The New World needs a New Agenda
There is vast difference in the Global Economic environment that exists today and the early 1900’s. Despite these differences, the agenda of the Right and Left in India continue to cling onto the past “Classical” practices and ideologies. The Right applies macro economic solutions unsuccessfully to alleviate poverty, while the Left fights for Unionized Labor and protects the entitlements of this workforce even at the expense and detriment of the businesses that provide employment. And in the case of Public Enterprises the expense of the Left’s “Job Protectionism” agenda is borne by the taxpayer. The practices, agenda and ideology of the Classical Right and Classical Left are outmoded, outdated, regressive and oppressive! It has been the battle between Profit and Wages. The Right is perceived as focusing on Profit at the expense of Wages. The Left is focused on Wages with no regards to the viability of the enterprise. The Left’s agenda for the most part, has a cancerous effect on our economy, while the Right’s agenda, is perceived to be one of dismembering the body and ignoring the amputated parts. There is a positive note though, Educated Workers are faring well and organized Blue Collar Workers are receiving their fare share for the most part. The positive effects of liberalization and the resulting economic growth are evident. The middle class has benefited tremendously in the last two decades. India is a Power House in IT and BPO. We are poised for a boom in Medical Tourism. The building construction industry is booming. The stock market is at an all time high and rising. Aside from the effects of liberalization, Bollywood is producing “slick” films. We have a thriving dairy sector. We are self sufficient in food.
The Working Poor are stuck in the Old World
Despite the progress made, the plight of the non-organized labor - the “Working Poor”, continues to be deplorable. The “Working Poor” consisting of construction workers, laborers (urban, rural & migrant), small business/retail employees constitute an “invisible segment” in that they are “intellectualized” and seen through as if they don’t exist. Both the Right and the Left pay lip service to the Working Poor while ignoring their plight. What is needed is an environment where both Capital and Wages flow freely resulting in the overall increase in the “Shared Wealth” of our economy. The goal is to continue expanding the economy, build and expand upon our successes and at the same time, drive the resulting benefits deeper and wider into the rest of the population.
The Sustainable Cure for Poverty is Jobs and Opportunities for the Willing
At the very discreet, “micro” level, what is required for individuals and families is the opportunity to earn a living, attain an adequate Quality of Life, put aside some savings for emergencies and discretionary expenses and build a “nest egg” for retirement. People at the very bottom of the economic ladder should be given opportunities to bootstrap themselves out of poverty. The solution is Jobs and Entrepreneurial opportunities for the Rural poor, Low Cost Housing for Urban slum dwellers and temporary facilities for the migrant construction worker.
Focus on Affordability
The focus ought to be to enable the poor to establish an acceptable Quality of Life. For Urban India this translates to a roof, sanitation facilities and discretionary income. i.e. provide Hostels, Low Cost Housing for the working poor, and temporary housing for migrant construction workers. For Rural India this translates to providing gainful sustained employment and entrepreneurial opportunities beyond the agriculture sector. In both cases there ought to be programs for the uneducated, unskilled, unemployed. This translates to Shelters in Urban India and Infrastructural Work projects in Rural India. Low cost Housing does not mean FREE housing! The poor should be provided means to earn and afford rent controlled housing. Ownership is a desired goal.
Establishing Minimum Wage and Guidelines for Living wages
Disregarding sound fiscal policy cannot provide jobs, nor should they be allowed at the expense of proper governance and environmental guidelines. Both the Right and the Left should pursue establishing these guidelines and facilitate the creation of jobs. After all, any income is better than no income for the uneducated, unskilled, and unemployed. Wage negotiations ought to be the purview of the Unions devoid of partisan politics. While "Minimum Wages" are established as mandatory for employers to pay, “Living Wages” calibrated to the “Cost of Living” for each demographic region could be published by independent third party organizations as recommendations and guidelines for employers and workers on what is fair. Living Wages is a floor and a measure of income required by an individual to support oneself adequately.
Balancing Profits, Wages and Sharing the Wealth
The Right is perceived as letting businesses maximize profit with little or no concern for the betterment of its workers. This results in the widening of the economic gap between the “Rich” and the “Poor”. In the current context the appropriate response is to share the wealth with those who helped create it in the form of profit sharing and co-ownership. In order for this to happen, the capitalization of the business should be allowed to increase without any artificial or unreasonable constraints, subject to proper governance and environmental guidelines.
The Downside of "Job Protectionism"
The Left’s preoccupation with “Job Protectionism” often results in an excessive and inefficient payroll. It also prevents the downsizing or closing down of enterprises in the absence of a viable economic environment. Doing so transfers the burden of supporting the losses of a public enterprise to the taxpayer. It protects the entitlements of a select few at the expense of the society at large. Only 1.7 % (18 million people) of Indians are the employees of the State and Union Government. Along with the employees of the organized private sector, (9 million people) represent a total of 2.6% (27 million people) of the population of India. Source: India 1st www.wakeupcall.org. The facts speak for themselves!
Increase the Economic Pie, Increase Everyone's Share
In the current context, the appropriate response is to provide the displaced worker with some assistance by way of retraining and/or job/relocation assistance at the taxpayer’s expense. Also, facilitating the formation of new enterprises would absorb the displaced worker, thereby eliminating the trauma of lost wages.
If one were to compare the country’s economic environment to a train, the ideal environment is to accelerate the train while adding more compartments to it. The ideal situation is to enable more and more people hop on board without slowing the train or over crowding it. Today the Left is clearly perceived as the brakeman of this train and taking more of an obstructionist role. The Right is accused of letting the train move faster without any regards to the people stranded on the platform and ignoring those who fall off.
The Classical Left approach is to curb and tax the rich to alleviate the poor. The Classical Right approach has been to let the rich flourish with meager handouts and lip service to the poor. While “Trickle Down Economics” has garnered ill repute, if you ignore the rhetoric of Tax Cuts and favouring the Rich, the fact of the matter is; as consumer spending increases, service jobs are created. Not only do we need to improve the money flow to the lower economic segment, we also need to focus on “Pick Up Economics” that gives the lower segments of society an opportunity to earn decent wages to overcome their predicament and climb on to the ladder of upward mobility, which then contributes to the overall economy.
What is needed is a mechanism for wealth generation wherein the rich and the poor reap the rewards of the increasing wealth. Urban and Rural India are two disparate environments that require different solutions. For Urban India, it translates to providing Low Cost Housing for the Working Poor. At a minimum, everyone should have access to a bed and sanitation facilities. For example the cost of providing temporary on-site housing and sanitation facilities for building construction and road (both urban and rural) construction workers should be included in the cost of construction. For Rural India, housing is less of an issue. Expanding the economy rapidly beyond the agriculture sector is the answer. Land reforms that enable this to happen is a necessary factor as well.
Ownership is Desirable, Jobs, Opportunity, Affordable Rentals, Affordable Living is EssentialThe Left’s preoccupation with ownership, ceilings of housing and agricultural land is detrimental to the respective Urban and Rural environments. Ownership ought to be regarded as a desirable end-point of an individual’s life as opposed to an entitlement. For instance, in Urban India, the limitations imposed, results in fewer Rental properties. What is required is to provide appropriate incentives to the business community to provide low cost rental housing for slum dwellers. It is far better to be able to afford to rent than live in sub-human and squalid conditions. In Rural India, land is being divided and sub-divided over successive generations, such that it is often impossible to sustain one’s family on the land owned. Programs geared towards the “marginal farmer” are an exercise in futility. What the “marginal farmer” needs is a viable exit strategy whereby he can trade his land for sustainable income. What is required is the lifting of these land ceilings along with incentives to promote agro-industry and manufacturing in rural areas, and in the process provide jobs and entrepreneurial opportunities to the “marginal farmers” and landless. It is far better to have a job that sustains one’s living than to own a piece of land that does not provide adequate income.
Fair and Equitable Compensation for Eminent Domain AcquisitionsThe Left can also play a constructive role in ensuring proper compensation and rehabilitation assistance is provided to individuals whose land is “solicited” for urbanization or industrialization. The current situation where the government is involved in the land acquisition is not working. In addition to the exploitative forces the villager faces, they face yet another exploiter, the Indian government. The land is being acquired way below the open market price based on the “market rate” established in the records. Both citizens and the government are responsible for this problem. Citizens record the purchase price at below open market values to avoid paying stamp duty and taxes. The government turns a blind eye to this practice. Instead the government should establish policies and practices that can be administered locally, to ensure the true value of the land is recorded by allowing market forces come into play. A January 2007 article by Swaminathan, “Case for community-led land acquisition”, provides some very practical suggestions. India needs to progress rapidly, but this progress cannot come at the expense of, and exploiting rural landowners.
So the ideal situation is for both the Right and the Left to focus on increasing the “shared wealth” of India. The Right ought to focus on “Capital Flow Economic” programs, by promoting policies and incentives for businesses to provide opportunities and amenities for the poor. i.e. facilitate the flow of Capital. The Left ought to focus on the “ Wage Flow Economic” programs, by promoting policies that ensure the ensuing wealth flows to meet the needs of the lowest segments of our society. i.e. facilitate the flow of Wages.
References:
http://en.wikipedia.org/wiki/Living_wage
http://www.grameenfoundation.org/
http://www.investorwords.com/5075/trickle_down_theory.html
http://www.swaminomics.org/
