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You could say Jagroop Singh is succeeding. He has 65 times as many cows as he did just one decade ago. Of course, back then, he only had one cow.
He is now making far more money, though. He receives 15 rupees for every litre of milk — three times what he made just two years ago. The milk, he sells to Nestle India, whose nearby factory blasts it into a powder and sells it abroad.
But Singh, among others, has stopped growing grain. And thanks to droughts and the subsequent rice shortage, grain prices have skyrocketed.
In a capitalist economy, increased efficiency = increased profit, and increased profit = improved lifestyle. This is the central guiding principle. By that standard, India, whose economy is growing 9% a year, is succeeding.
But in the agricultural sector, India's growth has declined, from 4.7 per cent between 1992-1997 to just 1.5 per cent between 2002-2006. And see, therein lies the rub. In places like India and China, more people have more money. They live in the cities, and naturally, they expect to eat more diverse food, food that is usually imported.
They have no grain, so they live off the grain of others. Americans pulled a similar trick in the housing market, when they bought up sub-prime mortgages using loans that were beyond their means to repay. In both cases, the idea is that future growth will make up the difference.
And in general, it has! US gross domestic product has risen constantly for years, and along with it, inflation. The idea that our production might flatten out... or drop... is unthinkable! That's why it's called capitalism, after all- our job is to convert resources into capital, and use that capital to encourage further growth.
But, can we realistically expect this growth to continue forever? Singh may find himself with 65 bony cows, and not enough grain to feed them!
The wise man, they say, lives within his means. Capitalism pushes for growth at all costs, even if those costs are beyond your means. Can that possibly be wise?
Justin Leverett no longer sleeps. 🙂
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