It is the Economy that Matters
For any subject to be understood the derivation to first principles is what matters. Economics as a term to medical doctors like myself gives an image of a dry boring subject divorced from life. It deals with day today production consumption and transfer of wealth. Seems simple but the consequences of this simple interaction is huge and complex. So why should a doctor or anyone for that matter learn about Economics in general? Is it similar to a nonmedical person asking the same question about the study of Medicine. Over a period of time I have tried to hear and learn about the same and based on different stages of life and the maturity of my understanding formed certain opinions or actually, I would say get convinced by some opinion only to get more convinced of the contrary view as well. Does that leave me wiser? Yes and no is the ambivalent answer but the certain answer is that all this leaves me confused, more than before.
Since the time politics and elections became important to me as a voter, I started hearing about poverty alleviation, incomes, expenditures, taxes, job creations etc. In the simplistic way of thinking populist welfare and a kind of rich must sacrifice to give to the poor were the obvious ways to correct inequality in a poor country like India. The intended and unintended consequences of policy and the nuances of all of these were beyond my understanding. This started changing initially when I once went to hear Late Mr. Nani Palkhiwalla in 1977. A 16 year old college youth saw a rock star and the applause and attention he got along with his sharp witticisms left me gaping with my mouth open. I grew up learning slowly how the ridiculous rates of income tax made evading tax something desirable and justified. The stifling of private enterprise and the power of the state to make everything difficult made me realize that corruption became a way of life.
The inefficiency of the state, was covered up by policy which gave the public sector priority over major sectors like telecommunications, power, gas, steel and mines, automobile manufacture, textiles, watches, televisions, railways, roads, dams and irrigation, fertilizers retail and so many such things. A few companies were still making good stuff like Tata which had steel plants, trucks, soaps. The Hindustan Lever again made quality products like soaps, detergents besides some others like ACC cement etc. However, even these were protected from competition by in the name of swadeshi, self reliance foreign entry into Indian markets was restricted. Heavy custom duties on quality imported goods made smuggling them and getting them past customs a kind of profession. Scarcity of everything, making people wait for ages to get basic amenities like cooking gas cylinder connections, telephones made us Indians almost beggars in their own country. As I grew we heard stories of the kind of life and services Western democracies particularly friends from USA and UK were having. Despite these handicaps the Indian industrialists slowly started getting better and brands like Godrej, Birla groups, Bajaj, Phillips, and so many others came and traded and established them selves in India. I remember the days when in the late eighties when I started my career as an Orthopedic surgeon in a second tier town like Vadodra in Gujarat, the difficulty and paper work for getting a loan along with absence of Telephone and Gas cylinder I was really struggling. While India was growing at snail's pace 2.5-3%, countries smaller than us and who were worse off than us like South Korea, Singapore, Malaysia, Thailand were galloping ahead
However, by the time the new crop of entrepreneurs like Ambanis along with established groups like Wadia's and the entry of Suzuki in the car sector along with some others showed how it can be done in terms of creating good share holder profit and reasonable quality products. However, most them were products of state partisanship with more than a whiff of corruption. The dependence of politicians on money power to buy votes led to a nexus between criminals, politicians, bootleggers. The ideals of the freedom movement enunciated by Mahatma Gandhi based on individual freedom were sacrificed at the altar the so called greater common good where the state wanted to control and monopolize the commanding heights of the economy with grand 5 year plans and a giant of a public sector big in size but examples of gross inefficiency as they were a protected bloated lot who had no competition and therefore no incentive to achieve or perform. Besides these I read about Gandhian economics which was about village economies and a different kind of self reliance based on reducing ones needs much like the present day minimalists.
Till the mid nineties I was not fully convinced about the right and wrong. of both these divergent paths but realized that something was happening which seemed right . Destitution and helplessness were less than before. Elections were still won on rhetoric and false promises but India started becoming a far more prosperous and better country to live. India started being compared to China which was still far ahead. The growth story ensured that millions were lifted above poverty line just on the increased GDP. However, all the reforms did not translate into greater investment in education and health care.
GDP is something I have not had a clear understanding off. It stands for Gross Domestic Production and is a measure of economic activity. "Gross" (in "Gross Domestic Product") indicates that products are counted regardless of their subsequent use. A product can be used for consumption, for investment, or to replace an asset. In all cases, the product's final "sales receipt" will be added to the total GDP figure. "Domestic" (in "Gross Domestic Product") indicates that the inclusion criterion is geographical: goods and services counted are those produced within the country's border, regardless of the nationality of the producer. For example, the production of a German-owned factory in the United States will be counted as part of United States' GDP. A lot of ambiguity and methods of calculation varies so when one compares and gloats about the figures often times the reality is different. Besides, the fact that domestic production by women and work in the unorganized labor sector was never counted made me skeptical about this. GDP becomes a political tool, Demonetization, jobless growth , inflation all are real problems which affect daily lives. We need to understand them and make sense of them as they affect us directly.
In conclusion I do not think that a medical person will ever be able to understand economics clearly and the opposite may hold true for an economist. I also seem to feel that the manner in which the markets crash or zoom up based on sentiment rather than performance makes me sometimes doubt the wisdom and understanding of economists particularly the academia who live in their own worlds and rely on data which is either wrong by errors or by design. Lest the economists take offence to my rant and show a similar mirror to the medical profession I am ready to call a truce even before they take umbrage to my ill informed rant.
A few books I have read have helped shake my understanding of economics in general I will list here hoping I get a few recommendations I get to help me get a better grip on the subject.
https://www.amazon.in/Malevolent-Republic-India-Under-Modi/dp/178738005X
Malevolent republic by Kapil Satish Komireddi
https://www.amazon.in/Pranay-Kotasthane/e/B0BSVH1PMC?ref=lp_4149737031_1_2
Missing in Action by Pranay Kotasthane and Raghu Jaitley
https://www.amazon.in/Desperately-Seeking-Shah-Rukh-Independence/dp/9354891934
Comments
It's essential for diverse voices like yours to contribute to the ongoing discussion about the economic landscape. Hope the economist react and have a healthy exchange.