Vantage point

Friday, February 18, 2005

My Musings on Poverty - Part 1

Explanatory Prelude - I believe Capitalism is good. I believe Globalisation is good. But I believe that the WTO, or indeed the existence of a body like WTO, which "enforces" capitalism, is bad. The reason I believe it is bad, is the same reason why I believe big governments are bad. These posts examine how a person who is anti-socialism and pro-capitalism can also be anti-WTO.

India is a country that has plenty of people on every peg of the Richness-Poverty scale. We have thousands, even lakhs of filthy rich people and we have thousands, even lakhs, even crores, of abjectly poor people who can't afford even the most basic of needs like food, clothing and shelter. The number of people on the poor side of the scale far outweigh those on the rich side of the scale.

So would you say India is a poor country?

I think not. A poor country is one which just does not possess enough resources.

Let us take one basic need - food, and look at countries from that perspective. A poor country would be one which does not have enough food to feed its citizens, i.e it does not have enough grain, vegetables and meat to feed its citizens. So is Saudi Arabia a poor country? It does not grow enough grain, vegetables and meat to feed its citizens.

Ahh, who said anything about growing? I said a country should "have" enough. Now, how will you have enough resources? Either you will "grow" them. Or you will "buy" them. Or you will "snatch" them. Snatching is something which is not done very often among countries. Only if there are wars waged, like Hitler's germany did. But in the normal course of things, a country will either grow or buy.

So a country like Saudi Arabia which can't grow, will buy food.

How will it buy food? By selling something else, that's how. What does it have that it can sell? Why oil, of course. Saudi Arabia is lucky. Fossil fuels under its land save it from poverty. But there are many countries which are not as lucky. So they
can neither grow enough food, nor buy it, because they don't have anything else to sell. Many countries in Africa are poor like this. But lets come back to India.

Is India poor? Not in terms of food. Quite simply, we grow enough food to feed our billion mouths. We don't even need to buy it, like Saudi Arabia does. Maybe 40 years back, we didn't grow enough, but ever since the Green Revolution happened, we have achieved "self-sufficiency" in food.

The next basic need is clothing. Do we "grow" enough clothing for a billion people? Yes, we do. We have enough raw material, and enough means of production to "grow" clothing. Saudi Arabia doesn't. It has to buy clothing too. Maybe 80 years back, we
didn't have enough means of production, but now we do. So we have achieved "self-sufficiency" in clothing.

Now we come to shelter. What do we need for shelter? Land, cement, bricks, iron ore, and wood are usually enough to build houses that will be our shelter. We have enough of almost all those things. So by and large, we have achieved "self-sufficiency" in shelter too.

Wow, will you look at that? Poor Saudi Arabia needs to buy almost all these things, but we don't. So I don't know about rich, but India is definitely not a poor country. In fact it is not even close to being a poor country, because it is self
sufficient in the basic resources.

How is it, that even though India is not a poor country, it has so many poor people? In the 1960s, there were times in India when we didn't have enough food. We were poor, in reference to food. But not now.

So why don't people just buy all this food, all these clothes, and all these houses?

Why don't they learn from Saudi Arabia?

Saudi Arabia could buy, because it had oil to sell. What do these poor people have to sell?

Saudi Arabia sells oil, but not all countries have oil. Some have extra food to sell, like the Europeans, some have extra clothes to sell, like the Chinese. Some don't have anything they "grow". Like Japan. Japan doesn't have a lot of iron ore, but it sells lots of cars. How does that happen?? Because Japan has the "skills" to convert iron ore into cars. There may be tens of other countries who have the same natural resources as Japan, but they don't have the skills to convert iron ore into cars.

Now here it gets confusing. Saudi Arabia has oil, thanks to the earth. Where did Japan get these "skills" from? Are the Japanese born with these skills? No. Then how can we say "Japan" has these skills? Well, Japan has "companies" that have these skills. Companies? Aren't we confusing ourselves even more?

Maybe we are. Let us get back to the people in India, after understanding that Japan has the skills to make cars from iron ore. So when Japan sells cars, it is really selling the skills.

Don't these hungry, naked, homeless people in India have skills they can sell to people who have extra food? They sure do. Then why don't they sell these skills, like Japan does?

to be continued...