Why is India still so poor?

Wednesday, January 8th, 2025

India is by far the poorest country Bryan Caplan has ever visited:

While I am well aware that life in India has drastically improved since 1991, the poverty that remains is still pretty horrifying. Uber drivers were lucky to net ten dollars a day. In every city I visited, I saw children under the age of ten begging in the midst of chaotic street traffic. Sometimes they were with their moms or older siblings, but these pitiful kids usually seemed to be all on their own. While most of them were inured to their plight, I also witnessed a few sidelined child beggars crying their hearts out with no one to comfort them. All Effective Altruism aside, I was tempted to hand each of them a day’s worth of rupees. But I didn’t. The situation was so hellish I felt paralyzed.

Why is India still so poor? “Lack of human capital” is only a minor problem. Even the lowest-skilled Indian workers I saw could easily prosper in the United States as drivers, waiters, cooks, maids, and janitors. “Dysfunctional culture” is also a distraction. Ordinary Indians have a great work ethic, grace under pressure, and passable English.

OK, so why is India still so poor? All libertarian bias aside, India’s central problem is absurd regulation and state ownership. Absurd how? To start: The Indian government strictly protects legal employees, so 90%+ of Indians work “informally.” Our bus driver to Agra was required to take a rest stop every two hours — in a country packed with tuk-tuk drivers zooming around like maniacs. The government caps the maximum size of farms — and bars foreigners (including Non-Resident Indians!) from owning farms at all. A great way to strangle the food supply and impoverish farmers at the same time. The Indian government also crushes construction, most notably with its infamous Floor Area Ratio regulation — in a country where plenty of people sleep on the streets. Developers aren’t even allowed to build skyscrapers in slums — and housing prices in major cities rival those in top Western cities. What about state ownership? Locals told me that private Indian schools cost parents one-tenth as much as public Indian schools cost taxpayers.

Indians often speak of British influence, for good and ill. No one, however, spoke of Soviet influence, which was strong from India’s independence until the USSR’s 1991 collapse. Independent India aped the Soviets’ “Five-Year Plans” until 2017, which probably explains the crazier agricultural policies. For me, the Soviet influence was most blatant at the airports. Not only are they ridiculously bureaucratic, with two or three times the normal number of redundant paperwork checks; India is also the only country I ever visited that makes it hard to leave. Seriously, what were they planning on doing to me if my exit papers were not in order?

India is the most unequal country I have ever visited. Officially, granted, it’s more equal than the U.S. But I strongly disbelieve the official statistics. In India, the worst slums I’ve ever seen are walking distance from some of the most lavish malls I’ve ever seen. These malls were vast and packed, their prices were as high as northern Virginia’s, and almost none of the customers were foreign. The upshot is that plenty of rich Indians were spending as much on a fast food lunch or a two pints of ice cream as an Uber driver earns all day.

India is the filthiest country I have ever visited. Outside a few prime locations, garbage and rubble line the streets. Skinny stray animals — including stereotypical sacred cows — abound. 98% of the inhabited areas I saw were comparable to the bottom third of Palermo, Italy. And that’s saying a lot!

India has the most frightening traffic of any country I have ever visited. Walking from one tourist site to another — or even from your hotel to the closest restaurant — is almost impossible. Usable sidewalks are virtually non-existent. Except in the dead of night, the roads are jammed with a kaleidoscope of buses, cars, tuk-tuks, pushcarts, bicycles, horse-drawn wagons, random cattle, and stray dogs. The three times I tried walking, I ended up fleeing for safety in a matter of minutes. My taxi driver assured me that the Jama Masjid was only two minutes away on foot. But after vainly trying to navigate the traffic, I beat a hasty retreat without even gazing upon the famous mosque.

Comments

  1. Bomag says:

    “Dysfunctional culture” is also a distraction.

    LOL. The cope is strong with this one.

    Interesting that he brings up Soviet influence. Wonder his take on China, also with Soviet influence, coming out much differently.

  2. Bob Sykes says:

    Average IQ’s, ca. 2024:

    India: 76
    China: 104
    Japan: 106

    https://worldpopulationreview.com/country-rankings/average-iq-by-country

  3. Kgaard says:

    Yeah exactly … “dysfunctional culture” is NOT a distraction. It is the core of the whole problem. But Caplan can’t say that because it opens a can of worms that his entire evolutionary strategy is committed to keeping closed.

  4. Jim says:

    Indians are poor because India is corrupt, and India is corrupt because Indians are corrupt. To foster corruption fastest and most reliably, import Indians.

  5. T. Beholder says:

    The “dysfunctional culture” is downstream of great many things. It’s a symptom. Still, they are not apathetic. And at least tend to see a patronage scheme for what it is, rather than being stumped by childish kayfabe.

    “…until 2017”

    Indeed. That’s when things began to turn around.

    https://web.archive.org/web/20170313151218/economictimes.indiatimes.com/news/politics-and-nation/uttar-pradesh-rejects-politics-of-appeasement-says-yogi-adityanath/articleshow/57589082.cms

    Back then a Hindu man was addressing a local duckface syndrome sufferer on Twitter with “Lament louder, O yatudhana, cause from your screeching mouth it is only praise!” So far from hopeless. Immune system can be trained, after all.

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