An article today in the New York Times talks about the long-term pitfalls in investing in India. They say that there isn't the human capital to feed the IT growth. The schools for engineering and technology are great, but the primary schools are dreadful and 40% of the population drops out in grade school.
Let's talk about this a bit. Behind the numbers is the social system in India, where most people can't afford an education. And that is exactly what would have to change. But what are the obstacles? A social system called the caste system. In it, most people are on the bottom and have no way to rise to a higher class level. Most people are in dreadful poverty.
So for this to change, high caste young people would have to go to school with low caste people in grade school. Then, when they are all competing in later grades, high caste people are going to have to accept that their children lost to some low caste kids. In young adulthood, Indians will have to accept Untouchables as co-workers and supervisors.
Econo-Girl has been to India. She doesn't see this as happening. Econo-Girl worked with an emigre from India once. He told the whole team how he paid the maid back home $2.50 a month. A MONTH! We offered to take up an office collection to give her a raise, but he wouldn't accept it, saying that if you gave them more money they just got spoiled.
Econo-Girl came to believe, after her trip to India, that the social mores surrounding economic activity is as important as the activity itself. In the States, we don't look to your family name before deciding on your promotion (for the most part). You have to deliver the goods. We don't defer to rank or age. And it is that flexibility that makes America great, and keeps it that way.