Monday, April 23, 2018

RBI Should Make the Cash Crunch Permanent

Many states of India are again experiencing situation like demonetization of 2016. ATMs all across India are running dry and we are seeing long lines outside banks. The finance minister Mr. Arun Jaitley said that this shortage of cash is because of unusual sudden spike in the demand for money. Newspapers are citing causes related with supply where RBI failed to print enough currency notes despite warnings from the commercial banks. A cash crunch like this is surely a combined effect of both demand and supply side factors.

Government has asked RBI to ramp up printing of currency notes in the aftermath of this cash crunch. According to the latest report, RBI is gearing up to print up to 1 lakh crore new notes to plug the cash gap. This is a big mistake. This cash crunch can be a boon in disguise. If this crunch continues then, in the long run, it can result into lower prices of all consumer and producer goods, which will increase the standard of living of Indians. How? Let us see.

The price of any commodity is determined by four factors combined together. Two factors are from the commodity side and two from the money side. These four factors are: 1) demand for and supply of commodity, and 2) demand for and supply of money. Price of any commodity is an exchange ratio of that commodity with the other commodity with which it is exchanging e.g., if Crusoe exchanges 2 fish for 4 coconut of Friday then the price of 1 fish is 2 coconuts and the price of 1 coconut is half fish. When we are in the indirect exchange money economy the one common commodity exchanging against all other commodities is money commodity (historically gold and silver). The price of every commodity in money economy is thus expressed in terms of money commodity e.g., if 2 fish are exchanging against 20 rupees then the price of 1 fish is 10 rupees.

The laws of demand and supply tell us what the price of any commodity will be. Other things being constant, when demand will increase, price will increase and vice versa; and when supply will increase price will decrease and vice versa.

Now as I said above, the price of any commodity, say like an apple or an orange, is determined by four factors: demand for and supply of commodity and demand for and supply of money commodity. Let us use an example of an apple here. Other factors remaining unchanged, rise in the demand for apple will lead to rise in the price of apple. Fall in the  demand for apple will lead to fall in the price of apple. Increase in the supply of apple will lead to fall in the price of apple, and fall in supply of apple will lead to rise in the price of apple. Similarly, rise in the demand for money (people keeping more cash balance in home), while other three factors remaining unchanged, will lead to fall in the price of apple. This because increased demand for money increases its price i.e., its purchasing power in terms of other commodities like apple. We have to remember here that the money commodity also has a price like other commodities, and that price is its purchasing power i.e., how much other commodities it can buy. A fall in the demand for money will lead to rise in the price of apple. A fall in the supply of money will lead to higher purchasing power of money and lower price of apple. An increase in the supply of money will lead to lower purchasing power of money and higher price of apple.

The on-going cash crunch means two things: One, higher demand for money, in the form of people hoarding more cash balance, and two, reduced supply because RBI is not printing fresh currency notes. And both things mean, as we have seen above, higher price of money i.e., higher purchasing power and conversely lower prices of consumer and producer goods. If the cash crunch continues for long then, under the assumption that other three factors do not change drastically, slowly the prices of all other consumer and producer goods will start to fall in the market. If RBI is not printing fresh currency notes and people continue to hoard cash then the purchasing power of rupee notes in the market must rise i.e., the prices of other commodities must fall. Of course, this effect will only be seen under the given assumption of other factors not changing drastically. If they change drastically then prices may either rise or fall. We need concrete data of the rate of rise and fall in those factors to decide the end effect on consumer and producer good prices.

Notwithstanding the change in other factors, one thing is certain that if RBI stops printing any more currency notes and people continue to hoard cash then prices of consumer and producer goods will fall. This fall in prices will be a boon for Indians. Falling prices means higher real income i.e., a person either needs less rupees to buy the same amount of goods that he was previously buying or with the use of same rupee notes that he holds he can buy more goods. In either case Indians will become truly rich.

Sunday, April 1, 2018

The CBSE Scam

The central board of secondary education (CBSE) in India is in a fix over the leak of mathematics and economics papers of standard X and XII respectively. After the leaks were revealed, students already gave their exams by the time the news of leak came out, CBSE and the HRD minister decided to retake these exams, which has created a storm of protest among the students. Parents of these kids are also enraged. Everyone is saying, why punish the students by retaking their exams when the culprits are the insiders of CBSE itself who leaked papers for money.

For someone who is aware of the true nature of the state and its central planning economic system this event is not a surprise. As Ludwig von Mises showed more than a century ago, any kind of central planning is bound to fail because of its inherent problems of failure to economically calculate and Hayekian knowledge problem. The real focus of protest here should not be that the papers were leaked, but that the government and its education board CBSE is enforcing uniform standard of education on millions of students across India. This collectivization should be the major worry issue for everyone.

We know that all individuals are different and have different personalities. This fact demands  a personalized individual education system where choices of each and every student are taken care of. As Murray Rothbard said,
One  of  the  most  important  facts  about  human  nature  is  the great  diversity  among  individuals.  Of  course,  there  are  certain broad characteristics,  physical  and  mental,  which  are  common  to all  human  beings. But  more  than  any  other  species,  individual men are distinct and separate individuals. Not only is each finger print  unique,  each  personality  is  unique  as  well.  Each  person  is unique in his tastes, interests, abilities, and chosen activities. Animal activities, routine and guided by instinct, tend to be uniform and alike. But human individuals, despite similarities in ends and values,  despite  mutual  influences,  tend  to  express  the  unique imprint  of  the  individual’s  own  personality.  The  development  of individual variety tends to be both the cause and the effect of the progress  of  civilization.  As  civilization  progresses,  there  is  more opportunity  for  the  development  of  a  person’s  reasoning  and tastes in a growing variety of fields. And from such opportunities come the advancement of knowledge and progress which in turn add  to  the  society’s  civilization.  Furthermore,  it  is  the  variety  of individual interests and talents that permits the growth of specialization  and  division  of  labor,  on  which  civilized  economies depend …
Since each person is a unique individual, it is clear that the best type  of  formal  instruction  is  that  type  which  is  suited  to  his  own particular  individuality.  Each  child  has  different  intelligence,  aptitudes, and interests. Therefore, the best choice of pace, timing, variety, and manner, and of the courses of instruction will differ widely from one child to another. One child is best suited, in interests and ability, for an intensive course in arithmetic three times a week, followed six months later by a similar course in reading; another may require a brief period of several courses; a third may need a lengthy period  of  instruction  in  reading,  etc.  Given  the  formal,  systematic courses of instruction, there is an infinite variety of pace and combination which may be most suitable for each particular child.
It is obvious, therefore, that the best type of instruction is individual instruction. A course where one teacher instructs one pupil is clearly by far the best type of course. It is only under such conditions  that  human  potentialities  can  develop  to  their  greatest degree.
The education system in India should be as close as possible to the one to one mentoring system mentioned by Rothbard above. The present centralized system of schooling is far removed from this ideal and, in fact, is exactly opposite to it. By collectivizing the education system, the Indian government wants to create a kind of a society which adheres to its own ideologies. This is not education. This is propaganda where future citizens of India are brainwashed and bred for exploitation. The  great American journalist icon H L. Mencken very aptly said,
The most erroneous assumption is to the effect that the aim of public education is to fill the young of the species with knowledge and awaken their intelligence, and so make them fit to discharge the duties of citizenship in an enlightened and independent manner. Nothing could be further from the truth. The aim of public education is not to spread enlightenment at all; it is simply to reduce as many individuals as possible to the same safe level, to breed and train a standardized citizenry, to put down dissent and originality. That is its aim in the United States, whatever the pretensions of politicians, pedagogues and other such mountebanks, and that is its aim everywhere else.
Indian parents and students should worry and focus on this basic issue of central planning and collectivization of education system in India. If the education system is more personalized then issues like the present paper leak will never be a problem as students will be studying those varied subjects in which they excel the most. They will never be giving exams of same question paper all over India. In fact, in such more and more personalized education system there will be myriad of ways in which students will be able to test their abilities in a right way. In the absence of government’s uniform collectivized system of education parents will have freedom to either homeschool or unschool their children. And when every child will get a chance to develop his/her personalities fully, they will excel and with them India will excel.

Tuesday, March 13, 2018

Protectionism and Its Consequences

Globalization is in retreat and protectionism is again rising its head worldwide. Recently the American President Donald Trump announced that he will impose very steep tariffs on imported steel, aluminum products and cars . In retaliation the EU has threatened to impose heavy tariffs on American imports in EU. Trump is also waging a trade war with China by threatening to impose heavy tariffs on Chinese imports. In retaliation China is threatening US with heavy import tariffs too. Here in India the Narendra Modi government also imposed heavy tariff on palm oil, chickpea imports and scores of other items like kites to cosmetics to electronic goods etc., in its recent budget.

Is this rising protectionism good for the Indian and the world economy? To understand this question we need to understand how our economic life works. Following brief analysis will show us what will be the impact of this rising protectionism on our lives.

Economics of Protectionism
Human beings act in a world full of scarcity to survive and thrive. The biological objective of every life on earth is to stay alive, reproduce and move ahead. To stay alive we need basic goods like air, water, food, shelter, clothes etc. To enjoy our lives fully we need many more goods like TVs, mobile phones, cars, bikes, computers and on and on. If you think about the goods that you consume on daily basis you will realize how long and endless this list of goods is. Now, we do not have to worry about those goods which are in abundant supply vis-à-vis our needs for them e.g., air (oxygen). Even after nice billion people of earth utilizing oxygen every fraction of a second there is plenty of oxygen left on earth. The goods that we have to worry about are the ones which are in scarce supply. Because they are scarce we have to economize on their use. These are economic goods.

Another fact of human life is that nature has endowed us with unequal resources including our skills and talents. Just like individuals, countries around the world are endowed with unequal and varied natural resources. Some countries have abundant oil reserves, but lack the human skill to extract those resources from ground. Some countries have abundant coal but no corn. Some have abundant water but no wheat. Some have abundant wine but no wool and so on and so forth. Now, as we have seen above, for survival we need more than one economic good. This creates a problem for all of us because we all are not capable of producing all these goods on our own e.g., to type this article I need a computer which sadly I cannot produce on my own; I also cannot produce the t-shirt and jeans that I am wearing right now or the bottle from which I am drinking water or the breakfast that I am going to have in a while and countless other such things. How do we get over this problem? The answer is: Trade. Exchanging what we can produce with what others can produce can help us mitigate this dire problem. For example, on an island economy there are two people viz., Robinson Crusoe and Friday. Mr. Crusoe is very good at producing fish and Mr. Friday coconut. Both can benefit by exchanging/trading fish for coconut. Without this  trade both Crusoe and Friday are poor i.e., they only have one good, either fish or coconut, to consume, but with trade now they can consumer both fish and coconut. Thus trade makes us all rich. This fact of trade is all the more true in our more than two person economies too. We all can consume and enjoy endless varieties of goods if we trade with each other. Trade enriches our lives. If trade within countries enriches their inhabitants’ lives then trade with foreigners will enrich their lives even more. If trade within nation is beneficial then trade between nations, foreign trade, is even more beneficial. This is because, as we have seen above, not all countries are endowed with all kinds of natural and human resources. Some countries are good at producing wool and some at wine and so on and so forth. Indians can export spices, diamonds, textile products etc., to foreign countries and in return can buy textile machines, oil, sugar, coal etc., etc., from abroad. Foreign trade thus benefits all.

Now, these benefits of internal and foreign trades can be realized only when these trades are free from any kind of restrictions and interference. Only when Indians and Americans and Chinese and Brits and everyone else can trade freely within their countries and with each other can the gains of trade be realized. Only when internal and foreign trades are free we all can enrich ourselves. Any kind of restriction on national and foreign trade will kill the gains of trade. Any kind of restriction will make us all poor.

The policy of protectionism, that the governments around the world are following today, puts heavy restriction on free foreign trade. If Indians, Americans, Chinese, Brits, Spaniards, Italians etc., people are not allowed to freely trade with each other by their governments, to protect some local inefficient manufacturers, then that will make them all poor. Protectionism means poverty. Self sufficiency means living a miserable primitive life of tribal people. Forcefully buying costly products from local producers, instead of buying cheap goods from abroad, means poverty.

Conclusion
The rising protectionism around the world is not good for anyone. It is only going to make the world a poor place to live for everyone. And poverty will kill people in the end. Putting restrictions on trade is a policy that invites misery and death. If you love death then you can celebrate protectionism. If you love life then you must oppose protectionism.

Sunday, February 18, 2018

Modicare

n recently announced budget the finance minister of India Mr. Arun Jaitley launched an ambitious government healthcare program. He dubbed it as Modicare like Obamacare in America, which the present President of USA Mr. Donald Trump is trying to dismantle. This new program, which is touted as the biggest healthcare program in the world, will raise the insurance coverage per family from present annual 30,000 rupees to 5 lakh rupees and will cover 50 crore people, which represents almost 41% of total Indian population.

Notwithstanding the myriad of benefits cited by the ruling government and news outlets, we need to be aware of wide economic, social and cultural impact of such government schemes.

Firstly, the economics of this program will require vast amount of resources, which the government doesn’t have right now. This will necessitate the government to impose new taxes on already burdened tax payers of India. Due to the high tax regime thousands of ultra-rich people are already leaving India annually. Any additional burden of taxes will only speed-up this emigration process. These ultra-rich people are some of those people in India who are providing valuable saving and investment resources which helps build the capital and production structure of the Indian economy. Their saving and investment activities are what make India richer as the time goes by. Once these people are gone, what is left behind are mostly poor people who do not earn enough, save and invest. Lack of capital will further impoverish Indians.  When government will not be able to fund Modicare using taxes, they will resort to market borrowing which will one day bankrupt the country. And when these two sources will fail, government will resort to their time tested method of inflation i.e., printing currency. They will ask the RBI to monetize the deficit by printing currency notes, increasing the money supply in the economy, and buying government bonds. This inflationary policy will ultimately ruin the Indian economy and people.

This program will create a giant healthcare bureaucracy which will be almost impossible to finance without going bankrupt. As Thomas Sowell said, It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it. Once in place it will be very difficult to dismantle this giant bureaucracy. The Indian government is already huge and making it even bigger makes no economic sense at all.

Second, the social and cultural impact of this policy will make even more people dependent on government largess. Modicare will alter peoples’ habits and make them lazy and careless about their health. When people will come to know that no matter what the government will pay their health bills, they will stop living a healthy lifestyle. This scheme will basically subsidize unhealthy lifestyle and punish healthy ones. This perverse incentive of Modicare will turn India into a sick society.

Not only this, this policy will result into shortage of medical personnel like doctors and medical facilities like clinics and hospitals in India.  In the present relatively private healthcare system doctors get their fees in cash directly from patients. This keeps their clinics going. We have to understand one fact that no doctor can run his clinic/hospital free of cost without making any profit. Once government starts paying their fees, they will start regulating how much fees doctors can charge and when they will get their payment. Price caps and delays in getting fee money from the bureaucrats will make it increasingly difficult to make profit and covering day to day cost of running clinics and this will make people reluctant to enter medical profession. We are seeing these things already happening in places like America, Canada or Britain where they have similar national health care system in place. Scarcity of doctors and medical facilities will further erode health standards of Indians.

Modi government has initiated this healthcare program in desperation to woo rural poor voters of India, and it might happen that if a new government comes to power in 2019 then this program might get scrapped. But one can never be sure. Government programs run mostly in one direction. Once they are started it is very difficult to roll them back. Successive governments will want to utilize this healthcare scheme for vote purposes, and that will make it very difficult to dismantle it.

All in all, Modicare will be a disaster like what Obamacare has turned out to be for the Americans. In USA the insurance premiums sky rocketed after the implementation of affordable healthcare act (Obamacare). Similar things will happen in India. Economic laws work same everywhere. Instead of making Indians healthy and covering their illness finances, this program will make them even sicker and financially bankrupt.

Wednesday, January 31, 2018

Indian Culture and Economic Development

Which factors determine country’s economic development? Development scholars have looked into this question for more than a century and they came up with different explanations like the theory of colonial victimization, dependency theory, geography and climate, institutions, culture etc. Out of these explanations the cultural explanation is fundamental. I strongly think that culture is the most important factor influencing the process of economic development of any country. I also strongly think that the twin process of biological and cultural evolution together, the gene-culture evolution, ultimately determines whether a country is going to develop or not.  This is because human beings are a product of both biological and cultural evolution.

Not going into the contentious issue of genetic basis of culture and economic development, here I just want to focus on cultural factors as a determining force behind economic development. I was recently reading an article by Argentine lawyer and sociologist Prof. Mariano Grondona  A Cultural Typology of Economic Development and found it very relevant to the development difficulties that a third world country like India faces since time immemorial.

In his article Prof. Grondona divides the (cultural) value system, values that can be grouped in a consistent pattern, of any society into two parts: 1) value system that favors economic development, and 2) value system that resists economic development. He lists down twenty different cultural factors, which are part of a value system, that are viewed very differently in cultures that are favorable and resistant to economic development. A quick review of these factors will tell us whether the Indian culture is in favor of economic development or resistant.
  • Religion: As Prof. Grondano says, throughout history, religion has been the richest source of values. A religion which treats life’s winners (the rich) unfavorably and losers (the poor) favorably is antithetical to economic development. Such religion breeds cultural values that exalts poverty and condemns riches. Hindu society and Hinduism is just like this. In India people who gave up productive societal lives for an ascetic life are revered everywhere whereas successful businessmen are derided for being greedy and selfish. Hard honest work is scorned and life of lethargy and laziness is celebrated. Such a culture can never develop.
  • Trust in the individual: The principal engine of economic development is the work and creativity of individuals. What induces them to strive and invent is a climate of liberty that leaves them in control of their own destiny. If individuals feel that others are responsible for them, the effort of individuals will ebb. If others tell them what to think and believe, the consequence is either a loss of motivation and creativity or a choice between submission or rebellion. However, neither submission nor rebellion generates development. Submission leaves a society without innovators, and rebellion diverts energies away from constructive efforts toward resistance, throwing up obstacles and destruction. To trust the individual, to have faith in the individual, is one of the elements of a value system that favors development. In contrast, mistrust of the individual, reflected in oversight and control, is typical of societies that resist development. Implicit in the trusting society is the willingness to accept the risk that the individual will make choices contrary to the desires of government. If this risk is not accepted and the individual is subjected to a network of controls, the society loses the essential engine of economic development, namely, the aspiration of each of us to live and think as we wish, to be who we are, to transform ourselves into unique beings. Where there are no individuals, only “peoples” and “masses,” development does not occur. What takes place instead is either obedience or uprising. And India is precisely this type of society where the individual simply doesn’t exist. An individual’s only identity is to which caste or clan or religion or community or family he belongs. The societal and community control over an individual are so many that it numbs one’s mind. Going against societal norms for most is suicidal. A society where such tight controls on an individual exist can never develop.
  • The moral imperative: The culture that is favorable to economic development is moral in nature. In development favorable cultures moral law and social reality coincides. In development-resistant cultures, on the other hand, there are two worlds that are out of touch with each other. One is the exalted world of the highest standards and the other is the real world of furtive immorality and generalized hypocrisy. The law is a remote, utopian ideal that does little more than express what people might in theory prefer, whereas the real world, effectively out of touch with all law, operates under the law of the jungle, the law of the cleverest or the strongest, a world of foxes and lions disguised as lambs. India is such a society of generalized hypocrisy. People say something in the public and do exactly opposite in private. The hypocrisy starts right from the top level authorities and leaders, both political and religious, and goes right down to the last man.
  • Two concepts of wealth: In societies resistant to development, wealth above all consists of what exists; in favorable societies, wealth above al l consists of what does not yet exist. This means societies favorable to development will innovate to change their future wealth whereas resistant ones will be happy in accumulating whatever wealth they can, and India is such a society where people are simply busy amassing wealth instead of busy thinking about how to increase their wealth in future. This is the reason why hardly any innovation takes place in India.
  • Two views of competition: The necessity of competing to achieve wealth and excellence characterizes the societies favorable to development, not only in the economy but elsewhere in the society. Competition is central to the success of the enterprise, the politician, the intellectual, the professional. In resistant societies, competition is condemned as a form of aggression. India is a society where most people, whether a businessman or politician or an intellectual or professional, hate any kind of competition. Most people are busy creating monopoly organizations for themselves using the state machinery. Indians love protectionism. 
  • Two notions of justice: In resistant societies, distributive justice is concerned with those who are alive now-an emphasis on the present that is also reflected in a propensity to consume rather than to save. The favorable society is likely to define distributive justice as that which also involves the interests of future generations. In such societies, the propensity to consume is often smaller and the propensity to save is often greater. A small percentage of people in India think of a future generation in India. The people in power, who are in charge of societal institutions, can hardly think beyond their tenures. They are ruining the coming generations to give little (false) benefit to the present.
  • The value of work: Work is not highly valued in progress-resistant societies … The entrepreneur is suspect but the manual laborer somewhat less so, since he must work to survive. At the top of the prestige ladder are the intellectual, the artist, the politician, the religious leader, the military leader. Again, India is exactly this type of society. Entrepreneurs, especially the smaller honest ones, are derided but unproductive people like politicians, religious leaders etc., are worshiped like Gods.
  • The role of heresy: A development resistant society always censors people who are dissidents. Heresy is always punished. Any kind of questioning of the established norms and authorities is strictly prohibited. But such questioning is the very process that creates innovation and new ideas that promote development. In India most people are simple followers of the past traditions and customs. Questioning is forbidden. Inquiring minds will get frustrated in India and so most of them fly to Western countries. In new India (sic) rational people are not tolerated and are now murdered regularly.
  • To educate is not to brainwash: Value systems favorable to development nurture the formation of individuals who are innovators, heretics. Education is the principal instrument of this nurturing. However, this must be a form of education that helps the individual discover his or her own truths, not one that dictates what the truth is. In value systems resistant to development, education is a process that transmits dogma, producing conformists and followers. In India the education system is a pure propaganda machinery of the government for brainwashing the future generation so that everyone become docile citizens. There is only rot memorizing going on inside the classrooms. Schools only create herds of graduates who can’t think on their own. No wonder India is a third world country.
  • The importance of utility: The developed world eschews unverifiable theory and prefers to pursue that which is practically verifiable and useful. To know what is verifiable and useful requires scientific attitude which hardly few Indians have. Indians are fatalist who will blindly follow what their lives dictate to them instead of controlling their lives through their intelligent actions. Such people can hardly develop themselves.
  • The lesser virtues: Advanced societies esteem a series of lesser virtues that are virtually irrelevant in traditional cultures: a job well done, tidiness, courtesy, punctuality. These contribute to both efficiency and harmoniousness in human relations. They are unimportant in a resistant culture. A job well done, tidiness, courtesy and punctuality are unknown concepts for most Indians. The Indian society hardly values time, and that is the reason why the chances of its development are minuscule in present.
  • Time focus: There are four categories of time: the past, the present, the immediate future, and a distant future that merges into the afterlife. The time focus of the advanced societies is the future that is within reach; it is the only time frame that can be controlled or planned for. The characteristic of traditional cultures is the exaltation of the past. To the extent that the traditional culture does focus on the future, it is on the distant, eschatological future. Indians always look to their glorious past forgetting their present dismal condition. If at all they think about the future then it is either their afterlives in heaven or hell or the next life. All want to get moksha in the afterlife but will happily live a wretched present life!
  • Rationality: The modern world is characterized by its emphasis on rationality. The rational person derives satisfaction at the end of the day from achievement, and progress is the consequence of a vast sum of small achievements. Most Indians are irrational and tribal to their core so true progress is impossible.
  • Authority: In rational societies, power resides in the (natural) law. In resistant societies, the authority of the prince or the state is similar to that of an irascible, unpredictable God. People are not expected to adapt themselves to the known, logical, and permanent dictates of the law; rather, they must attempt to divine the arbitrary will of those with power. This perfectly characterizes the Indian society. The present God of most Indians is Narendra Modi.
  • Worldview: In a culture favorable to development, the world is seen as a setting for action. The world awaits the person who wants to do something to change it. In a culture resistant to development, the world is perceived as a vast entity in which irresistible forces manifest themselves. These forces bear various names: God, luck, the devil, a powerful international conspiracy, capitalism, imperialism, Marxism etc. As I said above, upon any kind of failure or success most Indians will immediately blame of give credit to factors like God or luck etc. They will never say that my actions are responsible for my failure or success. Most Indians think their dismal condition is permanent and they can’t do anything to change it. This is a typical sign of a backward development resistant society.
  • Life view: In the progressive culture, life is something that I will make happen-I am the protagonist. In the resistant culture, life is something that happens to me – I must be resigned to it. Again, as I said above, most Indians are fatalist and they have resigned their lives to external forces. Whenever I discuss the issue of changing the Indian society in my classes most of my students will always say, what can we do sir? We are so small and powerless!
  • Salvation from or in the world: In the resistant conception, the goal is to save oneself from the world. But for the favorable culture salvation in the other world depends on the success of the individual’s efforts to transform this world. This again typifies the Indian society at large.
  • Two utopias: Both progress-prone and progress-resistant cultures embrace a certain kind of utopianism. In the progressive culture, the world progresses slowly toward a distant utopia through the creativity and effort of individuals. In the resistant culture, the individual seeks an early utopia that is beyond reach. The example of the latter in India is Narendra Modi’s grandiose utopian unrealizable vision of new India in 2022!
  • The nature of optimism: In the resistant culture, the optimist is the person who expects that luck, the gods, or the powerful will favor him or her. In the culture favorable to development, the optimist is the person who is resolved to do whatever is necessary to assure a satisfactory destiny, convinced that what he or she does will make the difference. This again is quintessential India.
  • Two visions of democracy: The resistant culture is the heir of the tradition of absolutism, even when it takes the form of Rousseauistic popular democracy, which admits no legal limits or institutional controls. The liberal, constitutional democracy of John Locke, Baron de Montesquieu, James Madison etc., characterizes the vision of democracy in the progressive culture. Political power is dispersed among different sectors and the law is supreme. India is a namesake democracy only. Politicians behave worst than past nabobs and kings, and the law is absent.  
After reviewing the list of these twenty cultural factors that are favorable or resistant to economic development one can easily see that all twenty factors in India are resistant to economic development. This is not surprising as underneath the veneer of modern democracy India remains a collectivist tribal society. This resistant culture is the reason why India is still a third world country, and will remain as long as this resistant culture is not changing in favorable direction. Such cultural changes come only after centuries of persistent hard work.  And it is also possible that such changes might never come and India remains a third world country forever. In the end everything depends on Indians. If they wish they can change their culture, but if they are comfortable with the kind of miserable lives they are living in present then there is very little hope for the future.