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Understanding Economics
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Found this interesting video from the same channel that made the video on purchasing power parity between India and US.
There's nothing we don't know about the state of the UK's economy already:
1) Dominance of London while the rest of the UK fall behind.
2) Skyrocketing cost of living including cost of housing & energy.
3) Crumbling NHS with staff quitting: this hit home since my cousin was one of those who left.
Reasons?
She specifies COVID and 14 years of austerity (which we've already discussed) but didn't mention Brexit.
Another interesting fact about Britain (not related to the video) is the legacy of Maggie Thatcher. I've never seen a figure more polarising in a Western democracy even decades after she left power. The Southerners adore her, almost like a demi-god who can do no wrong and saved Britain from the evil unions while the Northerners blame her for de-industrialising the UK, changing the focus to finance and the services industry that continued to help London grow.
The UK had a lot going for it:
1) It has sufficient hydrocarbon resources in the North Sea.
2) Had the ability to pull high-quality immigrants that were unrivaled by any other country apart from the US.
3) A robust manufacturing (coming out of WW2) and tech sector.
4) Giving birth to English - the most widely spoken language on Earth.
5) An R&D superpower with universities rivaled only by American Ivy League universities.
6) Cultural superpower, again only rivaled by the US.
I deliberately left out the empire since that has historically not always helped countries flourish in the modern era (eg. Portugal, Turkey).
It remains to be seen if the UK manages to pull back at some point, while it's interesting to see our former colonizer falling off a cliff, the UK till Brexit hosted more Indian investments & diaspora than the rest of the EU put together.
This is not a European problem though countries like France & Belgium are facing some of the same issues. The Netherlands and Denmark have been doing well while countries like Poland are rising to challenge their Western European counterparts.
https://www.youtube.com/watch?v=RbIF...channel=AevyTV
Quote:
Originally Posted by AltoLXI
(Post 5920344)
So the trade wars begin.
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More of a trade skirmish, rather than a battle or war.
End of the day, it is a negotiation tactic and very likely, Canada and Mexico will fall in line. After the initial mandatory bravado of course (cue Colombia). Using tariffs as a stick, Trump wants Mexico and Canada to "do more" when it comes to halting the flow of illegal immigrants and drugs into USA from these countries.
The conventional wisdom is that this will hurt US economy badly and will result in spike in inflation. That theory has big holes, but even if true, the countries putting counter-tariffs too will face the exact same situation. So logically, they will look to de-escalate rather than face future economic uncertainty.
This is Trump playing a game of chicken. The classic game of two cars hurtling towards each other at top speed to see who will swerve first. Only variation here is that Trump is driving an 18-wheeler truck, Trudeau is driving an F-150 and Mexican President is on a Corolla!
Can Canada-USA afford this tariff war? When tariffs are imposed on any country, the importers usually look for alternative. How does one look for alternatives if the country in question is half the entire oil import? Canada can't afford to provide 10% discount all of a sudden.
Canada has decided to fight back.
https://www.youtube.com/watch?v=yV101ei8mu8
And Trump will increase tariff if Canada retaliates.
https://www.youtube.com/watch?v=G3nZwivptaY
17.7% of Indian exports are to US of A. This is 2022 data.
and US of A is a major trade partner in almost all the products being exported.
Meanwhile Canada wants customers to buy Canadian products
Quote:
Originally Posted by AltoLXI
(Post 5920699)
17.7% of Indian exports are to US of A. This is 2022 data.
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Remains to be seen what happens when Trump turns his attention to Asia. India has sort of pre-empted any threats by reducing tariffs for Harleys and imported cars - something that the EU had been trying for 2 decades.
The graphs don't show the massive dependence on the US for the export of services. AFAIK, the US accounts for most IT exports and it's an easy target for MAGA folks as a venture that steals potentially high-paying American jobs - that too white collar.
It remains to be seen how US institutions which have been the envy of the world bear the brunt of this multi-pronged assault. Austerity (which is the less fancy term for what Elon & Vivek are trying) might be good but being reckless at it could stifle long term growth and hard to fix after a period of time as witnessed with the UK. Are there any case studies where austerity has actually helped an economy?
Quote:
Originally Posted by dragracer567
(Post 5920804)
It remains to be seen how US institutions which have been the envy of the world bear the brunt of this multi-pronged assault.
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Maybe this is by design. Arnaud Bertrand's take on how the US's relationship with world is changing (emphasis mine)
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It's becoming clearer and clearer that we're looking at a seismic shift in the US's relationship with the world, between:
1) The US dismantling its foreign interference apparatuses (like USAID)
2) Marco Rubio stating that we're now in a multipolar world with "multi-great powers in different parts of the planet" and that "the postwar global order is not just obsolete; it is now a weapon being used against us"
3) The tariffs on supposed "allies" like Mexico, Canada or the EU
This is the US effectively saying "our attempt at running the world is over, to each his own, we're now just another great power, not the 'indispensable nation'."
It looks "dumb" (as the WSJ just wrote) if you are still mentally in the old paradigm but it's always a mistake to think that what the US (or any country) does is dumb.
Hegemony was going to end sooner or later, and now the U.S. is basically choosing to end it on its own terms. It is the post-American world order - brought to you by America itself.
Even the tariffs on allies, viewed under this angle, make sense, as it redefines the concept of "allies": they don't want - or maybe rather can't afford - vassals anymore, but rather relationships that evolve based on current interests.
You can either view it as decline - because it does unquestionably look like the end of the American empire - or as avoiding further decline: controlled withdrawal from imperial commitments in order to focus resources on core national interests rather than being forced into an even messier retreat at a later stage.
In any case it is the end of an era and, while the Trump administration looks like chaos to many observers, they're probably much more attuned to the changing realities of the world and their own country's predicament than their predecessors. Acknowledging the existence of a multipolar world and choosing to operate within it rather than trying to maintain an increasingly costly global hegemony couldn't be delayed much further. It looks messy but it is probably better than maintaining the fiction of American primacy until it eventually collapses under its own weight.
This is not to say that the U.S. won't continue to wreak havoc on the world, and in fact we might be seeing it become even more aggressive than before. Because when it previously was (badly, and very hypocritically) trying to maintain some semblance of self-proclaimed "rules-based order", it now doesn't even have to pretend it is under any constraint, not even the constraint of playing nice with allies. It's the end of the U.S. empire, but definitely not the end of the U.S. as a major disruptive force in world affairs.
All in all this transformation may mark one of the most significant shifts in international relations since the fall of the Soviet Union. And those most unprepared for it, as is already painfully obvious, are America's vassals caught completely flat-footed by the realization that the patron they've relied on for decades is now treating them as just another set of countries to negotiate with.
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Link
Quote:
Originally Posted by dragracer567
(Post 5920804)
Remains to be seen what happens when Trump turns his attention to Asia. India has sort of pre-empted any threats by reducing tariffs
...
Are there any case studies where austerity has actually helped an economy?
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This is not a trade war that Trump has unleashed but a war against
Illegal immigration and deadly Fentanyl drug - both the issues considered as existential threats by Trump, Musk et all - using tools of trade (tariffs).
Trump may eventually turn his attention on Asia for trade wars but there won't be any drastic moves like he has done against Canada, Mexico, and China.
India also
reportedly pre-empted by agreeing, before Trump's inauguration, to take back around 18,000 Indians who are in the US illegally. (That announcement got S.Jaishankar a front row seat to Trump's inauguration lol:). As long as India keeps to its promise of bringing back illegal immigrants from the US, we may not get into Trump's crosshairs.
Quote:
Originally Posted by dragracer567
(Post 5920804)
Are there any case studies where austerity has actually helped an economy?
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Yes. President Javier Milei of Argentina has drastically cut down spending, subsidies, and has seen good success in bringing down inflation and getting Argentina back on the growth path in the last year.
https://www.youtube.com/watch?v=VX7rws4lPg8
Quote:
Originally Posted by DigitalOne
(Post 5920878)
This is not a trade war that Trump has unleashed but a war against Illegal immigration and deadly Fentanyl drug - both the issues considered as existential threats by Trump, Musk et all - using tools of trade (tariffs).
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Trump pauses Mexico tariffs for a month after Mexican president Claudia Sheinbaum agreed to send 10,000 troops to the border to stem the flow of illegal immigrants and Fentanyl into the US.
Source
I reckon Justin Trudeau may not like to do the same but he is already on the way out. It is just a matter of time before Canada also complies.
With all the pressure from Trump regarding tariffs, is India ready to drop tariffs on US goods?
We are now the 5th largest economy. Do we really need to protect domestic market from US products? It is not like US can build any products cheaper than us.
This is super-confusing. Not sure what he is trying to convey here regarding VAT (GST?):
https://x.com/realdonaldtrump/status...XHelEIRUMlD-NA 
The second part about non-tariff barriers is fine. China is the biggest culprit here. For eg, no foreign tech companies like Google/Meta/OpenAI are allowed to operate in China. Tech enabled companies like Amazon/Uber were magically uncompetitive in China, while being successful in rest of the world.
^^
No customs or GST for made in USA products!!
Like cars, even if India reduces customs duty on cars, we have 50% GST, apart from EVs which he sees as a tariff.
Anyone keen on ordering F-150 at 50 K USD or 45 lac INR - no customs or GST - get readylol:lol:
Quote:
Originally Posted by SmartCat
(Post 5928290)
This is super-confusing. Not sure what he is trying to convey here regarding VAT (GST?):
.
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Even I read that with much alarm only to check and be reassured that GST is not levied on exported products. :)
Came across this interesting analysis on X by @Surajbrf on the evolution of India's GDP per capita (in terms of PPP) in comparison to other developing countries around the world. The quotes below are directly from his post (linked
here ) as well as the images:
Quote:
This new thread will take a visual view of the growth of Indian per capita GDP in PPP terms.
Colour code:
Green: Richer than India
Red: Poorer
Pink: near par
Let's start the journey 40 years ago in 1985. Most of Africa was richer. India was on par with Chad.
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Quote:
Fast forward 15 years to 2000. Not a lot has changed. It wasn't a mischaracterization'for India to be viewed on par with Sub-Saharan Africa well into the 2000s - income wise India was middle of this pack . That's just how bad things were 50 years into the republic.
2/
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Quote:
Things were not much better looking at Asia in 2000. Pakistan was way ahead, with a GDP PPP per capita higher than even China then. Only Cambodia had a lower income in the ASEAN.
India was poorer than Haiti at the turn of the century. All of the Americas were richer.
3/
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Quote:
Step forward to 2015, and the picture starts to make some improvement. It's been a full generation since liberalization. Where's India ?
It's started to shed the equivalence to Sub-Saharan Africa, but still poorer than large parts of Africa. Lower -> lower middle income.
4/
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Quote:
In 2015, we also see the first cases of Indian GDP PPP per capita exceeeding countries in the Americas - first Haiti and then Honduras.
However you have to squint to see it, nothing much to see yet.
That was just how things were a mere 10 years ago. And how about now ?
5/
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Quote:
This is India in 2025. On par with Namibia. There are only 7 major countries in Africa that are wealthier - Algeria, Tunisia, Libya, Egypt, Gabon, Botswana, S. Africa.
With a GDP PPP per capita of $12,000 in 2025 vs $5100 in 2015, the change looks dramatic.
6/
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Quote:
And how about the Americas - how does this number compare to Central and Southern America ?
There are several countries India has outstripped: Bolivia, Nicaragua, Venezuela... close to El Salvador, Ecuador and Paraguay which sit in the $12-17K income range.
7/
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Quote:
Turning around to Asia, here's how Indian income relates to the rest of Asia today in 2025.
Middle of the pack vs the ASEAN
Higher than a handful of the Middle East
Higher than two ex-USSR entities - Tajikistan and Kyrgyzstan, similar to Uzbekistan and the Philippines.
8/
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Quote:
Zooming in closer to the Middle East, India in 2025 has a higher GDP PPP per capita than Yemen, Jordan, Syria and Palestine, on par with Lebanon.
How about Europe ? Kosovo is at $17K At current growth rate, Indian will near Kosovo / Ukraine / Moldova in the early 2030s.
9/
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Quote:
So far we used data. How about forward looking estimates for 2030 ? Current projections indicate parity with Tunisia and South Africa by then.
2030 is when the continental reference switches to the Americas here, not Africa where only a handful of richer countries remain.
10/
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My Thoughts:
1) This is primarily a comparison using PPP, nominally, India is probably at least a decade away from reaching the relative position in terms of GDP per capita. That said, PPP comparison does make more sense in many aspects. For example, when you compare Vietnam & Ecuador - two countries I'm familiar with, Vietnam is behind Ecuador in terms of nominal GDP which just doesn't make sense, Vietnam seems more developed in every conceivable way and is ahead in PPP terms, which does make sense.
2) This is as much about India's growth story as it is about Africa's failure to reach its potential. Countries that held immense potential like Ethiopia & Nigeria are embroiled in civil war while countries that were industrial powerhouses like South Africa and Egypt have seen an irreversible decline. Exceptions include countries like Botswana with a strong rule of law while Kenya with its relatively strong democratic traditions also seem at a better place.
3) Latin America is seeing a decline which might prevent them from ever becoming developed economies. Mexico and Brazil were economic powerhouses that are being left behind both by higher performing Asian peers and also an overpowered US economy. Argentina and Chile which were considered developed countries until recently don't show any signs of catching up though Argentina's recent economic policies might change things.
4) India has generally shown remarkable growth in the 21st century despite its massive size, diversity and democratic traditions (the last might've actually helped given the diversity) but as the examples from Africa and South America show, unlimited growth is never guaranteed.
5) Some of the data was very surprising: eg) India getting richer than Jordan. I actually verified this to be sure. Lebanon was a much richer country - a sad state of affairs!
6) While India is outgrowing its African and South American counterparts, the case is different in Asia as Vietnam still outgrows India while having a higher GDP per capita while countries like The Philippines, Thailand and Malaysia continue to grow modestly while already having a much higher GDP per capita, making it difficult for India to catch up in the medium term. Things look better in the neighborhood as India went from being behind Bangladesh in 2020 to potentially catching up with Sri Lanka giving India the third highest GDP per capita only behind The Maldives & Bhutan in 2030.
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