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India, a Story of Progress

Blog Post | Economics

India, a Story of Progress

The world should take note of which principles brought freedom and prosperity to India.

The 76-year story of modern India is one of the greatest stories of progress in history. At the time of its independence in 1947, it was a mostly agricultural economy of 340 million people with a literacy rate of only 12 percent and a life expectancy of only 32 years. Today, it has the fifth-largest economy by nominal gross domestic product (GDP) and third largest by purchasing power parity. In his book “Enlightenment Now: The Case for Reason, Science, Humanism, and Progress,” Steven Pinker highlights six key areas of progress: life, health, wealth, safety, literacy, and sustenance. In every one of these metrics, life in India has significantly improved over the years.

Self-Sufficiency Is Self-Destructive

Since independence in 1947, India suffered the consequences of socialist ideals. In a quest for self-sufficiency, the government played a heavy role in the economy. Under Prime Minister Jawaharlal Nehru, India pursued Soviet-style “Five Year Plans,” intending to turn India into an industrialized economy. From 1947 to 1991, the government owned most key industries, including steel, coal, telecommunications, banking, and heavy industry. India’s economy was closed to foreign competition, with high tariffs and restrictions to foreign investment. For example, the import tariff for cars was around 125 percent in 1960. The policy of import substitution aimed to produce goods domestically instead of importing them from abroad. In reality, massive waste and inefficiency resulted, as Indian businesses were protected from international competition.

Furthermore, India’s private sector was heavily constrained. Overregulation and corruption stifled the business environment, and subsidies and price controls disincentivized production, leading to market distortions and fiscal deficits. The government required industrial licenses for the establishment, expansion, or modernization of industries, causing bureaucratic barriers and corruption. This environment tended to harm small businesses at the expense of large corporations, as large corporations could better cope with the complex bureaucracy. The period was often referred to as the License Raj, comparing the extent of control of the industrial licenses to that of direct rule by the British Empire before Indian independence.

Sustenance, Health, and Life

In his 2016 book, “Progress: Ten Reasons to Look Forward to the Future,” Johan Norberg showed how these problems impacted daily life. When Norman Borlaug invented new high-yield wheat, India was facing a threat of mass starvation. Despite that, Indian state monopolies lobbied against both food and fertilizer imports. Fortunately, Borlaug was able to bring through his innovations. In 1965, yields in India rose by 70 percent.

From 1948 to 2018, the number of calories per person increased by two-thirds, growing from 1,570 to 2,533. For reference, the recommended healthy number of calories per person is 2,000 for a woman and 2,500 for a man. The average Indian now no longer suffers from undernourishment.

This achievement is even more remarkable when one considers the growth of the Indian population, which added a billion new citizens between 1948 and 2018. As well as having a greater population, Indians began living longer, with life expectancy more than doubling between 1947 and 2022. Furthermore, fewer children were dying—infant mortality fell dramatically between 1960 and 2022. Many children previously suffered from malnutrition. Parents could now watch their children grow up and have children of their own.

Wealth, Safety, and Literacy

However, problems in India remained. The License Raj continued to strangle the Indian economy in the name of protectionism. In 1978, the economist Raj Krishna coined the term the “Hindu rate of growth” to refer to slow economic growth of around 4 percent per year, which was prevalent in India from the 1950s to the 1980s. But Krishna was incorrect. The slow rate of growth had nothing to do with Hinduism or factors unique to India. Instead, India’s growth was low, because of the restrictive policies of the socialist government. As soon as India removed the restrictions to competition and commerce, it began reaching growth rates of between 6 percent and 9 percent each year.

The economic liberalization of India was prompted by an economic crisis in 1990. India, having borrowed heavily from international lenders to finance infrastructure projects, was facing a balance of payments crisis and had only two weeks until it would default on its debt. A new government under Prime Minister P. V. Narasimha Rao abolished the License Raj, removing restrictions for most industries and foreign investment into Indian companies. Restrictions on foreign technology and imports were scrapped, as were subsidies to fertilizer and sugar. India flung open its doors to the world, embracing competition in both imports and exports. Indian companies now faced foreign competition in the domestic market but also had the entire world market to sell to.

New industries sprung up, with India developing competitive industries in telecommunications, software, pharmaceuticals, biotechnology, research and development, and professional services.

The result was a dramatic increase in the standard of living for ordinary Indians. The economy flourished as foreign investment flooded in. The innovating spirit of ordinary Indians was unleashed. Between 1993 and 2021, access to electricity went from 50 percent of the population to 99.6 percent. The literacy rate improved from 48.2 percent to 74.4 percent. This is even more remarkable considering that India added extra 600 million people during that period.

Having access to a microwave, refrigeration, and electric lighting are all amenities that we take for granted, but these conveniences are relatively recent for the average Indian. A virtuous cycle of more educated, well-fed citizens creates greater innovation and prosperity. It is also correlated with less violence, with the homicide rate falling by 48 percent between 1991 and 2020.

Absolute poverty also has been falling. In 1987, half of the Indian population lived in extreme poverty. By 2019, this figure had fallen to 10 percent. Granted, there are still issues in India. Millions of people live in slums, and poverty remains a problem. However, it is worth appreciating just how far India has come.

As the Indian economist Gurcharan Das says about his country’s progress in the documentary “India Awakes,” “The principles that brought so much prosperity and freedom to the West are being affirmed in a country that is in the East.”

These principles are that of a market economy, openness to innovation, and a favorable attitude to commerce.

Life, health, education, and sustenance have all measurably improved. Violence and poverty have declined. Progress has occurred, and the world should take note.

Afrik 21 | Housing

A Reduction in the Proportion of Africans Living in Shanty Towns

“According to the United Nations Development Programme (UNDP), a shanty town is a disadvantaged part of a city characterised by very unhealthy housing built by the inhabitants from salvaged materials, extreme poverty and no rights or security of tenure. According to the World Bank, over 60% of Africa’s urban population now lives in shanty towns. These almost 285 million urban dwellers represent 60% of Africa’s urban population. In 2003, Africans living in shanty towns made up 71.9% of the urban population.”

From Afrik 21.

Science | Vaccination

First Malaria Vaccine Slashes Early Childhood Mortality

“In a major analysis in Africa, the first vaccine approved to fight malaria cut deaths among young children by 13% over nearly 4 years, the World Health Organization (WHO) reported last week. The huge evaluation of a pilot rollout of the vaccine, called RTS,S or Mosquirix and made by GlaxoSmithKline, also showed a 22% reduction in severe malaria in kids young enough to receive a three-shot series.”

From Science.

Blog Post | Urbanization

Introducing Centers of Progress: 40 Cities That Changed the World

“Cities, the dense agglomerations that dot the globe, have been engines of innovation since Plato and Socrates bickered in an Athenian marketplace,” as urban economist Edward Glaeser explains in his book The Triumph of the City.

Athens’s storied breakthroughs in philosophy are but one example of how cities have often been the sites of pivotal advances throughout history. Kyoto gave us the novel. Bologna gave us the university. Florence gave us the Renaissance. Paris gave us the Enlightenment. Manchester gave us the Industrial Revolution. Los Angeles gave us cinema. Postwar New York gave us modern finance . . . the list goes on. As Glaeser also notes, “Wandering these cities—whether down cobblestone sidewalks or grid-cutting cross streets, around roundabouts or under freeways—is to study nothing less than human progress.”

If you’re not able to travel to each of these extraordinary cities, perhaps the next best thing is to embark on a virtual tour from the comfort of your home. To that end, I wrote a book surveying 40 of history’s greatest urban centers, showcasing each city at a moment in time when it notably contributed to progress.

Centers of Progress: 40 Cities That Changed the World offers a fact-filled yet accessible crash course in global urban history, spanning from the agricultural revolution to the digital revolution. This book affirms the importance of cities to the story of human progress and innovation by shining a spotlight on some of the places that have helped create the modern world.

The book’s chapters can guide you through the Library of Alexandria, the stock exchange of Dutch Golden Age-era Amsterdam, and the pubs of Edinburgh during the Scottish Enlightenment, all in an afternoon.

Centers of Progress “takes the reader on a time-travel cruise through the great flash points of human activity to catch innovations that have transformed human lives” at their moment of invention, according to writer Matt Ridley in the insightful foreword that he kindly provided. Come explore Agra as the Taj Mahal was erected and Cambridge as Isaac Newton penned the Principia. Meet engineers in Ancient Rome, Silk Road merchants in Tang Dynasty Chang’an, music composers in 19th-century Vienna, and Space Age flight controllers in Houston.

Learning about past achievements may even hold the secret to fostering innovation in the present.

As I note in the book, “Although there are some exceptions, most cities reach their creative peak during periods of peace. Most centers of progress also thrive during times of relative social, intellectual, and economic freedom, as well as openness to intercultural exchange and trade. And centers of progress tend to be highly populated. . . . Identifying those common denominators among the places that have produced history’s greatest achievements is one way to learn what causes progress in the first place. After all, change is a constant, but progress is not.”

From the fall of the Berlin Wall to Hong Kong’s transformation from a war-ravaged “barren island” into a prosperous metropolis, many of the stories featured in Centers of Progress hold valuable lessons about the importance of ideas, people, and freedom. I hope that you will consider joining me on a journey through the book’s pages to some of history’s greatest centers of progress.

Blog Post | Health & Medical Care

Removing Government Barriers to Fertility

Larger populations of free people create more economic prosperity through innovation, so policymakers shouldn’t make it harder for people to become parents and raise children.

This article appeared in Discourse Magazine on August 15, 2023.

The world’s population has never been bigger, yet rates of poverty and hunger are at historic lows. How is that possible? It turns out that population growth can fuel resource abundance and economic prosperity through innovation. Contrary to popular belief, resources have become more plentiful as the global population has increased. Analyzing historical data, the authors of “Superabundance: The Story of Population Growth, Innovation, and Human Flourishing on an Infinitely Bountiful Planet” discovered that in recent decades resource abundance outpaced population growth, a phenomenon they call “superabundance.” This counterintuitive relationship arises from the fact that more people generate more ideas and inventions, leading to economic growth and improved living standards.

In other words, on average, free people produce more than they consume. Perhaps that is not so surprising, because human ingenuity is what transforms raw natural materials into valuable resources in the first place. A remarkable example is Hong Kong, which underwent a rapid free market metamorphosis from a barren island to a prosperous metropolis in the 1950s and ’60s.

However, it’s crucial to note that simply having a large population is insufficient to create abundance. The poverty experienced in China and India before their liberalizing economic reforms serves as a stark reminder of that. Merely having a large population is not enough; it is freedom that unleashes human potential and transforms living standards. Free societies foster innovation by granting individuals the liberty to explore new ideas, debate, trade and profit. And the more people do those things, the more opportunities arise for specialization, collaboration and technological breakthroughs. Under conditions of economic freedom, more people mean more entrepreneurs, more innovators and more creators.

Demographic Dilemmas

If it is true that free individuals engaged in idea generation and market exchange are “the ultimate resource,” as the late University of Maryland economist Julian Simon called them, then the more, the merrier. In a free society, fears about so‐​called overpopulation and resource depletion are baseless. Moreover, population growth rates are decreasing globally, with many countries now experiencing shrinking populations as fertility rates fall. Fertility is lowest in the high‐​income countries, in many cases at record lows and in most instances “below replacement” (i.e., lower than needed to keep the population from shrinking).

Many middle‐​income countries, including Brazil, China, India, Mexico and Russia, also have fertility rates below the replacement level of 2.1 children per woman. It must be noted, though, that smaller family sizes often relate to positive developments such as increased education for women and declining rates of child mortality. (More children surviving to adulthood decreases the incentive to have additional children as an insurance policy against a high likelihood of childhood death.) Moreover, many commentators celebrate the possibility of population decline for a variety of reasons, often believing that a smaller population will benefit the environment.

Others, however, fear that a smaller population size could come with various challenges. If a larger population has the potential to increase the rate of technological advancement and economic growth, then a smaller population could conversely slow the rate of progress. Such risks may be manageable through automation or immigration (although if birth rates continue to decline globally, then migration alone cannot counteract depopulation in the very long run). Thus, many thinkers across the ideological spectrum, such as Matt Yglesias and Ross Douthat, have expressed concerns about subreplacement fertility and possible attendant tradeoffs.

Irrespective of whether or to what extent their worries are substantiated, such fears have motivated a variety of policies intended to help families and boost birth rates in countries from South Korea to Estonia. Unfortunately, such “pro‐​natal” policies often take the form of expensive new government programs and subsidies that increase the burden on taxpayers while having little or no effect on fertility. In a recent Cato policy analysis I co‐​authored with Vanessa Calder, we found that in almost all cases, countries with pro‐​natal policies tied to explicit fertility targets failed to meet their stated goals. That conclusion fits with a larger body of research showing that the effect size of fertility initiatives is often small and comes at an enormous fiscal cost.

Ultimately, it is not the government’s place to encourage or discourage any particular family size, and past government attempts to alter fertility rates have sometimes even resulted in tragic human rights abuses. So, rather than embarking on new initiatives that are costly, are questionably effective and risk wading into the territory of social engineering or worse, policymakers should take a “first do no harm” approach to fertility. Instead of replicating costly efforts that have proven ineffective abroad, U.S. policymakers keen on supporting families and concerned about fertility decline should consider repealing the various government policies that can act as artificial barriers to fertility and raise costs for parents. In other words, policymakers should make sure that government policies do not interfere with individuals’ freedom to form the families they want to create.

Family‐​Friendly Policies

First, consider policies affecting family budgets and work. By some estimates, housing is the greatest expense associated with raising children, and regulations that limit the housing supply, including land use and zoning regulations, make housing less affordable. Meanwhile, tariffs raise the cost of construction materials and push the cost of housing even higher. The cost of food, the second‐​greatest expense associated with children, is inflated by subsidies that backfire, regulations and restrictive trade policies. Studies suggest that reforming such policies could reduce the retail price of milk, a staple among families with young children, by 15% to 20%.

Then there’s education: Increasing school choice would increase incentives for schools to meet the needs of students and their families. Next, consider child care. Various regressive regulations limit the supply of child care and push up prices. For example, Washington, D.C., adopted a licensing law requiring many child care workers to have a college degree. When it comes to child‐​to‐​staff ratios, requiring even one less staffer per infant reduces child care costs by up to 20%. In fact, many countries such as Denmark, Spain and Sweden have no government‐​mandated maximum ratio at all. Removing laws that discourage telework and flexible work can also make life easier for parents. For example, pandemic‐​era reforms removing barriers to telemedicine not only increased patient convenience but made balancing parenthood and career easier for some workers in medical fields by allowing for remote work.

Further, some healthcare policies excessively limit parents’ options regarding the way their children are conceived and born. Several government policies—including certificate‐​of‐​need laws restricting the creation of new birth centers and various state laws restricting vaginal birth after cesarean attempts to hospital settings and banning them at smaller clinics or birth centers—make it needlessly difficult for mothers who want to avoid cesarean sections to do so. Such restrictions not only disrespect mothers’ autonomy but can make having multiple children medically risky and, research suggests, may depress fertility, all without improving health outcomes.

Policymakers worried about families and fertility should similarly avoid overregulating the field of reproductive technology, which can help many couples struggling with infertility challenges. Policymakers should also avoid imitating Hungary, which nationalized its fertility clinics and subsidizes fertility treatments, resulting in fewer treatment options and lengthy wait times that have prompted many Hungarians to seek treatment in neighboring countries. Such policies not only diminish individual liberty but make bringing new children into the world unnecessarily difficult.

Finally, there are some well‐​intentioned but excessive child safety policies that make raising children more expensive and time‐​consuming. For example, one study found that extended‐​age car seat requirements were associated with only 57 car crash fatalities in 2017 but with a reduction of approximately 8,000 births in the same year. Speaking of safety, Utah (2018), Oklahoma (2021), Texas (2021), Colorado (2022) and Virginia (2023) have passed “reasonable childhood independence” legislation that pushes back against overly burdensome and intensive parenting norms. More states should pass these laws so that children benefit from increased independence and parents benefit from reduced stress levels.

Those are just a few of the reforms to labor, trade, healthcare, education, housing and safety policies that would reduce the regulatory cost of raising children and help families. Although I am skeptical of the idea of expensive new government policies aimed at increasing fertility, believing them to be misguided and possibly beyond the proper scope of government, at the very least, any expansion of spending on families should be paired with deregulation of the goods that parents demand most and reform of policies that artificially and needlessly make family life harder.

If free people are the ultimate source of societal abundance—if people themselves are “the ultimate resource”—then we should reconsider overly burdensome regulations that potentially frustrate fertility aspirations. The work that parents do raising the next generation of human beings is important—and arduous enough without the government making it harder. To increase abundance, families must be free.