Hunger in India

According to UN estimates, India has the largest number of hungry people. Over 200 million, or about one-fifth of India’s population, is chronically hungry. This is an apparent paradox in a country which is food-surplus on the aggregate. The Wall Street Journal of June 25th 2004 reports that according to Indian government sources, by 2001 India had a national stockpile of around 60 million tons of rice and wheat. It goes on to say:

But with inefficiency and local mismanagement plaguing distribution, it couldn’t move the grain fast enough through the system. Some even spoiled in warehouses. A 2002 government survey concluded that 48% of children under five years old are malnourished. That’s an improvement from three decades ago and even today, given rapid population growth, the proportion of chronically hungry Indians continues to fall. But in a sign that there are limits to the Green Revolution, the absolute number of hungry people in India began to rise again in the late 1990s, according to the U.N.

The paradox is easy to resolve if one understands one basic principle: that economic policies matter. The Indian economy has been chronically mismanaged by the Congress ever since India’s independence. And now the new Congress government could continue on the same failed path of socialism that led us to this sorry state. Vote-bank politics and the command and control license-permit-quota raj is responsible. Paul Samuelson could have been speaking about India when he wrote in April 2002 (HOW TO PROSPER IN THE TWENTY-FIRST CENTURY):

The good life does not come from dramatic speeches or boisterous parades. Where economics is concerned, so far, there is nothing in sight more promising than the limited welfare democracy where public laws harness and monitor the energies and efficiencies of the somewhat free marketplace.

It is a good time to review Amartya Sen’s book of 1982, Poverty and Famines: An Essay on Entitlement and Deprivation. Here is an excerpt from Ken Arrow’s review of the book:

In a free-enterprise economy every good or service has a price, and each economic agent starts out by owning some goods or services. The rice farmer owns some land, used for producing rice, which can then be sold on the market at the going price or reserved for use by the farmer and his family. The receipts from sales can be spent on other goods—different foods, spices, clothing, and so forth. The agricultural laborer has only his or her labor to sell; the proceeds can be spent on rice or other goods. Similarly the cities contain workers who sell labor for money to buy food, shelter, and clothing, and entrepreneurs who buy goods and labor, produce other goods, sell them, and have the proceeds for personal consumption and investment in business expansion.

People will starve, then, when their entitlement is not sufficient to buy the food necessary to keep them alive. The food available to them, in short, is a question of income distribution and, more fundamentally, of their ability to provide services that others in the economy are willing to pay for.

This, of course, does not mean that the supply of food is irrelevant. A decrease in the supply of food will usually increase its price, as people compete for the scarcer quantity. This will in turn decrease their ability to buy food by using their entitlement and, if they start close enough to the margin of hunger, may drive them to the point of starvation. Further, the entitlement approach, simple as it is, enables the analyst to say something about the distribution of the burden of starvation. Farm owners and, to a lesser extent, sharecroppers, should be less affected than others because the reduction in the amount they sell is at least partly offset by the higher prices. If the reduction in supply is caused by some factor, like flood, that reduces the amount to be harvested, farm laborers are thereby more likely to be seriously affected.

I am reminded of Oliver Goldsmith’s words from his poem The Deserted Village:

Ill fares the land, to hastening ills a prey
Where wealth accumulates and men decay

There is something rotten about India that so many people are so unconcerned about the true state of affairs. The communists are solely concerned with protecting a handful of jobs, the larger interests of the nation be damned. The government is concerned with blocking the liberalization of the economy and dragging it back to its insular autarkic pre-reform paralysis. The idiotic hype about India Shining and IT superpower crap has addled the brains of the already marginally stupid. One wonders where this is all going to lead to.

It is all karma, neh?

Peddling Pornography

Caught a glimpse of the front page of The Times of India while commuting to work this morning. I noticed that they are now peddling pornography to increase their circulation. No wonder they are referred to by some as The Slimes of India. The top left hand corner of the front page declares in bold print:

Internet Hawker Puts Brittney Sex Video Up For Sale

A few weeks ago it was confirmed that the newspaper has paid editorial-page content that masquerades as honest reporting. I wonder how much they get paid for peddling pornography on the front page.

{See also India’s Primary Concern.}

Tolerance and Economic Prosperity

When I feel angry about India’s lost opportunities and feel especially despondent about the Indian economy, I sometimes compare India with its neighbors, Pakistan and Bangladesh, just to get a sense of balance and say to myself “but for the grace of our un-countably many gods, goes India.” India is not ruled by intolerant monotheistic morons (an expression I picked up from the Department of Redundancy Department) — at least not yet.
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Irreversible Decisions

A friend of mine with whom I had dinner last night at a restaurant in Colaba has an interesting job. As he puts it, he gets women pregnant and is paid handsomely for doing it. He is a doctor and runs an in vitro fertilization clinic. There are more than one way of making babies (18 ways, according to his website Malpani Infertility Clinic) and he knows them all.
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Sex selection in a Second-Best World

Niket in a comment raised the issue of the skewed sex ratio in the context of population control. To my mind, the differential preference for boys over girls is a consequence of overpopulation as well. If the population problem were to be addressed, the skewed sex ratio problem will also be addressed. For my views on the causes and consequences of the skewed sex ratio, check two earlier blog entries. The first, The Skewed Sex Ratio where I wrote: Continue reading

The Population-Poverty Trap

The causal connection between population and poverty is widely researched and understood by many economists and demographers quite well. There is a causal link between poverty and population which is mediated by a third component which is broadly labeled the local resource base. Poverty cannot be understood without reference to the resource base that the population has access to. The three components of population, resources, and poverty are interrelated and influence each other in complex ways that vary across time and space. How these factors influence each other without any of them being the prior cause of the others is as interesting a study as it is depressing to note that the complex interrelations make problems arising within an economy nearly intractable to simple solutions.
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A Matter of Rights

Now it is time to follow up on the comments and responses to my last post, A Promise and a Challenge. First a clarification: my offer to buy dinner for anyone who is able to persuade me to change my position on the market-based solution to India’s looming population crisis clearly states that the dinner will be at a restaurant of the winner’s choosing. That is, the winner does not have to travel anywhere to collect on the wager. If you are in Timbuktu, and wish to have the dinner in a restaurant in Timbuktu, I will get myself to Timbuktu to pay up for the dinner.
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The Market for Reproductive Rights


Yesterday I proposed a Population Planning Authority of India which would have the mandate for formulating policies for population control and for enforcing compliance. Today I would like to outline a policy very briefly and then over time spell it out in detail.


At its core, the population problem can be characterized as an instantiation of the classic tragedy of the commons. If there is one problem that is very well understood by economists, it is that of open-access resource which leads to the tragedy and consequently the solution to the problem is also very well thought-out and sane. It is basic commonsense, really. Afterall, economics is codified commonsense. (Aside: that is why physicists insist that giving a “Nobel” for economics is sort of silly.)


The entire corpus of economic insight in the human condition can be boiled down to the two simple statements that I made yesterday repeated below:

  1. Markets work, and
  2. Incentives matter

(Aside: this is something isomorphic to the two statements a computer science professor of mine had made about programming:

  1. A program is a state to state mapping, and
  2. A state is a name to value mapping

End of digression.)


So therefore we use markets to solve the population problem by getting the incentives right. The central idea is to assign what is called property rights to every human with regards to reproduction. Every person should have an equal and limited right to reproduction and no person should have the right to an unlimited access to the common property resource by exceeding his or her quota of reproductive rights.


That is the core idea and the rest is mere details which should not detain anyone who has other pressing things to do. For the rest who are in no particular hurry, I will take a couple of minutes to go into some broad details. The finer details I will leave for later.


Imagine, if you will, that each person eighteen years or older has a right to have half a child ab initio. So if you want to have an offspring, you have to find someone who also has the right to have half a child. If and when you do find another person, you can now get yourself one child. Once you have that child, you and your mate will be required to undergo sterilization — with one small exception. You will not have to undergo sterilization if and only if you get yourself a permit to have another half a child at least before you spent your given reproductive right. How do you get a permit to half a child? You buy it off someone else who is willing to sell you his or her reproductive right. Who is able to sell his or her reproductive right? Some who has not had a child yet and who has undergone sterilization. That person has a permit for half a child and that permit is available for someone to buy it in the market.


So the basic point is this: as long as you hold a permit for having at least half a child, you will not be sterilized. The moment you don’t have the permit, you get sterilized immediately. You start off with a permit of half a child the moment you are of age to have a child, say at age 18. You can continue to hold that permit until one of two things happen. One, you submit to sterilization and you sell that half-child permit on the market. Or, two, you find someone else with half a permit and together you have one offspring and both of you have spent your ab initio reproductive right permits.


The above scheme allows a person to have an unlimited amount of children — provided they can buy the permits required. The price of the permits will be determined by the market. If half the population is willing to sell their reproductive rights, the other half of the population can potentially have twice the number of children that they could otherwise have. If no one is willing to sell his or her permit, then every person can have only half a child on average. If there are more sellers than buyers, the price of a permit will be low. If there are more buyers than sellers, the price will be high.


Frequently asked question: what about the fact that the rich will have more children by buying more permits? Answer: Yes, that is right. The rich do get to have more children. The rich are also able to take care of the children. The rich also get to buy more cars, and food, and more of all sorts of goodies. This way at least they will pay for having children and if the poor cannot afford to have children, at least they will be compensated for not having children by those who can afford to have children.


Well, that is it. The scheme is as sound a scheme that you will ever come across in this world or beyond. This is an idea that is brilliant even if I say so myself. It is the second most brilliant idea I have had[**]. Seriously though, I think that some policy makers with brains (tall order, I know) should take this up and implement the Population Policy Regulatory Authority of India and implement this policy. Who was it who said, “Sir, I have found an argument. I am not obliged to find you an understanding.” (Note to self: google and find out the exact quote.) So also, I have stated the solution. I am not obliged to implement it.


More to come.


** In my list of brilliant ideas, RISC ranks 10th. Somewhat like the Star Wars movies, I will reveal the ideas in a random rather than in ordinal order.


POSTSCRIPT:
For the humor impaired: only the last bits were said in jest. The rest is deadly serious stuff.