BOMBAY INDIA 11 DECEMBER 2006 – It’s over. The words came back to us yesterday. We were meeting with a man who advises wealthy Indians on what to do with their money.
“It’s all changed here… especially in the last five years. I mean the attitude… everyone is so ambitious. There is no social stability… because everyone is trying so hard to move up.
“You know… one thing that is nice about India is that a middle-class family can get a lot of household help, because there are so many people at the bottom willing to work for nothing. But we may be the last generation to enjoy that advantage. Those people that you see sleeping on the sidewalks, for example. They are probably not going to do that forever. They have jobs. They are probably from the country… they’ve come into town recently because this is where the opportunity is.
“There really aren’t any unemployed people. If you’re unemployed in Bombay, you starve to death. No, everyone finds work. And these people come from the country… and they get little jobs. And they sleep on the pavement and look for other opportunities. And then they get jobs here and there… maybe they’ll learn to drive a car and become a driver for a middle class family.
“But here’s the big change. He won’t stop there. He’ll bring his family into the city. And he’ll want his children to learn English. And the next thing you know they’ll be going to some technical college… or even going to the United States or England for their educations. And then… well, it’s a different world.”
Yes… very different. Because he’ll be competing with engineers, doctors, lawyers, and patent examiners from all over the world.
But wait… as soon as they enter this international professional class, their wages rise. One thing we’ve learned – and we are already practically an expert; we’ve been here 18 hours – is that, at the top, there isn’t that much difference between prices here and prices in the West. A financial analyst here can cost as much as one in the United States. A hotel room at a top hotel is about the same as in London. Even office space is not that much different. And property generally – can be more expensive than in downtown Baltimore.
The big difference is this huge pool of striving, groaning, sweating labor. It keeps coming in from the country – where there are said to be some 750 million people in the countryside…whose work is gradually being made superfluous by multinationals moving into the market and globalized commerce. They sleep on pavements… in railway stations… in mean tenements with a dozen to a room…. in crowded shanty towns in the slums on the fringes of the big city. Where will they go? What will they do? Will they not continue to rub down the American working stiff’s salary? Will they not continue coming into town… and scratching their way into the middle classes? Will they not push and shove their way into direct competition with the West… and maybe even surpass it? Maybe…
And More views:
- Ooh la la… economist Robert Shiller studied U.S. housing prices back to 1890. They follow certain patterns, he noted… just like everything else. When they depart too far from the long-term trend – roughly the same trend as GDP growth – they regress to the mean thereafter.
Well, today they are farther from the long-term trend line than ever before. They have a lot of regressing to do, in other words. If you project pass corrections into the future you get a 43.5% fall in housing prices coming… which will take until 2011 to accomplish.
- Remember ‘Freedom Fries,’ dear reader? Who can recall them without embarrassment for the United States? Americans were so outraged when the French refused to go along with the attack on Iraq that they practically declared war on them and symbolicallly fired the first shot by unofficially changing the name of ‘French Fries’ to ‘Freedom Fries’. The French were traitors, said some pundits. The French were cowards, said others. The French were worse than the terrorists, said still others. Fantasist Thomas L. Friedman declared in one of his lame columns that we were actually ‘at war’ with France!
To their credit, the French thought the war would end in a messy disaster and didn’t mind saying so.
Here at The Markets and Money, we guessed that the French were probably right. And now we find that a former U.S. president – Jimmy Carter – agrees. So does a Marine Corps intelligence report; the United States is ‘no longer capable’ of defeating the insurgents militarily, says the report. And along comes the new Secretary of Defense…and he too says the whole thing has become a big mess.
And now the papers are full of explanations for what went wrong. Two popular lines are being proposed:
- The Democrats: war was a good idea, but was mismanaged by the White House
- The Republicans: the war was a good idea…we did the best we could, but those Iraqis just can’t get their act together.
Well, we offer an irritating third alternative: the French were right. The war was a mistake from the get-go. The gods of war were never on our side; they rarely favor the attacker.