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While that's all true, sometimes you have to accept some drag on growth to get from here to there. Market solutions take some time to settle out, and people who are hungry today aren't going to wait. Revolutions are a problem when you're trying to construct efficient markets, so as long as the growth arrow is going in the right direction it's probably wise to leave these kinds of programs in place. Presumably as the Indian economy modernizes they can be phased out.


This is a good point, but a contrasting point is that people who are hungry today aren't going to wait until tomorrow to get a job. It is incredibly valuable to be able to cut the benefits, so any cuts that can be made should be taken. Revolutions would happen if a dramatic change came about, such as the welfare programs disappearing overnight; but by market logic, the poor would not riot for welfare if the welfare had never existed, giving them no expectation of it, and giving them a lower likelihood of being poor in the first place. Chances are very high that these programs will never be phased out, and likely never cut in size over time--in the long term, welfare expands to fill the gap of how much the rest of society can afford to comfortably pay. But if they could be phased out, say over a 10, 15, or 20 year period, my judgement is that it could be sociologically workable. That is to say, if there is a level at which people switch from not rioting to rioting when their benefits are cut, you just cut near that level continually until you're close enough to find creative ways to stop sending checks altogether without them noticing.


India was a socialist country from independence, so that expectation has been there already for generations. I agree the best thing to do is phase out the benefits when you can. The trick is actually doing it.




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