Civil Society, Infrastructure and the U.S. Economy

By February 28, 2011Economy, Infrastructure, Trade

A story in today’s Washington Post, “China tamps down Middle East-inspired protests before they can gain momentum,” reports on various shows of force against pro-democracy demonstrators.

Which reminds us of this story in the new online newspaper, The Daily, by Reason’s Shikha Dalmia, “Long live the American dream,” rebutting the oft-cited reasons for pessimism about the United States and its economy.

America does not have India’s infrastructure deficit or China’s civil society deficit
India’s gap with America extends not just to intangible capital but tangible capital as well. Basic facilities in India — roads, water, sewage — remain primitive. For example, a 2010 McKinsey Global Institute report found that India treats 30 percent of raw sewage, whereas the international norm is 100 percent. It needs to spend twice the slated expenditures over the next 10 years to deliver basic services.

China, meanwhile, has a major civil society problem. Its one-child policy has decimated the natural safety net that old people rely on in traditional societies. And China offers no public safety net to the vast majority born in villages. Worse, many Chinese have invested their nest eggs is various asset bubbles that will wipe out their only means of subsistence if they burst.

America does not have grinding poverty

Despite all the recent hoopla about China becoming the world’s second-biggest economy and India hoping to follow suit, the reality is that the per-capita GDP — even measured by purchasing power parity — in both is pathetic. America’s is about $47,000, China’s $7,500 and India’s $3,290.

Worse, both still harbor medieval levels of poverty, with 300 million people in each living on less than $1.25 a day. India’s IT boom gets big press, but it — along with all the tertiary industries it has spawned — employs 2.3 million people, or 0.2 percent of the population.

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