Create opportunities first

Development of capacities in an environment of shrinking opportunities acts like fuel in fire. The competition among the unemployed for the limited number of jobs becomes more intense, explains Dr Bharat Jhunjhunwala

Crores of youth graduate every year from our schools and colleges. Many remain unemployed, however. Industry complains that youth with proper skills are not available. The Government is seized of the problem and has recently increased the numbers of Central Universities, IIMs and IITs. This resolve is wholly welcome. But why has the development of capacities during the last sixty years of Independence not led to the removal of unemployment? It is also seen that educated youth often become a burden on their families. While waiting at the Lucknow Railway Station this author came across a science graduate who had come for an interview in the silk department of the UP government. He had been applying for jobs for the last ten years with no success. His capacities were surely more developed than say 95 percent of the people but he was not able to make any contribution to national progress. Rather he had become a burden on his family. Such youth are not inclined to take up their traditional occupations and they do not find jobs that would be suitable for their enhanced capacities. How will further enhancement of capacities help in the progress of the nation when millions of such youth are already languishing on our streets?

There is a need to understand the global politics of capacity building. This idea has been put forth most forcefully by Amartya Sen. One of the main principles of economics is that of utility. It is assumed that one who has two cars is at a higher level of utility or welfare than one who has one car. But Sen raised a valid objection. A youth who has two vintage cars may yet not be happy. He may want a fast moving modern sports car instead of the vintage cars that he has got. There are two qualities of the car—it’s being 'vintage' and its moving fast. The car should have the desired quality in order for it to enhance the welfare of its owner. Thus, concluded Sen, it is not sufficient to have goods in larger quantities—they should also have the desired qualities. Next, Sen asks, of what use is a fast moving car if the lad does not have the capability of driving it? It is necessary, therefore, that people’s capacities are developed so that they can function the things they have in a desired way. This is the logic for the developing the capacities of our people in order to increase their welfare.

But it seems to me that it is not necessary that a person’s welfare will be enhanced even if he has the requisite capacities. Take a young man who has latest fast-moving car and who also knows driving. He has goods of desired quality and also the capability to operate them. He may be yet unhappy though. He may want a Lamborghini or a Ferrari. Sitting in his air-conditioned sedan, he may dream of a Ferrari and be unhappy. I had a motorcycle while I was going to College in 1967. I was the only student in the class who had a two-wheeler. But I was often unhappy. I wanted a car. Then someone asked if you cannot be happy with a motorcycle when others have only bicycles; then you will also not be happy with a car. This advice changed my attitude and I started to enjoy my motorcycle. The point is that capacity can create unhappiness if the cultural values glorify consumption.

The problem with the thinking of Prof Sen is that he stresses the development of capacities but remain quiet on the parallel need to provide the goods to enable the functioning of the capacities. He is also quiet on the need to create a satisfaction-oriented culture. He is in favour of providing freedom to big companies to play in the domestic markets and produce goods at the least cost. He is not concerned that big textile companies are rendering millions of weavers’ jobless. The weavers have the capacity but not the resources to function and they are dying. The solution Dr Sen would suggest is to retrain them for working in call centers. But he is forgetting that there already exists a long waiting list for employment in the call centers. The enhancement of capacity of more numbers of our youth in speaking English, therefore, only makes competition worse. Previously one having a second-class degree would get a job in the call centers. Now, courtesy, capacity development, only first-class student will get the job.

Development of capacities in an environment of shrinking opportunities acts like fuel in fire. The competition among the unemployed for the limited number of jobs becomes more intense. A post-graduate is now willing to sweep the floors. The level of dissatisfaction among our people and the level of frustration in the society increases. The recent spurt in Naxalite violence in the country is partly explained by such a growth of capacity with ever less opportunities to operate them. One can see hoards of skilled workers such as carpenters, masons and painters standing on the main crossing in every city. They have capacities but are forced to work at a meager wage of Rs 300 because there are few opportunities. The upper class benefits from this high-capacity low-wage combination. They get a skilled worker at Rs 300 instead of Rs 5000.

The same logic applies at the global level. The development of capacities of the Indian people benefits, among other, the MNC employers and the American economy that gets cheap educated labour that is embodied in our exports. MNCs also get cheap skilled workers such as software programmers and nurses. Secondly, the scarce resources of the Government of India are used up in building the capacities of its people and fewer resources are left for building roads and building factories. That leaves open the field for predator MNCs to enter into virtually virgin area. The ultimate beneficiary of capacity enhancement when undertaken without development of indigenous opportunities is, therefore, the upper class including foreign countries and MNCs.

It is understandable that Prof Amartya Sen would plead the cause of MNCs and rich countries. He has worked four long decades for the universities in these countries. But why should an economist Prime Minister of the country ignore the fact that educated youth do not have employment and add fuel to fire by making policies that throttle their opportunities and leave the field wide open for the MNCs?