentum for meaningful periods of time. Instead, Africa's example has been fluctuations of growth rates that coincide with commodity price changes. The summary of this experience from the mid-1970s is that dependence of petroleum and agriculture-based commodities is not a reliable path to growth and improvement of welfare. 

And that's why the contention is that it is yet not possible to state with confidence that sub-saharan Africa has overcome the mix of economic and political problems that it faces. That brings me to this fascinating article in the East African which makes the credible and well-based claim that the countries in the eastern region of africa will be leaders in overall growth in the coming two decades. It is an article worthy of reading because it is based on a complicated but sensible method for assessment of the complexity of an economy and concludes that the countries of the region under reference have economies that are more complex and diverse in production than is warranted by the incomes today. 

The author of the article concentrates on a list of manufacturing firms to illustrate the claim derived from the index of complexity. it is less clear to me that all these firms confer a comparative advantage to the region because it is unlikely that all are able to compete internationally. My view is that given the fact that manufacturing industry is a smaller proportion of the overall GDP of these countries, there is scope for growth but not necessarily for all existing firms. A final point that is worthy of note is that in spite of the prediction that the region will lead in GDP growth, it will still fall behind India and China in respect of per capita income growth. I think the reason is that this region has a large and youthful population and is expected to maintain strong moderately population growth for a few more decades.  

Yasheng Huang Tells The India Vs China Story

Many comparisons of the development experiment between China and India and pitch conveniently on the side that commentators favour. As a result, there is very little clarity of thought about why China has indubitably raced ahead of India in economic growth, notwithstanding the absence of liberalization on the political affairs in China. Many people therefore readily assume that India's main problem seems to be its extremely open political system which makes it a disadvantage in terms of quick execution of development plans. Yasheng Huang's presentation to explain the differences is a tour de force in the TED talk below on that subject in which confusion and cliche's have endured.

 

As Huang maintains, it is a fact that India has not done so poorly but has been compared with a ver successful China. It is equally instructive that the slow reform in social policy that would register achievements for India's women is a critical barrier to its ability to compete.  

Untouchable: An Indian Classic

I was in the Indian City of New Delhi sometime last week for a formal meeting and because I arrived before the conference commenced, I made my way round the book stores on Janpath Road. I entered into a very small book store which had what I considered far too many workers for the size. While browsing from one side of the very small store to the other, I asked one of the attendants to point me to books that would teach something about India.  With minimum hesitation, he turned around to the opposite side of the store and grabbed the book that forms the title of my review here. He handed to me Untouchable by Mulk Raj Anand and added with confidence, "This is an Indian classic".

To start with, I have known for a while that India has a very highly developed publishing industry and has one of the lowest costs for publications among developing countries. Still, the degree of knowledge about titles that the store assistant showed is rare because I would certainly have left that store none the wiser if my attention had not been directed towards that book.

The book addresses the social and economic construction of stratification in Indian society in pre-independent India. In reading the book, I see the duality in the fight that this society faced in designated classes of people as untouchable and unclean. Contact with the low caste people known as sweepers would make one contaminated and require ritual baths to restore cleanliness. This novel is based on the life of the youthful Bakha whose family have been sweepers for time immemorial and who are condemned to living apart from higher caste Indians. Their isolation is aggravated by the fact that they have an exploitative relationship which requires the sweepers to take care of cleaning up toilets.

One cannot miss the contradiction that comes from the fact that the caste system in India as in other places, created bogus distinctions  that endured. At the same time that the priestly and warrior classes enjoyed superior status and avoided the contamination of sweepers, they depended greatly on these oppressed to accept their inferior station and thereby provide cheap labour for performance of the most unpleasant tasks in that society.

Bakha wonders through the day and is human in the fact that he gets hungry and angered, playful and serious and somehow wonders why his family must forever accept their inferior classification. He has three encounters that could provide a solution from three different people and the most convincing one for me is the technology solution. tThe author integrates history in this work of fiction by exploring the role of the Christian church, Gandhian philosophy and suggestions from educated Indians.  In an interesting twist, Bakha returns home in the evening convinced that Gandhi's call for Hindu compassion is part of the solution and wondering whether a flush system would complete lower caste emancipation.

For a book written in the 1930s, it describes from the eyes of an Indian, how injustice can endure when it is justified through religion and culture on the one hand together with an unmentioned but real economic basis.  It also reveals the quest for status that makes other lower caste groups such as washers and leather workers to act with derision towards the sweepers.  I recommend this reading for any person with an interest in the evolution of societies and to Llibertarians with interest in booting cultures that justify subjugation. Putting myself in the shoes (rare among sweepers) of Bakha, it may be debatable which was the more evil system between colonialism or the caste system. Just wondering!

Book cover Image from Amazon.com

Informal Sector Medical Practice in India

While casually reviewing a report yesterday, I learnt that many developing countries are constrained by a disproportionately large informal sector. In some countries in Africa, Latin America and Asia, It is estimated that the informal portion of the economy equates to between half and 70% of the formal GDP. What the real effects of this is on overall growth are perhaps not properly quantified but my thinking is that a large informal sector cannot be a positive economic factor for an economy.

On the other hand, my assumption has been that  a large informal sector is possible especially because of the preponderance of agriculture production and small scale trade. It appears that the informal sector is now going into other professions that have been considered a part of the formal economy such as medicine. Michael Spectre's article appearing in the New Yorker Magazine illustrates how the rise of a "medical red light district" in one of India's main cities complicated the ability to properly diagnose and render treatment for tuberculosis.

Not only is there a number of ill-educated medical practitioners but they are complimented by diagnostic centres that carry out radiological tests and quacks dispensing medicine to poor and vulnerable patients. This superstructure is supported by the perverse incentives that allow for medical practitioners who are employed in public hospitals to have other clinics to which they channel patients seeking help from the public hospitals. This elaborate scheme of brokers means that public hospitals are direct competitors for the private clinics operated by the same doctors. The effect is understandable and has devastating consequences for patients because of the clear sabotage of public facilities.

In my view, this is perfect illustration that public sector professionals are sometimes the greatest obstacles to attaining positive development outcomes. Better pay for medical practitioners may help but I doubt that the lucrative practice would stop just because the doctors have better pay per month. Being doctors who understand that incorrect dispensing of medicine leads to drug resistance shows that they are moved by economic incentives against their better judgement. Part of the solution lies in realigning those incentives to the public interest by rewarding doctors for the health outcomes that they achieve.

Indian Entrepreneur Urges Use of Markets Against Bribery

Corruption in both its grand and petty forms is a defining character of the public sector in many low income countries throughout the world. As a recognized problem, it is often quantified and its manifestations recorded and lots of books published about it. In spite of all the talk and discussions about corruption, the responses that have been adopted tend to be generic. These solutions often require ethical training for policemen, better surveillance, establishment of specific anti-corruption agencies, mandatory disclosure of income for politicians and tightening of rules and new laws against corruption. not only are these ideas uninteresting, they have had little effect in most corrupt countries.

An Indian lawyer and entrepreneur named Shaffi Mather has an idea that has stunned me both for its freshness but also because it introduces a profit element into the fight against corruption. In the TED talk on this page, he talks about having designing a business that uses a number of innovative tools and approaches by trying to fight corruption by adoption of a private and fee-based service to citizens who are faced with demands for bribery in order t receive public services. While the talk is slightly less than a year old, I find this a fantastic approach to a very serious problem that undermines growth in Africa and Asia in particular. Perhaps I should take a sabbatical and study his approach because he seems to have something to teach about business solutions to corruption.  

 

Can India's Democracy Sprint?

In the last couple of days, two pieces in the NYT have drawn me to consider my contention about how a large democracy manages the messy business of governing effectively. Reading this story covering the political economy issues facing the privatization process in India reveals the difficulty of making a definite transition from a socialist orientation towards a more market driven economy. I have no doubt that India needs to deepen economic reforms by undertaking privatization in order to ensure that resource allocation in that economy occurs through the market mechanism. No country could maintain efficient resource allocation where enterprises owned by the government collectively contribute 45% of GDP.

And yet the divestiture programme that has raised nearly US$ 3.5 billion in the last ten months alone still faces the hurdles because of the strength of political parties and monopolies that benefit from the high degree of government influence in the economy. That story suggests that in spite of the obvious success and the good timing, opposition to privatization may delay government divestiture programme. To my mind, while India is large and finally growing at impressive levels, it is unlikely to match china's growth levels unless the second generation of deep economic reforms are undertaken and the divestiture programme substantially advanced.

A second piece here tackles the related issue of large deficits and the need to curb expenditure by the Indian government. While it is clear that controlling high debt situation demands either the reduction of expenditure or hike in taxes, the Finance Minister in India seems to be at pains to sell these alternatives to politicians who are opposed to both alternatives. This situation too highlights the general frustration that people have with democracies because decision making requires wide consultation during which populism often takes over and delays sensible economic policy.

In earlier blog posts, I have often stated that my long term bets are laid with India because of the overall value that democracy confers. I maintain that bet though it is clear that given the speed of economic policy making in China, India is very slow and chaotic.

Will IT Centers Move to Rural India?

India and China are the countries on which forecasters and many other students of economics and development have cast their eyes for the next decade at the least. And to the many who are observing the great development experiment, India is cast as the country whose recent race into high economic growth is based on an services such as software development and business process outsourcing. China's huge advantage in manufactured exports is casually contrasted to India's intermediate dominance in export of services.

A major concern with India's development has been the fact that a large proportion of of its population is rural-based. So the service industries have been based in the main urban centers and therefore provided jobs to a minority of the labor force. Rightly speaking therefore, it is not clear whether India would be able to hinge its development entirely on the technology-driven service industries because they have so far not generated jobs in high quantities. Indeed, Mira Kamdar states in this book, Planet India that India's highly adulated information technology industry employed a mere 1 million people in 2007.

Lydia Polgreeen of the NYT has captured a new trend in India's technology industry. It appears that in the permanent quest for lower cost and the availability of literate people in India's less urbanized regions, firms are establishing offices away from Bangalore and Gurgaon, the traditional technology cities. Given the facts revealed in that story, there is internal competition for the most basic work and this drives the volumes towards the cheaper cities. To my mind therefore, there's anew dynamic in job creation in the technology industry and this will not only intensify competition within India's firms, but deliver greater efficiencies for firms that are outsourcing that work. So while there are no guarantees in development, this new frontier for IT work in India will lift more Indians from poverty.

Ambani Brothers Dispute Not For Courts

An article in the Times newspaper here covers the formal commencement of hearings in the legal battle between two brothers representing the most affluent of India's business families. In spite of this being described as a business dispute about the agreed price for sale of energy by one side of the firm to the other, I am skeptical that this is really a matter for the courts. The series of disputes between them that commenced after their father's demise suggests to me that this is more than a commercial matter.

Granted that there is a commercial interest for each of the brothers in the outcome of the case, to my mind, it is clear that this is a family feud related to inheritance that is being resolved in the courts. Notwithstanding the claim in the story that Mukesh and Anil Amabani are together managers of corporations that account for 5% of the Gross Domestic Product for India, I suspect that the feud between them cannot be resolved through the courts. Indeed, the proper arbiter here may still be their mother as she was the one who engineered the initial division of the property inherited from their father. Evidence that this is not entirely a commercial dispute would come in a subsequent court battle irrespective of the outcome of the present one. As a consequence therefore, the real arbiter for 5% of India's GDP is Kokilaben and she requires the wisdom of Solomon here.

What Does India's Democracy Show?

I think that the most fascinating countries to study in the world are the two democracies India and the United States. The reason being that the first was based on an idea and represents a very bold early experiment with freedom and consent by the governed. India, on the other hand was already a very large country and one with a large but poor population when it was formed as a republic in 1947. With almost a threefold growth in its population, India is today rightly considered as the world's largest experiment with democracy.

While I think that India's democracy is still growing and imperfect, I am impressed with the fact that this large country retains the urge to ensure popular voice in public affairs and especially in the appointment of its leaders. As any reader of this blog would probably be aware, elections in India are due. As this article in the Guardian states, it is still a miracle that its people are very enthusiastic about the elections.

Most impressive is the cost of the elections and the logistical arrangements that holding elections that qualify as such require. Consider that nearly 1 million electronic voting machines have been procured for the voting that will stretch over five phases over four weeks. Of the more 820,000 polling stations that have been situated across the country, it has been calibrated to ensure that no vote bearer is more than 2 kilometres from any one.

No wonder many large and small nations fear representative democracy because the basic institutional competence that is required to deliver a proper election of any size is very high. That Indian citizens are determined to maintain the experiment is part of my confidence that in the long term, India will most probably be one of the leading economies in Asia. No one should underestimate the capability of a country whose number of voters is twice the entire population of the United States. In addition, my estimate based on the most populous democratic countries in the world suggests that the number of voters in India is closer to all voters in the world's most 10 populous democracies put together.

India's Malnutrition Problem

I have stated before that one of the most fascinating self-executing experiments in economic development is that between India and China. Both countries have had economic growth rates that are well above the global norms and are large countries with sizable populations. Indeed, I have stated that India's ingenuity, added to its long experience with democratic, if chaotic government may give it an advantage over China in the long term.

Having stated that bold wager, I still have to concede that some facts about this fascinating country provide reasons for self-doubt. Somini Sengupta, writing in the NYT here, reports a set of strange facts regarding India's human development conditions. One of those that i have been aware of is that India has the largest number of malnourished people in the whole world. The story highlights the far more subtle problem of child malnutrition and the fact that the subsidy programme is poorly designed and ill-targetted.

While I concede that development is essentially a difficult slog and a chaotic process, it is still a paradox that a country that has a high tech software industry is incapable of designing an acceptable subsidy programme.

Did Caste System Produce India's Best Entrepreneurs?

Being a person with a keen intellectual interest in economics on the one hand in addition to the business culture and income growth among citizens of large countries, China and India have featured severally on this blog. In reviewing literature and other discussions on these countries, I have come to see the human tendency to carefully pick out what cultural aspects have contributed to the rapid rise of incomes and human development across societies. I had missed this article by Durcharan Das, in the NYT and received it from a discussion group a couple of days ago.

This story is especially poignant for me because of two reasons. First, I visited India less than two weeks after the terrorist attacks in Mumbai to which the author refers. Notwithstanding the fact that I was visiting New Delhi and not ground zero, I could clearly tell that the tenor of the public voice was that there's to be no fear shown because the terrorists would declare victory against all India. To that extent, I agree with the writer's suggestion that there was an audit about the failures that allowed the killings to take place without any overreaction that would betray fear. The Bombay Stock Exchange's index and other proxies for business activities were not affected adversely.

The second point was that on my third trip to this great nation built upon an old civilization, I could still clearly see the effects of long-standing discrimination and injustice owing to the caste system. I am therefore appalled that the author alludes to the caste system as a possible cause of the growth of the country due to the creation of strict entrepreneurial class known as the Vaishyas. I am surprised that a person whose name suggests Indian heritage can reasonably argue this point because stratification has always existed in India for ages. So how come it has only spurred rapid growth in the last two decades? That a preponderant amount of the Indian nationals appearing in the Forbes List are Vaishyas cannot be evidence of the success of the caste system because of the inherent self-selection and the failure to account foe the adverse effects of the same system on lower caste Indians. Indeed, if the caste system conferred exclusive advantages on the Vaishya caste, then their appearance on the Forbes list speaks to its success at limiting the capability of the other caste groups.

Malcolm Gladwell argues in his most recent book, Outliers, that what is often perecived as the special ability by a selected group may be the result of differences and decisions that provided an advantage. It may well be that a status conscious society is less willing to provide capital, business education or other amenities that allow the lower caste children to become leading businessmen too.

One only needs to review the indicators recording the special and economic achievements of India's lower caste people to realize that the picture drawn by Durcharan Das is far from complete. My thinking is that all factors considered, the caste system is not a positive factor in India.

Economics of Capturing Stray Cattle

A visitor to either of India's cities of New Delhi and Mumbai is wont to notice the number of freely roaming cows. It is understandable that the Hindu faith has enormous regard for the animal and has accorded it a sacred place. However, given that these animals fall easily within the province of private property, one can easily see that their owners would be given to free ride on the dispensation and bearing no cost for it. The result would be predictable: too many stray cattle in the streets.

Jeremy Khan writes here about the efforts by the city of New Delhi to capture stray animals and take them off the streets where they cause traffic problems in addition to the leaving dung on the city pavements. Interestingly, the city has responded by hiring about 165 cow catchers who are obliged to bring about 10 cows per day. Impliedly therefore, they capture 1650 cattle per day. Allowing for the mishaps and allowing for a slovenly work rate of 5 captured cows per worker, the deprtament should clear New Delhi's streets of virtually all the 32,000 stray animals within forty working days.

It is easy to see that the incentives borne by the catchers is inconsistent with this rate of work because the clearance of the cows from the streets would render them without jobs. No wonder the story reports that a number of cows have been caught multiple times. It is clear that the city of New Delhi has designed the incentives around the removal of the stray animals poorly.