Tuesday, July 17, 2012

Why India Can't Catch Up With the West

A deep gloom has settled in here: Europe’s glory days, it’s feared, are over. Private bank excesses and public-sector legacy costs are poised to drag the continent—and America—down for generations. Only India and China are seen as the rising stars in the global firmament. Their young economies have stalled this year. But they are expected to recover, learn from the West’s mistakes and become economic powerhouses, displacing the West’s global hegemony.
Setting China and its opaque autocracy aside, India, I am quite confident, ain’t going to perch its tricolored flag atop the globe anytime soon. Not until it does something about its soul-sapping bureaucracy. The world’s largest democracy doesn’t have rule of law—it has the rule of babus, the local term for petty bureaucrats. And so long as they keep challenging India’s entrepreneurs, there isn’t much chance that India will challenge the West.
For all their problems and flaws, Western powers—America, Canada, England, Germany, and others—have functional institutions such as well-defined property rights, effective courts that enforce contracts and state-of-the-art infrastructure that enhance the productivity of their citizens. By contrast, India’s horrendous bureaucracy systematically thwarts its citizens, killing productivity, often for no apparent reason but to exercise its powers over them.
Consider my recent encounter with it: My husband, son and I were in New Delhi and wanted to make a short trip to Malaysia with our cousins. Thanks to a law passed after the 2008 Mumbai attacks, noncitizens (as we are) who wish to leave and re-enter the country within 90 days have to get special permission.

Read more: http://reason.com/archives/2012/07/17/the

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