Labour Laws 2 - Jean Dreze will go down as the father of automation and labour productivity in India

First, I think NREGA is fabulous because its about time the poor bastards in the fields got something from the government, instead of always having their land and lives taken away by politicians.

Second, I love NREGA because it is going to usher in a manufacturing productivity revolution such as has never seen before. NREGA has made labour scarce in India before, during and after the harvest seasons because buzzing off to 'the native', as we Indians call it, at harvest time means paid for work during the harvest, and NREGA on the shoulders of that time.

Factories cannot deal with a fluctuating labour force so they will have to find ways to automate jobs done by coolies earning 3,000 to 5,000 rupees per day. Its tough to do because it means re-engineering (and not reverse engineering) machines that can be bought in Europe for EUR 90,000 for less than EUR 10,000. Can it be done? Yes.

When that happens you are going to see a boost to TFP that should throw manufacturing into a different orbit, make us more than competitive with China, Vietam et al and see the industrial workforce take on a totally different hue in terns of education, productivity and wages.

Private factory jobs will pay more than government factory jobs and that will weaken the hold that unions and their political masters have on asset divestment by the government because all the fellows currently at state owned firms will decamp to the private sector.

We have seen that before. Remember the start of private banks and the end of bank strikes?

Poor Jean. The man who destroyed the labour unions by freeing its members from overpaid jobs.

Now all we need is the electricity to power all those machines.