HOW WEALTH IS CREATED

By ARVIND BANAVALIKER

 

 

 

 

In his excellent book "The Competitive Advantage of Nations", Michael Porter says : "Firms, not nations, compete in international markets."

Similarly, we need to understand that governments don’t create wealth, only industries do.

In our country, it is customary to say that India is poor because of its large population. It is so very easy to say this that it has become almost like a reflex. No thought is given to centuries and centuries of grinding poverty, to why India became (or remained) a poor country in the first place or whether its continuing poverty itself could have anything to do with its burgeoning population.

To say that India is poor because it has a large population is also to effectively stop all thinking and all discussion. The problem may exist but the answer has been found. There is a certain size of cake and if there are a large number of people to share it, it follows that everyone’s portion must be small.

But what happens if smaller nations, much smaller nations, produce a much larger cake? How are they able to do this regularly, year after year after year? With many locational disadvantages at that! The Netherlands has only l6 million people but its gross domestic product (GDP), US$ 396 million, is much larger than ours. With a population of one billion, our GDP is only US$ 250 billion. Australia has only 19 million people but again its GDP, US$ 349 billion, is larger than ours. Canada has 30 million people and its GDP is US$ 569 billion. The Netherlands has a land area which has been won back from the sea. It has cloudy weather for nearly 8 months of the year. Australia is a large continent but geographically is placed well away from world markets. Canada has a large land area but, at least in the more industrialized eastern part, has summer only for about 5 months of the year.

Further, what if some of these nations, the Netherlands and Australia for example, were actually behind us in GDP only 7 to 10 years ago but have now not only overtaken us but have pulled well away from us?

Would you say then that there was something seriously wrong with our country? There is. There is a sickness, a malaise affecting this country and, therefore, its people. And the sooner we recognize it and acknowledge it and admit to it, the better. It is no longer enough to merely mouth platitudes stating that India is poor because it has a large population.

Of course, it breaks one’s heart to have to admit that there is an illness. But the good news is that, believe it or not, the illness is really not all that difficult to put right. What is more, the remedy is a sure-fire one, meaning, you administer the remedy and begin to see results.

Something dramatic happened in history about 300 to 400 years ago. This was the birth of modern science and technology . This was the birth of modern science and technology. As a result, certain nations in Europe shot forward and others like India and all other developing countries got left behind. Sciences such as astronomy, physics, chemistry, geology, biology, botany, zoology, metallurgy etc truly got started. Technology, the child of science, developed innumerable products from these sciences to make life better and more comfortable for man.

If you look around you, you will see all these products of science. These as the realization or fruition of one or more of the sciences which we have mentioned. The needs of man are considerable. Self-denial and self-abstinence are laudable goals in themselves but we need to reflect how far these national traits in India got in the way of not merely the discovery of modern science and technology in our country but also its willing or unstinted adoption by us after its discovery elsewhere.

The scene we are presented with in India today is that large masses of people have got to make do without even the basic necessities of life. Just think of the enormous possibilities that lie ahead. Think of the food that needs to be produced, the clothing that has to be manufactured, the houses that have to be built, the education that needs to be provided, the roads, transport and communication facilities that have to be organized, the medical care and hygiene that has to be arranged and so on. All this means jobs, jobs and more jobs — for men as well as women!

It can only become possible with the help of modern science and technology and not by anything else. This is what wealth creation is. Governments don’t create wealth, politicians don’t, bureaucrats don’t, only industries do. Religions don’t create wealth, journalism doesn’t, law doesn’t, literature doesn’t, even mathematics (it is only a medium of expression) doesn’t, only science and technology does.

What is even more important, technology changes man. Think of yourself in these two ways : say, before you learned to drive a scooter or a motor car and after you had begun to drive. You were now a different person altogether. Privately, you thought to yourself that you now could do this as well as anybody else. Later, a thought crept into your mind that if could master this, you could attempt almost anything else you chose. You began to feel that you were as good as anybody else in the whole world. But this glowing feeling came with a rider attached to it. If you were as good as anybody else in the entire world, then surely everyone else was as good as you were. See where technology leads you?

It leads you to an unquenchable sense of self-esteem and it also leads you, wonder of wonders, to a healthy respect for the rights and the abilities of others. All technology does this : whether it be a telephone, a bicycle, a camera or an airplane. We all agree that television and jet travel has annihilated distance and made the world a much smaller place. In the process, it has changed our very manner of thinking. This is another way in which, as the saying goes, technology determines culture.

Technology, therefore, changes intimately the life of every man, woman and child in a country and it these people that then take that country forward. Technology liberates the mind and these liberated minds then help to create more wealth and propel the country forward.

But technology is not in charge. Science is. Science is only another name in Latin for truth. Science is and should be the governor attached to the accelerator pedal. Science helps you decide, given the circumstances of your country (or even your circumstances as an individual or those of your family as a unit) what goods you need to have and what not, what kinds of technology to get, how employment-intensive industries can be favoured, how to extract the most from out of the littlest technology (should it come to that) and so on. It even teaches you virtues such as cleanliness, orderliness, punctuality, individuality, integrity etc. This is exactly how it happened in the developed countries.

The essential principles of modern science and technology are simple and easy to absorb. We began by saying that Governments don’t create wealth. Instead, in a non-ideological way, if the government of a country truly understood what does and singlemindedly pursued this path, it could immediately set its people on the road to prosperity. In doing this, it would help to solve its economic, political, social and philosophical problems as well.

 

It can only become possible with the help of modern science and technology and not by anything else.