Education levels the playing field
The new wealth of nations
Author- Surjit S Bhalla
Publisher - Simon and Schuster, Rs 599
The decline in world poverty in the last 40 years, the new wealth of nations, the hope that tomorrow will actually be a new day — Surjit Bhalla’s book shows how all this is to be attributed to the spread of education, says GAUTAM MUKHERJEE
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 upfront. 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 globalisation, 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 workplace 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 40 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 globalisation. It has also brought about a democratisation 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”.
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