When Labor is Cheap

Labor is cheap in India which leads to some differences from the United States.

The first couple of times I took a taxi to a restaurant I was surprised when the driver asked if I wanted him to wait. A waiting taxi would be an unthinkable expense for me in the United States but in India the drivers are happy to wait for $1.50 an hour. It still feels odd.

The cars, the physical capital, in India and the United States are similar so the low cost of transportation illustrates just how much of the cost of a taxi is the cost of the driver and just how much driverless cars are going to lower the cost of travel.

Everything can be delivered.

Every mall, hotel, apartment and upscale store has security. It’s all security theatre–India is less dangerous than the United States–but when security theatre can be bought for $1-$2 an hour, why not?

Offices are sometimes open 24 hours a day, 7 days a week. Not that anyone is in the office, just that with 24 hour security there is no reason to lock up, so the office physically stays open.

Every store has an abundance of staff. This one is puzzling since it results in worse service. Even in a tiny store, for example, it’s common to have one person tabulate the bill and then hand it to another person to ring you up. My guess is that this is an anti-theft procedure for the owner as it then requires two to collude to rip the owner off.

At offices, cleaning staff are on permanent hire so they come not once or twice a week but once or twice an hour. The excessive (?) cleanliness of the private spaces makes the contrast between private cleanliness and public squalor all the more striking.

Comments

Sounds awesome, USA should head in this direction, via open borders. Will be good for politics and property rights too.

Despite the fact that India is a bureaucratic nightmare THIS is the reason so many libertarians of the Tabarrock stripe love India. It's a land where ordinary workers are so crushed by poverty they basically need to sell absolutely everything they have, including every second of time, for pennies just to get by. This is the dream of Open Borders

Yup, you got it!

" A waiting taxi would be an unthinkable expense for me in the United States but in India the drivers are happy to wait for $1.50 an hour. It still feels odd.

The cars, the physical capital, in India and the United States are similar so the low cost of transportation illustrates just how much of the cost of a taxi is the cost of the driver and just how much driverless cars are going to lower the cost of travel."

OK, Alex is paying a person to sit and do nothing and thinks that is fantastic because he earns $50-100 per hour and it costs him only $1-2 and hour to pay someone to sit and play computer games on his phone. The guy lives in 50 sq-ft compared to Alex 500-1000 sq-ft. In India, Alex seems slums everywhere, but at home would be calling police, building inspectors, health departments, zoning if slums popped up the same distance and density around his home. But how else could the people Inn the US playing video games charge Alex to do nothing? Being forced to live in large living spaces far from Alex, people need government to tax people with income, Alex, to pay them to sit and do nothing but play video games on welfare.

If self driving cars come to India, they will come with a valet you pay $2 an hour to open the door and clean up after you. If not, there will be a tax that goes to pay welfare to have people sit and do nothing.

After all, if automation replaces all workers, everything must be priced at zero, or the quantity delivered will be near zero. Ie, only the Americans like Alex will have the income to pay for a self driving car trip.

Something that people don't take into account when looking at transportation in India is that many cars for the indian market would not be legal in the US: They might look modern, but they have safety features like a 1960s American car: Good luck with airbags, or even crumple zones. This makes the cars very cheap, but also deadly at even medium speeds: a 40mph collision can kill you. There's good videos out there that put those kind of cars through the same tests as cars sold in the US and Europe, and the results are gruesome.

Or the poor will simply starve to death. Problem solved!

India has traditionally (Since WWII) been a very closed country in almost all respects. Its economic opening started about 10 years later than China, which probably explains a major share of the China having reached higher development levels sooner.

The example of India makes precisely the opposite case.

Be a closed country like India used to be (still not very open), and you will be poorer than otherwise.

+1 - India is not poor because of libertarian policies, it is poor because it does not have enough libertarian policies. The best thing for a poor person is a buoyant economy, and a buoyant economy by definition is one where people can trade easily.

That very easily becomes dogmatic beyond reason.

All else equal, higher growth is generally better for the poor than lower growth. But that is not nearly the fantastical claim made by those who speak of rising tides, growing pies, and the like.

As far as open borders, it would *never* be like this is the US. You have to get rid of many labor regulations (both safety and minimum wages), business license requirements, and income/labor taxes first. Probably also welfare and a few other entitlements. Likely some environmental regulations.

More immigration, sure... after we do the other things first.

"As far as open borders, it would *never* be like this is the US. You have to get rid of many labor regulations (both safety and minimum wages), business license requirements, and income/labor taxes first."

That's why posh peoples' favourite kind of immigrant is the illegal immigrant! Have to keep that illegal immigration pipeline open -- lure them in with loose talk about open borders and amnesty every few years.

Life's great when you basically have slaves waiting on your beck and call

Voluntary slaves?

I think the phrase you're thinking of is "wage slaves".

i.e., not slaves?

A wage slave is someone whose contract situation requires them to work so much that they are unable to find alternatives.

They work, say, 14 hour day 7 days a week for a wage. And that wage is only high enough to keep them alive, maybe with room for some high-child-mortality reproduction.

Paying someone the equivalent of an average day's wage to do nothing is not slavery.

But ... I get your point. I don't like to waste my time with taxi drivers in India because they're mostly fraudsters and headaches to try to rip you off are too likely. Rickshaw drivers and pullers are a much much better option, and in many situations of bad traffic are also able to maintain an average speed faster than walking (which a taxi cannot because it's larger and can't get through/around stuff).

Why do people think they are slaves?

These are just jobs. Driving a car is a pretty good job compared to mindlessly assembling iPhones.

Also, this guy will "wait" for Alex, maybe. More likely is he says he'll be there in an hour and takes a short ride customer in the meantime. Or he eats his own lunch then, and thus gets paid to eat lunch.

India is lagging behind China in economic development, but it is seeing it nonetheless. In my grandmother's generation, every middle-class family had livre-in servants plural (mine was widowed young and far from rich).

Nowadays, poor people have much better opportunities and the middle class grumbles they have to share maids.

This parallels Western development. Agatha Christie issaid to have remarked: "I never thought I would be so poor as to not have live-in staff, or so rich as to have a car and driver". Both of the current British Prime Minister's grandmothers were "in service", as the euphemism goes.

" It’s all security theatre–India is less dangerous than the United States–but when security theatre can be bought for $1-$2 an hour, why not?"

Not quite sure of this. As far as I understand, the security is to compensate for the fact that the law and order situation in India is weak (though, say, gun homicides are certainly rarer), mostly because the number of policemen per capita is far lower in India than in most other countries, including the US. It is a mystery to me why there aren't more policemen in India in spite of labor being cheap; whether the problem is political or economic.

I don't know about India, but in China there are fewer police than you might expect (although police is a broad term there) because those rich enough to ask the government for more protection have private security. The state does not much care about protecting the poor, and the poor would not regard adding more cops as protecting them anyway, as mostly they just shake them down.

Disagree - law and order works largely fine in India. Petty thievery, break-ins etc are amongst lowest per capita. Anecdotally: I have lived most of my life here and the only two times I have been robbed have been in Europe.

True.

Given its level of per-capita income, it's amazing how safe India is. It's a remarkably low crime society. Contrary to the rants of Indian feminists and liberals.

And the reasons for this are cultural in my view. Hinduism, as a religion, emphasizes rectitude/honesty more than equality/kindness. It is a right wing religion in many ways. And this aversion towards "short cuts" is built into the psyche of the people.

I guess it explains the caste system and the sati.

@Shrikanthk, regardless of what our differences may be, please do not respond to this lowly troll Ribeiro. The liberals that run this set up tolerate whatever Ribeiro will say, but our own angry but far milder comments will not be judged as kindly.

Maybe you should try to be less angry.

Just stay away from large crowds. You never know when police are going to whip out the batons and instigate riots when it's totally unnecessary.

I used to think that was draconian. But their batons are made of wood, not metal. Actually, it probably doesn't hurt that much or cause permanent damage often, but instead leaves lots of bruises.

In the USA and other advanced countries, the means of assaulting citizens are more refined so that they do not leave evidence. Which means that India is better in this regard. a) They do not lie about the fact that torture is in fact used for some cases and b) Thus, when state power is abused it is more often possible to have evidence. (Whether it can be more easily acted upon is not clear to me ...)

If street shitting were a crime in India half the country would be in jail.

Geez, the prices for services in India can't be directly compared to those in the US. Not all that long ago skilled American workmen were paid $8 per day. There are still many alive in the US that once made less than a dollar per hour. Of course, you bozos would prefer that an individual have no job at all rather than what you perceive to be an ill-paid one.

Do I want armies of underclass servants paid lower than subsistence wages to do perform almost make-work services? I don't think it's a recipe for long-term growth. I'd rather those people have opportunities to study or train to develop knowledge and skills that let to them move into productive jobs with wages on which they can support themselves and even a family.

Armies of underclass servants paid lower than subsistence wages to do perform almost make-work services? That would be a best case scenario. How many Vice-provosts for Diversity and anti-White Hate does your old college have now?

We are deluged in vast armies of overclass servants paid higher than the 1% wages to do perform services designed to stop anything useful being done. Speaking of which, I just saw Anita Hill being interviewed. Naturally she is a professor of social practice or something at Brandeis. Go figure.

You got it!

Our local university had two positions open for "Director of Diversity", one for African-Americans - higher paid - and another for Native-Americans. I don't know the reason for the pay differential. I think roles like those may explain the rising cost of university.

What were the salaries for these jobs?

Its not make work.

You can hire humans, or install cameras.

Both have the same function of deterring theft.

We could force all Americans to do all their own house repairs, you know, to avoid "make work" for handymen. Do you think that's smart?

I’d rather those people have opportunities to study or train to develop knowledge

I'm glad to see what you want them to do. Should we ask them? Nah, let's just go with our gut on what's best for them!

In reality, there are lots of people who HATE HATE HATE school and see being in it as torture. I know that's really weird for us to believe because lots of us were straight-A keeners. But it's true.

With wage subsidy, these people get to work to support their families, which is what they want.

Slavery was also banned.

Should we appeal to sayings about the devil and idle hands? Or accept that among the most technologically advanced countries in the history of the planet, it is intolerable that we would allow some to toil in primitive or substandard working conditions.

Among other things, it is very practical to ban such substandard work and promote higher value added. Make $1 a day work illegal. Provide schooling. And soon the poor will be producing economic value in the range of $20,000 a year, not $20,000 a lifetime. Very smart.

I think that everyone should have a 50s style suburban marriage. But if some people want to get involved in BDSM, that is fine by me. In the same way, I think everyone should have a nice clean office job. But if some people want to work in conditions that you deem to be primitive or substandard, that is also fine with me. It is not as if they lack choice. It is not as if your rules, while they sound nice, actually only ever work to put up barriers to Third World trade and support oligarchic work practices.

It may be that providing some education to some of the poor will result in their offspring producing economic value in the range of $20,000 a year. But education is not a magic wand. It does not in and of itself add value. These days education is probably destroying value anyway. Greatly expanding education opportunities for White people did add value. Expanding education for Blacks and to a lesser extent Hispanics has not obviously done so much. I don't think that is a racial thing. I just think the racial classifications make it more obvious from the data. If the government collected data on dope-smoking White trash, the same may well be true.

Wages for security personnel and janitorial staff are much less than that of the US all over the world. So what? The law of supply and demand isn't nullified by the wishes of American academics. This post is designed to excite the high percentage of dim bulbs that regularly comment here.

Well, the requirement that costs be lower than price still holds.

In India, the low wages requires the costs of essentials to live must be lower. Cars to move people around, self driving or not, is not an essential in India because slums are close by to where Alex is and people can walk to work cheap.

In the US, even Alex wants the poor to be forced to live a car ride away from him, so the cost of car rides forces the price much higher for workers. Paying $1 an hour to a worker who must pay $10 in living costs results in a quantity of zero delivered.

But given producers of food want to be paid $5 for burgers and fries, if wages aren't high enough, then either government welfare must pay some or all the $5, or sales quantities will be zero.

Alex classically in today's free lunch economics fails to consider how stuff gets paid for that he's involved in producing, how his excessive income gets paid. Where did the money come from to pay tuition or $250 for his textbook? Not from Alex paying workers $2 an hour.

The Payscale site says US janitors receive a median wage of $10.91. The minimum wage in Australia is around $13.25 US. Or about $14.45 if forced retirement saving is included.

Minor quibble "The cars, the physical capital, in India and the United States are similar "
The manufacturering cost of cars will be similar, but (I'd guess) the distribution, retail, service, repair, valeting etc costs will be much lower

'It still feels odd.'

I'm confident you will get used to it, pukka sahib, following in a long line of Europeans who cannot stop from indulging in something this - 'aloof, impartial, incorruptible arbiter of the political fate of a large part of the earth's surface.' "Race against Time" by Maurice Freedman

A sensation that must be familiar to someone at the forefront of making the world safer for the rich to get richer in.

'and just how much driverless cars are going to lower the cost of travel'

For some - a driverless taxi will undoubtedly make use of something along the lines of Greyball to keep all the riff-raff out. Even if Uber promises to stop using it to keep law enforcement from doing their jobs against those breaking the law.

Because of the many and manifest failures of Communism, decolonization, African Nationalism, Arab Socialism, the Permit Raj etc etc ad nauseum, Pukka Sahibs are still the aloof, impartial, incorruptible arbiters of the political fate of a large part of the earth’s surface.

And the world is so much better off for it.

'And the world is so much better off for it.'

Strangely, the losers of the Opium War still don't agree with that.

And truly strangely, the winners of the war in 1904 that earned Roosevelt his Peace Prize don't agree with that either.

How do you know? Have you polled the Chinese? All 1.4 billion of them? Or are you just making nonsense up?

As it happens China is a great example. They found playing second fiddle to a bunch of White men humiliating. They had been sneering at the lesser races for thousands of years. Suddenly those Pukka Sahibs treated them like they treated the Koreans. Intolerable! They tried every other option they could. They flirted with Fascism. They embraced Communism. But Moscow didn't hate White people enough so they developed their own more extreme form of Communism. None of it worked. In the end, Deng Xiaoping gave up. Made his peace with the Pukka Sahibs. And China has been improving ever since.

The Japanese seem fine with it too. What do you think they object to?

Are you an alt-right/white nationalist type that thinks capitalist globalization is a good thing? If so, that's interesting. Most of the alt-right and WN writers I've read seem to regard capitalist globalization as the very worst thing, worse than socialism and communism.

In most of the cases cited, it was probably more about having generals play at economics than the communism per se.

Central planning per se, and not socialist preferences, resulted in the very bad outcomes. They knew that they needed an educated public, road and energy, and some other basic things. But it did not cross their minds that they would badly implement plans which were bad plans in the first place.

I do not, however, believe that their interests and/or independence would have been better served by allowing multinational corporations or WB and IMF advisors to run their economies in the 1970s and 1980s.

So, maybe I could say that all of those groups/movements/ideologies are a wealth of case studies for dumb ways to do things that should not be repeated. But in terms of empirical evidence of failures of communism, or more especially central planning, I think too many other factors relating to backwardness and general incompetence at a lower stage of economic development are relevant, making it difficult to pin the blame on "communism" per se.

I admire the sort of perfect mentality that this comment encapsulates. It is the confidence with which people share callow and historically vacuous opinions that do nothing but show how little they understand. Is it worth correcting? Why not?

The only Communist country in which generals played a significant political role was Poland. Maybe China for short periods during and after the Cultural Revolution. It was the PLA that insisted on the return of Deng Xiaoping for instance.

A neat switch from Communism to Socialism. But of course Central Planning is at the heart of both. You cannot have socialism or Communism without central planning. It is true that the arrogance of the Communist leaders was quite spectacular. But Marx had solved the problems of history for them! They did not need real world experience or the advice of experts! They had Das Kapital. That is sort of linked to, you know, Communism.

What you believe is cute. China did opt to let the MNC and the WB and the IMF in after the 70s. How did that work out for them? The 70s were not such a good time in China. Africa has been one of the success stories of the 2000s. Thanks to the WB and the IMF.

Sure Nathan, if you were in charge, you would do a bang up job. You would not repeat the mistakes of Mao. You are wise enough. Only you. People like you always blame everything on someone else. Perhaps smart people would not try Communism in a country that was not "ready" for it?

Lenin was a technocrat. In that respect, he would probably agree with your most salient criticisms of communism here, with the exception that he did not have the benefit of history to inform him about the failures of highly centralized planning (especially, how this appears to be far more corruptable than when there are genuine elections and more room for markets).

I did not say that little old me could make everything perfect. I said that generals make for bad economists.

As for the sarcastic personalized insults built into your response, I will give it the response it deserves.

Generals do not, actually, make for bad economic decision. They can. They can screw up spectacularly. But on the whole generals make for very good economic policy. Greece under the Colonels was in much better shape than it is now. The Military of Brazil laid the foundations for what little modern industry Brazil has.

Lenin was not, of course, a technocrat. He was a lawyer turned ideologue. Who did not want to put experts in charge but other ideologues. He, you know, executed a lot of the technocrats. This is basic Russian History 101. What you might get from reading a First Year textbook on the subject.

Implicit in your comments is your cute belief that you know better than Lenin! Better than Mao! Which would not be hard. But also better than the Market! Better than the IMF! Better than the World Bank! You are actually displaying the same arrogance that Lenin did.

His philosophical writings expressed confidence that a technocratic elite could be effective in managing a country.

If his philosophy is irrelevant to the instance being criticized, then ... the philosophy is irrelevant, right?

Someone or other used whatever philosophy to justify a bloody revolution. Because the written stuff is irrelevant. And the rest wasn't communism anyways, was it?

Singapore followed the model of welcoming multinationals. Real failure

Sheesh. Lighten up. Alex is not saying that ultra cheap labor is a *good* system or one that he recommends, he's just observing the effects, many of which seem odd to American eyes. In contrast, I remember reading an account somewhere by an Indian who'd come to the U.S. and was surprised to see, at his university, that the head of his department not only drove his own car to campus, but also carried his own briefcase into the office!

Was it Gregory Clark's Farewell to Alms that pointed out how utterly inefficient Indian factories were in large part because the labor is so cheap?

The excellent but extremely politically incorrect Caravan by Carleton Coon made the same point about rich people in the Middle East.

I play the penis like a trombone....tromboner!

This happens in China, too.

A big problem with cheap, abundant labor is that you can get a re-work mentality.

Ideally, you wish to avoid quality issues that require re-work in the first place.

"very mall, hotel, apartment and upscale store has security. It’s all security theatre–India is less dangerous than the United States–but when security theatre can be bought for $1-$2 an hour, why not?"
It means I can hire hundreds of people to make up my army, overwhelm the security, take over the offices and steal everything they have there. There will be no locks to stop me. Soo, we the newly-earned riches, I will be able to command a mighty army that will take over all Asia.

Impossibilidades não façais,
Que quem quis sempre pôde: e numerados
Sereis entre os heróis esclarecidos
E nesta Ilha de Vénus recebidos.

It is ot "impossibilidades". Quite the opposite, it is possible, feasible. We have the technology and the manpower, it is there for the taking. To quote further from Os Lusíadas: "The feats of Arms, and famed heroick Host,,
from occidental Lusitanian strand,
who o'er the waters ne'er by seaman crost,,
fared beyond the Taprobane-land, 1
forceful in perils and in battle-post r
with more than promised force of mortal harrd ,-
and in the regions of a distant race
rear'd a new throne so haught in Pride of Place :. " (from the famed Richard Burton's translation of the epic)

We are invencible, a master people.

Brazil and India would do better to focus on matters of common cause.

Like a) getting membership in an expanded UN veto holders' club and b) lobbying for a higher percentage of their respective quotas in international institutions like the IMF and World Bank.

The Imperialists and their Indin puppets will never allow Brazil to hold veto power or get more influence in the IMF. They hate us. The existing international order must be smashed.

So it is not a surprise that you do not have enough Portuguese to understand that nor any idea of what the poet was trying to say.

Remember, Google Translator is not your friend.

At the direct order,it means "For you there are no 'impossibles'/For those who firmly desire can achieve/ And you will be ranked among the sublime and exalted heroes/". Boy, again, if I needed an English translation, it has already been done since at least the 19 th Century probably even before that. It is simply the most important Brazilian epic of all history (for all practical matters, there is no distintiction between Brazilian and Portuguese literature). This verse is just one of the most studied in all Brazilian history. My grandfather's generation had to parse it, my father's had to read it in the original, mine had to read the translation to Brazilian Portuguese.

And again, master the Indian would not even merit being discussed in the same breath we discuss our forefathers' impossible ("more than promised force of mortal hand") accomplishments. They created a new world, now it would be just matter of take over a slum.

You miss the point. As usual. It is not surprising you need an English translation. We know that. It is not surprising that it is the cornerstone of Portuguese literature.

It is not even surprising that you know nothing about it, cannot read it and failed to understand what was said.

After all, Google translator is not your friend. And to find an English translation you would have to be able to recognize it. Which, given you are a fat White accountant from Ohio, it is not surprising you did not.

You mean I would have to be able to read the words
"OS LUSIADAS
(THE LUSIADS) :
ENGLISHED
BY
RICHARD FRANCIS BURTON
(edited by hjs wife,
ISABEL BURTON).
In Two Editions" and then look at the translation for the equivalent Canto to the quoted original? Do you really see it as some herculean task? I think you do not grasp the concept of "book".

Reminds me of South Africa where my middle class friends felt an obligation to employ as many as possible.

"The excessive (?) cleanliness of the private spaces makes the contrast between private cleanliness and public squalor all the more striking." Of course, that phenomenon isn't limited to India. Why is it that in America public spaces are often deprived while private spaces are bestowed with riches? Indeed, it seems that the only public spaces that continue to be bestowed with riches are sports stadiums. It's sometimes said that Americans just wish to be left alone. No, Americans don't wish to be left alone, they wish to be entertained. Separation of the public and the private has even reached the highest office in the land: visiting heads of state used to be received in public spaces, at the White House or at Camp David, but now are received at Mar-a-Lago. In a country with increasing inequality and the segregation of the rich from the non-rich, we can expect increasing neglect and deterioration of public spaces. America isn't in danger of becoming Greece; America is in danger of becoming India. India with real nice sports stadiums.

Why is it that in America public spaces are often deprived while private spaces are bestowed with riches?

There is a parochialism of the Right that assumes that everyone ought to be, and perhaps really are, just like Peoria. But there is also a parochialism of the Left that thinks everyone else does things better than the West.

This is an utterly absurd comment. If you walk through any random town in America you see roads that are clean, repaired and available for public use. You see the verges of the road with trimmed bushes, mown grass and a more or less absence of trash. You see bus stops that are safe. You see public lights that work. Anywhere you go you will find public toilets within an easy walk that are, on the whole, clean and safe. Often with toilet paper and water that runs.

That anyone could compare this with the rest of the world - much less India! - is bizarre.

An odd difference between "deep Mexico" and "deep America" is that while America is more finished, cleaner, it also has visible homeless people. There are no back streets the truly poor can afford. In Mexico a grass shack is just traditional housing. A recently closed bank in our town is still very clean. The three guys sleeping on its front step not so much.

I certainly would not trade with Mexico, but this is not perfection either.

it also has visible homeless people.

About 0.25% of the population are vagrants. Some of them would have been candidates for the asylum in 1955. Ultimately, some people fall through all the slats, and the only thing you can do is set up shelters and soup kitchens for them. It's a problem small enough for private philanthropy to handle with some police officers assigned by local governments.

It is nice to hear that private philanthropy can handle this. When does your plan begin?

I've already been sucking a lot of dick to raise money!

The plan was carried out years ago, did you not notice?

I think he's talking about stuff that is there for the purpose of pleasing people, as opposed to things which only do so by virtue of making it easier to make money.

Stuff like some statue or artistic work in a park. (Something other than a general with a horse and gun, or variant thereof, which most would consider more "historical" than "cultural" per se.).

Some labor was cheap in the South in the 1850's as well.

The questions to ask are: what caste, and whether the society invests in its citizens human capital, and, if not, what are the long term consequences.

I'd be interested in a convincing explanation of why it is that public spaces in the subcontinent are quite as squalid as they are. What prevents some small Indian city from getting its municipal act together under a crusading mayor and serving as an example for others? Or does this in fact happen sometimes?

While travelling in India ( i hail from there) I have found that Kerala, in the South, the most literate state is quite clean in public spaces. Some individuals have started movements in this direction , but not sure they have been very successful.

When the starting rule is that cows are allowed to wander anywhere, and therefore the starting point is cows and goats shitting everywhere, on streets, in walking areas, etc ... This does set a good example.

Also, if you don't want trash on the streets and are unwilling to cart it personally to some distant locations, waste removal services will be needed (and while you're at it, may as well formalize a method for the poor to process this waste, in order to keep the recycling mafias out).

So, it's hard to justify spending money on waste removal when 1/3 of children who should be in grade 5 are not in school. Clean streets will not help them learn.

Pay them to pick up trash. Not kidding.

The child labour people would be up in arms.

I literally saw a president whip an entire town to do precisely that in celebration of a major event. A civil war started the next day. (Are the two somehow related? Actually probably not ...)

In principle, I'm very open to the idea. In China, students are responsible for very regular cleaning of the school premises. (They tend to do a piss poor job of it, but that's not a big deal because they do these tasks every day.) Like, 10 or 20 minutes average daily chores for students isn't horrible. It's not like you're chain ganging them for the entire afternoon.

I don't know what goes on in Indian schools these days, but when I was a kid, students were expected to do some basic "class cleaning" at the end of the day (regardless of age.) It covered everything short of mopping up the place with solution. Kids were supposed to take turns, so it's not like anyone could shirk this task. Being kids, we of course complained about this, but grown-ups didn't have a problem with it, as far as I remember.

Things may have changed starting in the mid-90s, which was around the time I graduated from high school. The country changed in many ways during that period, not just the economy.

The Indian public is not squeamish about cow crap, so I'm not sure there's a string correlation with propensity to litter. Aren't other cultures similarly tolerant, though in different ways? I've heard the French don't mind dogs doing their business anywhere, and my understanding is that when horse carriages were ubiquitous in American cities, there was horse crap everywhere you looked.

Reasons: poverty (cleanliness lies higher in Maslow's hierarchy than food and shelter), negative reinforcement cycle (when publicly challenged, the typical offender will be humiliated and respond with defiance rather than admit his mistake and rectify his behavior; so right-thinking people also stop caring or bothering.)

"Corporate" towns can be relatively clean, because they have self-selected populations and don't exactly function as democracies. But in a typical Indian municipality, any social crusade is bound to bump against the collective ego of some section of the population, so a potential crusader has everything to lose, politically speaking.

People will have to stop thinking parochially for this situation to improve. Perhaps Modian nationalism is the solution, as the Hindutva types like to believe (though the libertarian in me recoils at the prospect.)

Cleanliness is even more important when you're poor, because you can't afford to be sick. There are plenty of poor people who manage to bathe, not shit in the water supply, handle their food properly, and pick up their garbage.

Squalor is not caused by poverty, but by high time preference.

For whatever reason China was able to harness its peoples' amour propre to international vistas which makes it easier for them to correct shitty habits internally. Indian society is compulsively incapable of accepting constructive criticism.

China has people poop and pee in public too. And spit. They're still working on this stuff too

The money that Indian municipal administrations in India receive is much lower than what their counterparts elsewhere receive. For instance, my hometown in Kerala just doesn't have enough funds for garbage collection, and people just dump their organic waste on some footpath (usually near a sign in the local language that says "Don't deposit pollutants here").

So here is what the local administration in my hometown claimed as a major achievement: they cleaned up the area near a pond and built a nice walkway around it; not even a park. This is not as stupid as it sounds, because that is all of the funds they receive.

I don't know the reason for this paucity of local funds: whether it is because tax collection in India is low, or because the central and state governments just decide to keep things more centralized.

And I can't quite say that decentralization would be necessarily a good idea: central government and state governments have far better access to resources and talent (also consider that urban/rural body elections are not nearly as glamorous as the remaining elections, though that has been thankfully changing).

But labor is cheap in Kerala. So it is not as if garbage collection is out of the reach of local councils. After all, in the end all garbage has to be collected. Unless it is eaten by a cow or a dog. Eventually. It is just a matter of whether the local government prefers spending money to do so and is coherent and efficient enough to organize such a collection. Or whether they prefer to focus on how spiritual India is while soaking the money away in a Singaporean bank account.

Not true. While labor is less cheap in Kerala than in other states, it is true that the municipalities/corporations have enough money to *collect* the garbage. But at least my home town and many other corporations do not have enough money to process the garbage. They tried once, and failed.

Local elections and administration works differently under very different constraints. One shouldn't assume one knows how they work simply by making analogies with other contexts one is familiar with.

Here might be a useful example to keep in mind: the central Government has made a lot of noises about its intention to clean the whole of Ganga. Part of the plan involves setting up sewage treatment plants in Varanasi (the constituency of the prime minister), the reason being that the existing plants can only cover something like 40% (if I remember right) of the total sewage the city generates).

This has clearly been a priority area for the Government, because they have made a lot of noise about their intent to get this done. And yet, the remaining sewage treatment plans are only expected to be completed by the next year or the next to next. This is how even a corporation in whose performance the central government has political stakes, so you can guess the plight of municipalities that have to fend for themselves.

It all looks easy to someone who thinks 'Just by changing priorities everything can be changed', but once you get closer you know that the devil is in the details.

I'm still left wondering about the question of why a higher priority doesn't end up getting assigned to properly funding municipal functions that anywhere else, rich or poor, would be considered absolutely essential. Much more complex enterprises do get funded and achieve their goals e.g. the nuclear program. But thanks for those responses to the question, particularly from 'blah'.

I don't have clear answers either, but here are some thoughts.

1. One admittedly very partial reason that I can think of is that the nuclear program can be, and is, handled by the central (federal) Government, which has access to experts and resources. On the other hand, the urban/rural local administration can only be handled at a local level, and the local bodies don't have the same access. They simply lack capability to spend money well - in other words, the already weak "state capacity" in India is even weaker at a more local level, and this trumps the virtues of decentralization.

Here is an analogy to relate to it. One could make the case that education should be left to the states and not to the center, for the usual decentralization-related arguments. But in practice, the central Governments' (NCERT/CBSE) textbooks are light years ahead of the frequently terrible "state board" textbooks in their quality/merit. The former are written by among the best in India, while the latter are written by among the best in a given state.

2. There is also the fact that returns from a nuclear program can be estimated in terms of dollars/rupees, whereas no one knows how much of the money spent in city cleaning can be recouped.

3. Thirdly, the Government is actually thinking partially about fixing this too: they are trying this through the smart city program, about which they have been making a lot of noise. This doesn't involve fixing entire cities though; they choose cities by holding a competition of sorts among the local governing bodies, and set concrete tasks involving:

1. Developing a very small (50 acres if greenfield, 500 acres if retrofitting) portion of the city very well;
2. Handling one basic function throught the city well - it could be sewage disposal, it could be fixing drinking water supply to all households etc.

You see, this is a very specific, concrete, task. And the Government gives the city a percentage (I forget - 20?) of the money estimated to be necessary for this task, ask the state Government to raise a matching amount, and expects the local body to raise the rest through municipal bonds and other methods.

It hasn't been very successful yet, but at least this shows that there has been partial though unsuccessful efforts.

By the way, if Alex is reading this, I would recommend to him to look up on a *private* venture along the lines of (i) above, namely, the Saifee-Burhani upliftment project:

http://www.sbut.com/

It is run by the community of relatively well-off, well educated mercantile Tayyibi Ismaili Shia Muslim community called the Dawoodi Bohras.

Enjoying your economic-naturalist reporting from India Alex, keep them coming if you have time.

How do we reconcile these large staffs at every establishment with what Alex recently told us about Indian firms consisting of one or two employees?

No man differs more from another

Than he does from himself

On a different day.

That's a very good question and I don't claim to have a definitive answer because the data sources are weak. Here are some thoughts:

1) India has 1.2 billion people and what I describe in this post is about stores I go to in Mumbai and Delhi. Rural areas where a majority of the population lives (depending on how rural is measured) are very different.

2) When I say the stores are overstaffed I am talking about stores where two or three people would be plenty and there are 5 or 6. Note, however, that these are still very small firms. Very few firms have more than 10 employees. It can easily be the case that most Indians don't work for firms, most firms are overstaffed and most firms are small.

3) Some of the stores and many of the staff are in the informal sector so they are not official employees. Consider, for example, the guy who works for Shake Square delivering shakes. Is he an employee? Almost certainly, not officially. Now you could say he is an unofficial employee but it's probably more accurate to say that he is a guy with a motorbike who is trying to scrounge any employment that he can get and this day or week or month the shake store needed someone but tomorrow or next week or next month he will have to look elsewhere.

4) Some of these firms are family firms which again makes owner/employee a bit vague.

'and I don’t claim to have a definitive answer because the data sources are weak'

... but that will never stop Prof. Tabarrok, at least until he is called out in a way that is impossible to duck.

This is a blog post, not an article for journal publication.

It would not benefit progress of knowledge if people felt it necessary at all times to have journal-quality integrity in a document before sharing some interesting ideas or thoughts.

Because of India's 'progressive' labour laws, firms use contractors who in turn use sub-contractors. Prof. Andrew Sanchez of the LSE, a social anthropologist, has a book about the Tata Steel Plant in Jamshedpur. He describes a comical situation where the direct employees play cards or get high while the hard work is done by the lower-paid 'casual labour'. For some reason, Sanchez thinks his book proves Neo-Liberalism is a Criminal Enterprise.

The Tata Steel company itself, or contract work outsourced to small-scale informal industries (there are many of those in the outskirts of the city) ?

Tata companies (Steel, Motor, etc.) used to have pretty tight employment contracts, and functioned in modern ways. You could not enter the premises without valid gate passes, and those were not handed out willy-nilly. Employees receives benefits and pensions. Has all that been thrown away?

Tatas had superb Training & H.R Depts.- better than many blue chip Western Corporations and, as you say, it was a bit of a 'culture shock' to walk into a Tata run Company and to see protocols being observed.
I would make 2 observations. Because of the Colonial legacy, Indian contracts favoured the Employer for White Collar Work. An Anglo Indian secretary won an important test case in this respect in the Sixties but you still had- and, notoriously, in the BPO case- still has pretty onerous one-sided contracts.
The situation was better for Labour. In the Twenties, Tatas in Jamshedpur had an American manager with a racist attitude. On the one hand, you had a sort of 'jajmani' caste system- hereditary entitlements to jobs (Tatas use the expression 'wards' to refer to sons or daughters of employees)- but on the other you had huge opaqueness agbout wage scales.
The Labour movement- at times spearheaded by a Parsi 'ward' who had taken a degree in Metallurgy from Pittsburgh- had a good effect on Tata's operations because standardizing wage-scales and reducing dictatorial and racist methods boosted efficiency and profits. In the Thirties there was substantial real wage improvement and the Nationalist leaders too benefited from Tata largesse.
I should point out that Leftist Trade Union leaders actually protected the Tatas from rapacious politicians. Thus Tata could have a 'left-liberal' ethos because it made financial sense. It could have been a great steel company. Unfortunately, apart from foolish dirigiste policies, three factors contributed to the current sorry state
1) Wage drift under Stagflation was tackled by legislation aimed at the problem posed to the Exchequer by ballooning deficits in the Public Sector associated with worker's agitations for parity. Tatas was caught by this while the PSUs just ignored the law.
There could have been reform in 1995 on this issue but by then the thugs were running Bihar. V Gopal, a Tata Union leader with good connections in Delhi, had already been murdered.
2) Tata's 'caste system' had initially drawn 'outsiders' to Jamshedpur. Good education meant their kids wanted more managerial jobs. Also they didn't actually want to do any work. The generation which came of age during the Fifties, happily destroyed their kid's futures by functioning as work-shy crooks. Well educated managers found the corrupt and criminalised atmosphere intolerable and took pay-cuts to get transferred. On the macro-scale, Mums and Dads wanted their kids to get into Tata Services not go off to Jamshedpur and get murdered by some local gangster in cahoots with the scrap-dealers or whatever. Tata retreated from the hinterland. Eventually, it lost a lot of money seeking to emigrate to England- like L. Mittal.
3) Real wages for skilled manufacturing are falling because the price of accommodation and, in places like Jamshedpur, 'dasturi' has increased disproportionately because of the criminalisation of the interface between State and Enterprise. This isn't the fault of the industrialists but it does mean they can't offer line workers a good deal. Ultimately, there has to be cooperation between the Municipal authority and the Industrialist to ensure that productivity gains aren't captured by extortionists.

It seems unlikely that we will get back to a situation where the majority of workers in a big modern factory are permanent employees with Pensions and Housing Allowances and so on. Why? Well the previous generation took the benefits and did no work- or rather stole what they could. It may be that the rising generation has learnt the lesson and so the proper method of doing things will in fact be implemented. However, this is likely to happen, or is happening, in first generation business houses, not that of the crisis ridden Tata's.

Hey, thanks for engaging and making an honest attempt at a real answer.

It's not just India. Many places in the "Third World" are similar with many staff, security in buildings and taxi drivers who will wait while you dine. I've seen this in Africa, the Far East and Dubai(except for waiting taxi drivers in Dubai).

There still is a puzzle to be explained: why is capital sitting idle? If "labor is cheap in India", that would argue for more emphasis on full utilization of capital. Or is the unspoken conclusion that "capital is even cheaper"?

Clarification: the puzzle is with respect to the waiting taxis. The inefficient factories, extensive retail staff, etc. are all consistent with a low relative cost of labor to capital. My explanation for the waiting taxis when I travelled in India was that I was such a lucrative customer that waiting for me was better than looking for another fare, who was unlikely to be a profligate tourist.

"Every store has an abundance of staff."

In larger stores in cities, I have had employees walk along with me as i pick up items, just in case I need help . Can get irritating very fast.

Warehouses in India are very labor intensive, low automation facilities. Where the facilities my employer runs in the US is filled with conveyors, automatic sorters, and pick to voice systems, the Indian warehouses are filled with a bunch of guys with clipboards.

Didn't some guy named Solow do some work on this?

It's almost like people make countries instead of the other way around.

Alex: one place I think you'd be interested in visiting is Chandigarh, the capital of Punjab. It's India's first (only?) planned city and feels completely different from any other Indian city I've visited - it's not at all overcrowded and appears to be very prosperous. It was designed by the Swiss architect Le Corbusier and the main government buildings are UNESCO-listed.

U.S. banks used to employ security guards. Then they decided that it was more cost-effective to risk getting robbed every once in a while and being compensated by insurance than to employ a guy with a gun to stand around all day.

But they do hire a guy to call the tow company if you park in their lot.

This is one of the side effects of an interaction of demography, India's relatively unsuccessful attempts to boost its anemic industrial sector, and it's particular Educational Quality.

India will continue to have an increasing young population for the next few decades. But due to a variety of reasons(complicated industrial regulations, China's rise, disappointing Agricultural productivity , failure to attract much FDI due to things like an underdeveloped financial system etc) there isn't a growing relatively high wage paying manufacturing sector to absorb the labour. And while the services sector is a major component of its current success the employment generation of that sector isn't as large as manufacturing could be/have been. In addition most of the employment generation is tilted towards more high skilled English proficient speakers, normally who have tertiary education. Even aome of the current manufacturing is relatively high skilled and this can give rise to main regional variation where some coastal cities with hubs of manufacturing and services much more developed then other parts. And given the poor quality of secondary education in addition to its accessibility there is powerful cleavage created. Where low skilled workers don't have the higher relative wage earnings of manufacturing, or the skills for the higher wage parts of service sector so are stuck in mostly informal jobs with low pay.

This excess labour also likely has a determental effect on productivity growth as it surely disincentivizes technological adoption by businesses.

So Yh

I have heard that Indian families who immigrate to the US for educational or professional reasons experience culture shock: even a middle class family in India can afford to have hired help do much of the cleaning, washing, and other household chores. But in the US servants and maids are affordable only by the upper income classes. Thus many of these immigrant families have to do more household work than they were used to.

True , but with the labor saving devices , almost any Indian family prefers the work at home in the US compared to India. And as times have changed , dealing with maids ( and drivers) in India is harder and its almost the #1 complaint among those who choose to go back to India.
I remember I spent my first month in the US as a guest of a host family on a farm in Wisconsin and they were flabbergasted to hear that we had full-time servants, They refused to believe that i was only upper middle-class.

Due to a combination of climate, pollution, dust, and poor construction, a typical Indian house require more, and more frequent, cleaning, than a typical American one. In America, a reasonably disciplined household can get by with a once-a-week cleaning. In India, professionals mostly can't keep their houses clean on a continuous basis and still hope to hang on to their jobs unless they are ultra-disciplined and ultra-motivated.

Personally, even disregarding the feudal connotation of having full-time servants, returned geeks like me find it much easier to deal with machines and monitors than maids (and other miscellaneous factotums.) I can't be the only one, so perhaps the culture will gradually change. The older generation is very dependent on people for help though.

The comments are ridiculous Alex is describing not praising.
They need more capital in India and it is improving.

This recent immigrant to the US from South Africa found manual labor costs in the US to be huge. He had to get innovative and develop technology to help himself move. It is a small lesson in the cost of labor driving innovation/automation.

https://www.youtube.com/watch?v=OqyVAHUIBRo&feature=youtu.be&t=1274&ab_channel=mjlorton

In the 1980s to buy a book with cash in Foyle's bookshop in London you went to one of a large number of subject-specific desks, deposited your books, and got a slip of paper with a total of books bought and total price on it. You walked with this to one of a smaller number of cash desks, and paid cash there (I may not have remembered all the details correctly but there were definitely two steps involved with two different people). As Wikipedia says, "In the past, it was famed for its anachronistic, eccentric and sometimes infuriating business practices; so much so that it was a tourist attraction" - more to the point, this was pre-Amazon and Foyles was the biggest bookshop in the UK.

Argos - a high street store in the UK - still has this strange approach, of separation of the ordering process with the payment and collection. It is also common in Russia. I think it is something to do with management of fraud by employees.

Argos is different from other stores because Argos is basically a catalog selling operation with stores that are also warehouses for the items sold: for most items customers order from the catalog at the store and don't see the item until five minutes after they have bought it, when the staff fetch it from the warehouse for them. Foyles displayed its stock like an ordinary bookshop, except that it simply had a much wider range of books than any of its competitors. I presume Argos maintains a much wider range of stock than a normal store of the same size could display. Foyles was simply old-fashioned and distrustful of its staff - the Wikipedia entry for it is interesting.

It's likely that it is not security theatre. In addition to crime deterrence it's meant to keep away the poor. It's also pernicious for those visitors that are supposed to feel welcome because it creates a situation where brutish stupids are lent guns and a little authority. Since their time is worth less than $2 an hour they assume legitimate visitors are equally un-rushed. Professor A.T. is white so the inconvenience imposed upon him would have been minimized.

My observation was that the free labor corps mostly consisted somewhat older men (i.e., younger workers tended to have tech or foreign language skills). My guess is that the effect is mostly a holdover from their Communism experiments.

Yes, it's nice to be rich when everyone else is desperately poor. If you had your way, you'd plunge me and my family into the same misery as the poor in the third world.

Anybody who thinks India is a model to be emulated is insane. This is straight out of the Onion.

It's not as bad as full-on Stalinism. So you've got that going for you: You're only about 60% as bad as a communist.

So what? You both want to destroy my country to bring about some crazy fantasy utopia, and there's plenty of rope to go around.

Sadly, the only way to communicate with you lunatics is by force.

I'd take the current cost of driverless public transportation (e.g. subways) + parking, and definitely not an Indian driver wages, as a lower bound for estimating the cost of driverless taxis in the US

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