In the 1960s and 1970s, as South Korea and Hong Kong liberalized, India persisted in Jawaharlal Nehru’s vision of state planning and protectionism. No one deserves more blame than Nehru’s daughter, Indira Gandhi, the nation’s third prime minister.
One of Gandhi’s many sins was to limit capital investment. Most factories could not contain more than a few hundred-thousand dollars’ worth of equipment. At its height this control affected more than 800 products, including car parts, clothes, shoes, toys, and toothpaste. While China gained an economic foothold exporting cheap consumer goods, India could not even produce pencils efficiently.
By 2005 large firms employed more than half of China’s manufacturing workers, but only about ten percent of India’s. This is one reason why China’s GDP per capita was equal to India’s in the 1970s, but triple India’s by the 2000s.
In the abstract, at least, most Americans like small businesses and dislike big corporations. In Big is Beautiful: Debunking the Myth of Small Business, Robert D. Atkinson and Michael Lind argue for an attitude adjustment. Continue reading “Big Business Will (Probably) Save Us”