How to Do Development| Episode 57 | Everything is Everything

[@5amyak]

Almost a crime to watch this for free and not share this. This one brings a lot of episodes together, feels very short. Thank you for allowing us to eavesdrop.

[@swamidkbose]

the series was introduced to me by my friend manish mishra at the time when i had started developing these notions myself. great acceleration to my understanding. thanks

[@FahadHasin]

Some friendly pushback, looking to be educated: 1. The episode begins with a straightforward definition of development: income (per capita GDP). While many things are important for individuals to lead a good life, but only a reasonable income can enable that. Top 15 economies (PPP, current international $) are: Luxembourg, Singapore, Ireland, Qatar, Macao SAR (China), Bermuda, Norway, Switzerland, Brunei Darussalam, Cayman Islands, United Arab Emirates, United States, Netherlands, Icebland, and Denmark. Many of these - such as Singapore, Qatar, Macao SAR, Brunel Darussalam, and UAE - are not particularly free countries. 2. South Korea became a democracy in 1998 after joining the OECD in 1996. So, it seems that much of its transformation from a poor to a rich country happened during a period of less freedom. Similarly, Singapore has a fair degree of curtailment of freedom. 3. I was, therefore, confused when Ajay argued that all advanced economies are liberal democracies and made the case that freedom is an important ingredient for development. Amit clarified that "an advanced economy is not just about people earning more money; it's also about freedom percolating down to society." But this is a change from the initial definition of development the episode adopted i.e. GDP per capita (towards the end, we again return to the initial definition). Defining advanced economy as one that has freedom and aspects of liberal democracy and then claiming that freedom is a key ingredient for becoming an advanced economy seems tautological. The dependent and independent variables are the same. 4. I deeply value freedom and share the normative values mentioned here. However, that is a separate point from an analytical explanation of what causes growth. I would have liked the episode to stick to the straightforward definition it started with and then give an explanation for all high-income countries, rather than excluding countries that do not fit our normative values. 5. Finally, Ajay argues that growth in spurts is not impressive; what we need is sustained growth: "What’s miraculous about the US and UK is that they were able to sustain 3% growth for 200 years... We have not found the amazing economic development story where they did not get 6% or 7% growth, but they got 200 years of 3%. So they just hammered year after year.” In 1960, India's GDP (current US $) was about USD 37 billion, which grew to USD 3.5 trillion in 2023. That's a CAGR of about 7.5%. Based on this, can we say India is on the right path? Even in the post-2011 period, which Ajay dubbed as a period when we lost economic dynamism, the CAGR is 5.73%. That is above the higher end of the benchmark of 5% growth despite the COVID-19 shock. This seems to me too low a benchmark.

[@atishkumar4605]

one of the things that we miss out on while looking at growth rates is that it should be aligned with the number of people entering into the workforce. The magical number of 8% is required to generate enough employment. Anything less than should be unacceptable.

[@AbhishekPandey-sy7pb]

Great points. I too was taken aback by this sweeping generalization that freedom only has enabled development. Would love to be countered.

[@harigopal4204]

Yes, you're right about the lack of freedom in those countries.. There's a great paper by Atul Kohli on this. His point is that all those east Asian economies that grew rapidly were only able to do so because their states played an active role in supressing labour and making it "pro-business". This doesn't necesarilly mean the 'freedom' or 'liberalisation' that Amit refers to, as the approach is distinct from the neoliberal 'pro-market' approach- which is itself flawed for different reasons. I think academic economists have moved beyond simplistic state vs market dichotomies, and for good reason. It's safe to say that no serious economist would argue that the price mechanism or the market itself is always infallible, as indeed they aren't. States and markets go hand in hand, any historical investigation would reveal the same: markets were almost always created by states (closely tied to the need for creating markets to maintain standing armies), and market institutions always need to be supported by the state. Private property itself, the most fundamental institution of capitalism, requires the state.

[@bookedbin]

Everything in 'Everything is Everything' is top-notch.... 😍

[@kazimustaqeem]

On Friday I pray to God, take rest and listen to philosopher Amit verma and economist Ajay shah😅

[@Niirbhay]

Nice discussion. I would like to listen more on bureaucracy. Permanent, archaic bureaucracy lies at the core of public policy in India. Unless reforms in bureaucracy take place, nothing is going to change. All these insights are known to bureaucracy but they are not willing to change because this current structure helps their own interests. The real question is how to & who will bell this cat? I would like one episode on bureaucracy in India with its comparison with developed world bureaucracy.

[@SangramChahal]

Take away their house help and just see the fun 😂😂

[@Gunther819]

I was going to the barber to get a haircut, but now I'll go after watching this video, lol. Peak quality content with consistency not to mention that amazing background (which keeps getting better).

[@vikasshetty6156]

This brilliant episode deserves atleast a million views . Sad that such a great podcast does not get the views it deserves .

[@logical.Indian]

Hello Amit, I just listened to your recent podcast where you mentioned that an increased divorce rate signifies women's empowerment. I completely agree with you and have always held this perspective. I read your article on this topic and I'm happy to see that I'm not alone in holding this belief. Really enjoy your work, keep it up!

[@waqarhussain7924]

At 1:04:46, beautiful frame: The serene and picturesque scene where four young and not-so-young individuals sit together on what seems like the edge of a cliff, gazing out over a vast valley bathed in the soft hues of a dying sun. Majestic mountains stand on the horizon, their peaks silhouetted against the warm, fading light.

[@blahblahblah5924]

It's mind-blowing how India doesn't have a single recognizable global brand. It shows you the state of the State.

[@ajayshah5705]

To get a doubling or quadrupling of per capita GDP, this is not essential. It suffices to do things like Indian services exports firms. It suffices to have Hyundai make cars in India for export markets. We need high productivity firms to operate in India, we don't need for them to be owned or led by Indians.

[@fullmetalalchemist9126]

@@ajayshah5705are you actually Ajay Shah ‘s YT account ?

[@samadhanshendge3102]

Its a treat to listen episodes on this channel. Amitji is doing great service through both of his channels. Hats off !!

[@MMR3000]

The long awaited episode.

[@AbhishekSingh-ip3xe]

Would love an episode each on healthcare and taxation in India.

[@khushilshah]

This episode is on the ‘most’ used word in the budget speech by our FM.

[@jollyabraham2308]

This episode has got me thinking. Thank you. 2 episode requests: 1. A defn of development that goes beyond per capita GDP - What metrics improved in India between 1991 and 2011, and have lagged since then? 2. How does rule of law develop?

[@seemasrivastava7509]

Loved this! Wish there was a course on Development Economics by Ajai. Thanks for choosing this topic.

[@inventorpranjal]

Just ordered Ajay's book. Here we go, flirting with libertarianism. Edit: wrote Amit instead of Ajay

[@FahadHasin]

You mean Ajay's book?

[@yj9032]

लिबर्टेरियन सोच बेहद बकवास होती हैं।

[@vibhupandey3702]

@@yj9032 aapko aisa kyun lagta hai?

[@sukritigupta2224]

Brilliant episode. So insightful! ❤

[@the_0_man]

casually dropping awesomest video, with great knowledge to bank on, with the bestest "green screen". content that India needs.

[@awenindo]

Man, these guys are living the high life.

[@BijoyHossen-ic7ue]

😂😂😂😂😂😂lol

[@omerjan4701]

What are they high on ???

[@awenindo]

@@omerjan4701 grey cells

[@Et_seeker]

Gdp per capita ppp of US $ 73000 and India $9000 -8x. In 1991 it's 24,000 vs 2,100 around 12x

[@ivanlobo397]

Discussion on trust capital is interesting.

[@user-ng5xr2ju2z]

Man, WHAT AN EPISODE! A lot of what you guys say has for long been my fundamental philosophy in life, especially on building genuine competence. I really want to reach the level of your thinking P.S: Ajay sir, could you please respond to my comment on the physical infrastructure episode, I would love to know what you think of my arguments, because thats one episode I had a fundamental disagreement with.

[@prateeksaraswat1]

These are fantastic videos. I have loved almost every one ❤

[@bmitra1]

The technology model is flawed because it does not take into account the rapid advancement in technology. By the time less developed nations read the manuals, technology has moved on a couple of generations. To become developed, you need to be ahead of the west and be at the cutting edge. That's what Israel, Taiwan, Korea, Japan and even China has done. This is neither easy nor inevitable.

[@ajayshah5705]

There is a 9x gap in real per capita PPP. For some generations, there is a lot available for India without needing to be at the frontier.

[@5amyak]

Singapore is one of the great successful exception as well.

[@rahulkedia80]

If poverty rates and median income move in concert , it would be useful to talk about the how and the why . What underlying mechanic links the 5th percentile to the 50th percentile. Articulating that will make the point an explanation instead of an assertion , which imho will make it more useful! Analysis is better than factoids at improving mental models I think!

[@deep-insight]

Awesome episode 👍

[@mevivek56]

Podcast isn’t only about machine & quality of video. It is about marketing, growth & lot of other items. Pods like these are gem, disappointed to see the minuscule distribution

[@MMR3000]

10,000 fans who watch and engage with deep content are better than 5 million people watching and forgetting shallow content.

[@unlearnwithprasanna]

@@MMR3000Absolutely

[@tubelz]

Start a chain gang. Share everything is everything with 10 others and ask them to share with 3 others, if they found value in in listening. Amit and Ajay are doing their part.

[@tubelz]

You might also consider donating money to Amit and Ajay.

[@ashutoshdhote1339]

@@tubelzi have suggest to few of my friends but people don’t have patience to listen this content they can listen beer bicep on erection every weekend

[@AbhishekSingh-ip3xe]

🎯 Key points for quick navigation: 00:00:00 *🎶 Introduction to the episode's theme and importance* - Discusses the personal quests vs. societal impact in various fields like economics, politics, and society, - Emphasizes the need to avoid ideological biases and focus on genuine progress, - Explores the fundamental question of making the world, particularly India, a better place for all. 00:05:49 *📊 Why is Indian per capita GDP 1/10th of the US?* - Highlights the significant gap in per capita GDP between India and the United States, - Explores the implications of this gap on economic development and societal well-being, - Discusses the central question of development economics: understanding and bridging this gap. 00:12:38 *📜 Historical evolution of development economics* - Traces the early foundations of growth theory and the solo growth model, - Discusses initial perspectives on development focused on capital accumulation and productivity, - Critically examines early assumptions and their implications for economic development. 21:37 *📉 Development theory and historical perspective* - Development is statistically rare; most countries fail to achieve advanced economy status. - Countries like South Korea, Taiwan, Israel, and Chile have been exceptions, achieving rich country status. - Early optimism in post-World War II development theories overlooked statistical realities. 24:07 *🏔️ Challenges of development and mindset* - Acknowledging the difficulty of development can lead to better preparation and strategy. - Overly optimistic approaches can lead to missteps and unrealized goals. - Development requires a realistic assessment of challenges and long-term commitment. 28:22 *💼 Challenges in the Indian context* - India's development challenges include underutilization of labor, institutional barriers to capital inflow, and technological adoption. - Despite global capital availability, India faces institutional constraints hindering economic growth. - Technical capability exists, but barriers prevent widespread adoption of advanced technology in Indian firms. 32:33 *🌍 Commonalities in advanced economies* - Advanced economies share characteristics such as liberal democracy, high productivity firms, and secular governance. - They exhibit low variability internally and are characterized by high economic and social freedoms. - Successful advanced economies emphasize freedom of expression, rule of law, and high levels of social progress. 42:05 *📊 Paths to development and empirical insights* - Development strategies should be empirical, focusing on closing GDP per capita gaps through effective policies. - Data-driven approaches are crucial for understanding poverty rates and effective poverty alleviation strategies. - Policy discussions should prioritize evidence-based solutions over ideological debates. 43:14 *📉 Impact of Median Income on Poverty Rates* - Median income explains 99% of the variation in poverty rates across countries. - Economic growth, specifically increasing median and mean incomes, is the primary driver of poverty reduction. 48:06 *🏛️ Three Pillars of Development Economics* - Development hinges on three main pillars: high productivity firms, robust state capability with rule of law, and a political system where the state serves the people. - Each pillar-economic productivity, effective governance, and political modernization-relies on the foundation of rule of law for success. 52:34 *🤝 Society's Role in Development* - Society plays a crucial role in development beyond state and market dynamics. - Building trust capital and fostering collaboration among people are essential for addressing societal challenges. - Norms, values, and the ability to communicate and cooperate are pivotal for societal development. 01:05:16 *📈 State Capability and GDP Growth* - Improvements in state capability are not automatically linked to GDP growth. - GDP growth does not guarantee state efficiency or capability enhancement. - Economic growth and state development can diverge, leading to misconceptions about state efficacy. 01:06:26 *🌍 Development Spurts and Cycles* - Development tends to occur in spurts rather than as a continuous process. - High GDP growth periods can lead to complacency and governance challenges. - Understanding development cycles is crucial for sustainable growth strategies. 01:08:40 *🔄 Sustainable Economic Growth* - Sustainable economic growth requires continuous adaptation of state capabilities. - Historical examples show sustained growth relies on consistent state adaptation. - Challenges like corruption and institutional adaptation are critical in sustaining growth. 01:12:16 *📚 Misconceptions in Economic Development* - Common misconceptions in development include the role of education and infrastructure. - Debates over growth versus redistribution often overlook the necessity of economic growth. - Clear understanding of effective development strategies is essential to combat poverty. 01:18:24 *📖 Reassessing Development Models* - Reassessing traditional economic models like the Solow model is crucial for understanding development challenges. - State capabilities, rule of law, and public choice theory play pivotal roles inshaping development outcomes. - Effective governance and institutional design are key to achieving sustainable economic development. 01:25:00 *🌍 Main content on the intellectual journey of Indian economic growth from 1991 to present.* - Intellectual journey of Indian economic growth from 1991 to present, - Focus on mistakes made, incomplete actions, and rebuilding for sustained economic growth at 5% per annum. - Reflects on the influence of economic thinkers like L. Pritchett and challenges in national development. 01:26:13 *🧠 Understanding kinky development and its impact on national progress.* - Understanding kinky development and its impact, - Kinky development as losing sight of big-picture goals for narrow, less impactful solutions. - Critique of mainstream development economics' focus on trivial issues over transformative change. 01:28:41 *📊 Distortions in development economics driven by career incentives and funding dynamics.* - Distortions in development economics driven by career incentives and funding, - Influence of philanthropic attribution, populism, and academic journal biases on research focus. - Impact on meaningful economic policy versus superficial interventions. 01:35:21 *🌱 Realigning development economics with fundamental questions for global progress.* - Realigning development economics with fundamental questions, - Emphasis on rethinking core economic challenges for over 100 developing nations. - Call to rebuild societal, financial, and institutional frameworks conducive to advanced economy status. Made with HARPA AI

[@rohitka5737]

Guys, for the political structures that might be suitable for productivity, do you think something like ranked choice voting can give us better outcomes than first past the post. If so what is the impediments for its implementation

[@aanchalpandey168]

I absolutely loved the episode, very enlightening. But one doubt, one of the requirements explained for a developed economy based on studying all the current developed nations was that there should be a liberal democracy with free press. Now in these examples, Middle East nations were talked about and disregarded because of the 'oil factor' being an anomaly, but China was not talked about. Is China not a developed economy? Anything I am missing here?

[@ajayshah5705]

China is not a developed country.

[@inventorpranjal]

How does your critic of state intervention as state coercion stand vis a vis reservations or Affirmative action in general?

[@SangramChahal]

First 30 mins I heard while commute. Now there is a power cut in office & I can finish this.

[@supreethvasisht2451]

I have an observational rebuttal to first pattern recognized that all advanced economies are Liberal. I argue, during the phase they were building up their Economies, all were deeply autocratic. Take example first four, out of which China, South Koreas were Dictatorship during the time they started the change. The dissent and nay sayers were deeply punished in their society. So was Singapore. Speak about USA in the late 1850s to 1930s was a strict state. Germany after unification had iron laws, because they had just come out of socialist revolutions of 1848. Read how Bismarck crushed the nascent socialist movement. Japan was during 1860-1945, a highly militarized state. Some criticism which was deemed positive was welcome and adults with good intentions were tolerated, but not trouble makers. Which most Indian politicians are! Basically, the anarchists like Yogendra Yadav and politicians like in congress were punished in such societies. Here, they still have audacity to play identity politics and stifle unity of the nation. Hence I argue, to kick start some progress, some carrot stick strategy has to be devised. Some people have to be punished.

[@abhishekmittal8658]

Through this logic, you are negating almost the basic premises which EiE has advocated so far: freedom for citizens to criticise, positive effect of feedback loops, and a “know it all” state being bad for the country. I think it’s a stretch, and I implore you to think again. Just because we hate leftists like Yogendra Yadav, shouldn’t force us to advocate a dictator state where freedom is curtailed.

[@kushaldmurthy7111]

Amit, a question that occupies my mind all the time as an employee of an american MNC is that what can I do to help build a indian firm? Can you answer this question in some shape or form in any of your podcast?

[@ajayshah5705]

1. What matters is firms operating in India. It does not matter whether they are foreign owned or Indian owned. 2. To build the knowledge and culture of high productivity firms is god's own work. Think more about organisation design, the network of contracts, checks and balances, incentives. 3. We have many episodes on firms. Also see the four great papers.

[@unefemme3290]

Please do a chapter on the Budget 2024

[@ghanvedsingh8946]

Without atamnirbharta every idea is merely a talk we in India especially who are in power don't use their minds in the nation s service but use it for one s own progress

[@oflavia2910]

Per capita can also be high as it's an average. Not in India but this is possible

[@Kalinga_3]

I agree with you. But why is China not included in your analysis as a 'developed' economy. Rest 4 nations are pretty small to be fair

[@ajayshah5705]

China is not a developed country.

[@Abhishek-ti5er]

❤❤❤.

[@oflavia2910]

What about singapore???

[@SheshankReddyS]

Four countries doesn't include Singapore?

[@subodhghorpade]

👍

[@sathyendrababu7868]

Hair light 150kms away❤

[@ajayshah5705]

150 million km

[@ttongkangaji]

Damn, is this still Bir?

[@pranavlucian]

Great episode as always. But I have to say, the political environment in most of Western Europe and the USA feels incredibly tribal

[@Sameer-er3wz]

40:05 Single Mom-ing as an indicator of social progress may be ok. But broken homes affect wealth creation and the economy negatively in the long run. I don't think it is something that we should aspire for.

[@ashwinikumarprasad6395]

Single mom is worst thing that happen to women. It's worst thing in development economy