Why are Joe Sixpack and Old
Left Comrades angry?

You have to time it right to get the full impact. I happened to, purely by chance: for I showed up at 8 am and had to wait in the glass-encased security building for about half an hour before my host arrived mumbling apologies. Looking out the large windows, I could see bus after bus disgorging an army of youngsters, both male and female: there were literally thousands of them. Possibly a hundred buses going to every part of town; and in the evening, the same ritual is repeated in reverse.

Mostly in their twenties, clean-cut, attractive youngsters dressed in business casual outfits. The men mostly in long-sleeved dress shirts; sedate checks seem to be a favorite, and sensible black shoes and often carrying a shoulder bag with presumably the work they had taken home.

The women mostly in what has, alas, become the uniform of office workers around the country, the churidar suit. While they may be convenient for the wearer, they are a big blow to that age-old spectator sport of woman-watching because they are billowing tents designed to hide as much as possible: they leave everything to the imagination.

These fresh-faced youngsters I observed, some dressed quite comfortably in jeans as well, were all coming into a campus that looked astonishingly like the Silicon Valley, circa late 1990s; in particular I am thinking of the Silicon Graphics buildings off the Amphitheater Parkway in Mountain View. The same curving expanses of walkways (even better here: granite, not concrete), the same flowing water, the same irregular, curvaceous and pleasing architectural features.

Grassy knolls, glass-skinned towers, sunny expanses of lawn (with 'Do not walk on the lawn') signs, company stores, fancy name-brand coffee bars, subsidized cafeterias. Glossy training rooms with theater-style seating, an LCD monitor for each user. Centers of excellence in state of the art technologies.

Comfortable cubicle farms for the engineers, discreet glass-walled cabins for the managers. In a cozy courtyard, a mock-Japanese garden with bamboo and polished river-bottom pebbles, much like the carefully raked rock garden in a Buddhist temple in Kyoto.

All this is so much like the Valley that it is uncanny. And this at a time when erstwhile boom areas on North First Street in San Jose, parts of Fremont, Mountain View, etc are now mired in recession. It is a clear vindication of David Ricardo's theory of comparative advantage. Ross Perot was right about the giant sucking sound: it is the sound of American competitive advantage collapsing.

For, like some of those Star Trek planets that appear to be the Earth but aren't, this one is an optical illusion, too: this office park is not in the Valley, but in Bangalore's Electronics City; and it belongs to one of India's high-flying software services firms. And there are at least five others exactly as impressive just around the corner in this area a little far away from the center of Bangalore. I am reminded of Xanadu:

I sometimes wonder whether these are overdone, overly expensive islands of luxury that will turn out to be white elephants for the firms over time. I hope not; but it is clear that they do give visiting Americans a serious case of cognitive dissonance: this is hardly the India they have been expecting, and indeed, it is vastly different from the dusty and crowded roads they have traversed to get there.

And there are other oases just as splendid at the International Technology Park Limited at Whitefield in Bangalore which I visited in the early stages of its occupancy; at the Singapore-style Tidel Park in Chennai where I used to be a regular visitor; presumably at the CyberCity in Hyderabad: I have only been there when it was under construction; and even at the more traditional sloping-red-Kerala-tile-roofed and stunningly located Technopark in Trivandrum, which I have visited a few times.

Then there are the advertisements on a random Wednesday in the Bangalore Times of India classifieds: among well-known foreign companies, there are Quark, General Motors R&D (looking for mechanical engineers and CAE engineers), SAP Labs, Tektronix, DE Shaw Systems, Oracle Global Consulting, Quest (for aeronautical engine design), LGSoft, Alstom, Amdocs (looking for software developers to go to Cyprus).

What is the simple economic fact behind all this? It is that the few hundred thousand people who work at Wipro or Infosys in Bangalore, Satyam in Hyderabad, TCS or Cognizant in Chennai, are each significant people in their own right. For, each of them has within a few years risen from the middle-class to the upper middle-class. The trickle down and spinoff from their sharply rising incomes (industry average raise expected in 2004: 15%), and sharply rising numbers (industry growth in 2003: 23%) are quite high.

The best analogy I have is what happened in Kerala in the 1970s and 1980s. The state, which, because of its intrusive Marxist mentality, has created practically no jobs and no income, has nevertheless managed to claw its way up the league in GDP per capita. This is because the hundreds of thousands who went to the Persian Gulf as semi-skilled labor enabled their families to rise from lower-class to middle-class in one generation; the tens of thousands who went as skilled engineers, doctors, and managers, enabled their families to leap from middle-class to upper middle-class.

What has been the impact on Kerala as a whole? Rapid generation of (money-order) wealth, and a significant increase in consumption. Kerala, which in the 1960s used to be far below the national averages in GDP per capita, is now one among the top five or six. And this, despite the fact that much money coming into Kerala is unreported: there is a thriving kuzhal (pipeline) mechanism that evades Income Tax's eagle eyes. Here is a table, using data from an Economist survey (http://www.economist.com/displaystory.cfm?story_id=2423065), data for the top ten states with population greater than 10 million.

Amazing, isn't it, Kerala, with no industry, only boutique agriculture, and services like tourism and the export of skilled labor, has managed to climb so high? The economic ripple effects of success stories can be quite dramatic.

Of course, the brave new world of IT, or BPO, or pharmaceuticals, or R&D, does not solve the problem for India's masses. Far more jobs are needed to take care of the demographic bulge, our Baby Boomers who are part of the cohort that means half of India's population is below 25. This is where Indian manufacturing is coming into its own.

The Hyundai plant in Sriperumbudur is world-class. It looks like a mirage as you drive past, a globally-competitive factory plonked right down, greenfield fashion, in the middle of rural Tamil Nadu. And similarly Saint-Gobain's float glass plant nearby. A resurgent manufacturing sector in India is giving the Chinese a run for their money. The examples are many: Moser Baer, Essel Propack, Sundaram Fasteners, Bharat Forge, Tata Motors.

And to say nothing of agriculture. I believe that agriculture is one of India's great, traditional, and hidden strengths. The Nehruvian line, mysteriously, was that the temples of modern India are big Soviet-style factories. No, it turns out that the temples are the temples, the factories are the factories. Sorry for any confusion.

But the soul of India's competitive advantage is in agriculture. Despite the fact that agriculture was completely ignored by the Nehruvian Stalinist Planning Commissions, India's land is among the best in the world (57% arable compared to 15% for China); with its genetic variation, varied climate conditions, given adequate water (and that is admittedly a big if), India will compete hard with the US and Australia and Argentina in agricultural exports. Slowly agriculture is beginning to gain the priority it deserves.

Is this enough? Are we done yet? Of course not. Far more needs to be done, but this is a beginning. I never tire of pointing that change comes incrementally. Everyone in India did not have newspapers at once, or radios, or roads: these come over time. Those who whine the most about how the poor are starving, gentleman Marxists, tend not to miss too many meals themselves. If they weren't hypocrites, they should be starving too in sympathy.

And IT is a symbol of what private-sector enterprise and will can accomplish in India. Unchained, India's entrepreneurs are finally showing what they can do, despite the naysaying by everyone from your neighborhood Nehruvian Stalinist to the New Delhi correspondent of the Economist, one Simon Long. He ascribes all the good news in India to the last monsoon, and he trots out the tired old bromide, 'fiscal deficit', in his recent survey of India (link above). I am amazed he doesn't talk of the coming AIDS catastrophe that will apparently decimate India's demographic advantage.

Long is apparently an admirer of 'famous economist' Raj Krishna, and prone to insulting others' religions, for he uses the discredited and bigoted term 'Hindu rate of growth' frequently. I wonder why Long does not talk about the 'Christian rate of growth' of Nagaland or Mizoram. Long does not appear to be an admirer of famous economist Rajeev Srinivasan (that is yours truly) yet, and he is not using the accurate term Nehruvian Penalty. I am disappointed. But he has some useful numbers, which I will happily use.

Are a few islands of excellence or prosperity enough to take care of India's poor? Of course, I repeat not. But are a few islands of excellence or prosperity enough to take care of China's poor? You and I, and any sensible person, would say no. The dogmatic ideologues, will say yes. They are doshaikadrks (those who see nothing but bad things) only when it comes to India.

These are the people who are powerfully impressed by the glossy exterior of Shanghai's empty white-elephant skyscrapers and clean, slum-free environs (which of course is because the seething masses of rural unemployed -- 150 million of them --  are driven away from Shanghai; if they were allowed to settle, they would instantly create ghettos rivaling Dharavi).

These are people who do not understand that China's banking system is broke (see my earlier column India and China: Startling Economic Facts and that they just used up $45 billion of their foreign reserves to make a small dent in the huge non-performing assets, on top of another $200 billion spent already. Estimates are that it will take some $600 billion to fully clean up the mess.

No, they take a superficial approach which suggests that they start off with a conclusion and then attempt to fit whatever facts come their way to this conclusion. A splendid example of this was pointed out to me recently by reader infww: a series of articles by the same person, glorifying China and Pakistan, and putting India down. Suppressio veri, suggestio falsi. See http://www.blonnet.com/bline/2003/05/14/stories/2003051402140400.htm about how Musharraf has brought Pakistan feel-good, http://www.blonnet.com/bline/2002/11/25/stories/2002112500241400.htm about how China has oodles of feel-good, and http://www.blonnet.com/bline/2004/02/05/stories/2004020500010800.htm about how India, alas, has feel-bad.

Yea, verily is it written: there is much money to be made and many awards to be won by toeing the Xinhua propaganda agency line and going on guided tours of China that carefully avoid the brutal reality in places such as Daqing and Tibet.

If visitors to India were brought only to TCS, Infosys, Satyam, HCL, Cognizant and Wipro, they too would go away singing the praises of the country. But that is not the full story.

At the same time, the unseemly brouhaha -- thinly disguised racism -- over job loss, and the paranoia naming the Indian engineer as the villain, while laughable, is dangerous personally to individuals of the brown skinned persuasion. Those with long memories will remember a time when Japanese were similarly demonized. Then there were murderous attacks on yellow skinned people: Japanese were killed by redneck factory workers, and Chinese too, by mistaken identity.

This, incidentally, is what it means to be a 'minority' in the West: if you are not white-skinned or Christian, you are a numerically small, powerless group of people who are liable to be picked on, harassed and subject to pogroms and ethnic cleansing despite no provocation from your side. Therefore, you need some kind of legal protection. This meaning has absolutely no relevance in the Indian context.

The Indian had better watch out for his physical safety in the US. Laid-off US geeks, otherwise mild-mannered, threaten to shoot Indians. The US is also fresh out of monsters: Saddam Hussain has been nabbed, and it is likely that Osama bin Laden will be presented to General Powell by General Musharraf on a plate just in time to ensure a Bush re-election. And China has many big US MNCs as their fifth columnists.

India conveniently presents itself as a punching bag. Do not be surprised if India becomes the new 'rogue state', especially if non-proliferation ayatollah John Kerry makes further progress. The fundamentalists running the so-called US Council on International Religious Freedom (Orwellian translation: that means the freedom for bizarre American Christian cults to propagate their fascist views) have already made a great beginning. Other goodies will no doubt follow. After all, negating others' comparative advantage by any means possible is the essence of mercantilism.

Comments welcome at rajeevs@rediff.co.in