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Why is poverty higher in India than in West?

    Contents

  1. Introduction
  2. Factors that determine poverty in a nation
  3. Why is poverty higher in India than in West
  4. How can citizens of India reduce poverty?

Introduction

The purpose of this article is to enumerate and discuss ONLY those factors
  1. which increase poverty, and are present in India and absent in West.
  2. which decrease poverty, and are absent in India and present in West.
The purpose of this article is NOT to enumerate factors that are present/absent in BOTH countries. Hence a large number of factors, such as moral values, greed etc will get dismissed as non-issues. Why? Becuase greed is present in US/West as well as India. And moral values are at same level in India as well as West.


Key reasons that increase poverty in a nation

When we compare poverty in two countries, two factors play role :
  1. Differences in per capita income/wealth
  2. differences in distrubtion of incomes/wealth
The differences in per-capita incomes of any two given countries, say US and India, depend MAINLY on following factors
    Natural factor

  1. the availability of natural resources : more the natural resources, higher the per capita income

    Artificial factors

  2. nexuses in administration : lesser the nexuses judges, Ministers, MLAs, officers, regulators etc have amongst each other and with wealthy individuals, lawyers, criminals etc, easier it will be to setup and windup industries, and so more will be technological and scientific progress, and more will be the per-capita income.

  3. Political inequality in the nation : most of the decisions related to making laws, and appointments of senior officials are 100% political in nature and NOT based on scientific law. The political inequality can be guessed from --- to what extent which person's DISCRETION depends in influencing a decision. Higher the political inequaility, which is same as saying that more the power is concetrated. Such higher concertation of power increases the density of nexuses, and lessens the progress. IOW, lesser the political inequality, more is the progress.

  4. Political culture of activists : An "x%-activist", by definition, is an individual, who spends x% of his time/money for the cuase of improving his nation, with no personal motive. The activists in West have realized the the damage that political inequality creates in a nation, and how useful it is to reduce political inequality. And they have also realized that proper drafting of laws can indeed reduce political inequality. The activists in India have significantly low knowledge about the damage political inequality creates in a nation and benefits nation will derive if political inequality reduces. Nor have activists in India realized that proper drafting of laws is necessary and sufficient to reduce political inequality. The activists in India feel content in giving medicines, food and knowledge to commons, and believe that reducing political inequality will do no good, and is NOT necessary eighter. The callous attitude of India's activists towards issue of political inequality is one reason why political inequality DOES NOT reduce in India, and so nexuses in administration remain unchecked. And so things remain same even after they change. IOw, the politoical culture of activists is an important reason why many problems, in India, do NOT get solved.

The reasons like differences in technological skills between people of US/West and India is covered by above stated reasons. The technological skills depend on level of industrialization, which depends on how easy it is to start, run and wind-up a business or a factory, which depends ONLY on how (less) nexused the administration is, and NO OTHER factor. In India, starting, running and winding up a factory is far far more difficult than doing the same in West, as MLAs, officers and courts in India are far far more nexused than in West, and no other reasons.

The factors like history, culture, planetary positions etc non-factors.

The above reasons determine total or per-capita GDP. Now inside a country, poverty depends on one more factor --- distribution of income and wealth i.e. relative income/wealth levels of various individuals in a country.

This distribution of income/wealth depends on :
    Market related factors

  1. physical/intellectual skills : given two persons in the same region, one with more physical/intellectual skills will have more income

  2. Capital he owns : higher the capital one owns, more will be the income

  3. Land he owns : more the land a pertson owns, higher will be the income. This factor is highly dependent on location as well.

  4. Natural resources, such as mines, he owns. More the natural resources he owns, more will be his income.

  5. Inheritance : Now more the income/wealth his parents had, higher will be the wealth he owns

    Political factors

  6. His nexuses with judges, Ministers, officers, policemen etc. A person with denser/more nexuses will earn higher than those who have fewer/lesser nexuses. This in turn depends how NEXUS-PRONE the administrarive/court procedures are.

  7. Regressive taxes : regressive taxes increase income inequality. For more on regressive taxes, please click here.

  8. Wealth and inheritance tax : If a country has wealth/inheritance tax, income/wealth inequality will reduce inside that country.

Now lets see how these factors explain why poverty is higher in India than in US/West.


Why is poverty higher in US/West than in India?

  1. More per capita natural resources.

  2. Due to lesser nexuses in administration, the industry is efficient, and so productivity is high and so is wage level. Hence lesser poverty.

  3. US/West have inheritance tax. This reduces the need for regressive taxes, like sales tax, excise etc and hence higher disposable income for the poor. And poor have more income to spare for their kids' education, and this further reduces poverty.

  4. US/West have wealth tax. This reduces the need for regressive taxes, and hence higher disposable income for the poor.

  5. US/West has lesser regressive taxes than India. US has relative less tax on beer, tobocco, sugar, oil, tea, coffee and various edible products. It also has lower taxes on cloths, gasoline, electricity etc. So poor pay a lesser fcation of their income as taxes on such commodities. Hence they have more disposable income

  6. Due to money from wealth/inheritance taxes, the govt expenditure on schools is higher, and parents do NOT need to pay fees from kindergarten to XII-grade. So once again, poor have more disposable income.

  7. Lesser regressivenes in taxes and education subsidized by wealth/inheritance taxes and NOT by regressive tax, is the KEY reason why poor have more disposable incomes and basic education as well. As a result, relative difference in skills is less, and this further reduces income difference.

  8. In US/West, unemployed individuals get dole, that also reduces the poverty.

Now lesser regressiveness in taxes is ONLY becuase the law-makers in US have lesser nexuses with wealthy individuals. But as nexuses of law-makers with elitemen increase in US, the tax structure in US is becoming more and more regressive, and so poverty is increasing.


How can citizens of India reduce poverty in India?

How can citizens of India reduce poverty?

Trivial.
  1. Steps 1-3: The citizens should force MLAs, MPs and District Panchayat Members to create procedures that would enable citizens to pass laws in District Panchayats, Assemblies and Parliament. Please read LM.01 to see the procedure using which citizens can pass laws in District Panchayats and City Councils. Please read LM.02 to see the procedure using which citizens can pass laws in Assembly. And please read LM.03 to see the procedure using which citizens can pass laws in Parliament.

  2. Step 4 : The citizens of India, using LM.01-03 can enact procedure EAS.15. This procedure will give enable citizens to collect rent from GoI-owned land, and distributed it equally amongst ALL citizens. This will increase income of lower section, without any tax on wealthy individuals, and will reduce poverty.

  3. Steps 5-6 : The citizens of India, using LM.03 can enact procedure TX.01 and TX.02. These procedures will reduce evasion of incoem tax and capital gains tax. This will reduce the need for regressive taxes like excise, sales tax, octroi, service taxes etc.

  4. Step 7 : The citizens of India, using LM.03 can enact procedure TX.04. This law enables citizens to remove clauses of tax codes, and also expel the officer/Minister who wrote regressive tax code, using "Review by Jury" over a specific clause in an Act related to income tax, capital gains tax, wealth tax, service tax, excise, sales tax, or any other tax.

  5. Step 8 : The citizens of India, using LM.03 and TX.04 can remove regressive taxes like sales tax, service tax, and reduce excise and customs. This will reduce poverty.

  6. Step 9 : The citizens of India, using LM.02 can enact procedure TX.03 at state district level, which will enable the statea and districts to obtain wealth tax. This will reduce the need for regressive taxes like excise, sales tax, octroi, service taxes, entertainment taxes etc.

  7. Steps 10-23 : The citizens of India, using LM.01-03 can enact procedures EAS.01-14. These procedures will enable citizens to collect royalty from natural resources and divide it equitably.

These TRIVIAL steps will bring India's courts far better than courts of US/West.


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