The diverse shades of economic growth

Imagine a government getting 1,000 persons to dig a hole, paying them ₹300 a day for the job, and another 1,000 persons to fill it up at a similar cost. National GDP would increase by ₹6 lakh, but, at the end of the day, there would be no asset created for human betterment. Yes, GDP has grown, but has the economy?

Now consider that much the same thing is happening in modern weapons technologies, many of which are awesome. Each nation wants to be able to defend itself, and the larger ones want to be able to bully smaller ones. Hence, the quest for the ‘ultimate’ weapon, which would make the one possessing it invincible and, if it desired, being able to conquer others.

Billions are spent on building weapons (roads, in our example) which are not going to be used and so are assets that do not contribute to economic growth, though they do, in conceptualising and in building them, contribute to GDP growth.

The US built, and is the only country to have used, a nuclear bomb, to defeat Japan and end WWII. But Russia also built up a nuclear arsenal; so neither had an advantage. Now several countries have nuclear bombs, including North Korea, which is threatening to use them.

With warfare becoming increasingly remote (using drones) and automated, countries are developing incredible systems to block attacks. These are already in use. Russia has an airbase, Khmeimim in Syria, which recently came under attack from unidentified drones with explosives. It shot down seven and captured three drones. Its Kharuska-4 system allowed it to do so.

The US is not lagging behind. It is rumoured to be ready with a hypersonic SR-72 aircraft. A November 16, 2017, article in Daily Mail said that China is to test a hypersonic plane that can fly at an incredible speed of 26,843 mph and hit the US in 14 minutes!

All this means that India, too, will have to spend resources acquiring or developing these technologies to be able to defend itself. So will other countries. Scarce resources needed to do other things which can improve the quality of life of citizens, will go to build these weapon systems.

For example, Jakarta, a city with over 30 million people, is sinking, partly due to global warming but largely due to faulty management of the city. Its citizens are digging illegal wells, thus draining the underground acquifiers of water. Acquifiers are like cushions, on which the city rests, and so Jakarta is sinking.

Much the same scene is being played out in Bengaluru.

These and several other issues (jobs, speeding up the judicial system, etc) are what our politicians ought to concentrate on.

Instead they are busy creating unnecessary fires, and dousing them.

We have a long way to go to tap the potential this country has to offer.

(The writer is India Head — Finance Asia/Haymarket. The views are personal.)