Pakodanomics is the new economics

In recent days, China’s state broadcasters and news agencies have published more than a dozen profiles of recent university graduates who have reportedly made a fortune in low-skilled jobs such as selling street food or growing vegetables rather than pursuing white-collar jobs.

The Chinese Communist Youth League recently criticised young graduates for holding on to their professional aspirations, accusing them of refusing to “tighten screws in factories” and urging them to “take off their suits, roll up their sleeves, and go to the farmland”.

But the Chinese authorities’ campaign to urge their educated youth to take up manual jobs has attracted a backlash on social media. The popular Chinese social media platform WeChat’s retort to the Communist Youth League author was whether he was “willing to give up his current position and salary to become a cleaner.” Such a social media backlash in autocratic China underscores the growing youth anger over unemployment, a lack of social mobility, and a bleak future.

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The unemployment rate in China in March 2023, among those aged 16 to 24, stood at 19.6 per cent, the second-highest level on record, and will remain above 16 per cent for the full year.

India and China are the two most populous nations on the planet. They both, put together, account for about 36 per cent of the world’s population, with each country having an equal share. India accounts for a meagre 2.4 per cent of the world’s surface area, yet it supports and sustains a whopping 17.7 per cent of the world’s population, with a GDP of $3.18 trillion. China, on the other hand, has a much bigger GDP of $17.73 trillion and a much larger surface area of 6.3 per cent of the world’s surface area—for the same level of population as India! Even though the current unemployment rate in China may seem higher than that of India, China has much more resources than India to sustain its population.

Moreover, China’s population growth is stagnating (or entering a declining phase), whereas India’s population is growing at about 0.80 per cent, with 65 per cent of Indians being under 35 years old. Hence, the swelling ranks of jobless youth represent a much bigger demographic challenge for Indian policymakers than for Chinese policymakers.

“Investing in education no longer guarantees a high return,” said Ming Xia, a political-science professor at the City University of New York. “That has undermined the basic idea of how ordinary people could climb the social ladder.”

“Pakodanomics” refers to the economic policies instituted in India to encourage self-employment and entrepreneurship. The term originated from a comment made by the Prime Minister of India, Narendra Modi, in January 2018 stating that street food vendors (selling pakodas) should also be considered in employment statistics, and hence the unemployment rate in the country is actually much lower than statistically reported.

In one widely shared video published by CCTV of China, a young couple with college degrees said they made RMB 9,184 ($1,335) a night as street food vendors selling teppanyaki tofu and French fries in eastern Zhejiang province. But social media users were sceptical of the reported earnings figures of the said street food vending couple. A popular post on the microblogging platform Weibo estimated that the street food vending couple needs to serve about 1.6 customers per minute throughout the night in order to earn such an amount daily. “If it’s so easy to make money,” wrote the author, “I am sure we will be surrounded by tofu and French fry vendors everywhere.”

Leaving aside the earnings figures, Pakodanomics seems to be the new economics emerging in the two most populous nations of the world. If the educated youth of India and China ask the AI-powered ChatGPT to suggest an employment opportunity, it may as
well reply to them to take up “Pakodanomics”!

(The writer is a retired
corporate professional.)