Monday, October 18, 2004

WHAT IF…

Times of India, Oct 17, 2004

I have been visiting the Far East regularly now for the past thirty years, and each visit has left behind the taste of a sweet and sour Chinese dish. I have marvelled at the sweetness of their economic achievements, watching poverty vanish from country after country. The sourness comes from an unhappy comparison with India and from the sadness of our missed opportunities. Last week’s visit to Hong Kong was no different. Like many an Indian before me, I asked wistfully, what if in 1947 the British had kept the island of Mumbai for fifty years? And what if Mumbai had become like Hong Kong?

Well, for starters, there would have been a policeman on the street when you needed him and he would treat each citizen equally and politely. The roads would have been clean, nicely paved and lit at night. An impartial judge could be trusted to interpret the law fairly and speedily. A diligent teacher would have been insistently present in the government school to teach my child, and so would a doctor in a clean government hospital if I were sick. Today’s Hong Kong offers all this. Although Hong Kong does not offer political liberty or democracy, the average citizen’s life is paradoxically freer, more benign, and happier than the average Mumbaikar’s. The reason is that Hong Kong delivers far better governance and far more economic liberty. The combination of the two raises the quality of life to a level that is the stuff of ‘Bombay Dreams’.

Indians are also impressed with Hong Kong’s wealth, and for good reason. Its per capita income is higher than England’s; its exports are more than twice India’s; its reserves are also higher than the whole of India; its currency is stronger than the rupee and the Hong Kong businessman commands greater respect.

However, if Mumbai had become Hong Kong, its greatest gift would have been to fuel India’s industrial revolution, as Hong Kong has done for China. Mumbai would have kept open our window to the world when the rest of India shut down during our dark socialist decades of the License Raj. It would have kept alive our great trading traditions, as it went on to become one of the world’s financial capitals. And when India began integrating with the world economy after 1991, it would have brought not only capital for India’s industrial revolution, but also trusted relationships with customers in the global market. Smart businessmen understand that anyone can put up a factory, but it takes real talent to perceive unfulfilled needs of customers in a competitive market and success lies in satisfying and retaining their loyalty. This was Hong Kong’s great bequest to China--it not only invested financial capital in China, but it brought trusted relationships with customers that it had cultivated over decades. This is a crucial but less appreciated reason behind China’s industrial take-off.

This thought game is not a mere academic exercise. Even today, when we are struggling to unshackle the chains of state control over industry, our Leftists are determined to stop those reforms. Instead of amending our labour laws to bring us on par with our competitors, the Left wants to burden our under-performing industry by extending reservations to the private sector. I would humbly request our honourable Leftists to take the new Delhi-Shanghai flight at state expense to learn how to compete in the global economy and how to wipe out poverty in a sustainable way through growth and not subsidies. Only then will they realise the damage they are doing by returning us to the Jurassic Park of the Licence Raj.

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