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sexta-feira, 6 de setembro de 2013

A Russia perdeu um seculo inteiro (o Brasil vai fazer o mesmo?) - Alexei Bayer

1913-2013: How Russia Botched an Entire Century

Could Russia have been as successful as the United States?



One hundred years ago, shortly before the Bolsheviks seized power in 1917, Russia was on the verge of becoming the China of the day. It had embarked on the path to industrial capitalism two or three decades after the United States and Germany.
By the start of World War I, it was developing dynamically enough to get on track to catch up with the leading industrial powers of the day.
The Russia of that era was an enormous country, even larger than the Soviet Union at its peak, because it included both Poland and Finland within its borders. It also boasted tremendous natural resources and a vast, diversified population.
Russia featured remarkably modern elements. For example, it abolished serfdom in 1861, two years before President Lincoln’s Emancipation Proclamation in the United States.
In the countryside, a class of prosperous peasants was emerging. And in Russia’s southern provinces and in Ukraine, there were large, productive farms — similar to those later found in the American Midwest.
These farms made Russia the breadbasket of the world, accounting for around one-third of the global wheat trade before World War I. In fact, Russia’s early 20th century wheat traders were so sophisticated that they initiated hedging prices and used financial markets in London and New York for their crops.
In the Donetsk region in eastern Ukraine, coal and steel production was expanding, also using British investment and knowhow.
The construction of the Trans-Siberian railway, inaugurated in 1890, linked European Russia with the Pacific Coast. This made the economic development and exploration of Siberia possible, a move from which even today’s Russia benefits most handsomely.

Lagging literacy

At the same time, Russia’s educational system was poor. Around 70% of the population was still illiterate at the start of the 20th century. However, the illiterate were mainly peasants. In cities, primary and secondary schools were being established, benefiting even the urban poor.
Russia also had very modern universities and a substantial scientific research establishment. Mathematician Nikolai Lobachevsky pioneered hyperbolic geometry and chemist Dmitri Mendeleev is credited with creating the first periodic table of elements, both in the 19th century.
Russian physiologist Ivan Pavlov was the fourth winner of the Nobel Prize for Medicine in 1904, followed by immunologist Ilya Mechnikov in 1908. No Russian has won the prize since.
Professional and technical education, too, was increasingly open to children of lower-ranking officials, workers and even peasants. The ranks of the Russian intelligentsia, the educated class, were swelling. By the start of World War I, the literacy rate rose to 40%.
Despite lagging behind in terms of literacy, Russia managed to develop world-class culture and arts. Tolstoy and Dostoyevsky were probably the most internationally famous and influential fiction writers of their time.
Chekhov’s plays shaped the development of theater throughout the 20th century and Gorky’s plays were performed all over Europe in the years before World War I.
Stanislavsky developed an acting method that is still widely used in Hollywood. The Actors’ Studio and Lee Strasberg, who trained some of the brightest stars of American theater and cinema in the middle of the 20th century, adapted it.
Meanwhile, Stravinsky, Prokofiev and Shostakovich were at the origins of modern classical music, and Diaghilev’s Ballet Russe created modern dance.
In 1913, the Armory Show became a major sensation in New York City. It brought the French post-impressionist art of Van Gogh, Gauguin and others to America for the first time. While Americans were just catching on to these trends, Russian artists had already moved beyond post-impressionism.
Just two years later, in 1915, Kazimir Malevich created his Black Square, the first abstract painting.

An economic boom

While it is hard to assess economic growth in the early 1900s — few institutions collected data back then, any available figures were notoriously unreliable and modern statistical tools had not yet been developed — there is evidence that Russia stormed into the modern era after 1905.
There was rapid urbanization, with men increasingly moving to towns in search of employment. The share of the agricultural sector fell from 58% of the economy in 1885 to 51% before World War I.
Meanwhile, industry, construction and transportation accounted for 32% of the Russian economy, up from 23% in 1885. The rail network increased from 2,000 km to 70,000 km.
Like all rapidly developing nations, including the United States shortly before, Russia was a huge user of foreign capital. In the final decades of the czars’ rule, foreign investment accounted for 40% of all industrial investment, and a substantial portion of agricultural investment as well.
Western Europe, notably England, France and Belgium, provided most of that capital. By the start of World War I, Russia accounted for 15% of all international debt.
Even though Russia was still an underdeveloped country by prevailing Western European standards, it was not as backward as it is commonly portrayed. Just look at Russia’s performance in World War I, when it confronted Europe’s leading industrial power, Germany.
At the start of the conflict, Russia was not only able to mobilize quickly. It also managed to deliver troops and supplies to the front fast enough to start an invasion of Galicia in September 1914.
In fact, Russia was able to help its Western allies by forcing Germany to divert forces out of France in order to use them to assist Austria-Hungary, which was reeling from Russia’s assault.
In World War I, Russians certainly were outmatched by German efficiency and military technology. But the czar’s troops held up a lot better than Stalin’s Red Army did in the summer of 1941.

Soviet failures

After the Bolshevik revolution, the introduction of the command economy did manage to mobilize the Soviet Union. Later on, by channeling much of the country’s immense resources into the military-industrial complex, the communists were able to defeat Nazi Germany. Thereafter, they were able to come close to matching American military prowess for around half a century.
But such a gigantic effort could not be sustained. To get close, the Soviet government wasted and destroyed much of the resources on which Russia’s economic success relied.
First and foremost, it squandered Russia’s human resources. Russia’s population is currently around 140 million. Some demographers believe that natural growth since 1913 should have put its population to almost 200 million or even 225 million.
Two World Wars, fought by Russian commanders without regard for losses, two famines in the early 1920s and the 1930s, purges and social ills brought about by communist mismanagement have resulted in as many as 85 million in today’s Russia “going missing” — not being born at all.
The communists did create a good educational system and achieved nearly 100% literacy, but they managed to waste human capital in other ways. Peasants were herded into collective farms, effectively reintroducing serfdom.
Life expectancy for men in Russia now is an extremely low 64.3 years — on a par with or less than in many countries in Sub-Saharan Africa. Chronic illnesses and alcoholism that often precede an early death rob society of the most productive years of its males.
Moreover, the economic system that prohibited private enterprise kept several generations of Russians from fulfilling their potential and benefiting society as a whole.
While pre-revolutionary Russia was developing into a major global economic power naturally and consistently, the USSR was a colossus with feet of clay.
Today’s Russia still suffers from the disastrous legacy of the Soviet era. Instead of co-leading the world, as its potential suggested at the start of the 20th century, it is, on average, one of the poorest and technologically backward countries in Europe.
In a 19th century kind of way, Russia produces little and survives by selling its vast array of raw materials to the world’s leading industrial nations.
With that as economic strategy, the country itself exists in a serf-like state. The raw material riches benefit small, kleptocratic elites, who shift their assets abroad. Considerable parts of the country’s infrastructure are as if they dated back to the medieval era. Social services are rudimentary and the quality of life is extremely poor.
The United States has spent much of the past 100 years relentlessly developing, perfecting its industrial base and its technological infrastructure and investing into human capital. It has focused on creating optimal conditions for individuals to achieve their potential.
Despite various mistakes and setbacks, the United States still sets the direction of technological innovation and its culture dominates the world.
Russia, in contrast, has wasted its resources, especially human ones. It literally killed off many talented people. Others were able to escape in time and achieved fame in Europe and, especially, in the United States, thus contributing notably to America’s economy and culture.
Choreographer George Balanchine, writer Vladimir Nabokov and, most recently, Google founder Sergei Brin are just a few examples among many.
Russia’s political economy has not moved forward much over the past 100 years. Despite mind-boggling mistakes, mismanagement and crimes of its leaders, Russia even now has much unrealized potential.
Russians may yet rise up and fulfill their human potential. But for that to happen, they will need to change the country’s kleptocratic political system and end their own serf-like mentality. Both are, in so many ways, the direct descendants of the Soviet era.
Alexei Bayer is a contributing editor of The Globalist. His debut novel, Murder at the Dacha, which is set in 1960s Moscow, was published in May.

quinta-feira, 9 de maio de 2013

Ferguson vs Keynes: Economic (Im)Possibilities of Our Grandchildren - The Globalist

O site The Globalist retoma um bom debate. Primeiro ler, depois refletir, depois comentar...
Paulo Roberto de Almeida



Globalist Document > Global History
Niall Ferguson Vs. Keynes, the (Gay, Childless) Futurist


By John Maynard Keynes | Sunday, May 05, 2013

Harvard historian Niall Ferguson recently asserted that John Maynard Keynes was indifferent to the long-term consequences of deficit spending because Keynes was gay and childless — and thus didn't care about future generations. Ferguson apologized for his remarks. But he might not have made them in the first place if he had read — as you can below — Keynes' "Economic Possibilities for Our Grandchildren."


We are suffering just now from a bad attack of economic pessimism.
It is common to hear people say that the epoch of enormous economic progress which characterized the 19th century is over, that the rapid improvement in the standard of life is now going to slow down, that a decline in prosperity is more likely than an improvement in the decade which lies ahead of us.
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I see us free to return to some of the most sure and certain principles of religion and traditional virtue: that avarice is a vice, that the exaction of usury is a misdemeanor and the love of money is detestable.
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I believe that this is a wildly mistaken interpretation of what is happening to us.
We are suffering not from the rheumatics of old age, but from the growing pains of over-rapid changes, from the painfulness of readjustment between one economic period and another.
The increase of technical efficiency has been taking place faster than we can deal with the problem of labor absorption. The improvement in the standard of life has been a little too quick.
The prevailing world depression, the enormous anomaly of unemployment in a world full of wants, the disastrous mistakes we have made, blind us to what is going on under the surface to the true interpretation of the trend of things.
For I predict that both of the two opposed errors of pessimism, which now make so much noise in the world, will be proved wrong in our own time — the pessimism of the revolutionaries who think that things are so bad that nothing can save us but violent change, and the pessimism of the reactionaries who consider the balance of our economic and social life so precarious that we must risk no experiments.
For the moment, the very rapidity of these changes is hurting us and bringing difficult problems to solve. We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come — namely, technological unemployment.
This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.
But this is only a temporary phase of maladjustment. All this means in the long run is that mankind is solving its economic problem. I would predict that the standard of life in progressive countries 100 years hence will be between four and eight times as high as it is today.
There would be nothing surprising in this even in the light of our present knowledge. It would not be foolish to contemplate the possibility of far greater progress still.
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I would predict that the standard of life in progressive countries 100 years hence will be between four and eight times as high as it is today.
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Now it is true that the needs of human beings may seem to be insatiable. But they fall into two classes — those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows.
Needs of the second class, those which satisfy the desire for superiority, may indeed be insatiable. For the higher the general level, the higher still are they. But this is not so true of the absolute needs. A point may soon be reached, much sooner perhaps than we are all of us aware of, when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes.
Thus, for the first time since his creation, man will be faced with his real, his permanent problem — how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.
The strenuous purposeful money-makers may carry all of us along with them into the lap of economic abundance. But it will be those peoples who can keep alive, and cultivate into a fuller perfection, the art of life itself and do not sell themselves for the means of life, who will be able to enjoy the abundance when it comes.
Yet there is no country and no people, I think, who can look forward to the age of leisure and of abundance without a dread. For we have been trained too long to strive and not to enjoy.
It is a fearful problem for the ordinary person, with no special talents, to occupy himself, especially if he no longer has roots in the soil or in custom or in the beloved conventions of a traditional society. To judge from the behavior and the achievements of the wealthy classes today in any quarter of the world, the outlook is very depressing!
For these are, so to speak, our advance guard — those who are spying out the promised land for the rest of us and pitching their camp there. For they have most of them failed disastrously, so it seems to me — those who have an independent income but no associations or duties or ties — to solve the problem which has been set them.
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Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.
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I feel sure that with a little more experience we shall use the new-found bounty of nature quite differently from the way in which the rich use it today, and will map out for ourselves a plan of life quite otherwise than theirs.
For many ages to come, the old Adam will be so strong in us that everybody will need to do some work if he is to be contented. We shall do more things for ourselves than is usual with the rich today, only too glad to have small duties and tasks and routines.
But beyond this, we shall endeavor to spread the bread thin on the butter — to make what work there is still to be done to be as widely shared as possible. Three-hour shifts or a 15 hour week may put off the problem for a great while. For three hours a day is quite enough to satisfy the old Adam in most of us!
There are changes in other spheres too which we must expect to come. When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals.
We shall be able to rid ourselves of many of the pseudo moral principles which have hagridden us for 200 years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues.
We shall be able to afford to dare to assess the money motive at its true value. The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognized for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.
All kinds of social customs and economic practices, affecting the distribution of wealth and of economic rewards and penalties, which we now maintain at all costs, however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting the accumulation of capital, we shall then be free, at last, to discard.
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A point may soon be reached when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes.
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Of course, there will still be many people with intense, unsatisfied purposiveness who will blindly pursue wealth — unless they can find some plausible substitute. But the rest of us will no longer be under any obligation to applaud and encourage them.
I see us free, therefore, to return to some of the most sure and certain principles of religion and traditional virtue: that avarice is a vice, that the exaction of usury is a misdemeanor and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow.
We shall once more value ends above means and prefer the good to the useful. We shall honor those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin.
But beware! The time for all this is not yet. For at least another 100 years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not.
Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.
I look forward, therefore, in days not so very remote, to the greatest change which has ever occurred in the material environment of life for human beings in the aggregate. But, of course, it will all happen gradually, not as a catastrophe.
Indeed, it has already begun. The course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed.
The critical difference will be realized when this condition has become so general that the nature of one's duty to one's neighbor is changed. For it will remain reasonable to be economically purposive for others after it has ceased to be reasonable for oneself.
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The increase of technical efficiency has been taking place faster than we can deal with the problem of labor absorption. The improvement in the standard of life has been a little too quick.
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The pace at which we can reach our destination of economic bliss will be governed by four things: our power to control population, our determination to avoid wars and civil dissensions, our willingness to entrust to science the direction of those matters which are properly the concern of science, and the rate of accumulation as fixed by the margin between our production and our consumption — of which the last will easily look after itself, given the first three.
Meanwhile there will be no harm in making mild preparations for our destiny, in encouraging, and experimenting in, the arts of life as well as the activities of purpose.
But, chiefly, do not let us overestimate the importance of the economic problem, or sacrifice to its supposed necessities other matters of greater and more permanent significance.
It should be a matter for specialists — like dentistry. If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid!
Editors note: This Globalist Document is excerpted from John Maynard Keynes' "Economic Possibilities for Our Grandchildren," published in 1931 in "Essays in Persuasion."

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sexta-feira, 1 de fevereiro de 2013

A globalizacao e a pobreza no mundo - The Globalist

Contrariamente às equivocadas afirmações dos altermundialistas, como gostam de se chamar os antiglobalizadores, a pobreza tem diminuido no mundo e nao foi' exatamente graças à ajuda externa, ou à assistência publica internacional, e sim em virtude da globalização.
Já escrevi alguns artigos sobre a redução da pobreza em nível mundial, apoiando-me nos trabalhos do economista catalão da Columbia University, Xavier Sala-i-Martin. Os interessados nesses meus trabalhos podem buscar no meu site (www.pralmeida.org) pelas palavras-chave "pobreza", "redução", ou pelo nome do economista, creio.
Paulo Roberto de Almeida

The Globalist Quiz > Global Economy
Marketplace Globalist Quiz: How Poverty Shrinks Globally
By The Globalist | Thursday, January 31, 2013

The developed world's attention seems to shift all too briefly to the fight against poverty in the developing world. There are signs of progress in this fight, but there are also concerns about the impact of the global financial crisis. We wonder: What is the share of the population of developing countries that now lives in extreme poverty?

Answers:
A. Over half
B. About one-third
C. About one-fifth

A. Over half is not correct.
As recently a 1981, 52.2% of the population living in developing countries lived in extreme poverty. The World Bank defines this status as people living on no more than $1.25 a day (in constant dollars). Back in 1981, the total number of people living in extreme poverty was 1.94 billion.

Even today, the level of extreme poverty in Sub-Saharan Africa is still around that level, at 47% as of 2008 (the latest data available). However, many countries around the world — not just China, as is often assumed — have made big strides in reducing poverty levels.

Mexico's extreme poverty rate, for example, fell from 19% in 1999 to only 5%. And even in Ethiopia, Africa's second most-populous country, the level of extreme poverty fell by over 30 percentage points in a decade, from 86% in 1999 to 54% in 2008.

B. About one-third is not correct.
As recently a 1999, 34.7% of the population in developing countries lived in extreme poverty. That year, the total number of very poor people was 1.74 billion. The decline in percentage terms is all the more impressive, as the size of the developing world's population has increased by about 2.3 billion people since 1981, or by 66%.

Still, in the developing world outside China, the absolute number of people in extreme poverty — at 1.1 billion — is still the same as it was in 1981. While that number was on the rise in the 1980s and 1990s, it has been falling since 1999.

In the Middle East, extreme poverty is down to 2.7% of the population. In East Asia, it is down to about 14%, and in South Asia 36%.

C. About one-fifth is correct.
As of 2008, 22.4% of the population in developing countries — or 1.29 billion people — lived in extreme poverty. That is roughly equivalent to the current population of China.

Indications are that the steady decline of extreme poverty in the developing world has not been halted by the global financial crisis. It is estimated that the incidence of extreme poverty in developing countries had fallen to 20% by 2010.

That would not only move another 100 million people out of extreme poverty, but also mean that the first of the UN's Millennium Development Goals — cutting extreme poverty in half from its 1990 level — can been achieved before the 2015 deadline. Moreover, the absolute number of extremely poor people in developing countries is steadily decreasing to the one-billion level.

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terça-feira, 25 de dezembro de 2012

The Globalist's Top Books of 2012

The Globalist's Top Books of 2012
December 25, 2012

From the legacy of British colonialism and the possibility of Hitler's assassination to Turkey's role in the Arab Middle East and Afghanistan's cotton fields, The Globalist Bookshelf crisscrossed the world and spanned centuries of history in 2012. As a year-end special, we present ten of the best books featured on The Globalist this year (along with five others for good measure).

1.    Ghosts of Empire: Britain's Legacies in the Modern World
By Kwasi Kwarteng
Excerpt: How has the British and U.S. to desire to control Iraqi oil shaped the
 country's recent history?   

2.    Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else
By Chrystia Freeland
Excerpt: Why have Americans been so tolerant of the rising gulf between rich and poor?   

3.    Who Stole the American Dream?
By Hedrick Smith
Excerpt: Why has the American Dream slipped out of the reach of more and more of the middle class?   

4.    Waging War on Corruption: Inside the Movement Fighting the Abuse of Power
By Frank Vogl
Excerpt: How can transparency help end the fleecing of resource-rich countries by their corrupt leaders?   

5.    Economics After the Crisis: Objectives and Means
By Adair Turner
Excerpt: Why do economists — and the policymakers who heed their advice — need to reconsider the conventional wisdoms of their profession?   

6.    Full Planet, Empty Plates: The New Geopolitics of Food Scarcity
By Lester Brown
Excerpt: What can be done to help those on the lower rungs of the global economic ladder cope with rising food prices?   

7.    The Economics of Enough: How to Run the Economy as If the Future Matters
By Diane Coyle
Excerpt: What policies should governments focus on to ensure that future generations live at least well as the current generation?   

8.    Borrow: The American Way of Debt
By Louis Hyman
Excerpt: What is "patriotic" about cutting taxes for the rich? And how is the middle class "empowered" by piling up mountains of debt?   

9.    The Revenge of Geography
By Robert D. Kaplan
Excerpt: Will water make Turkey a greater power in the Arab Middle East in the 21st century than it was in the 20th?   

10.    Hitlerland: American Eyewitnesses to the Nazi Rise to Power
By Andrew Nagorski
Excerpt: How did Hitler's relationship with a young American woman change history in the 20th century?   

Honorable mention:
Doing Capitalism in the Innovation Economy
By William H. Janeway
Excerpt: Can the United States muster the will to step into the 21st century world of energy?   

Bull by the Horns
By Sheila Bair
Excerpt: Mitt Romney badly lost the women's vote. But are Republicans the only party with a "woman problem?"   

Little America: The War Within the War for Afghanistan
By Rajiv Chandrasekaran
Excerpt: Why would USAID not get behind an effort to turn Afghan farmers from poppy to cotton?   

No One's World
By Charles A. Kupchan
Excerpt: Western dominance will wane in the 21st century, but what will take its place?   

Exits from the Rat Race
By Robert Skidelsky and Edward Skidelsky
Excerpt: How did mid-century concerns about economic fairness give way to today's crisis-prone, Darwinian capitalism?   

For a complete listing of books featured on The Globalist Bookshelf in 2012, click here.

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sexta-feira, 30 de novembro de 2012

Brazil and India compared with each other ??? My God !!! (only in the mess...)

Parece que o autor deste livro acha que o Brasil se parece mais com a Índia do que com qualquer outro país, ou vice-versa (faz diferença). Não creio, ou pelo menos não quero crer: a Índia é uma coisa (I beg your pardon) caótica fazem mais ou menos 4 mil anos, e aparentemente vai demorar mais uns 4 mil anos para deixar de ser um caos.
Acredito que o Brasil deve diminuir sua caótica situação doméstica em menos tempo do que isso: talvez só mais uns 150 anos...
Paulo Roberto de Almeida


Learn more about Breakout Nations at Amazon.com

Globalist Bookshelf > Global Economy
The India-Brazil Axis
 

By Ruchir Sharma | The Globalist, Saturday, August 11, 2012
 
There has been plenty of talk in recent years about the parallels and contrasts that mark the India-China relationship. But Ruchir Sharma, author of "Breakout Nations" and a managing director of Morgan Stanley Investment Management, points out that Brazil — although half a world away — shows many more real-life parallels to India than China does.

ndia has its reasons for self-confidence. By many indicators, from the number of TV sets in the hands of consumers to the number of cars on the road, to the large and increasingly young population, India does indeed look much like China of the 1990s.
Culturally and politically, India has far more in common with the chaos and confusion of modern Brazil than with command-and-control China.
Back then, China was poised to supplant Thailand as the world's fastest-growing economy. But to assemble a true composite picture of India that would argue that India looks just like 1990s China, one has to leave out many of the less flattering images. Moreover, China is not the only possible model for India to consider. It turns out that, culturally and politically, India has far more in common with the chaos and confusion of modern Brazil than with the command-and-control environment that defines China.
While China has summoned the willpower to produce a new round of landmark economic reforms every four or five years for some decades now, the once-dynamic reform cycle stopped in Brazil back in the 1970s.
After that, the dynamism and optimism the world associated with the then-very modern buildings of Brasilia, its new capital city, began to languish. Brazil became self-absorbed and, before long, fell off the list of up-and-coming economies and entered the abyss of having to contend with one of the worst bouts of hyperinflation the world had ever seen.
Both India and Brazil are "high-context" societies, a term popularized by the anthropologist Edward Hall. It describes cultures in which people are colorful, noisy, quick to make promises that cannot always be relied on, and a bit too casual about meeting times and deadlines.
These societies also tend to be particularly family-oriented, with tight relationships even beyond the immediate family, based on close ties that are built over long periods of time. In an environment this familiar, there is a lot that goes unsaid — or is said very briefly — because values are deeply shared.
By the same token, much is implicitly understood from context. The spoken word is often flowery and vague. Apologies are long and formal. In that regard, Indians and Brazilians are a lot more like Italians than, say, Germans.
Both India and Brazil are "high-context" societies in which people are colorful, noisy, quick to make promises that cannot always be relied on, and a bit too casual.
High-context societies believe deeply in tradition, history and favoring the in-group, whether it is one's own family or business circle. They are vulnerable to corruption. If this description sounds questionable to businessmen or tourists who know Brazil and India as open, familiar and straightforward, think again. It could very well be that what you have experienced is only the low-context facade adopted by the outward-facing elites who need to deal with foreigners. Sure, everyone is welcome at Brazil's Carnival or an Indian wedding, and they may even be made to feel like an insider. But the reality is that it takes decades to become a real part of these cultures.
India's Prime Minister, Manmohan Singh, is fond of remarking that whatever can be said about his country, the exact opposite is also true. There is something to this — India is rife with contradictions, no doubt.
But his remark also represents a convenient form of high-context analysis. It is a way of avoiding overt confrontation with hard facts — or with the side of India that could drag it down.

A passage to India

Of course, Brazil and India are far from the only high-context cultures. This kind of social interaction is typical in much of Asia and Latin America. Yet I am convinced that there is a particular bond between Brazil and India. I feel it all the time when I visit these countries. The parallels range from the late dining habits and colorful personalities to casual informality and cultural choices.
Attesting to this is that fact that the most popular soap opera in Brazil in recent time has been "A Passage to India." This is a Brazilian-Indian love story, filmed in the Indian cities of Agra and Jodhpur, and in which Brazilian actors play the Indian roles and pass easily for North Indians. To Indians who have seen it, the show is right on the mark in terms of look, mood and even lighting.
At the same time, Indians and Brazilians are only very loosely aware of their connection, if at all. And yet the mutual admiration and emulation society works in some very ephemeral ways.
High-context societies believe deeply in tradition, history and favoring the in-group, whether one's own family or business circle. They are also vulnerable to corruption.
Consider Google's purchase in 2002 of a California-based social networking site called Orkut. Google was keen to compete with Myspace and Facebook in Orkut's 48 languages. The site fizzled out in just about every country — except for in India and Brazil, which together generate more than 80% of Orkut's traffic. Evidently, something about the site's look, feel and features hits that Indo-Brazilian chord of brotherhood.
Social media habits and preferences aside, there is also a distinct Indo-Brazilian connection in politics. This is visible in the desire for state protection from life's risks — social welfare for the nation as one big in-group — to a degree that is rarely found in other high-context societies, such as China and Chile.
The political elites of India and Brazil share a deep fondness for welfare-state liberalism. In addition, both countries' populations demand high levels of income support — even though their economies do not yet generate the necessary revenue to support a welfare state.
Per capita income is about $12,000 in Brazil and only $1,400 in India. Brazil offered what was probably the emerging world's most generous, yet strategically placed and effective welfare program — the Bolsa Familia income supports.
Not to be outdone, India's governing Congress Party has lately turned to generous spending in an effort to recover the political backing it lost in recent decades to an array of regional parties. In 2005, it pushed through the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which guarantees the rural poor a hundred days of public-sector employment each year, at an annual cost to the Indian Treasury of nearly $10 billion.
It was easy enough for India to increase spending in the midst of a global boom, but the spending has continued to rise in the post-crisis period. Inspired by the popularity of the employment guarantees, the government now plans to spend the same amount extending food subsidies to the poor.
There is also a distinct Indo-Brazilian connection in politics in the desire for state protection from life's risks in the form of social welfare.
If the government continues down this path, India may meet the same fate as Brazil in the late 1970s, when excessive government spending set off hyperinflation and crowded out private investment, ending the country's economic boom. One of the key mistakes made in Brazil at the time was indexing public-sector wages to inflation, which can trigger a wage-price spiral. India's central bank has voiced its fears of a similar price spiral as the wages guaranteed by MGNREGA (an inept acronym to be sure) pushed rural wage inflation up to 15% in 2011.
Furthermore, under the current regime of drift in India, crony capitalism has become a real worry. Widespread corruption is an old problem, but the situation has now reached a stage where the decisive factor in any business deal is the right government connection.
When I made this observation in a September 2010 Newsweek International cover story titled "India's Fatal Flaw," I was treated as a party spoiler. Top government officials in India told me that such cronyism is just a normal step in development, citing the example of the robber barons in 19th-century America.
Since 2010, the issue has exploded in a series of high-profile scandals, ranging from rigged sales of wireless spectrum to the shoddy construction of facilities for the Commonwealth Games that India hosted that year.
India's place in Transparency International's annual corruption perception index fell to 88 out of 178 nations in 2010. That was down from 74 in 2007. (A lower rank indicates higher official corruption.) India is approaching the point that Latin America and parts of East Asia reached in the 1990s.
That was also the point in those countries when a backlash started to build against continued economic reforms — because any opening up of the economy was tragically, but not without reason, seen to favor just a select few. That delayed true growth strategies, which were very much needed to benefit the population at large, for well over a decade in many places.
India may meet the same fate as Brazil in the late 1970s, when excessive government spending set off hyperinflation, ending the country's economic boom.
In India, similar stirrings of deep middle-class discontent about the direction (read: true beneficiaries) of economic reform appeared in 2011. That was when many urban Indians started to rally behind social activist Anna Hazare, who morphed quickly from being a hunger striker protesting corruption to the leader of a civil movement capable of paralyzing Parliament and damaging business confidence. No other large economy has so many stars aligned in its favor as does India, from its demographic profile to its entrepreneurial energy and, perhaps most important, an annual per capita income that is only one-fourth of China's.
But destiny can never be taken for granted. India's policymakers cannot assume that demographics will triumph and that problems such as rising crony capitalism and increased welfare spending are just sideshows instead of major challenges. These are, after all, exactly the factors that have prematurely choked growth in other emerging markets.

Editor's note: This article is adapted from Breakout Nations: In Pursuit of the Next Economic Miracles (W.W. Norton & Co.) by Ruchir Sharma. Published by arrangement with the author. Copyright © 2012 by Ruchir Sharma.

Brazil's Strategy for Economic and Social Sustainability -Brazil's Strategy for Economic and Social Sustainabilityds

 

Photo credit: Vepar5/Shutterstock.com

Globalist Perspective > Global Economy
Brazil's Strategy for Economic and Social Sustainability
 

By Carlos Ivan Simonsen Leal | Friday, November 30, 2012
 
Brazil's economic history provides a valuable lesson for policymakers hoping to solve global problems such as climate change. For decades, writes Carlos Ivan Simonsen Leal, Brazil's leaders refused to deal with the country's runaway public finances, leading to one economic crisis after another. Do world leaders want to risk the same with the global environment?

n Brazil, the mood is very different from Europe. We don't have a recession, we have mild growth. Of course, we don't have the same high standards of living as either Europe or the United States.
Only those countries that are laying the groundwork for global cooperation at home are making a positive contribution to solving the problems at hand.
But the crucial thing we have learned over the last 25 years of managing our economy — and especially from the periods when we mismanaged it — is this: Whenever you don't face up to the problems you have, they will end up bigger than they are. For many years, we made the political decision to avoid the issue of public deficits. And so we had a series of hyperinflations — not one bout with it, but an entire series. This, of course, halted the growth of our country.
That was a hard lesson. The first thing the new president, Dilma Rousseff, upon being inaugurated in January 2011 was to rein in fiscal expenditures. This, of course, coincided with a global economic slump. It is therefore no surprise that Brazil's growth slowed from 7.5% to around 2.5% to 3%.
Our new president has also come under pressure from some of her own party's core constituencies — in particular, public-sector unions — to raise wages well in excess of current inflation. President Rousseff could have taken the easy path and said, "Well, let me raise wages by 5%, 7% or even 10%, while inflation is 4%."
One might have expected her to give in to that demand — she is a socialist, after all. But she did not do that. She resisted.
The impression that I get from what is happening in some other parts of the world is that political leaders do not have the courage to resist the excessive demands of the public sector. It is conveniently forgotten that someone always has to pay the bills.
The European Union started out with countries that had very good credit positions and that could raise debt quite easily in the markets. Now, Europe faces a crisis whose root is not only financial, but concerns the ability to compete.
There are clear downsides to the European consensus that growth shouldn't be measured just in terms of increases in GDP. One also has to be aware that if GDP basically "grows" at 0% for ten years, while other parts of the world are experiencing 5% or 9% growth in GDP, then one will become increasingly irrelevant.
What is happening in some other parts of the world is that political leaders do not have the courage to resist the excessive demands of the public sector.
This is a very basic but often forgotten point about the direct linkages of fiscal discipline, economic performance, and a society's long-term future. He who seeks to avoid facing the hard choices will have to face even harder, even less pleasant choices down the road. We in Brazil have accumulated too much experience of seeking to avoid many hard choices. If there is one positive aspect of this, however, it is that we now have a surprisingly broad-based consensus that we should no longer engage in such short-sighted and ultimately self-defeating strategies.
At the present time, we are halfway between making most of the hard choices we need to make - and not doing so. Of course, an inclination to make half-decisions is the nature of things everywhere. We try to avoid the worst scenarios and then play according to those constraints.
But the important matter is that we have to be ready to discuss the consequences of our partial inaction. If we do not do so, then things can become unmanageable quickly.
This is especially true when it comes to matters such as the environment, trade (including protectionism), monetary policy, income distribution and access to energy.
On each of these big agenda items, we are dealing with a dynamic process. We will have to choose between short-term and the long-term goals. Ultimately, the nature of politicians and the citizenry alike is to try and delay those decisions.
The political and economic reality, especially in an integrating world economy, is if you don't make your choices, they will be made for you. They will arrive at your doorstep whether you want them to or not.
The dynamic nature of this process is very interesting. You may be a loser in the short run, and you may be winning in the long run. There is a problem of credibility in the game.
But if we have processes that entail faith and credibility among players, it is much easier. If we don't have those, it will be much more difficult.
Given the strong competition for access of markets and natural resources, we are inclined not to devote resources to anything but making gains in those arenas.
What is even more interesting with regard to this dynamic process is that the domestic inclination to procrastinate may be dealt with by virtue of the fact that the process is ever more international in character. Take the issue of the environment. No doubt we are facing a very difficult situation. The evidence is indisputable that we cannot proceed for another 20 years doing what we have been doing — unless we want to really compromise the world for the rest of time.
The choice we face is between gambling our very existence on living in a world under climactic conditions that we have never known or not. The rational choice would be not to do that.
On the other hand, given the very strong geopolitical competition that is going on for access of markets and access to natural resources, we are inclined not to devote any resources to anything but making gains in those arenas.
Someone has to start playing the card of comparative gain rather than playing the card of non-cooperation. Other nations have to join this game and realize that this non-maximization is the best path.
We have to be smart enough to think of what could happen to the world a few years from now if we don't change course. Are we going to continue on a path the consequences of which are going to be very difficult to repair within ten years?
In my view, the best approach is to focus on two or three topics that represent the most important constraints on everyone, whether it is trade, labor mobility, technology transfer or the protection of our environment.
If at least we could do that, much would be gained. Solutions, preferably market-based, will come soon afterwards. To be sure, each region and each country will have its own solutions according to its own politics, but the world as a whole will become more maneuverable.
The way in which we are currently trying to proceed — by trying to interact on everything — is bound to make progress on anything impossible.
Each region and each country will have its own solutions according to its own politics, but the world as a whole will become more maneuverable.
The biggest price of entry to the global game, though, may be just this: That only those countries that are laying the groundwork for global cooperation and progress at home are making a positive contribution to solving the problems at hand. The reason why they would be willing to do this is not to make any concessions to other nations, but to improve their own lot, their national standard of living, as measured in terms of quality of life.
Measured against that mark, we Brazilians feel that we are moving in the right direction and are making a positive global contribution. We have learned the core lesson from our not-so-distant past.
The border between being lax on dealing with pressing realities and falling into the trap of self-delusion is very thin.














This essay was adapted from a presentation given by the author at the 2012 Salzburg Trilogue.

Hosted by the Bertelsmann Stiftung, the Salzburg Trilogue facilitates international cultural dialogue by bringing together recognized public figures to consider matters of current importance.
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