BOOK
REVIEW
TITLE:
THE NEW WEALTH OF NATIONS
AUTHOR:
SURJIT S. BHALLA
PUBLISHER:
SIMON & SCHUSTER INDIA, 2017
PRICE:
Rs. 599/- HARDBACK
Education
Levels The Playing Field Between East & West
Echoing what is regarded as the first work on
the Free-Market and Capitalist thinking, Adam Smith’s pathbreaking treatise,
right there in the title of his latest book, Dr. Surjit S Bhalla, sets the tone
up-front.
This book is mostly about the transformational
ability of universal education to right a host of historical wrongs,
particularly in a world without economic borders.
But, while this may be good for the masses, and
the emerging new classes, many of the traditional near elites are being
impacted. Those who have long banked on just rank, birth, privilege, and
networks, to deliver the goods.
What can be done for them, to preserve their
reserved places in the hierarchy of spoils? Not much it seems. The forces of history
are against them now. They will have to use their inherent advantages to work
for their continued preeminence, or slide down the slippery economic slope.
This, even as the top 1%, envied for owning a
disproportionate amount of the world’s wealth, being the true engines of growth,
will go on from strength to strength.
Amongst a veritable sea of eminent but
left-leaning economists, given to highlighting victimhood, historical and imperial
injustice, ideological dogma, Dr. Bhalla makes for a refreshing change of tempo
and content, in this, his third book.
Bhalla is also an Economic Advisor to the Prime
Minister Narendra Modi, appointed recently, in 2017, and comes to the role
after stints in several eminent organizations including the Rand Corporation,
Brookings Institution, the World Bank, Goldman Sachs, Deutsche Bank.
He simultaneously continues in his role as a
Senior Analyst at the New York based Observatory Group and is Chairman of his
Oxus Research and Investments firm, the last two conducted from his present perch
in New Delhi .
Educated largely at Princeton University,
Bhalla is not shy or apologetic about plumping for the present and future of
the fast growing emerging economies, particularly those of India and China, that account for a substantial portion of the
world’s growing population.
He bases his optimism on the effects of globalization,
purchasing power parity (PPP), and a large numbers of skilled and educated
people available in the international market place. And these, at a discount in
absolute terms, to those from the West.
The panacea is the universal spread of
education, from the primary level upwards everywhere, but particularly outside
of the Advanced Economies (AEs).
Bhalla equates education with wealth. He
demonstrates ways to measure the effect of different levels of education, not
only on wages and earning capacity, but on economic options and possibilities.
Writes Bhalla: “Between 1980 and 2000, college
graduates in the West expanded by 47 million; in the rest of the world the
expansion was a larger 104 million”. By 1992, “ the absolute number of college
graduates in the Rest (81 million) exceeded those in the West (79 million) for
the first time”. By 2030, projections “point to an excess of 280 million
college graduates in the Rest-more than three times those in the West”.
But, paradoxically, in the interim, jobs have
becoming scarcer, even as more of them globally have gone to people from the
emerging economies, making a case for entrepreneurship and the start-up
economy. He also touches upon the concept of a universal basic income and
negative taxation to tackle the possible unrest coming up.
Another key
postulate in this book is that low inflation is here to stay. The reasons are
many, mostly traceable to recent and current history, but planners can indeed
count on an era where inflation will not spoil the party. This implies what
Surjit Bhalla never tires in advocating in his regular newspaper columns- there
is no need to keep interest rates high and constrain money supply for fear of
runaway prices. Instead, low interest rates will spur growth as people are
encouraged to borrow and take the risk of making an investment towards future
profits.
Dr. Bhalla also explores the effect of more and
more equality and education for women, both in the work place and at home and
society in general. Some 50% of the population of the world is coming into its
own, perhaps for the very first time.
The author asserts that “the decline in world
poverty in the last forty years is truly the greatest miracle of history” and
once again attributes it to the spread of education.
Of course, “500-600 million” people living on less than
the PPP $1 a day, the World Bank’s Poverty Line of 1990, is a very large number
of absolutely poor still.
Many of these people are now found in
Sub-Saharan Africa, but interestingly, the number of absolutely poor people in
India and China are about equal, despite a 4:1 economy ratio in favor of China.
This is arrived at by a statistical exercise using the World Bank income definition at 2011 PPP
prices of $1.9 per day, and is assessed in terms of household consumption, and
not income.
Concern with absolute poverty has however moved
on to measurements of new entrants into the Middle Class. This term has been
defined variously historically, but now it points to a troika of almost
synonymous words- education, middle class and globalization.
It has also brought about a democratization of
the elite, a change in the dynastic power structures of old, and this, perhaps
for the first time.
As Bhalla puts it : “Yesterday’s core is today’s
periphery,” thanks to “the force of education, the new wealth of nations”.
For:
The Sunday Pioneer BOOKS
December
31st, 2017
(910
words)
Gautam
Mukherjee
