Eating is an agricultural act - Wendell Berry

Thursday, May 03, 2007

trickle down effect - pshaw

read this really interesting interview with an senior economist (prabhat patnaik) on the growth in india and the accompanying damage it is causing. 2 things piqued my interest.

1. It's futile to expect that higher growth will actually have a trickle-down effect.
2. The logic of capitalism is that capitalists compete against one another. But here, the capitalists have a monopoly and these governments are ruthlessly competing against each other to attract investments.

read the whole interview here.
hat tip: charity focus blog


SrgntPepper said...

prabhat patnaik is from JNU. am surprised he was not lynched just for for acknowledging the concept of a trickle down effect.

from his interview :
"there will be more demands, let's say, for a golf course, or luxury apartments and therefore agricultural land will be taken away and there will be more dispossession of the peasants."

this is classic destructive leftist spin.

Farmers are committing suicides despite ridiculous subsidies, free power and no income tax benefits. The problem with food is that there are way too many people making it in way too many quantities, thereby making it cheap.

If a golf course is going to provide better employment for a farmer, then what is the point in opposing it, purely becus it is agricultural land? if as the doomsdayers predict, food becomes expensive becus of lack of land to grow it on, won't that be good for the farmers? better margins than ever before?

csm said...

majorpeps - lets look at these positions factually and logically without branding people who make
or take them.

we may be comfusing things with the farmer suicides (which i think is a totally green revolution screw up).

the prob with food is and commodities is that it is nexused terribly with middlemen the chain from producer to consumer is far too long for either one to benefit.

also one should keep this factor in account. businesses and brands are valued not only on their current value but potential future value.

while building a golf course and giving the local farmers employment there may seem a better alternative than loss making farming, i think there is merit in looking at the long term impact of this change in the overall socio economic balance in that area.

SrgntPepper said...

a generic statement saying there is no trickle down effect because there is no competition can hardly be called factual and logical.

for PP's comments to merit referral, he could have shown how an economy or business that has competition allows TDE to happen, whereas in India the same biz doesn't.

I can give you numbers. An acre of land that grows cashews in the Konkan will generate Rs 20000/yr income after 5 yrs. I say the farmer should sell his land to Reliance SEZ, and invest the money in Reliance stock, becus in the whichever way you study the "long term impact of this change in the overall socio economic balance in that area" you cant possibly come up with a case for growing cashews. unless, of course, you are a JNU 'economist'

csm said...

i try to stay close to neutral territories.

i also did not state that pp uses fact and logic. was only hoping that we in our analysis and discussions use.

i also believe in free markets operations as long as it is not a doctored one or a falsified one (how does this come to play, i am not sure).
so if the konkan cashew farmer has complete information and if he feels that his best interests are in selling to REL SEZ, then so be it.
only point i would like to research on is the long terms impact of such mass processes.

SrgntPepper said...

no csm man, your post starts with a verdict : "on the growth in india and the accompanying damage it is causing" you have already determined that the long terms effects are bad.

PP has not bothered to demonstrate the long term effects of this high growth. leave alone establish criteria to classify whether these effects are good or bad.

so if the long term analysis says that farming will die, and gardening and caddying will the the jobs of the future, will PP draw the conclusion,'fine, lets do this, chuck the bullock carts, and lets get lawn mowers and golf carts'?

unlikely, he will condemn the farmland takeovers as imperialistic dispossession.

csm said...

it is a ninterp[retation think for sure.

had this thought when this was rumbling through. a question more addressing the theory itself.

trickle down effect.
something is fundamentally wrong with these 3 words. it is saying that there are copious rains somewhere lush and prosperous and eventually somewhere far in the downstream, something will trickle.
like stray dogs and street kids competing on the trash heap outside a lavish wedding.

why not a trickle up effect? why not a equitable 1% growth across the entire population in comparison to a creamy 8% growth?

does anyone have the ability to long term forecast in the current scenario?
if we had that ability, then the green revolution may not have caused as much negative impact as it helped in addressing the food security issue.

SrgntPepper said...

Trickle down effect is not a theory. it is a description of what actually happens. person A spends money, giving employment to B, who spends money on herself, giving employment to C so on.

The reason street kids and stray dogs have to depend on scraps is that they have nothing productive to offer. which is why there can be no trickle-up effect. If i am wrong, pls explain to me how it would work.

and to me the proof of a theory lies in the eating. today, there are more people with jobs, with mobile phones, with motorcycles than ever before. if this is not trickle down, then what is it?

What do you mean by an equitable 1% growth? can you explain this? if one sector has the potential of growing 100%, you will sacrifice that potential, and force spending on some other sector that has no potential?

Finally, if like you say, we can't predict long term impact, on what grounds can anybody claim that an idealistic theory is better than a practical one? wouldn't it be more prudent to actually accept how things have happened elsewhere in the world, and gear up people for that change rather than sulk and hope for a hypothetically 'better' thing?

csm said...

mani shankar aiyar's speech.

sainath writes on farmer arrests due to loan defaults.

i know what actually happens. i am saying that the nomenclature itself smacks of the 'crumbs' mindset.

what is this 100% growth coming from. is it pure or is there a hidden cost in that due to cannibalisation?

i am sure that we can predict long term impact. i did not mean to imply that we cant, just that we dont.
in the earlier example of farmer options in konkan, a potential solution could be to look at ways and means of expanding his farm income. this is certainly possible - individually, collectively and institutionally.

and please dont ever say that street kids or even stray dogs do not have anything productive to offer. that is blasphemy.

anyway, it is saner to take this offline :-)

SrgntPepper said...

naah. no point in taking this offline, becus it wont go anywhere anyway.

mani shankar aiyar is a minister of 'sports'. if he had any shame he'd dissolve the ministry.

and farmer arrests are because of three players :1. the cops, 2. govt banks, 3 stupid subsidies that make it appear like farming is an easy deal. all three being arms of the public sector.

it will be the capitalist private sector that will invest in farms and godowns and logistics that will bail out the indian farmer, not socialist govt policies.

csm said...

incompetent governments vs greedy industrialists...

it is a no contest.
the poor fellow gets knocked out in first round.