DELHI, India – This country is the world's biggest, most vibrant democracy. I've spent the past two weeks here speaking to policymakers about the direction it is headed. What's become clear to me is that India's economic and political challenges are nearly identical to those in the U.S., only bigger, more obvious and more urgent.
As I speak to experts about what needs to be done to improve growth and broaden prosperity in India, it is like holding a magnifying mirror to my own country. This is what I see:
1. Income inequality is the defining issue of this generation. India is home to the world's largest personal residence, the 27-story tower built by Reliance Industries Chairman Mukesh Ambani. The tower includes six stories just for parking and is reckoned to be the first billion-dollar home. There are three helipads.
India also has roughly four hundred million people living in absolute poverty. The chasm between rich and poor is so enormous and so unavoidable that one has no choice but to confront the question of what basic human dignities are owed to all people (if any). There are many reasonable answers to that question, which is why it consumes the political process.
2. Government is doing too little – and also too much. India needs better roads, better schools, more power, a saner tax system, and a whole host of other things that only the public sector can facilitate. If the country is to grow faster, the government will have to step up and do more things better.
All the while, India is a country where the government tends to meddle excessively elsewhere in the economy. Indian industrial policy still requires that any manufacturing firm with over 100 employees seek government permission before laying off workers. The government owns banks, mining companies, the national airline and scores of other enterprises that are typically in private hands elsewhere in the world.
The notion of "big government" versus "small government" makes no sense here, just as, I would argue, it has become a silly distinction in America. Government needs to do more of some things and less of others; wisdom lies in knowing the difference.
3. The short term is winning. There are huge apartment blocks going up on the periphery of Delhi and Mumbai with no obvious plan for delivering basic infrastructure. The notion of urban planning is fanciful, even as millions of people pour into cities across the country. The Indian government subsidizes water for farmers, even as crucial water resources dry up. And so on. To an outsider, it's obvious that many of these things are bound to end badly if there is not some change of course.
Kind of like Social Security and Medicare.
4. The governing process is corrupt. Bribes are omnipresent in India, from the lowest levels of government to the highest. At one point, my students watched out the window of our bus as one motorist crashed into another and then delicately slipped cash into the hand of the investigating police officer. (Shortly thereafter, the police officer told the second motorist – the guy who had been hit – to move along.)
The U.S. is obviously not corrupt in the same way. Still, the hallmark of our electoral system is that individuals and companies can channel huge amounts of money to politicians. What the two countries have in common is the pervasive belief among everyday voters that the system is manipulated by the rich and well-connected for their own benefit, rather than for the common good.
5. India's politicians are small, for lack of a better word. Their rhetoric does not do justice to the scale of the nation's challenges. Elections that should be contested around big, substantive question are instead decided based on handouts to key constituencies, empty slogans, unrealistic promises and alliances based on provincial interests.
The lament we have heard frequently is that no Indian politician can offer a clear economic vision of where the country needs to go and how it ought to get there.
That feels familiar, too.