CAN INDIA BE GREAT WITHOUT A CCC?:

Software of Democracy (THOMAS L. FRIEDMAN, 3/21/04, NY Times)

While India has the hardware of democracy — free elections — it still lacks a lot of the software — decent, responsive, transparent local government. While China has none of the hardware of democracy, in the form of free elections, its institutions have been better at building infrastructure and services for China's people and foreign investors.

When I was in Bangalore recently, my hotel room was across the hall from that of a visiting executive of a major U.S. multinational, which operates in India and China, and we used to chat. One day, in a whisper, he said to me that if he compared what China and India had done by way of building infrastructure in the last decade, India lost badly. Bangalore may be India's Silicon Valley, but its airport (finally being replaced) is like a seedy bus station with airplanes.

Few people in India with energy and smarts would think of going into politics. People don't expect or demand much from their representatives and therefore they are not interested in paying them much in taxes, so most local governments are starved of both revenues and talent.

Krishna Prasad, an editor for Outlook magazine and one of the brightest young journalists I met in India, said to me that criminalization and corruption, caste and communal differences have infected Indian politics to such a degree that it attracts all "the wrong kind of people." So India has a virtuous cycle working in economics and a vicious cycle working in politics. "Each time the government tries to put its foot in the door in IT [information technology]," he said, "the IT guys say: `Please stay away. We did this without you. We don't need you now to mess things up.' "

That attitude is not healthy, because you can't have a successful IT industry when every company has to build its own infrastructure. America's greatest competitive advantages are the flexibility of its economy and the quality of its infrastructure, rule of law and regulatory institutions. Knowledge workers are mobile and they like to live in nice, stable places. My hope is that the knowledge workers now spearheading India's economic revolution will feel compelled to spearhead a political revolution.

Ah, yes, infrastructure boondoggles as a sign of national health--one forgets that at the New York Times the New Deal worked. India's problems are significant, but falling behind China in the race to build highways to nowhere is not among them.

Posted by Orrin Judd at March 21, 2004 9:40 AM