Wednesday, September 25, 2019

Why Balanced Economy

Why Balanced Economy


In global economic narration, we always hear about developing and developed countries. Some countries are very rich while in some countries people are scarce of minimum requirements.

Going through below referenced image, I saw some conclusions or criteria regarding developed countries;

1.       Large portion of labor force in manufacturing and service industries
2.       Higher contribution of industrial and service sectors to national income or GDP
3.       Export of industrial services and products
4.       Infrastructural development and capabilities
5.       Use of modern and advanced technologies in production and services



But why these developed countries are going after trade war?

Why are they trying to influence other countries to allow them to do business?

Why do they lobby to impose sanctions on other countries?

While searching answers for above questions, let’s look at concept of balanced economy first.

Balanced economy means a system where everybody gets employment opportunities and can live a dignified live without depending on others or government’s doles. His minimum requirements (food, cloth, housing, education and medical facility) are fulfilled.
  1. 30-40% of people should depend on agriculture.  In India, around 60-70% population is dependent on agriculture, which is too high.
  2. Around 20% should depend on agro-industries (post-harvesting industries which depend on agricultural production such as flour mills, paper mills, medicine from plants, sugar mills etc.)– Raw produce should be processed in local areas rather than exporting them and getting it processed elsewhere.
  3. Around 20% should depend on agrico-industries (pre-harvesting industries which promote the rapid growth of agricultural products, such as shovels, axes, picks, spades tractors, etc.) With modern age technology. This sector needs a boost in India as still lot of manual labour is deployed. Much research is needed to increase productivity.
  4. Around 10% should depend on general trade and commerce such as general goods stores, stationery shops, restaurants, repairing or service centers etc.
  5. Around 10% should be engaged in intellectual or white collar jobs such as clerks, bank employees, administrating officials. This number is very high in developed countries and it takes away required labor force from other areas.
  6. Around 20% to 30% should depend on non-agricultural industries (such as steel, cement, metal, auto, electrical and electronics, non-plant pharmaceutical etc.). The percentage of people engaged in such industries should be formed by reducing the percentage of people depending directly on agriculture and other aforesaid industries.
These percentages can vary slightly depending on kind of resources available. Like agriculture could be difficult in Saudi Arabia.
The concept of balanced economy is a special feature of PROUT. This principle needs to be adopted not only at national level, but also at state, socio-economic unit and block levels. These concepts are part of decentralized economy for which you can read here.

The motive of capitalistic economies or countries is production for profit not for consumption. 
(For more details, refer to my previous blog on production for consumption)


Impact of imbalanced economy

  1.  If a country has surplus labor force in one sector and its own population can’t consume the output; then this country will depend on other countries and tries to flex its muscles. Like, Britain got heavily industrialized and invaded India through East India Company. Money from developing or under developed countries move to developed countries.
  2. If these highly industrialized countries don’t get a market to sell their finished goods then they will have to suffer from economic recession and growing unemployment. Therefore, they become more aggressive in their imperialist approach.  They pressurize developing or under developed countries to consume their finished goods or allow these developed countries to invest in developing ones. Like US is pressurizing India to open its market for US companies. At one side, they are shouting for shooing away non-Americans, waging trade war against China and on the other hand, they are asking developing countries to give access to their markets. In international diplomacy, there is nothing like 'free lunch'. Definitely, this corporate sponsored 'Howdy Modi' program is not a free lunch. There must be lot of bargaining done by US, sacrificing the interest of India. Why Trump become suddenly soft on India while he was shouting against India for duties levied on imports?
  3. Over Industrialization also creates psychic diseases and people of those countries ignore finer expressions of life by being highly materialistic.
  4. If the country is industrially less developed, then per capita income and purchasing capacity cannot be high. Their standard of living will not be high. They will be exploited by developed countries and war like situation arises. Developed countries create conflict between developing countries, so these countries depend on them for weapons. Like USA supplying arms to both India and Pakistan.
I think government should try to boost sectors which require more manpower like agrico-industries and agro industries. The income should become decent in these sectors. It should also setup career counselling programs to motivate people to required sectors instead of everyone running after white collar jobs.

But will the governments adopt the concept of Balanced Economy? There is always hope at the end of the tunnel and this hope is of 'Mass Awakening and Circumstantial Pressure', which will compell governments to adopt and implement the balanced economy.

Some References for world trade export/ import


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