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'Indian elites are out of touch with the poor'

Last updated on: November 12, 2013 11:58 IST

The disparity between the outlook of the rich and poor was greater in India than in any other emerging economy. Indians might want to be worried about this because this suggests that the rich are really out of touch with the poor, Bruce Stokes, Director, Global Economic Programme, Pew Research Center, tells Faisal Kidwai.

Differences between how the upper class and elites view economic growth and how the poor perceive it is the greatest in India, according to a senior official at Pew Research Center, a think-tank based in Washington, DC, that studies various issues, such as public opinion and demographic trends.

Stokes, bottom, left, warns that while income inequality is increasing in many countries, it seems that the rich in the country are not as worried about it as they ought to be. Such disparity, he adds, tends to contribute historically to social and political unrest.

"We have been studying public opinion around the world since 2002. Last year we carried out a study in 21 countries and next year we will be seeking opinion on various issues in 60 nations. Starting this month, Pew will be looking at the mood of India in the run-up to general elections in 2014. The goal is to take the pulse of global public opinion on a range of topics and create a data trend to see how things are evolving." says Stokes.

Apart from that, he adds, PRC's study next year will focus on the attitudes of the emerging global middle class. It will look into how people feel about economy, democracy, women and a host of other issues. In each of these studies we also ask a number of questions that are just geopolitical, such as how do Indians feel about Pakistan, China, etc.

In an interview in Mumbai, Stokes says Pew carried out a survey that shows while Americans are fascinated by India and hold a positive view of the country, their perception of China has turned negative. One of the major reasons why Americans look at India positively is the fact that Indian-Americans are the best educated and the richest immigrants the US has ever had.

Your study also says it’s the Indians who have lost greatest faith in their economic fortunes?

Surveys have shown that the Indian population is worried about inflation, so something has to be done. Recently the Reserve Bank of India raised the interest rates to curb inflation. There is an ongoing debate about need for structural change. Indian economy needs to be more open, attract a lot more foreign investment and reform the labour market. We have never asked about that to people in India so we don’t know what they would say. My guess is that the general population would either not understand it or might oppose it as reforms mean change and in most countries people are vary of change.

India obviously requires some kind of change. That’s what happened in the early 1990s when the reform process started. There is some kind of understanding among the elite that there has to be another break with the current situation. Basically, that’s why you have an election. We are going to be looking at some of the Indian government’s reforms in this current survey. We will ask about food and work programmes in rural areas, so we will get some sense of how people feel about these major initiatives. But we have not asked whether you would want to change the structure on foreign investment because people would not have much of an opinion. That’s probably beyond the average person’s interest.

Pew also discovered that while many Indians are pessimistic about the economy, the upper class and elite remain pretty positive.

People who are doing well tend to be more optimistic about the economy than those struggling. What was striking in last year’s survey was that we looked at the attitudes on the economy of the top third of the income stream and compared it to the bottom third. Not surprisingly the people at the top third in India were much happier than the bottom ones. But the discrepancy was greater in India than any other emerging market.

In other words, the disparity between outlook of the rich and poor was greater in India than in any other emerging economy. This was really significant. Indians might want to be worried about this because this suggests that the rich are really out of touch with the poor. I took the results to India and I must admit that while talking to the elites I sensed that they were not worried at all. That’s fine. They can make their own judgement about this.

We do know that inequality is a problem in India; we do know people think it’s growing and they don’t like that. We know that’s true all over the world. And that tends to contribute historically to social and political unrest. We see it in China. Our survey shows inequality is one of the top three problems people face. For whatever reason, the Indian elite were not as worried as they ought to be. But people in America are not as worried either even though there is rising inequality in the United States. There is slowdown in mobility. So if you are born rich it’s less likely that you are going to die rich, which is part of the American dream.

Why is this income inequality growing? Are you seeing any serious attempt to close this disparity gap?

Our data does not show exactly why. The kind of market capitalism that has evolved in the last few decades is what some Cornell University economists have called a winner-take-all capitalism. When I was a boy, I was a baseball fan and my favourite player was very good. He was the best player, I thought. He made seven times the median income. The highest paid baseball player today makes 31 or 32 times. Now we could say the system is rewarding talent. But is the guy who is paid 32 times the median income today is a much better player than the guy in 1960s?

We know this is true in corporate life, too. The disparity of a chief executive’s pay to the average salary has grown dramatically in the US. It’s the nature of capitalism in the 21st century that gives disproportionate rewards to a small number of people. We can debate whether that’s fair or unfair, good or bad. It’s probably indisputable that that’s the kind of capitalism we have today. I don’t see any move to change it. People come out with data, as we do, that shows that people don’t like the current system but I don’t see a coherent alternative evolving.

You have said that Pew also studies people’s perception of other countries. How do Americans perceive India?

I would say fairly positive. We recently asked Americans whether they would want to increase trade with India and the majority said yes. Indian-Americans are the best educated and the richest immigrants the US has ever had. Americans have always been weary of low-income, low-skilled immigrants. Americans have an almost daily experience with a call centre in India. America has always had a fascination with India. Franklin Roosevelt wanted independence for India and Winston Churchill did not like that.

Since the end of the Cold War there has been more of a warming of the relationship. Let’s face it, India is seen by some Americans as an alternative to China. When it looked like India will be posting 10 per cent growth rate per year, people were obviously attracted to the country because they wanted to be associated with the winner and India did look like a winner at that point.

What’s the view of Indians towards America?

The attitude towards the US in India has really been up and down over the years. I think it has a lot to do with the changing nature of the relationship. We saw after the nuclear deal that was struck between the US and India under former President George W Bush that the popularity of Bush and the US went up. Certainly Indians were excited about President Barack Obama like so many people around the world. But in the fifth year of Obama’s administration, we have noticed volatility in some countries.

In China, 61 per cent of the population liked Obama in 2001, now it is 31 per cent, which is about the same as Bush’s popularity was. In Western Europe, Obama’s popularity has come down a bit, but it is still astronomically high. Obama is much more popular in Europe than in the US. In the Middle East, there was no Obama bounce whatsoever. In other words, the election of Obama did nothing for the reputation of US.

With China growing at such a fast pace, have you noticed a change in how Americans look at China?

It’s changing for the worse. Americans are extremely critical of China. Couple of years ago we asked Americans whether they would like to be tougher on China or have closer relationship and at that point the majority was for better ties. Now most want to be tougher. Americans are worried about job losses to China, the growing amount of US debt held by the Chinese and the trade restrictions. These things tend to come and go. We are at a low point. The attitude of Americans toward the Chinese and the attitude of Chinese towards Americans are mirror images of each other.

If history is taken as the guide then things can only get better. There is a certain percentage of population that will never like China and a certain percentage that will always feel positive towards China. As of now, things are pretty bad. Obama is down to 31 in his approval rating in China. The lowest Bush ever got was 30 per cent. So it’s pretty bad.

And what’s the perception of Indians and Pakistanis towards their giant neighbour?

We know that Pakistanis have a positive view of the Chinese, much more positive than Europe or United States. And we also know from last year’s survey that the Indians are worried about China.

Since we are discussing the neighbourhood, let’s talk about Burma. Many are betting big on that nation. What’s your take?

Talking to people in the business community and elites, there is a great deal of interest in Burma and in the future of that country. People see it as an opportunity. We have not asked people about it and my guess is that they will not have much opinion about it. Burma has not been engaged enough in the world for many to have much of an opinion about their future. My feeling is that most people could not find Burma on a map. We did a survey couple of months ago and found that only 20 per cent of Americans could find Syria on the map. This was at a time when we were thinking of going to war with that country.

It would be interesting to see a similar survey carried out in other countries, including India. It will give us an idea about how aware others are.

Yes, we have never done that in India. We say, for instance, my god, how come only 20 per cent of people could find Syria on the map? My guess is that figure might be higher in other nations compared to the US. We also asked Americans to find Egypt on the map and only half the population could find it. In a way it’s an implicit criticism of how ignorant Americans are.

Faisal Kidwai in Mumbai