When visiting GMU in 2009, I was asked for my most outrageous belief. I tried to use my view of the crisis; that tight money, not the financial crisis, caused the Great Recession. But they wouldn’t accept that example. Later I tried to satisfy them with a post claiming that India would have the world’s largest economy within 100 years. I thought that was a fairly outrageous prediction, as most people think of India as a poor country. Later I learned that it’s not really that outrageous, and moved the date up to 70 years out in order to be more provocative. Now I’m going to move it to 50 years. That’s right, in less than 50 years India will have the world’s largest economy. Maybe 40.
A recent paper by Willem Buiter and Ebrahim Rahbari contains the following table:
By 2050, India’s per capita GDP will be almost 75% of China’s per capita GDP, and India’s will be rising faster. That’s just 39 years out.
Meanwhile the UN says that by 2050 China will only have 76.5% of India’s population. That means the total GDP of India will be almost as large as the total GDP of China by 2050, just 39 years from now. And India will have a much faster growing population (China’s will be shrinking by then), and somewhat faster growth in GDP/capita. India will become number one sometime in the 2050s, and that means my younger readers will live long enough to see this blessed event. Alas, I’ll be gone by then.
I’m increasing resentful of the GMU people for rejecting my outrageous claim that tight money by the Fed caused the Great Recession. No lowly professor at Bentley should be expected to come up with more than one such idea in a lifetime. I’ll die a happy man if my gravestone reads:
Scott Sumner: Devoted his life to blogging on Hetzelian ideas.
(Robert Hetzel has a great new book coming out, which may revolutionize how the profession thinks about the crisis of 2008.)