The Great Scramble of Millions

Context: There is a need for an economic model that goes beyond conventional paradigms to address the ground realities of our common people.

Issues with the current economic model: 

• Impact of Covid-19: As the Gross Domestic Product (GDP) started declining, the plight of the migrants and poor sections of society showcased the structural weaknesses of India’s economic model.

• Failed rhetoric of global vs local: While some economists pushed for localization of manufacturing, others insisted on remaining vocal for global.
• The call for global has been weakened by the failure of the economists in devising and anticipating the economic situation after the 2008 crisis.
• Failed theory of competitive advantage: as it does not explain how the citizens of the nations will get a fair share of a global pie and are countered by the theory of rational self-interest.
• Theory of competitive advantage: 
• If all nations stick only to what they do best and buy from others what the latter can do better, the global economy will be larger. 
• There will be no waste of resources by those who are less efficient than others.
• Theory of rational self-interest: Those who have a competitive advantage (and the power that comes with it) will fix the rules of the game to preserve their edge.
• Failure of simplistic trade theory: as it ignores that competitive advantages are neither God-given nor permanent. 
• Nations can develop capabilities that they do not have and compete successfully.
• For E.g. This is how nations have always developed their economies: Japan, South Korea and Taiwan after World War II; Germany and the US before it; and China recently.

Way Forward: 

• Focus on building internal capabilities: Good sports coaches do not throw trainees into the ring against champions right away. They spend energy outside the ring to build their trainees’ capabilities.
• Create a learning society: that can learn faster than all its potential competitors can.

• • •  Economists do not need to reinvent the wheel. They could humbly learn from others.

• Reinvent Economic Model: 

• Move on from the debate of whether pre-1990s socialism was better for India’s masses or the post-1990s adoption of capitalism.
• Must listen to “non-economists” with other insights.

• Engaging with people on the ground: The following two building blocks of data democracy are already in place and need to be integrated with privacy considerations.

• Policymakers and economists at the steering of the policy must listen to millions struggling with their lives and livelihoods.
• New forums are required urgently for the participative development of solutions that take into account the real concerns of the country’s population.