Manker Olson once wrote that Germany and Japan grew rapidly after World War II because the war removed a large amount of bureaucratic corpses and allowed these defeated countries to rebuild with more streamlined and efficient economic systems. He claimed that the main reason was that he was able to do so. a david brooks This column explains this theory.
In 1982, economist Mancur Olson attempted to explain a paradox. Although West Germany and Japan endured widespread devastation during World War II, both countries experienced miraculous economic growth in the postwar years. Britain, on the other hand, won the war and its institutions remained more intact, but it soon entered a period of low growth and fell behind other European democracies. what happened?
In his book The Rise and Fall of Nations, Olson concluded that it was precisely Germany and Japan that enjoyed explosive growth. because Their old arrangement fell apart. The devastation itself and the forces of American occupation and reconstruction drove away the interest groups that had impeded innovation. Old patterns that inhibited experimentation were wiped out. This disruption created space for something new to happen.
There is always a danger with this kind of explanation that it becomes nothing more than ‘what-if’. Interesting idea, but ultimately untestable.
The Economist magazine has an article with the following title: “Why should India create dozens of new states?“, This article is about the creation of a new Indian state named Telangana in 2014. At first, people were pessimistic.
It was carved out of the poorest areas of the state. Unlike other rich southern states, it is landlocked. There is still only one airport. Apart from Hyderabad, there are no major cities. Many predicted financial difficulties and even insecurity.
The new government worked hard to cut red tape and make Telangana an attractive investment destination.
Another advantage of a new nation is that there may be more room for experimentation. After Telangana was established, it immediately started working to make itself attractive to investors. Many Indian states want to improve their ease of doing business rankings and are promising “single window permits” for businesses to deal with red tape. However, this process remains challenging, with multiple departments working on their own schedules. Telangana’s innovation was to do away with many requirements and promise approval within 15 days. Such ideas were “possible only because we are a new state and we didn’t have a legacy that dragged people down,” says Jaish Ranjan, a senior bureaucrat involved in drafting the policy. “Everything was a blank slate.”
the phrase blank slate I am reminded of Manker Olson’s hypothesis regarding the reconstruction of Germany and Japan. So what is going on in Telangana? Were the results as disappointing as experts expected? Here’s what The Economist said.
Ten years ago, the Union of India welcomed a new member, the state of Telangana, into its membership. Of India’s 29 states at the time, it ranked 12th in terms of population, 11th in terms of area, and 10th in terms of per capita income. One of those rankings has since changed dramatically. By last year, Telangana had soared to boasting the highest per capita income of any decent-sized state, after tiny Sikkim and Goa.
The landlocked state is now wealthier than the coastal state, which hosts important business hubs such as Mumbai, Bengaluru, Chennai and Ahmedabad.
The Economist suggests that some of India’s other emerging states also fared a bit better after independence, but not as well as Telangana. A clean state may be a necessary condition for fundamental reform, but it is not a sufficient condition. success reform.
PS. If you are as old as me, you may remember these Indian cities by their previous names.
Mumbai (Bombay), Bengaluru (Bangalore), Chennai (Madras)
This is a photo of Hyderabad, the largest city in Telangana state.
