Wednesday, November 29, 2006

Martin Lee Anderson

In June 2005, Martin Lee Anderson, a Florida teenager, took a joyride with his sister, a cousin and two friends in his grandmother's jeep. They had an accident. The grandmother had to press charges in order to receive money for the vehicle. Martin was put on probation. A few months later, he was charged with violating the terms of his probation for trespassing at a school. His parents had to choose between a distant detention center and a boot camp nearby. They chose the boot camp. (Narrative drawn from this account).

Martin arrived at the boot camp on January 5, 2006, his "intake day". On an intake day, boys were made to run 16 laps and do multiple push-ups and sit-ups. Martin fell while on his last lap. Nine Guards beat, kneed, and kicked him, in addition to applying pressure-points behind his ears several times, while a nurse watched. They forced him to inhale ammonia while closing his mouth. After about half-an-hour of this, when the boy did not respond, they called in medical help. The boy died at a hospital a day later. He was 14 years old.

The county medical examiner later said in an autopsy report that Martin died from internal bleeding arising from "sickle cell trait".

In February 2006, the Miami Herald (and CNN) obtained a video of the beating recorded at the boot camp. The ensuing furore led to a tortuous investigation which ended yesterday with the guards and the nurse who played onlooker being charged.

Florida now has a law which closed its boot camps and replaced them with facilities focused more on education and counseling.

I will leave it to you to guess Martin's race.

Tuesday, November 21, 2006

More on the Indian economy

Shunya has made a few interesting points about my previous post on the Indian economy. My response was getting a bit long, so I have elevated it to an independent post by itself.

The Gini coefficient tends to magnify small differences between Lorenz curves. I speak from experience with ROC curves, which are close cousins of Lorenz curves. I would be wary of reading a great deal into small Gini index differences.

In any case, income inequality is a bit more tolerable if the lowest income levels are well above subsistence levels. To visualize this, imagine two histograms of income, A and B. Distribution A is relatively compact, but its left tail extends almost to zero. Distribution B is more spread out (more inequality) but its left tail is at a much higher value than that of A. (In other words, B is shifted substantially to the right and is wider). I think most people would agree that distribution B would be better for a country than distribution A.

To make this point concrete, consider poverty levels in the US and India. In the US, the threshold is set at an annual income of about $20,000 for a family of four and the percentage of the population below the threshold is about 12.6%. In India, a very low level of income is used for the poverty threshold (the better to get a good number for the fraction of the population below it). Using numbers from this report for reference, a threshold of Rs. 500 per person per month in 2005 seems to be an appropriate definition of the official Indian poverty line. About 23.6 % of Indians are below this poverty line. This amounts to an annual income of Rs. 24000 for a family of four. Conversion to US dollars (at an exchange rate of Rs. 45 to the dollar) and multiplication by a PPP factor of about 5 brings the poverty level to about $2700. To summarize:

Poverty line
Fraction below
India $2,700 23.60%
US $20,000 12.60%
A heck of a lot of people are a heck of a lot poorer in India.

The last point about India's democratic freedoms is very important, but tangential to the issue I am addressing. Economic performance may be measured and evaluated on its own. Adding political freedom to the criteria for deciding which country is more admirable is a personal preference, one that coincides completely with my own. Nevertheless, it is a personal preference and, speaking in economic terms, changes the utility function altogether.

Shunya's defense of the urban middle-class Indian's celebratory mood is a defense of the mindset I described in my previous post. Having come 10 m from the starting line in a 100 m race is certainly an achievement. You only have to agree not to look at how others are doing. Bring the champagne along. I would be more than happy to raise a toast.

Monday, November 20, 2006

(Robber) Baron Clive of Plassey

On June 23, 1757, Robert Clive, a Lieutenant Colonel in the King's Army, led the East India Company's troops to victory against Nawab Siraj-ud-Daulah at Palashi . It was less a battle and more of a skirmish, what with the English having ensured the non-participation of about two-thirds of Siraj-ud-Daulah's army through a conspiracy. In the immediate aftermath of the victory, Clive arm-twisted his puppet Mir Jafar into paying huge sums of money to the British. He helped himself to about 20,80,000 rupees, an amount that is quoted in several places as £234,000.

I have always been frustrated at not being able to fathom the scale of the looting. Here are some indicators of scale that I have come across recently:
  • According to this account of historical money and prices in the 18th century, the upper limit of a nobleman's annual income was about £25,000. Clive's take from Palashi was nearly ten times the annual income of perhaps the richest people in England.
  • This House of Commons Library research paper tells us that the 1750 £ was worth about 150 times the 2005 £. This means that Clive's earnings amounted to £35.1 million, when expressed in modern terms. I suspect that this would be hard to beat in terms of remuneration for a day's work.
The total amount that the British extracted from the Murshidabad treasury was about £3 million. That would work out to £450 million today.

Saturday, November 11, 2006

Time for the champagne

I kept reading about the booming Indian economy doing very well, so I decided to check out some of the data:
  • World Bank measures of economic size (2005 data):
    • GDP in US dollars: India ranks 12th, with a GDP of $785 billion. The US tops the list, with a GDP of $12.5 trillion. China is 4th, with a GDP of $2.2 trillion.
    • GNP in US dollars: India ranks 10th with $ 793 billion, China is 4th with $2.6 trillion and the US is 1st with $13 trillion.
  • Per capita PPP GDP:
    • US: $43,000
    • China: $6615
    • India: $3473
(The populations are, roughly, China: 1.3 billion, India 1.1 billion and the US 300 million).
  • In PPP terms, the pie in India is large, but unfortunately so is the population. Even if we make the totally unreal assumption that everyone gets an equal share of the pie, the slice is very very small. If we look at the size of the 2005 pie slice relative to other countries, we find that India ranks 144th and China is 107th. The US is 3rd.
  • Of course, income distribution is extremely unequal in both India and China, so poverty is widespread. Rural-urban disparities are huge. However, China is doing much better than India on a variety of fronts, both in terms of infrastructure as well as in terms of basic human development. This article provides the details.
In India, people revel in the media hype about growth rates and celebrate how economic reforms undertaken in 1991 (or liberalization/globalization) have worked wonders. As this paper points out, a look at the data makes it apparent that the high growth period started at least a decade earlier. This makes India's growth period roughly coincident with China's. China is already far ahead of India and pulling away even further.

One more indicator of China's rapidly increasing economic power is the astounding level of its foreign exchange reserves. These are now close to the $1 trillion mark, growing at about $20 billion a month. India's forex reserves are at a mere $167 billion.

I have an analogy for the Indian frame of mind. Imagine you are running a 100 m race. When you reach the 10 m mark, you turn around, look back, and say: "Look at how wonderful I am! I have come so far from the starting line!" Most of the other runners are beyond the 60 m mark. The only other runner comparable to you is at the 40 m mark and gathering speed. You pat yourself on the shoulder and start looking for the champagne.