India is being transformed through free enterprise, Arthur C. Brooks, the president of the American Enterprise Institute, wrote in a recent Ripon Forum article, and if the country continues to grow at its current rate it will cease being a “poor nation” in only a few decades.
The change in India from his first trip there more than three decades ago to the present was striking for Brooks.
“What I found in the streets of Chennai shocked me,” Brooks recalled of his first trip to India as a 19-year-old. “I saw poverty I had never encountered before: lepers, malnourished children, and a constant stream of beggars. Degradation and desperation seemed to be everywhere.”
Since that first trip, the percentage of those living on a dollar a day or less dropped dramatically, down 80 percent since 1970, adjusted for inflation, owing in large part to embracing free enterprise.
“I went to India to get beyond the data and speak to actual people whose lives had been transformed by the spread of free enterprise,” Brooks said.
To fully understand the rapid changes taking place in India’s economy, Brooks visited Dharavi, a Mumbai slum that is home to more than 700,000 people. The majority of those who live in Dharavi, which is approximately two-thirds the size of Central Park, also work there, putting every inch of land to use.
“The ramshackle houses are all improvised, one piled on top of the other, built without permission over many years,” Brooks said. “Even in daytime, the walkways are dark as night. You have to watch your head and your feet at the same time.”
But Brooks was struck not by what Americans would see as “inner-city poverty” but by the industriousness of those who live there.
“I visited a makeshift factory where workers sorted pieces of plastic, intensely washed them and dried them in the blazing sun,” Brooks said. “And that was just one factory. There are at least 15,000 factories there, and fully 85 percent of Dharavi’s residents work inside the slum itself.
“Despite the overcrowding and terrible sanitation, Dharavi is a magnet community. Migrants from all over India flee desperately poor villages, pouring into the slum to seize the chance to work. Everyone I talked to — everyone — told me that Dharavi was on its way up. It is a relentlessly optimistic place.”
The turnaround, Brooks said, happened in the last 20 years, when free enterprise took the place of Indira Ghandi’s push for socialism.
“[I]n the past 20 years, free enterprise has transformed India,” Brooks said. “Between 1965 and 1975, per capita income in India rose by just 0.3 percent annually. But from 2005 to 2013, that figure has more than doubled, from $740 to $1,570. If India continues growing at these rates, it will cease to be a poor country in the next few decades.”
The lesson, Brooks said, is that while it is easy to take free enterprise for granted and even to focus solely on its imperfections, Dharavi stands as a case study offering striking proof of the transformative power of free enterprise.
“The solution is never to retreat from capitalism or regret material abundance,” Brooks said. “It is to build an even more robust and inclusive free enterprise society.”