Ashish Khetan's Khretinism

Ashish Khetan, who has a Masters in Law from Cambridge, is by no means an ignorant or stupid man. Yet he writes as follows in Scroll magazine- 

The UK ($2.83 trillion GDP), Australia ($1.38 trillion GDP), and the Netherlands ($902.36 billion GDP) are now publishing periodic reports on economic wellbeing and income inequality, tabulating the distribution of income along with aggregate annual national income and output accounts.
India, the world’s fifth-largest economy ($2.94 trillion GDP), is paradoxically also home to 270 million people living below the poverty line of $1.25 a day, the Reserve Bank of India said in 2018. India must start informing its people not just about the size of the pie but also how the pie is being divided. Policymakers and voters alike should have statistics on who grew and by how much when the country grew.

Khetan does not seem to be aware that India has more than ten times more people than the UK and Australia and the Netherlands put together. Only 15 million people in India pay income tax. The UK has double that number of tax payers despite having a tax threshold over double that of India. But its population is 5 per cent of India's population.

 In other words India is a dirt poor country where the vast majority of people are only slightly above the subsistence level. Indeed, they are poorer than beggars in Australia or Europe. There is very little scope for dividing up a pie in a country where the per capita daily income is less than 7 dollars- which is 140 dollars less than Australia. The Indian State can extract only about ten percent of GDP because most people are on the subsistence level. Sure, it can raise tax rates but then it would get less revenue and per capita Income would go down. There is no point asking how the cake is divided up when productivity is so low that the majority of people only get enough bread to stay alive and have babies. The plain fact is much of India is a Malthusian basket case. States which have undergone demographic transition will nevertheless get stuck in a middle income trap with an ageing population. Some like Khekhar himself, who has given up on journalism and then politics to work for Essar, may be doing okay. But what if tax rates go up and Essar shifts to the UK or elsewhere?

Khetan focuses on Indian Net National Income. This is inflated by foreign remittances. The poor in India don't have relatives abroad nor do they own shares in Microsoft or Apple. Remittances  are mainly gifts. People will help their own families. They won't hand over a portion to the Government to divide up with non-relatives. If the Government attempts to seize remittances it will kill the golden goose. If it tries to use exchange controls, the State Banks will be disintermediated by hawala operators.

The GDP per capita of India’s millions of labourers and its 138 billionaires is the same: Rs 142,719 (at current prices in 2018-’19).

This is false. The contribution to gross domestic product of billionaires is very high. That of labourers may be only marginally higher than what they require for their own subsistence. Or it may be lower than that. This is because billionaires are highly productive. Labourers have low or zero marginal product.

The per capita net national income during 2018-’19 was Rs 126,406. But we all know that Rampukar Pandit, the construction worker, who was photographed sobbing by a road in Delhi in May, did not make Rs 126, 406 last year. Nor did the labourers who died on the railway tracks, with some stale rotis and a few hundred rupees as their sole possessions. We also know that this was not what the richest man in India earned in 2019.

Khetan is right to say we know all this. But, in that case, why tell us about it? Many of us know how and where Essar makes its money. We can see for ourselves how and where migrant laborers make their money. Why on earth would we need more detailed National Income Statistics when everything is obvious to us already?

The cost of gathering detailed statistics is more than justified by its usefulness to industry in rich countries. This is not the case for poor countries where Malthusian traps exist. Moreover, the quality of Indian statistics is very poor- which is why certain sorts of surveys are no longer done. People understood that the numbers were simply invented. One result was that Indian Corporates are often taken by surprise to see where their sales are coming from. It turns out there is money out in the boondocks. You can't rely on the Sarkar to tell you about this. But then there is precious little you can rely on the Sarkar for.

The Indian government publishes no such comparable statistics. In fact, the indicators required to measure income inequality have not been developed by the Indian government. Instead, it continues to be fixated with “growing the pie”, $5 trillion and beyond. But how would we know if the government’s economic policies are benefitting the vast majority of people if we don’t even have the statistical measures to tabulate the distribution of growth?

The Government's economic policies may harm the people but they can't help them much. Only if productivity goes up- which means girls quitting the countryside to work in horrible factory dormitories- will demographic transition occur. There will still be a middle income trap but this permits some sustainable redistribution.

Why not 'fixate on growing the pie'? Doing so means that the country's credit rating goes up rather than down. Borrowing is a little cheaper. By contrast saying 'we don't care about GDP, and hence Government Revenue, and hence Debt Servicing Ratios' will cause an immediate downgrade of all types of India based credit. Having 'statistical measures' is silly if you live in India and can see that migrant laborers in your own City aren't exactly living the high life. The fact that people flood in to take really shitty jobs at subsistence wages tells you all you need to know about the countries Malthusian woes.

I can understand it if a Development Economist says 'India needs stats of this type' because this makes that Economist's job easier. Similarly a violinist may say 'Government should produce good quality violins and educate people to appreciate violin music'. Khetan, as a Corporate lawyer, should be demanding better Judicial and Administrative processes. That would be understandable. Why is this cretin clamoring for something which is completely useless to everybody except a handful of academics?

The efforts of academics like Thomas Piketty and Emmanuel Saez have led to the World Inequality database on the historical evolution of the world distribution of income and wealth, both within countries and between countries. But it’s insufficient and incomplete.

It is also completely useless. Piketty's native France is ruled by Macron. Saez's country is ruled by Trump. Britain, which pioneered inequality studies, turned its back on redistribution at precisely the same time- Harold Wilson's first Government was also the last time redistribution was tried. It turned out the Working Class don't want the thing. Only absolute, not relative, standards of living matter.

Income measurement is a state function and responsibility.

No. It is a useful side-effect of fiscal policy- i.e. taxing the populace. That's why it exists. The thing has no value in itself.

Only the government has the vast resources, legal and executive powers and its institutional infrastructure to measure the distribution of income, consumption and wealth and corelate it with its economic policies and objectives.

This is nonsense. A better job would be done by a private company. Indeed, that's what used to happen when fiscal policy was based on 'tax farming'. India was actually rather good at this sort of Statistical methodology. Unfortunately, the quality of statistics quickly turned to shit. That's why Household surveys have to be discontinued and rejigged so often. Basically, people just look at the last return and make up numbers. I recall one Survey from the Nineties which purported to give detailed information about how long people slept. But the survey revealed that few had watches or clocks or radios. So the meticulous figures presented had been made up out of thin air!

National Income Accounts are crap in many countries. But this does not matter in the slightest. A smart guy can easily figure out what the figures would look like. What's more, he can make money by doing so. Then, he can send his idiot son or daughter to MIT and they can get a job as a Professor who needs detailed statistics to work out that most people in Malthusian trap countries are not actually drinking champagne and eating caviare.

But the “Streetlight Effect” – a drunk on a dark night searches for his lost keys only under a streetlight because that’s where the light is – is what best describes the approach of the Indian System of National Accounts.

Khetan may be a drunkard. For all I know, he curls up with a copy of the National Accounts when of strong drink taken. 'Aha!' he says drunkenly to himself, 'Billionaire's per capita income is same as a Laborer! What's more, my salary package is bigger than either's! I must open another bottle to celebrate!'

India’s National Indicator Framework Baseline Report, 2015-’16 (the latest) for measuring progress towards Sustainable Development Goals shows India has not developed most of the indicators required to measure and mitigate inequality (or SDG Goal 10).

How strange! Every time I visit India, I see all the laborers driving around in Bentleys.

The Niti Ayog website proclaims: “India played a prominent role in the formulation of the United Nations Sustainable Development Agenda 2030 and much of the country’s National Development Agenda is mirrored in the Sustainable Development Goals (SDGs). The progress of the world to meet the SDGs largely depends on India’s progress.” SDG 1 is to end poverty in all its form everywhere. SDG Goal 10 is to reduce inequality within and among countries.

At one time, India had a Planning Commission which so fucked up the Economy that Modi downgraded it to a 'Niti Ayog'. But it is completely shit. Everyone else ignores it completely. The thing is like the 'Lok Pal' or the 'Bhoodan commission' or the 'Non Aligned Movement' or other such relics of past idealism.

As for the UN SDG bullshit, who gives a toss about it? Bill & Melinda Gates have shouldered it rudely aside.

Why is India so poor? Malthus explained this over two hundred years ago. Very poor people have babies who are destined to be very very poor. If you get girls out of agricultural involution into factory dormitories you get Demographic transition though you may still get stuck in a middle income trap unless like South Korea you deliberately climb the value chain. Much of India is refusing to do this. Female participation is declining whereas in Bangladesh it is rising. Thus it will overtake India as it overtook Pakistan.

Khetan isn't an utter fool. But the fellow went to Cambridge and got a Masters. Thus he must attempt to rival Rahul Baba in cretinism.

Of India’s children under the age of five, 35.7% years and below are underweight, according to the National Family Health Survey. The Global Nutritional report, 2018, shows that 46.6 million Indian children are stunted, which is 38.4% of all children under five. In India, wasting among children under five rose to 20.18% in 2019 from 16.5% in 2010. North Korea, Pakistan, Niger, Cameroon, Bangladesh and Nepal fared better than India in the Global Hunger report.

Are Khetan's own kids undernourished? I doubt it. But if girls have nothing to do but marry men as poor as their fathers in rural shitholes, this problem will grow worse. The Malthusian check here is kids who never mature enough to have kids.

In the data released by the Ministry of Health and Family Welfare in 2016, 23% of women ( aged 15-49) had Body Mass Index below normal. It also showed that 50.4% of pregnant women were anaemic. On the other hand, as many as 58.4% of children (between six-59 months) were found anaemic. Only 36.4% of women were receiving maternity benefits.

The tragedy here is that those 'maternity benefits' will disappear. Currently there is a constituency for them but when girls get to shift to factory dormitories they won't want to subsidize the child-bearing of those back in the village. Instead there will be rural depopulation. This will actually reduce the cost of distributing 'maternity benefits'. But it will also boost productivity so there is a modest sort of virtuous circle.

Why is Khetan writing this khrap? He is virtue signalling. He gave up 'Aam Aadmi' politics for a Corporate job. So, he writes this stilted nonsense to show he is still a bleeding heart.

Unhappy with how statistical information like GDP failed to reflect the true state of the economy and the society, Nicholas Sarkozy, when he was president of France set up a commission comprising two Nobel prize winners, Amartya Sen and Joseph Stiglitz 2001, and French economist Jean-Paul Fitoussi, to identify the limits of GDP as an indicator of economic performance and social progress, and recommend more relevant indicators and measurement tools of social progress.

Why did Sarkozy do this when the financial crisis hit? The answer is obvious. He wanted to say 'there is no recession. Things have gotten better under me. French quality of life is better than that of Germany'.

But everybody soon forgot about that silliness. Why? The French voter cares about his material standard of living. As the Yellow Vest movement has shown, the French don't give a fuck about 'social progress' and 'sustainable' this or that.

The idea was to replace GDP with statistics that truly reflect the fortunes of a country.
A year later, the Sen-Stiglitz-Fitoussi Commission produced a detailed report. They recommended that measures of quality of life, inequality, well-being and the quality of environment need to be included in the traditional indicators like GDP.

What happened next? Nothing at all. The thing was as big a fiasco as Sen's Nalanda International University.

 The economic philosophy of “growing the pie” followed by successive Indian governments has turned India into a 1% economy.

Gandhian and 'Socialist' policies, of a stupid dirigiste type, had caused the real incomes of the mass of the people to stagnate or fall for Malthusian reasons. Some shady entrepreneurs did get rich but smart people emigrated. Then India ran out of money. It took the path of least resistance and so for twenty years the illusion was created that India could keep pace with China. But that bubble burst a decade ago.

Moving away from GDP numbers and collecting and publishing data on the income, wealth and wages, by decile and centile, will be the first step towards creating a model of equitable growth

Anyone can do this. The thing isn't rocket science. But it won't make any difference whatsoever. Why? For the same reason that measuring your dick three times a day won't increase the size of your dick. A Malthusian shithole like India can either move girls from involuted agriculture into big factory dormitories or it can continue to muddle along till the thing happens by default as Malthusian checks begin to operate. That's it. That's the whole story.

Agitating for a different type of Statistics is like agitating for a Lok Pal. Everybody knows in advance that the panacea won't work, but still for 'time-pass' why not pretend otherwise?