A Persian Cafe, Edward Lord Weeks

Tuesday, 23 May 2017

Listening to American Pop Music and Buying Their Blue Jeans

One of my favourite Marginal Revolution posts is "The Baffling Politics of Paid Maternity Leave in India". Alex Tabarrok, currently making use of his sabbatical from GMU to teach in Mumbai, observes that Indians often favour policies which make sense in an American context, but not at all in India. Quoting directly:

When I gave a lecture at a local university, for example, I apparently shocked the students when I said matter-of-factly:
India would be a better country if it were richer and more unequal.
I think India’s extreme poverty makes this obviously true in a utilitarian sense, i.e. better for Indians, but it wasn’t so obvious to the students some-of-whom discussed inequality in terms that could easily have been duplicated at Berkeley. The inequality conversation has jumped the pond in ways that seem to me to be completely inappropriate.
Writing in the Times of India, Rupa Subramanya gives another example, a bill for paid maternity leave that has just passed the Indian parliament (waiting only on the president’s signature). As I pointed out earlier, by far the majority of Indians are self-employed and in the informal sector. The very idea of paid maternity leave, therefore, is bizarre.
I'll stick with the example of inequality. The USA, having one of the highest GDP-per-capita-s on Earth, can afford significant redistribution and may find it appropriate to do so even if this harms growth. (This is a moral mistake, of course, but we'll bracket that for now). India, being around 9 or 10 times poorer than the US, should be concerned with achieving greater wealth first and foremost; if this increases inequality, then so be it. Become rich now and redistribute later is immensely preferabe to redistributing now and never becoming rich. This ought not, one would hope, to be too controversial when presented in its entirety.
(I am of course presuming that there is a trade-off between redistribution and economic growth. This is not a claim to which I am married, we're just taking it for the sake of argument here.)
(Also, note that the UK is distinctly at the lower end of high-income countries. If we were part of the US, we would be the poorest state. Does this mean that, although not to the same extent as India, we ought also to prioritise growth over combating inequality?)
Yet because inequality is an issue in the US, other countries follow the lead. Tabarrok attributes this to a desire for positive PR: these policies are not aimed at combating the objective problems faced by India, but at showing to the west that India is an enlightened, modern and progressive nation. This, I think, attributes too much intelligence and strategic thought to the Indian political class. Is it not simpler to model most people as having a one-size-fits-all view of politics: the policies which suit the US must also be the policies which suit the India, with perhaps an allowance for past history and the dangers of changing too quickly?
I think similar dynamics are at play in the UK: people hear or read things which were true or at least plausible when describing the US, but are simply false on this side of the Atlantic. This seems the most charitable way to understand talk of "rising inequality": by the best measure we have, the Gini coefficient, UK income inequality fell sharply following the crash of 2008, rose ever so slightly for a couple of years, and then went back to falling quickly. Admittedly the data only goes up to 2012, but that which we have is emphatic. Duncan Weldon, no right-winger, has commented that "insisting that UK inequality rose in the last decade is basically the intellectual equivalent of climate change denial". It seems fair to suspect that many people who learn their politics from US sources implicitly assume that US institutions, norms, and indicators must be universal - or at least, fail to explicitly consider different countries separately. This is especially bad in countries such as the UK and India where English is a main language of politics.

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