An Indian Civilizational Perspective

Poverty in India and the solutions

After reading the speech of Indian Prez on this blog here is a mail my friend, Raj, sent me:

We have so much going for us, so many success stories, so much good work
going on.. then where do we lose?  Why is everything still a struggle in
India?  What basic trait / fundamental requirement (if any) are we
lacking?

The question is an important one.. and something that needs to be addressed in all its aspects.  These are my thoughts on this subject.

There is a book – “<a href='http://Mystery of Capital‘>Mystery of Capital” by Hernando de Soto.  He is a Peuvian Economist who has challenged the conventional thought about poor people and why Capitalism seems to be such a success in the West and NOT in the developing countries.  His arguments are eye-opening!  I have read summarized version of his entire book.. will read the book soon too..



What he essentially says is that poor in the developing world have enough capital – the land that they occupy has immense value.. the assets they own have tremendous monetary value.. the problem is they cannot leverage these resources!  And the ONLY reason is because of lack of clarity in the ownership!  If the poor could lease out his land to the most efficient agricultural businessmen in India with the absolute LEGAL conviction that the businessman tenant CAN NEVER usurp his land.. the productivity will rise manifold.. the poor/marginal farmer will have more than enough to eat.. and the increased production will help all others! 

Also read:  Economist Galbraith Dead

This ownership question is the ONLY reason why in the West you can have umpteem Derivatives and Futures markets .. that help the society manage its risk and bring stability and efficiency in its  operations!  We cannot!

Its this basic issue that has been clouded by the messy haze of socialist thinking in India and the developed countries that we are so poor.. even a simple thing as the amendment in the Rent COntrol Act to give the Owner his rights vs the impunity that the tenants have currently cannot be done.  McKensey guys say that this ONE act can totally revolutionize the real estate market in India and bring DOWN the prices of apartments and make this real estate market truly realistic.

Now, his counter argument was a good one:

What if ‘ownership’ is abused, as is happening with the patent system?  eg. ntp vs. rim.. ntp
is a small ‘patent holding’ company that hasn’t done any innovating or
inventing, but just bought up a patent that would likely be used by rim
and got them by the short and curlies on that.  In this regard, open
software, gpl, linux and everything else that seems to be going more of
a community ownership rather than individual or corporate ownership.
How does that fit in with the views on ownership expressed above?

Again a very valid and important argument on abuse of ownership?  What do you say?


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