I have been in India for one week and will likely stay here for two more months.
Although I write about India all the time, whenever I am physically away from it, I somehow lose touch with how things actually work here. When someone gives me a time to meet or makes a commitment, it takes me a while to re-establish in my mind that such “promises” mean nothing here. When I see poverty and human-rights violations all around me, my first impulse is to do something. But after a few encounters, I realize that the victim is almost always just the other side of the same coin.
I increasingly think of Hinduism as a sort of operating system. Indians process information through Hinduism. I am not fond of Christianity, but it does have a few moral anchors and some vague links to rationality. Hinduism has none of these.
It is easy to blame government regulations for the lack of manufacturing in India. But the deeper problem is that many Indians are extremely wild in their thinking—superstitious, irrational, and incapable of principled abstraction. Hinduism gives no real value, except rhetorically, to “truth” and “integrity.” In fact, I doubt that Hindus make much abstract or principled connection with these words at all. It is a religion of materialism, expediency, and rationalization. Such people simply cannot be trained to work in factories, because Hinduism stands in direct conflict with technology and science. Alas, people seem to be becoming more religious.
The protests after last year’s rape case in Delhi forced me to rethink. Had India changed? After much thought and many conversations, my conclusion is that the protests were likely driven by a very simple fact: a seemingly higher-caste girl had been raped by a group of lower-caste men. Caste-based thinking—albeit in a different garb—still dominates India. The protests had little to do with any genuine awakening.
I went to a wedding in a very small town. On the way, I saw non-stop oceans of poverty, tyranny, and environmental degradation. For a few months, I have been asking myself why I face such vicious verbal and email attacks when I talk about India’s obvious backwardness. My conclusion is that what I see and what other Indians see are completely different. Many middle-class Indians simply do not regard the 80% poor of India as fully human. In their mental constructs, poor people barely exist. Ironically, it is I who gets blamed—with all sorts of negative connotations—for being a “capitalist.”
Despite being a radical anarchist, I think Mao might have cleaned up China’s cultural slate and baggage in certain ways.
The host family at the wedding—my cousin’s family—not only refused to accept any dowry, but also refused to accept any gift from anyone. This is extraordinary. They are from a very remote place and are not rich. Weddings are often a good opportunity for people to make money. Such islands of sanity and integrity give me hope. A few tears swelled up in my eyes.
Economic growth
In my view, India must fall into smaller pieces—perhaps 50 nations—before there is any hope that it will truly awaken and join the mainstream world. There are millions of structural problems in India that slow the economy and create massive conflicts.
Despite this, economic growth should continue, for the simple reason that technology is reducing the real cost of living and doing business for the poorest people. For someone with a per-capita GDP of $1 a day, improved connectivity has major growth implications. As I like to say, in such an environment, even the Jerry Springer show has educational value. Economic growth will likely coexist with increasing religiosity, nationalism, chaos, and the eventual break-up of India.
Gold
Fake jewelry seems to have made huge inroads. Indians are still buying a lot of gold, but increasingly in the form of bricks and coins. Gold will likely remain the preferred way for Indians to save.
But there is a problem. The Indian currency has fallen by about 20% in recent months, so while gold has risen significantly for Indians, it has not risen in US dollar terms. I think the Indian rupee must fall about 50% more, because it is truly expensive for an economy at India’s stage of development.
So, if the rupee falls, gold might still rise by 50% in rupee terms without rising at all in US-dollar terms. Moreover, if gold rises by 50% in rupee terms, it will likely kill the gold market in India, because Indians already allocate the majority of their savings to gold and property. This is a true Catch-22 situation. There is simply no extra cash left for higher-priced gold.
I see absolutely no hope for India’s economic growth rate to increase. The low-hanging fruit has been picked, and in the meantime, the government and society have acquired all the bad habits. So, although I tell my mother to keep her cash in gold, India might not be much of a factor for gold bullishness in US-dollar terms going forward.