[lbo-talk] India observations

Wojtek S wsoko52 at gmail.com
Tue Aug 3 09:16:41 PDT 2010


I just returned from New Delhi, India, where I spend some 10 days working on a joint project with the Central Statistical Organization. The entire city is dug out in preparation of the 2010 Commonwealth Games. The amount of public works undertaken by the government of India is truly astounding - the infrastructure projects are going on virtually 24/7. Some of these projects, such as the Delhi Metro, are truly amazing. To date, New Delhi have three metro lines, two (above grade) running east - west and one (underground) north- south. However, far more is being constructed, albeit none of the new construction is likely to be ready for the 2010 games. The metro is urgently needed, as the traffic in New Delhi is absolutely atrocious. It takes 45-60 minutes to go the distance of 5-6 km by taxi or rickshaw, a distance that the metro covers in 10-15 minutes. The metro is very modern and inexpensive, but crowded.

On the other side of the public works spectrum are street and sidewalk improvements - which are carried out in virtually every part of the city.

Unlike the metro, this is the third world face of India. The work is carried out for the most part manually, only with very simple tools, and no machines. Construction materials (such as cement mix) are carried out by workers on their heads in a relay fashion. The work pace is very slow and productivity is very low (an observation confirmed by my CSO colleagues.)

The work is very hard, exhausting (the temperature reaches 35-40 degrees Celsius and humidity - 90-100%) and very dangerous. During my short stay, I heard several news reports of work crews being hit by cars (in one case, 4 workers were killed and several other injured.) On the surface, the introduction of construction machinery would greatly improve the efficiency of public works. On the other hand, however, that might put a lot of manual workers out of their jobs. Since over 75% of Indian labor force works "on their own account" (mainly in subsistence farming and hawking various services in congested urban centers) - the hiring of these inefficient manual laborers does not seem like a bad idea at all.

The outcome of these public works project is also mind boggling to a Westerner. Just a few days after a section of the street improvement is completed, it is covered by mud and rubbish and one wonders whether any work was performed there at all. It reminded me of Angkor (Cambodia) where magnificent palaces and temples were reclaimed back by nature and covered by vegetation. Except that in New Delhi there is very little vegetation (despite the "Green Delhi" campaign to plant a tree here and there) and the "nature" is refuse generated by the huge mass of mostly poor people.

That leads to another observation - standards of living. While India's macro-economic indicators may be impressive - what one sees on the street level is a mass of low income or destitute people. People are camping out under tarp or simply sleeping on the streets under the metro tracks. This image seems quite indicative of India situation - the spectacular modernization projects seem to be be passing way above the heads of a big chunk, if not the majority, of the population.

Scamming, touting and hawking are ubiquitous - obviously Westerners are the targeted especially hard, but the locals are not off the hook either.

Virtually every transaction involves a ripoff. The fare for a rickshaw ride that by the meter would be about 20 rupees, mushrooms to Rs100.

Asking the driver to use the meter is pointless because these either "do not work" or are doctored in one way or the other. The only strategy that works is haggling, which can bring the initially asked price of Rs100 to Rs50-70. But then, even being ripped off by the factor of 2 or 3 is a good deal for a Westerner - Rs 70 is about $1.50 - less than a metro ride in DC.

Speaking of the meters - an Indian colleague told be the following joke. A Japanese tourist lands at the Indira Gandhi International airport and takes a taxi, a little Tata Indica to his hotel. on their way, they are passed by a Toyota. The tourist says "Toyota - made in Japan, runs very fast." A moment later, they are passed by a Honda. The tourist says, ""Honda- made in Japan, runs very fast." A few moments later, they are passed by a Suzuki. The tourist says, "Suzuki- made in Japan, runs very fast." Finally, they arrive at the hotel, and the tourist asks the driver how much the fare is. "Three thousand rupees" replies the driver. "Three thousand!?" yells the tourist. At the tourist office they told me that it would be only Rs500-600." The drivers points at the meter and says "This is what the meter says. Made in India, runs very fast."

This brings me to another observation - a very different nature of consumer ripoff in India and the US (or for that matter Europe.) In India - it is personal and negotiable. The original asking price may be 10 times the actual value of the good or service in question - but haggling, which is normally expected, can bring that price significantly down. The asking price for two pairs of leather sandals may be Rs 1,700 but 15 minutes of haggling (and a cup of tea courtesy of the merchant) brings that price to Rs700 . Leaving th store and returning later would probably bring that price down even further - but then Rs 700 is about $15 - a very good deal for two pairs of leather sandals. In the US - a pair of crappy plastic footwear at Payless Shoes would be $19.95.

In the US - by contrast - the ripoff is institutionalized, impersonal and non-negotiable. A corporation sets up the price that typically is 10 times the actual manufacturing cost - and that is it. Take it or leave it - no haggling, not even a personal conversation with the salesperson (that would against "company policy.") Sometimes, the corporation may offer the item at a reduced price - but then again it is a pre-arranged "sale event" - a benevolent act of a corporate uebermensch - rather than interpersonal communication and negotiation.

In that light - the "ripoff" is a wrong frame to compare retail transactions in India and the US. A more accurate frame is that of alienation - in the US it is alienated ripoff carried out by impersonal corporations; in India - it is a personal negotiation that may end in a ripoff or may not - depending on the sides' determination and haggling skills. Ironically, most Westerners who throughly internalized the impersonal corporate framework think they are being ripped off in India even though what they eventually pay is way below the price they would pay in the US - which is the subject to a much higher ripoff factor (aka "value added" in the economic mumbo-jumbo) set by corporate markups.

In that light - the whole idea of price being set by "supply and demand" - as the neoliberal economic "theory" wants us to believe - is not worth the paper on which it written. What determines the price is not some abstract regression lines on the paper but the buyer's ability to pay and capacity to negotiate the price. In the US, the former is high and the latter is low

hence the US prices are much higher than those in India.

Wojtek



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