Wednesday, May 23, 2007

Compassionate Socialism Causes Child Starvation in India

Despite much of the ballyhoo about Indian privatization, India remains a primarily socialist country, and the socialism has resulted in massive child hunger. The Associated Press reports via Yahoo! that 46 percent of Indian children are underweight. The article attributes this to rural versus urban living, but the real problem is the crowding out effect of above-market wages to public sector employees. After six decades of compassionate socialism in India, India's children are hungry.

According to, "India followed a primarily socialist economic path between 1947 and 1980." After 1980, India began to privatize some industry, and the nation's economy began to grow. By 2003, India had increased the percentage of private sector employment to below 35%. According to a chart located here 180 million Indian workers work for the public sector while only 80 million work for the private sector. However, this actually reflects a trend toward the private sector. India's recent growth is due to the transfer of employment to the private sector.

The problem of an employment crowding out effect is serious. Writing for the World Bank, Glinskaya and Lokshin find that public sector wage premiums range between 62 and 102 percent over the private-formal sector and between 164 percent and 259 percent over the informal-casual sector and that "India has one of the largest differentials between wages of public workers and workers in the formal private sector" in the world.

The high wages in the public sector, which still dominates the economy, reduces demand for employment. The result is that those who have primary sector jobs are better off, while those who do not go hungry.

Six decades of compassionate socialism has resulted in starvation in India. Unlike New York, Indians cannot flee to Colorado or Nevada. They are stuck in a backward, socialist society.

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