- A thought experiment for macro people: What if we were to give every citizen in the US a "tax-free year" - Do you think an increase in consumer spending justify the loss in tax revenue? (Corporations would still be taxed as per in this particular experiment)
- Catalyst Capital tables $2 billion rival bid to acquire Hudson's Bay
- The Bear Case on India (Part 2)
| Posted: 27 Nov 2019 03:08 PM PST I wonder what impact this would have on consumer debt too, if each worker were to receive, essentially a 25+ percent pay rise in a single year. Does anyone know if this has ever been done before? (Other than in obvious tax havens) [link] [comments]  |
| Catalyst Capital tables $2 billion rival bid to acquire Hudson's Bay Posted: 27 Nov 2019 01:57 PM PST |
| The Bear Case on India (Part 2) Posted: 27 Nov 2019 05:50 AM PST This has lots of images and this sub doesn't allow me to post them without messing things up. So please go the the link (highly recommended): https://pradyuprasad.wordpress.com/2019/11/26/__trashed/ Text only (click on link above if you want a nicer experience):
In the previous part I had shown that the demographic dividend is actually a demographic dud. We will have no "dividend" if half the country does not participate in the workforce. But what happens to those enter the workforce? Are they skilled enough? And will they get jobs? I'll answer these questions in this post. I am going to argue that the Indian workforce has a large skill problem with university degrees being close to worthless, and a rapidly growing share of the educated unemployed. Such is the state of education in India today. We have two distinct phenomena: a group of you Indians, who will grow up know know how to do basic arithmetic, along with an educated group who cannot find jobs. See image here: https://imgur.com/a/Db6cUQu This graph shows unemployment rates by education level in India. The striking part of this graph is that graduates has an unemployment rate of around 15% right now, while those with no education have unemployment rates of close to zero. This shows the main challenge in India: we have low quality graduates and this will make the demographic dividend (which isn't all that great as shown in the previous post), less effective and unlikely to drive economic growth at all. In fact we will be seeing the exact opposite of the conventional prediction that India's demographic dividend is its greatest benefit. The exact opposite is happening. Millions of "educated" Indians (though fewer than expected by the UN) will enter the workforce with degrees of poor quality, face unemployment or at best underemployment. How we got here- The abysmal state of primary education See image: https://imgur.com/cQp9EMf ASER reports that only 43% of 14 year olds in India could divide in 2018. This was 44% in 2017, similar in 2016 and has been declining since the peak of 75% in 2006. What is happening is India is facing the results of decades of underinvestment in education. The World Bank estimates that the average Indian gets only 5 years of education adjusted for learning. In comparison the average Chinese gets 9.7, Brazilian gets 7.6, Russian gets 11.9, American gets 11.1, British gets 11.5 and South Africa is lower at 5.1. Clearly if we want to be in likes of China, the US or the UK, we have to get the primary education system in order. India has the highest ambition to education ratio in that list. For a country that is supposed to be the next economic superpower, India is doing an extremely poor job at educating its young minds. This isn't a one off that happens at one level. The rot in the education system is reducing GDP growth in the long run. Secondary education has its problems too Just like their younger siblings in the primary education system, secondary students have poor learning outcomes. In the latest National Achievement Survey the NCERT found that in only 6 educational boards (out of 36) more than 20% of students could pass a basic mathematics test. Those 6 were the CBSE a central government curriculum, the ICSE a curriculum made by the Council for Secondary Education in India, Andhra Pradesh, Assam, and Odisha. Let that sink in for a moment. In only 6 education boards out of 36, more than 20% of students could pass a mathematics test for their age level (class 10/15 years old). How can India become an economic superpower when its human capital formation is so poor? How can a country where the majority of students cannot do basic math become a developed country? See image: https://imgur.com/5qzKaAr The rot spreads to the tertiary level The thesis of most India Growth Story enthusiasts is that there are many smart people who will get jobs, and contribute to society. It is evident that few of the people who will enter the job market are skilled given that ~56% of 14 years olds in India could not divide in 2018, and the majority of 15 year olds (87%) could not pass a math test for their grade level. India do not have a skilled workforce. To make things far far worse, tertiary institutions are doing a poor job of moving the workforce from unskilled to skilled. The blame does not fall on them though. Given the input quality they can be cut some slack. But even with what they have, they are doing very poorly. A survey by the consulting firm AspiringMinds revealed that only 3.84% of engineers can write compilable code, only 36% of them do an internship and only 7% of them do more than one internship. Even for jobs that require low skills compared to the others like a BPO associate 60% of students are unqualified. For a country that has a mission of Digital India, these are pathetic statistics. Colleges emphasize theoretical skills over practical ones, are not incentivized on quantifiable learning outcomes like jobs and incomes and therefore are close to useless in skilling the country Conclusion The India Growth Story is falling apart job by job, step by step. While economists predict a rebound in FY20, don't let that fool you that long term GDP growth in the country is severely constrained by these factors. All the data that is not linked in the post is here: https://docs.google.com/spreadsheets/d/1AZbEyeeKN39C7INkiD9WEbBhpGshCReTCzfiMx0GTyY/edit?usp=sharing [link] [comments]  |
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