06 December 2012, 04:51 PM IST
I have a longer post on cash transfers coming up shortly, but until then, a brief aside on small businesses. I have no position yet on Foreign Direct Investment (FDI) in retail, so let me make it clear at the very start that I am not discussing its merits.
Pratap Bhanu Mehta has a typically strongly-argued piece in today's Indian Express in which he says that the debate over FDI in retail should remind us that we are a nation of small business-owners, that the "petty bourgeois" dominates our country's thought and aspirations. "[P]ost-liberalisation… the real pathway to mobility was not your canonical wage job. It was, instead, the proliferation of small acts of entrepreneurship. Mobility for a driver, for instance, was often not a form of driving that paid higher wages; it was owning your car even when returns were not that high. The desired pathway out of wage labour, for those who could manage it, was owning a business of your own, no matter how precarious that ownership….Change may offer more efficiency and security in the abstract, but it also seems to close off this inchoately expressed desire to be independent," Mr. Mehta argues.
S Ainarappan (75) sells fruits outisde a temple in Chennai (Photo credit: SL Shanth Kumar, Times of India Chennai)
It's an argument that may strike you as particularly plausible when you talk to an auto-driver about his desire to own his own auto on your way home from work today, or when you stop for a chat and a kilo of onions at your neighbourhood sabzi-wala.
We have a poor record of polling attitudes in India, so a lot of this conversation is necessarily going to be speculation. But the first study that came to mind when I read Mr Mehta's piece was one that I read just last week while researching my piece on the statistical and philosophical issues with defining India's middle class. MIT economists Abhijit Banerjee and Esther Duflo argue in this 2007 paper that yes, the middle class in developing countries tend typically to be small entrepreneurs, but there is nothing particularly entrepreneurial about them, nor are they particularly successful on average. "While there are many petty entrepreneurs among the middle class, most of them do not seem to be capitalists in waiting. They run businesses, but, for the most part, only because they are still relatively poor and every little bit helps. If they could only find the right salaried job, they might be quite content to shut their business down," Mr Banerjee and Ms Duflo argue.
I find this very convincing largely because the same auto-owner/drivers and sabzi-walas that I chat with always tell me they do not want their kids doing the same – even on a bigger scale - as them. We want our kids to study well and get a good, steady job, is what I always hear. A generation ago, it was always a "government job". Now, young girls often tell me they want an "office job" in a private company, a job they only too often do not find. But yet the aspiration I think remains to somehow survive the uncertainties of being a petty entrepreneur so that their kids don't have to.
We may be a nation of small businesses, but I don't think we want to.
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