 You're watching News Made Easy. I am Anand Dev Chakravarti. Today I am going to talk about 30 years of free market lies. And what do I mean by that? I mean policies and propaganda which tell you that the free market, capitalism, pure naked capitalism, privatization, deregulation, these help everyone. Not just the rich, but when the rich get richer everyone prospers. And that's the only path for growth and for removal of poverty in a country like India. So what does free market policy ultimately boil down to? It boils down to saying that the public sector is bad and private sector is good. Why? Because in public sector, which is government led, what happens is that salaries are guaranteed. And when salaries are guaranteed, why should anyone work? If salaries are guaranteed, why should anyone work? Which is why government servants essentially sleep at work. They don't do anything. And what does that do? Productivity goes down, output goes down, costs rise and that leads to losses. So the public sector is inefficient and it causes losses and generally slows down growth. Now the exact opposite is told to us about the private sector where it said that the profit motive makes people work very hard. And what does that mean? The profit motive which means that the urge to make profits, it leads to higher productivity. It leads to innovation and it leads to reduction in costs, increases profits. And what happens when an entrepreneur or a business person makes profits, of course they're happy, but they spend a lot. They spend a lot of their money, not only on goods and investment also and that means that production rises because they are spending more. And when production goes up, what happens? More job opportunities, right? And that is why the rich do get richer but the rest also get richer because of what has been called trickle down privatization policies. Trickle down is used as a pejorative term. It's generally said that if you make the rich richer, the poor will also get richer. That is ultimately all the core of free market policies. And those policies have been followed first by Rao Manmohan in 1991 when it first became the key driver of India's economic policies. And then after, by every government, whether it is Mr. Atar Vihari Vajpayee, Manmohan Singh for 10 years and now Narendra Modi, Prime Minister Narendra Modi, they all broadly follow the same liberalization, privatization policies and say private sector is good. So, has the 30 years from 1991 to 2021, the deregulation, liberalization, privatization, globalization policies that we've seen, have they helped? The poor has this made, the average Indian richer has it made, everyone richer. Okay, here's the data and I'm going to take the data from the world inequality database and inequality has actually increased. The database clearly tells us and you can see it in these two lines. The red line is the bottom 50% in terms of income of India, right? And the data is from 1951 to 2021 as you can see 70 years after independence. And you can see that till about 1981, the first 30 years, what we can see is that the richest top one person, the richest one person, the share in total national income, the total income of the country actually dropped, right? And the share of the bottom 50% rose and that's what has been called the period of Nehruvian socialism, right? And then there was the Indira Rajiv period of 1980 to about 1989, 1990 and this period is when gradually liberalization started and you can see that the richest one person is actually slowly starting to creep up in this period at the bottom 50% as gradually dropping and then the 1991 Rao Manmohan reform start, post globalization, post reforms period, look at what has happened. The top, the bottom 50% have just dropped sharply, their share in total national income has dropped sharply and the bottom, the top 1% look at their share, the blue line, just shooting up straight up there as from 1991 to 2021, the last 30 years of liberalization that we've seen. Okay, now one could argue that, okay, this data looks fine, that inequality increased but who cares about inequality, where everyone is getting richer, okay, the rich might be getting richer and earning more faster, so inequality will increase, but the poor might also be earning much, much more. So this data will not tell us whether in absolute terms the poor have got, had it much better in post 1991, post reforms than it was before that. So let's compare it. So I'm going to take absolute income, right? It shows us that poor remain poor. Again, from the same database, we're going to see what happens and you can see this red line. There's been a rise in income for the bottom 50%, real income adjusted for inflation, but has 1991 made any difference before 1991, from 1951 to 1991, 40 years on an average per year, the real income of the bottom 50% was rising at 2.2%. What happened from 1991 to 2021? 2.3% increase, virtually nothing, virtually no difference. 1991, the epoch making, 1991, which apparently brought prosperity to India, made no difference to the real income growth rate of the bottom 50% of our population, and it should have been much more because years had been spent on creating a base for the economy and once you've reached a launchpad, after that growth was going to be faster. So there is no reason to believe that privatization, globalization, liberalization made any difference to the bottom 50%. They continue to be as poor as they were. What happened to the top 1%? And here, again, look at that graph and you can see that surge, right? You can see it because between 1951 to 1991, the top 1%, their income rose at the rate of about 1.8% per year. As I told you that their share in the economy dropped, so their rate of growth of real income was lower than the bottom 50%, right? Nehruvian socialism. After that from 1991, look at the growth rate, 6.4%. 6.4%. Let me put both of them on the same graph and you can see here, this time the red line is the top 1% and you can see that huge rise after 1991. But look at what has happened to the real income of the, that blue line that you see at the bottom, that blue line. You can hardly see it. Hugging the bottom, it's remained exactly where it is. Hardly any movement for the bottom 50% of India's population. Hardly any gains, virtually no gains from 1991's reforms from privatization. And so what we've seen is no real income growth and higher inequality. If there's no real income growth, let me tell you, inequality increasing is bad because it shifts the power to the hands of the very few. Power, democracy is affected by that. But we'll go into that in probably in some other show. You know, a lot of people argue that, okay, you can't really talk about this because in India, really no privatization took place, globalization didn't really take place. If it had, things would have been different. Even now the government is everywhere and things are very difficult. It's very difficult to start a business. Well, that's all true probably, right? So let's talk about the US, right? It's the same story in the US, which is the home of trickle down. The home of this private sector profit driven growth model, right? And you can see that it's the same story. Again, I'm going to look at the data from World Inequality Database. You can go there and this is a chart that they have put up. You can see trickle down has completely failed in the US. And there's an interesting thing here because from about after World War II ended, about 1945 onwards, the US government actually spent a lot and that is what caused a boom till about the mid-70s, right? And you can see that in that boom period, inequality reduced. The bottom 50% in the US, their income actually went up and the top 1% their income dropped pretty sharply. Not their income, but their share in national income dropped pretty sharply. 1980, we hear Reaganomics comes in, right? Deregulation, private sector gets full support and low taxes. Tax cuts which are supposedly going to help the entrepreneurs invest more, induce them to spend more. What happens? And you can see this exact same story as India just 10 years earlier because these policies came to India 10 years later from the West, right? These are Western policies which were brought to India 10 years after it took place in the US and UK. In 1980 onwards, you can see what happens. Reaganomics makes the rich much richer than before. Look at the growth rate. There's an absolute rise and the bottom 50% drop sharply to the bottom. This is the story of the US. It clearly tells you that free market policies hurt the poor. They have hurt the poor not only in India but in the US as well, the home economy of free market policies. So that is it. The 30 years that we've been facing this propaganda lies that free market policies help and even today they're being pushed onto you. All of you believe them and that is why we keep quiet when the government decides to privatize more and more and hand everything over to private capital. Just the top one person. Keep watching NewsClick. We'll be bringing you more of such data-driven stories every week. Thanks a lot for watching.