Why India is in good shape for the future

Dan Pepper passed on this article in Newsweek highlighting the underlying strength of India's economy.

"Be nice to countries that lend you money"

Great perspective on America from the banker who runs the $200 billion China Investment Corporation in The Atlantic. He loves us, but thinks our perspectives on the world are totally wacked. In the interview, he gives a pretty unvarnished perspective on the financial crisis (a fundamental change), derivatives ("bullshit... crap... they serve to cheat people"), American pragmatism (the best part of our culture) and -- most importantly -- China's attitude towards it's U.S. dollar reserves ("We’d love to support you guys—if it’s sustainable").

But the comment that struck me the most was what he had to say about Wall Street compensation and salary disparities in China and the U.S..

"When I graduated from Duke [in 1986], as a first-year lawyer, I got $60,000. I thought it was astronomical! I was making somewhere a bit more than $80,000 when I came back to China in 1988. And that first month’s salary I got in China, on a little slip of paper, was 59 yuan [$8.63]. A few dollars! With a few yuan deducted for my rent and my water bill. I laughed when I saw it: 59 yuan! The thing is, we are working as hard as, if not harder than, those people. And we’re not stupid. Today those people fresh out of law school would get $130,000, or $150,000. It doesn’t sound right."

As someone who's worked in China and India, that hits home. People in these countries ARE pretty smart and they're working damn hard. But because of the historical differences in economic development between our country and theirs, they get paid a tiny fraction for doing the same work.

He's right: it doesn't sound right. And it probably won't last.

India and China in The Economist

Last week's issue of The Economist had a survey with eight articles covering the range of issues facing India and an interesting piece about the different ways the current economic outlook threatens India and China. If you're interested in either of these topics, check it out.

The China/India comparison is fascinating. I'm more than a little concerned about social unrest in China over the next few years. Their economic growth has been massively dependent on exports to consumers in the West. And two months ago those consumers buying. As factories in China close, a lot of people are going to be out on the streets and angry. And historically, China has been vulnerable to social unrest. Look for whether their businesses are able to respond to the new environment and how successful the government is in quelling public demonstrations.

For all its inefficiency and corruption, India's democracy at least provides a pressure valve for its society's discontents.

In case you haven't had your fill...

...of articles about the election, here's a really great piece in Newsweek about the three major campaigns for president and how they were run. Newsweek's reporters were given inside access to the Obama, Clinton and McCain campaigns . In return they agreed not to publish the story until after the election. The result is an in depth profile of all three candidates and the way their teams managed their campaigns. Says a lot about the quality of the candidates.

Really...?

See this piece by Joe Nocera in the NYTimes about how India avoided getting sucked into the financial crisis. Sounds great. Not sure how much I believe it.

My impression is that many of India's strengths in the current economic environment came from a failure to liberalize the economy. But perhaps there was more forethought in that then I was aware of. I just hope we don't hear that the government has avoided investing in physical infrastructure and reforming labor laws because that might have led to an unhealthy dependence on manufacturing exports.

Let's try this again...

Stop blogging for a few months and the whole world goes to pot.

So, I got a bit distracted with things over the last couple of months and the blog fell through the cracks (also, there's a new firewall at work, which prevents me from procrastinating in this particular venue). But now, with all the crises going on around the world I find I'm emailing a lot of interesting articles to friends. Then I remembered, "Hey, didn't I used to have a blog... and can't you use blogs to post you read so others can read them too..." Yup.

So let's give this blogging thing another shot...

Just watching the Olympics opening ceremony and learned this fascinating nugget of information: Omar Bongo, the president for life of Gabon, has offered any Gabonese gold medalist "A dream house and untold riches."

Now, I'm not saying you shouldn't trust central-african dictators-for-life, but isn't "dream house and untold riches" awfully ambiguous? Before winning the gold, you might want to see that house and be told just what sort of riches he has in mind. Then again, maybe its better not to look a gift horse in the mouth.