Climate Change Be Damned!

Manmohan has just unveiled a New Plan:

A Plan For The Climate!

Here is the news today:

“The National Action Plan on Climate Change stated that India’s per capita greenhouse gas emissions will “at no point exceed that of the developed countries”. The plan will be implemented through eight missions, which represent multi-pronged, long-term and integrated strategies for achieving key goals in the context of climate change.”

This basically means 8 new regulatory hurdles for businessmen.

This is an elitist ploy. Note that the report ends by quoting a civil society activist who says: “We are disappointed with the complete lack of transparency and the closed manner in which the plan has been prepared.”

This climate change politics is the return to Communism and Central Planning, and thank heavens that there is at least one statesman in the western world who condemns it in precisely these words.

And that is Vaclav Klaus, president of the Czech Republic. He has seen communism and recognizes the return of this “religion” in another garb.

Here is what a Washington Times report on an interview with Klaus starts off saying:

“Environmentalism, says Czech President Vaclav Klaus, is the new communism, a system of elite command-and-control that kills prosperity and should similarly be condemned to the ash heap of history. The provocative Mr. Klaus, an economist by training and former prime minister, said in an interview that today's global warming activists are the direct descendants of the old Marxists who trampled on individual freedoms and undermined free markets in pursuit of a greater good. "I understand that global warming is a religion conceived to suppress human freedom," he told editors and reporters at The Washington Times. "It is used to justify an enormous scope for government intervention vis-a-vis the markets and personal freedom."

So draw the battle lines:

Environmentalists on the Left side.

Libertarians on the other!

And do read my "Just Hot Air: The Al Gore - IPCC Agenda".

Crying Out For Justice

The Bhopal gas disaster took place in 1984 – and victims are still looking for justice.

As this article from Time magazine says:

“Two decades on, a criminal case charging Union Carbide and its officials with culpable homicide is still dragging on in a local court in Bhopal, because none of the accused have been available to the court. In 1985, the Indian government had filed a $3.3 billion claim in a U.S. court against Union Carbide, but eventually settled out of court for $470 million — which amounted to less than $500 for each of the 500,000 people harmed by the accident. In addition, Union Carbide never cleaned up the accident site, which continues to leech highly toxic chemicals into the soil and groundwater of the surrounding area, affecting even people born decades after the gas leak. In 2001, Dow Chemicals acquired Union Carbide, but has refused to accept any liability for Bhopal.”

Why was relief in torts not sought?

There is no need for a criminal case if compensation for the victims is sought. There is therefore no need to prosecute the case “beyond any reasonable doubt”.

Decisions in tort cases are based “on the preponderance of evidence” – and decisions are therefore quick.

And this is a “private”, not State action: Anyone can “sue” anyone who causes him damage. It is a "civil", not "criminal" case. Note that the article says:

“In 1985, the Indian government had filed a $3.3 billion claim in a U.S. court against Union Carbide, but eventually settled out of court for $470 million — which amounted to less than $500 for each of the 500,000 people harmed by the accident.”

So the government can sue and collect the relief on behalf of the tort victims, but the people cannot sue and collect for themselves!

This is not a “rule of law society”.

Something is seriously wrong with the administration of justice.

Perhaps it is all-round “knowledge failure.”

(And they want to teach!)

Socialism Murdabad!

According to a special report published today in The Indian Express, Air India and Indian Airlines, the two state-owned airlines that have been merged into the National Aviation Company of India Ltd (NACIL), are making losses to the tune of 8 crore rupees per day or 3000 crore rupees per annum!

Who is losing this money?

Since private businessmen are not losing this money, it means that the citizenry – you and I – are the ones forking out this money to flatter the socialist ego of The State.

When the private sector has entered civil aviation in such a big way, what is the need for a state-owned entity in the industry?

Obviously, NACIL should be sold off immediately.

If 8 crore rupees was well spent we could build 2 km of expressway per day.

That is the ‘opportunity cost’ of socialism.

Murdabad! Murdabad!
Socialism Murdabad!

The Centre Must Fold

Since we in India refrain from discussing constitutional questions – at our own peril – let us benefit from such a discussion in the USA.

In an important article on the “impossibility of limited government and the prospects of a second American revolution”, Professor Hans-Hermann Hoppe (author of Democracy: The God That Failed) says that the US Constitution must be seen as an “error”:

“At the outset of the American "experiment," the tax burden imposed on Americans was light, indeed almost negligible. Money consisted of fixed quantities of gold and silver. The definition of private property was clear and seemingly immutable, and the right to self-defense was regarded as sacrosanct. No standing army existed, and, as expressed in George Washington's Farewell Address, a firm commitment to free trade and a noninterventionist foreign policy appeared to be in place. Two hundred years later, matters have changed dramatically.
Now, year in and year out, the American government expropriates more than 40 percent of the incomes of private producers, making even the economic burden imposed on slaves and serfs seem moderate in comparison. Gold and silver have been replaced by government-manufactured paper money, and Americans are being robbed continually through money inflation. The meaning of private property, once seemingly clear and fixed, has become obscure, flexible, and fluid. In fact, every detail of private life, property, trade, and contract is regulated and re-regulated by ever-higher mountains of paper laws (legislation). With increasing legislation, ever more legal uncertainty and moral hazards have been created, and lawlessness has replaced law and order.
Last but not least, the commitment to free trade and noninterventionism has given way to a policy of protectionism, militarism, and imperialism. In fact, almost since its beginnings the US government has engaged in relentless aggressive expansionism and, starting with the Spanish-American War and continuing past World War I and World War II to the present, the United States has become entangled in hundreds of foreign conflicts and risen to the rank of the world's foremost warmonger and imperialist power. In addition, while American citizens have become increasingly more defenseless, insecure, and impoverished, and foreigners all over the globe have become ever more threatened and bullied by US military power, American presidents, members of Congress, and Supreme Court judges have become ever more arrogant, morally corrupt, and dangerous.
What can possibly be done about this state of affairs? First, the American Constitution must be recognized for what it is — an error.”

Since these analyses will help us Indians as we search for the legal foundations of our own Second Republic, let us also see how Professor Hoppe thinks a new revolution will happen in America:

“A modern liberal-libertarian strategy of secession should take its cues from the European Middle Ages when, from about the 12th until well into the 17th century (with the emergence of the modern central state), Europe was characterized by the existence of hundreds of free and independent cities, interspersed into a predominantly feudal social structure.
By choosing this model and striving to create an America punctuated by a large and increasing number of territorially disconnected free cities — a multitude of Hong Kongs, Singapores, Monacos, and Liechtensteins strewn out over the entire continent — two otherwise unattainable but central objectives can be accomplished. First, besides recognizing the fact that the liberal-libertarian potential is distributed highly unevenly across the country, such a strategy of piecemeal withdrawal renders secession less threatening politically, socially, and economically. Second, by pursuing this strategy simultaneously at a great number of locations all over the country, it becomes exceedingly difficult for the central state to create the unified opposition in public opinion to the secessionists that would secure the level of popular support and voluntary cooperation necessary for a successful crackdown.”

This should give India’s libertarians much to mull over. We too could do with a nation of “a multitude of Hong Kongs, Singapores, Monacos, and Liechtensteins.”

Strong central government in such a huge sub-continent is the basic cause of disaster. A strong central government is necessary for central planning. In a free trade, free market scenario, local self-government in each of these “Hong Kongs, Singapores, Monacos, and Liechtensteins” will matter much more.

You can read the full article by Professor Hoppe here.

Onwards to a Second Republic!

The Pedestrian Is The Aam Aadmi

Today, the headlines are marking the passing away of a great soldier, Field Marshal "Sam" Manekshaw, hero of the Bangladesh war.

Today, the front page of The Times of India also mentions that 90 per cent of pedestrians in Delhi “feel unsafe while crossing the road.”

Interestingly, when I searched the ToI website for this story (unsuccessfully), I stumbled across a host of such stories from other Indian cities.

Here is one from Vadodara.

Here is one from Bangalore.

Hey!

We’re dying on the unsafe streets!

We don’t need no “war heroes.”

The pedestrian is the aam aadmi.

He must be SAFE.

Don’t protect him from Musharraf – who has his own problems anyway.

Don’t protect him from the Chinese.

Protect him while he crosses a piece of “common property” called the pot-holed road – which belongs to The State.

You own the roads, Manmohan, you look after the aam aadmi pedestrian.

Therefore review the “security policy.”

See where the “insecurity” lies – on the pot-holed apology of a road the government owns as a monopolist.

This “road” is your property and the pedestrian is the aam aadmi you wail about so much.

Your time starts Right Now.

And why don’t we have a national movement to drive slow?

What’s the huge fucking rush anyway?

Pehle aap to the aam aadmi when he is crossing the road would be excellent road manners.

Maybe, this way we will “protect” the aam aadmi on our own.

We Won’t Need Manmohan - and no soldiers too.

Dilli Chhoro!

The other day I drove on the latest experiment of the “transport planner” – the Bus Rapid Transport (BRT) corridor in south Delhi.

This is “knowledge failure” – it struck me.

The twin bus lanes are empty and the two car lanes are jammed. Road pricing might help on some of these stretches, but the real solution is to build proper roads.

But then, the design and construction of roads, and their layout, is also supposed to be based on “knowledge”.

In which case, all of New Delhi outside the area that the Brits left behind is an example of “knowledge failure”.

The urban planners and designers, the urban arts committee, the development authority, the transport authorities, the state government and its municipality – they are all working under widespread knowledge failure.

This capital city of socialism is a failed city because the knowledge with which it is governed is in serious error.

The solution is already here:

Private developers are roping in foreign architectural firms to design the new townships that will soon emerge all over India.

Then Dilli Chhoro – and split to one of these new, private townships; that too, one where the weather is pleasant all year through, unlike Delhi.

Theme Song of the Day:

Jefferson Starship’s “We Built This City On Rock-n-Roll”.

The Nightmare of Central Planning

The word “nightmare” in the title to this article on inflation and the central bank’s response – a rise in interest rates – adversely affecting those who have taken loans to buy homes, cars etc, is noteworthy: “nightmare”.

Nothing less.

Yet, it proves a basic truth:

WHERE THE GOVERNMENT PLANS, THE PRIVATE PLANS OF THE CITIZENS DO NOT SUCCEED

“Monetary policy” – the jazzy knowledge of the central banker, backed by “macroeconomics” – is a kind of “planning”: a central “mastermind” in control of the supply of money and credit.

When we have sound money, which is hard money and its representatives, there will be no “monetary policy”.

Instead of inflation, prices will steadily fall, as output rises with productivity increases.

Then, the long term plans of individuals – to buy a house on installments, say – will have much greater chances of succeeding.

Thackerays Are Migrants Too!

Thank heavens for good, honest scholarship.

A renowned Marathi scholar and professor, Hari Narke, has affirmed that Bal Thackeray’s father (who studied in Madhya Pradesh) came to Bombay as a migrant looking for a job.

Here is the relevant extract from the news report:

Hari Narke, Mahatma Phule chair professor in the University of Pune and a renowned scholar on Ambedkar, has written a strongly-worded article in the NCP mouthpiece, Rashtravadi. Narke has flayed Maharashtra Navnirman Sena Chief Raj Thackeray, who is Bal Thackeray's nephew, over attacks on migrants in Mumbai. "Raj should read the autobiography of his grandfather Prabodhankar Thackeray (Bal Thackeray's father). Prabodhankar, who studied in Madhya Pradesh, has written how he travelled in other states for livelihood", Narke says. "This proves that the Thackerays, who are not original inhabitants of Mumbai, came to this city in search of livelihood."

Indeed, every Indian city is chock-a-block full of migrants.

I recall an experience I had while serving on the editorial team of The Economic Times, in New Delhi.

One morning, during the edit meeting, I asked each member of the board to reveal their origins.

It so transpired that each and every member of the edit team turned out to be a migrant, including myself.

We were laughing over this discovery when a bearer entered with our morning cuppa tea.

I asked him where he had come from, and he proudly said, “Nepal.”

Just goes to show that migrants and migration need to be better understood.

And I hope that the Thackerays will now cease targeting migrants, recalling that their noble ancestors were migrants to Bombay (not Mumbai!) themselves.

We must all thank Professor Hari Narke for this vital contribution to this important debate.

Inflation: Two Views

The Times of India today carries a leader article on inflation by Bhaskar Dutta, professor of economics at Warwick University.

After reading the article I have decided never to send my son to this university; that is, of course, if he ever decides to go to university, since I have always advised him against formal education – especially in Economics.

Dutta must be a teacher of that fiction called “macroeconomics” – or has suffered being a student of it, thereby destroying his ability to see that inflation is a purely monetary phenomenon, caused by the abundance of fiat money, and the fractional reserve banking system, which creates credit out of thin air. The cause of inflation is excess money – not fewer goods.

Dutta thinks otherwise. Take these lines from the piece:

“Very simply put, the world economy is just not producing enough to satisfy rising world demands. Some time ago, President George Bush earned instant notoriety because he quite naively (but why expect anything else from him?) blamed China and India for the rise in food prices. However, there is a grain of truth in his statement.”

Actually, if inflation today is a “global phenomenon” the cause must be global money – especially US dollars.

Yet, from the USA there is an observant and intellectually incisive article by a well-taught schoolboy on how the copper in the US penny is worth two pennies – and the implications thereof.

And here is another on how these pennies are now going to be coined in steel.

We already have steel coins in India – for quite some time now.

Dutta favours more direct subsidies on food.

I favour “sound money”.

To me, “macroeconomics” is nonsense upon stilts.

Read my “Funny Money” – also from The Times of India, a year ago.

The Future of Urban India

Since the Manmohan Singh government has squandered billions by waiving farm loans and guaranteeing rural employment, they do not have the funds necessary to invest in urban infrastructure.

Here is the news:

"NEW DELHI, JUNE 22: For UPA government’s ambitious project to provide urban infrastructure under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) scheme, there is an estimated investment shortfall of Rs 48,715 crore annually."

Read the full story here.

The only solution is to invite private players into urban infrastructure.

This is the only way by which every little town can get a tramway.

Then there are other solutions in the paradigm of New Public Management (NPM) by which almost everything can be handed over to the private sector.

Read my old article on NPM here.

Yet it does seem like a criminal misappropriation of public money when resources are diverted from crucial areas like urban infrastructure and thrown away on foolish schemes.

The news report mentions that “municipalities are neither financially sound nor credit-worthy”. Further, they are entirely dominated by the state government.

So let us abandon panchayati raj and focus all attention on building sound institutions of urban local self-government.

Read my earlier post: “We Need Mayors, Not Panchayats.”

Let us build a nations of over 500 free trading and self-governing cities, and thousands and thousands of such towns.

The USA has 350 million people in 200 cities.

For our 1000 million people we need three times that number of cities.

Let us build them – and ensure that the local government works.

Urban Land For The Rural Poor

What can liberals offer the rural poor?

How about cheap, affordable, URBAN land?

The idea is simplicity itself: Each and every urban agglomeration in India must be made to “sprawl” outwards with rapid transport connections into the surrounds – roads, trams etc.

These transport connections will increase the total supply of urban land substantially, bringing down prices.

This will allow more and more rural people to afford the shift to a city, buy a cheap plot of land and set up house.

For those who cannot afford this, the repeal of rent control will enable them to rent quality homes at affordable rates.

What about the completely destitute?

I have made the suggestion that all urban roads should be built with extremely wide footpaths, so that poor migrants from rural areas can sleep on them.

The police should protect them.

And there should be guard railings on the footpaths so that they are not run over by drunken drivers.

So, on a cool Sunday morning, is that a good idea or what?

Think about it. And read my old post "Unsprawled".

Judicial Corruption - The Cure

Fali S Nariman’s speech on judicial corruption is well worth the read.

As a senior lawyer, he must be aware of things.

One para of the speech is particularly noteworthy:

“I belong to a profession where there is the least transparency; clients do not know what mumbo jumbo their advocates argue in courts, people cannot understand the long judgments given by the men and women in black robes; the judiciary, especially the higher judiciary, has put itself on cloud nine, wrapped in a convenient cloak of inviolability. How are judges appointed? Why are they appointed? What are their shortcomings? How are these dealt with? It is met with a condescending answer: “It is none of your business to ask us questions, we know what is best for the system.” Any attempt at exposure is visited with retribution in the form of imprisonment or fine for contempt of court.”

The legal community is a self-regulating profession: only lawyers can become judges, and lawyers also control legal education.

Because there is little transparency and everything is mumbo-jumbo legalese to the common man, this self-regulating profession is in a great position to exploit its power – and increase litigation, from which they directly benefit. Socialist interventionism through legislation is in their financial interest - because it increases litigation.

Thus, the legal community is just another ugly “vested interest”: notice how all the major parties have lawyers on board.

Therefore, not only must Economics be de-mystified, so the common people can understand its truths, so too must the knowledge of law.

Judicial corruption is the greatest evil to ever befall a nation.

The solution does not lie in an “ombudsman” as Nariman says. The solution lies in a new moral consensus on law itself, to be achieved through “politics”.

A moral consensus has everything to do with law.

This will not only ensure the “rule of law” (as opposed to the arbitrary rule of men), but will also lower litigation considerably.

Onwards to a Second Republic!

The Delusion of Knowledge

I have a pleasant day ahead of me – lecturing young people who are seeking knowledge relevant to their concerns.

So today I am happy to post a link to my recent article on knowledge and education – the anarchist view. The link below is to the complete, unabridged, no-holds-barred version, which was mauled by the editors. This is the article as it was originally written.

The abstract reads:

“Every activist in Indian education suffers from a ‘delusion of knowledge’ — the notion that the socialist State, i.e. government, is in possession of knowledge that the poor need to succeed in life. In reality, the State is itself based on failed knowledge, writes Sauvik Chakraverti in Education World.”

If this prompts you to want to read the full 900 words, as originally written, click here.

Then, spread the good word.

On the Hindu-Muslim Question

Mumbai’s Shiv Sena “boss” (a.k.a. “supremo”), Bal Thackeray, has written an editorial in his Marathi “mouthpiece”, Saamna, calling for “Hindu suicide squads”.

He has done this not long after this piece of recent news:

"New Delhi, June 6: After declaring terrorism as anti-Islamic, the Jamiat Ulema-i-Hind is all set to launch a website to clarify misconceptions regarding Islam. Jamiat, one of the leading Islamic organisations in the country, had hit the headlines recently by organising a massive rally in Delhi where clerics from every state came together to issue a fatwa against terror."

Thankfully, we Hindus – as opposed to hindoos – do not belong to the Thackeray cult.

This gives me a wonderful opportunity to use my own mouthpiece to air the liberal position on the Hindu-Muslim question, that too, in English, the weltsprache.

It is this:

Both the Hindu and the Muslim faith endorse the free market.

Hinduism said Shubh Laabh aeons before Adam Smith revealed this vital insight to the West: that private profits are also good for society as a whole: profits are “auspicious”. Adam Smith is dated 1776 – and this insight still does not inform the West, who are plagued by socialist visions of numerous kinds.

Hindus are proud their forefathers discovered the Zero.

They should be even more proud of Shubh laabh – and the idea that dharma, artha, kama, moksha are the “ends of life”.

Note that the position of artha is ahead of kama but following dharma – which means that Hindu “morality” (or dharma) meant earning one’s artha and enjoying kama in ways that did not use unjust means. In worldly matters there are only two relevant moralities: the economic and the sexual, and it is interesting that economic morality matters more to the Hindu than sexual morality – though both matter.

Islam is THE religion of the market. The Prophet Muhammad, peace be upon him, was a trader, as was his wife Khadija. The Prophet once said, “He who makes money pleases Allah.”

Much of the Koran is written using idioms and metaphors from the market and trade.

Islam is a religion of traders, not soldiers.

And yes, they have sexual freedom too.

And all their worldly morality concerns only the economic and sexual spheres. They abhor riba – or “unjust profit”. And marriage is but a contract to them. We could learn much.

Not only are Islam and Hinduism free market religions, they also contain the basic element of an anarchistic vision. There is no Supreme Book or Supreme Pope in Hinduism. We have to find our own “guru” – and there are millions of them; many, of course, complete frauds.

In Islam too, the germ of the idea that knowledge (or ilm) must be completely free clearly exists. The word “ilm” is the most recurring word in the Koran – and it is interesting that when disputes arise in Islam, scholars, not priests, address them.

The liberal should not be surprised to find that not only Hinduism and Islam, but even Jainism, Buddhism, Sikhism and Zoroastrianism endorse free markets – because this is the only “moral” means of survival. Adam Smith was not an “economist”: he was a moral philosopher.

So we return to the only issue that matters in Indian politics today: a new moral consensus to replace the old moral consensus that Nehru forged, according to which profit was a “dirty word”.

This ungodly faith of Nehruvianism must be replaced, not only by sound economic theory in the classrooms, but also, on the streets and in the bazaars, by the new moral consensus regarding Shubh Laabh; dharma, artha, kama, moksha; and “He who makes money pleases Allah.”

This is the political task before India’s liberals – not elections. Thackeray has given us a wonderful opportunity - that too, in Mumbai!

Read my "The Purpose of Politics".

Fight The Excise Department

There is a website called www.bureaucrash.com that goes by the slogan, “Tax Slavery Sucks”.

Indeed, democracy is meaningless unless the tax payer is being faithfully represented.

In India, they represent the tax collectors and those who spend – and therefore live off – tax money.

Consider two news stories of today: one, on the sudden hike in excise duty for big cars – which ends up impacting poor rural Indians who ride about crammed into “utility vehicles” like the Toyota Qualis and the Chevrolet Tavera.

The sudden tax aims to hit buyers of big gas-guzzlers, but ends up hurting the poor.

In either case, environmental reasons for this tax are unacceptable, because Indian road conditions make every car a gas-guzzler. Indians waste fossil fuels because of bad roads. Unless roads are properly built, such taxes have no effect on the environment.

There is another story on the hike in excise duties for bar licenses in Andhra Pradesh, and the fine print is worth reading:

“The department has categorised bars into five groups. For bars to be set up in places where the population of the village or town does not exceed 10,000, the fee would be Rs 9.92 lakh.For places where population is above 10,000 but below 50,000, the licence fee is Rs 12.57 lakh. For bars in towns where the population is above 50,000 but below 3 lakh, the fee would be Rs 18.52 lakh. The licence fee is Rs 21.16 lakh for bars where the population is above three lakh but below seven lakh.And finally, for bars in places where the population is above seven lakh, the fee is Rs 23.81 lakh.”

Undoubtedly, this irresponsible excise department is affecting the profitability of an entire industry.

Indeed, in Delhi, this industry – bars, taverns, pubs and the like – has never been allowed to grow. It does not exist! People in Delhi buy their booze from government shops and take it home to drink. Young people have no places to “hang out”.

There is a Cat Stevens song called “Where Do The Children Play?” In Delhi, we might as well ask, “Where Do The Adults Play?”

Reminds me of a recent encounter I had with a Delhi cop.

Ramu and I were parked on a quiet side road, the music was on, and we were sipping beer, smoking a spliff.

Suddenly a cop came up to my window and asked, “Chachaji, aap kya kar rahey hain?”

Translated: “Respected Uncle, what are you doing?”

I replied, “Bhateejayji, hum beer pee rahay hain.”

That is: “Respected nephew, we are drinking beer.”

He said “yeh tho allow nahin hain” – this is not allowed – and I said that I was a visitor from Goa, where there is a bar every 15 yards. Where can I sit and drink in Delhi? I asked. And how can there be two different laws in the same country?

The cop insisted that we must move, get home, and then drink the beer. This was the Law in New Delhi.

And so we drove off.

Instead of peacefully sitting and drinking, we were now driving and drinking – for we had certainly not handed over our beers for destruction.

The Lesson: There are three aspects to the science of Economics.

The first is pure theory: here, they are dead wrong.

The second is public finance and taxation: here, they are dead wrong once again.

The third is public policy – and here, because they are wrong in the first two, there cannot be any sound policy whatsoever.

The Goal: A Policy-less Government.

Administer justice, build roads, catch crooks – and that is all.

Tax Slavery Sucks.

Fight this tyrannical, senseless beast called the excise department.

And remember, whether in Hyderabad or Delhi, if you make bars unaffordable, you encourage people to drink in their cars. Take that for "public policy".

Reflections On A Trade Union Scandal

There is much to think about in the ugly corruption by the Legislative party leader of the Communist Party of India (Marxist) from Tamil Nadu, C Govindsamy.

Govindsamy took 25 lakhs from the mill-owners of Tirupur (all very big exporters, by the way) to “settle a wage dispute”. Read the news report here.

Note that theirs is the “party of the working classes”.

They are the champions of “collective bargaining”.

They go around “unionizing” workers.

They have passed all the legislation on hiring labour.

Their unions are legally allowed to use force to press for their demands – as in the case of strikes.

But that is their “theory”.

In practice they are corrupt to the core.

The first thing to note is the low quality of “party cadres” of the CPI(M).

Yet, the newspaper report says, “the cadre feels there is a need for a reorientation course on party’s ideology for all functionaries.”

If that is the case, let us explore the liberal stand on trade unions. Perhaps CPI(M) cadres will learn something.

There are three basic facts that go against trade unionism. The first is that they can never raise the wages of ALL workers. This is apparent in India: we have had trade unionism for long, but they have raised the wages of just a small privileged minority of workers. This fact is a source of strength to the liberal position on trade unions. Recall that the Swatantra Party of Rajagopalachari and Minoo Masani never had a trade union wing.

The second fact is that workers are NOT homogeneous: there is never a “demand for labour”; there is always a demand for a particular kind of labour.

The third fact is that there is competition between workers of any particular kind: they too compete, and their interests do not coincide.

Thus, wage contracts should be based on “personal bargaining”, with each worker signing his own contract on his own terms. Once employed, he competes for the next promotion.

This liberal view is based on the harmony between labour and capital.

The more the capital, the higher the productivity, and the higher the productivity, the higher the wages.

There is no “conflict” or “class war” between the owners of capital and workers. The idea that capitalists expropriate the “surplus value of labour” is not just false; it is libel. Teaching such nonsense to working people destroys industrial relations, promotes disharmony, and ultimately damages the economic environment – to the detriment of workers: look what happened to West Bengal after decades of “militant” trade unionism.

Finally, let us look at Say’s Law of Markets from the point of view of the poorest, non-unionized worker. From his point of view both as a consumer as well as a producer, all monopolies and monopsonies are bad.

(Trade unions are monopoly sellers of labour in certain industries.)

All monopolies and monopsonies raise prices and thereby lower the quantity sold of the good they control.

(Thus, trade unions LOWER the quantity of labour employed.)

When the quantity of the good sold in the market falls, then Say’s Law indicates that the demand for all non-competing goods falls as well.

If the poor non-unionized worker is producing something that does not compete with what the union is producing, he faces a fall in demand. He sells less.

Now, let us look at the poor non-unionized worker as a consumer. When monopolies and monopsonies raise prices, he consumes less, he buys less, he loses again.

I conclude with two quotes from the late Professor WH Hutt, whose works on trade unionism, Keynesianism and Say’s Law are most illuminating. This is from an obscure work on immigration, in which he writes of some special implications of Say’s Law of Markets. Read it carefully and reflect on it:

“Given any population of working age, and in the absence of monopsonistic exploitation, the aggregate flow of REAL WAGES will be maximized, and inequality in the distribution of the wages flow will be minimized, when every wage-earner is offered and accepts the lowest wage-rate necessary to acquire his services.”

He then states this proposition in another way, which is easier to understand:

“The aggregate flow of REAL INCOME will be maximized when entrepreneurs acquire all productive services needed (those of men and assets) at least cost.”

If you look at the matter from the viewpoint of the poorest non-unionized worker, you will discover that he will sell more as well as buy more under these conditions of competitive price-setting.

Indeed, Professor Hutt was talking about poor immigrants, who should be allowed to compete for unionized jobs in the West. If they are allowed to do so, every westerner will ultimately gain. Unionism is bad for the West too.

(To understand Say's Law better, read my recent article on the subject here, which shows how India Inc. misunderstood this law and how India thereby lost.)

Montek... And The "Magic Bullet"

Montek, Sonia’s chhota ustad at the Planning Commission, has opined that “there is no magic bullet to cure inflation.”

Since inflation and monetary policy are now “poll issues” (see earlier post) this statement from a former IMF man must be scrutinized using sound theory.

What is inflation?

How is it caused?

What are its effects?

We will briefly deal with each of these important questions.

First, inflation is a disease of the currency. A steady rise in ALL prices should correctly be seen as a steady fall in the value of the currency.

The cause of inflation is government monopoly paper money enforced in all market exchanges by “legal tender” laws.

The “magic bullet” to get rid of the curse of inflation is “currency competition”. In such a scenario, gold and silver coins would be privately coined and circulated, and notes redeemable in these coins would spontaneously emerge. Irredeemable paper money would be hounded out of the market.

The biggest gainers under such a regime of “sound money” would be the poor. Let us see how:

The effects of inflationism must be understood over a stretch of Time. There is no direct, proportional mathematical relationship between the quantity of money and the “price level”; indeed, there is no “price level” at all. The “rate of inflation” is statistical nonsense.

To “understand” inflation, we must see who first get to spend “new money” and who get to spend it last – after a long period of Time has passed.

The money is first spent by the government, their contractors, and those who get big loans from the cartelized banking industry. This is what happens in the first period of Time, when prices are relatively unchanged. This “new money” enables these privileged few to purchase real goods and services at “old prices”.

Now, prices start rising slowly, first of those goods that the new money is spent on, and then gradually the value of money falls – what is a “general” rise in all prices. This is what happens over the second period of Time.

The third period of Time opens with the daily wage earner getting some of this new money to spend (via the National Rural Employment Guarantee Act!). But, while his wages have not increased, the buying power of his wage has fallen. He thus purchases fewer goods from the market than he otherwise would have, if the value of the money had not fallen.

There is thus a “redistribution of real wealth” that accompanies inflation: real goods get transferred from the poor to the government and its hangers-on and from savers to borrowers. The government often claims to “encourage saving”, but when it inflates it actually encourages borrowing, thereby destroying the character of the business community – who should be the biggest savers.

The key point to note is this: When the government increases the total paper “claims to property” (which is legal tender paper money) without increasing the properties themselves, all that can result is a redistribution of those properties.

No “economic stimulation” occurs.

Rather, this is how the poor and those who save lose heavily.

This is how and why the poor get poorer.

So there, Montek!

We have the “magic bullet” and are now looking for the “magic gun” to shoot it from.

Currency competition will finish off the curse of inflation - which is caused by central banking based on Keynesian poppycock.

Social Order - Without the MHA

Of all the Sunday columns – and I used to write one myself (but that’s another story) – I found Tarun Vijay’s “Fire In The North-East” most compelling, because it is a major attack on the crucial ministry at the Centre that is responsible for “law and order”: The Ministry for Home Affairs.

All is not well with this crucial ministry.

Do read the full article here: the RSS-type pseudo-patriotism aside, it makes a good read. After all, it is anti-Congress, and anti-Left too.

It is like sitting back and watching your enemies bash each other.

Tarun Vijay provides a list of organizations “banned” by this ministry:

1) United Liberation Front of Assam (ULFA)

2) National Democratic Front of Bodoland (NDFB) in Assam

3) People's Liberation Army (PLA)

4) United National Liberation Front (UNLF)

5) People's Revolutionary Party of Kangleipak (Prepak)

6) Kangleipak Communist Party (KCP)

7) Kanglei Yaol Kanba Lup (KYKL)

8) Manipur People's Liberation Front (MPLF)

9) Revolutionary People's Front (RPF) in Manipur

10) All Tripura Tiger Force (ATTF)

11) National Liberation Front of Tripura (NLFT) in Tripura

12) Hynniewtrep National Liberation Council (HNLC)

13) Achik National Volunteer Council (ANVC) in Meghalaya

14) Babbar Khalsa International

15) Khalistan Commando Force

16) International Sikh Youth Federation

17) Lashkar-e-Toiba/ Pasban-e-Ahle Hadis

18) Jaish-e-Mohammad/ Tahrik-E-Furqan

19) Harkat-ul-Mujahideen/ Harkar-Ul-Ansar/ Karkat-Ul-Jehad-E-Islami

20) Hizb-ul-Mujahideen/ Hizb-ul-Mujahideen Pir Panjal Regiment

21) Al-Umar-Mujahideen

22) Jammu And Kashmir Islamic Front

23) Liberation Tigers of Tamil Eelam (LTTE)

24) Students’ Islamic Movement of India

25) Deendar Anjuman

26) Communist Party of India (Marxist-Leninist)-People's War; all its formations and front organisations

27) Maoist Communist Centre (MCC), all its formations and front organisations

28) Al Badr 29) Jamiat-ul-Mujahidden

30) Al-Qaida 31) Dukhtaran-e-Millat (DEM)

32) Tamil Nadu Liberation Army (TNLA)

33) Tamil National Retrieval Troops (TNRT)

34) Akhil Bharat Nepali Ekta Samaj (ABNES)

He then says:

”The ban on these outfits in fact is nothing but a mockery of law as most of these organisations are active under different names. In the northeast, banned organisations like ULFA issue press statements and call the Army an "occupational army"; in Nagaland, a terrorist and separatist organization like the NSCN (IM) has its headquarters in Hebron where it 'celebrates' its "republic day" inviting journalists from Delhi and Kolkata; in Jammu and Kashmir, the government has announced pensions for the family of terrorists killed in encounters with security forces!”

Heck! We Liberals are banned too!

Maybe we should form a “rainbow coalition” with all these banned groups.

At least then we will gave guns on our side!

But jokes aside: It is only in liberal politics that the solution lies.

We need a new moral consensus that sees social harmony to lie in voluntary exchange. This civilizing activity that lies at the foundation of our “natural order”, and its natural “rules of the game”, should then become the Basic Law as a consensus.

Only liberal politics – the spreading of this message – can achieve the return of social stability.

After all, the roots of social stability must lie within society itself – and they do.

There are no armed policemen “maintaining order” in any of the world’s great shopping districts – including our own Chandni Chowk, Brigade Road, and Connaught Place.

If order and stability could be brought about “from above” then the Ministry of Home Affairs would have succeeded long ago.

Thus, the conclusion is stark:

Not just for fruit and vegetables, meat and fish, clothes and shoes, phones and electricity – even for “social order” we have to rely on MARKETS.

Highly recommended reading: “The Production of Security” by Gustave de Molinari (a close associate of Frederic Bastiat) who was the founder of what is called “market anarchism”.

It is a short article.

So do read it – here.

Since it is Sunday and some may want to read further, here is Thomas Paine himself.

Read.

Then think!

Action must come later – but it must come.

Lying Through Their Teeth

New Delhi: June 14, 2008: 0930hrs
Barkha Dutt, the feisty television journalist, has finally woken up to the fact that “the State can lie”.

She asks the precise question:

“When the Minister of State for Home unfailingly points to a ‘foreign hand’ each and every time, without a blink of the eye, do we wonder whether he's lying?”

Of course he is.

Let us never forget the fact that we in India suffer from huge INTERNAL PROBLEMS.

There are many little – and sometimes not so little – internal wars that are going on all over the country.

And their number is increasing.

We have over 200 (out of 600) districts being run by armed Naxalite rebels.

There is Kashmir, Manipur and Nagaland.

And now the Darjeeling hills are burning.

Foreign hand?

What utter crap!

Opportunity Knocks for Indian Liberals - Twice

New Delhi: June 13, 2008: 1000hrs
There are two interesting lead editorials in the papers today.

The Times of India says that urbanization is going to be a poll issue.

The Indian Express says something deeper: that monetary policy is going to be a poll issue.

Both editorials should be carefully read by all the liberals of India, for it is we who have been talking for long about our urban vision, and about sound money.

Of course, we don’t have a political party as yet – because of legislation banning liberals from participating in the political process, which remains a "socialist" monopoly. Not that parties like the BJP or the Shiv Sena are "socialist" in any meaningful way.

But these limitations should not stop us from campaigning.

If urbanization is what the people are demanding, and if the number of urban constituencies is rising (as the ToI edit says) – we can support independents in cities and towns.

Similarly, if inflationism is a poll issue (as the Express edit says), then we must highlight the importance of sound money to the really poor: the fact that inflation results in a redistribution of real wealth from the poor to the State (and its hangers-on).

Looks like Time is on our side.

Let us make the most of it.

Ron Paul: Out but not Down

New Delhi: June 13, 2008: 0930hrs
Ron Paul, the other Republican candidate for president, who stood for sound money, a non-interventionist foreign policy and the ideals of Liberty is officially out of the race today.

However, as Lew Rockwell reports:

“But Ron will still hold his grand rally in Minneapolis on September 2--where he will NOT endorse McCain--and continue his efforts to change the Republican party. He will also, more importantly, step up his educational work for Americans in all walks of life, and all ages from home schoolers to seniors, in the principles of freedom, peace, sound money, Austrian economics, and the free market. Ron’s special targets, as always, will be the warfare state, the Federal Reserve, and the income tax.”

The battle for Liberty continues – even in the USA.

Happy 21st Birthday, Gaurav

New Delhi: Friday the 13th June, 2008: 0900hrs
My son, Gaurav, turns 21 today.

Here is a beautiful poem that I dedicate to him on this joyous occasion:

IF
by Rudyard Kipling


IF you can keep your head when all about you

Are losing theirs and blaming it on you,

If you can trust yourself when all men doubt you,

But make allowance for their doubting too;

If you can wait and not be tired by waiting,

Or being lied about, don't deal in lies,

Or being hated, don't give way to hating,

And yet don't look too good, nor talk too wise:


If you can dream - and not make dreams your master;

If you can think - and not make thoughts your aim;

If you can meet with Triumph and Disaster

And treat those two impostors just the same;

If you can bear to hear the truth you've spoken

Twisted by knaves to make a trap for fools,

Or watch the things you gave your life to, broken,

And stoop and build 'em up with worn-out tools:


If you can make one heap of all your winnings

And risk it on one turn of pitch-and-toss,

And lose, and start again at your beginnings

And never breathe a word about your loss;

If you can force your heart and nerve and sinew

To serve your turn long after they are gone,

And so hold on when there is nothing in you

Except the Will which says to them: 'Hold on!'


If you can talk with crowds and keep your virtue,

Or walk with Kings - nor lose the common touch,

If neither foes nor loving friends can hurt you,

If all men count with you, but none too much;

If you can fill the unforgiving minute

With sixty seconds' worth of distance run,

Yours is the Earth and everything that's in it,

And - which is more - you'll be a Man, my son!

The Superior "Indica"

New Delhi: June 12, 2008: 1200hrs
The word ‘indica’ that is being used by Tata Motors as the name for its small car, the Tata Indica, has another traditional use in science.

And that is as the name of a plant that originated in this sub-continent: Cannabis Indica – the great ganja plant of the Indian sub-continent.

Now, the Tata Indica is not really a great car. I hired an Indica taxi some months ago, and the ride was terrible. But there is more.

In the year 2000, I had the occasion to attend the Geneva Motor Show. Here, Ratan Tata personally launched the Tata Indica, while also saying that his ambitions lay in “being a small player in the international passenger car industry.” In other words, Ratan Tata himself didn’t see a big overseas market for the Tata Indica.

Now compare this with the market for Cannabis Indica. I noticed that in Europe, Manali hash sells for four times the price of its Moroccan rival, and is highly prized by connoisseurs.

There is thus a huge market for Cannabis Indica, because it is a high-class product.

The Tata Indica pales in comparison.

Something to think about, what?

Which Indica should we promote?

Also read my previous post: “Announcing the Bhola Company IPO”.

Kamal Nath's Perverted Clientelism

New Delhi: June 11, 2008: 0730hrs
Kamal Nath is the epitome of the intellectual-moral perversion that is the hallmark of a true Congressman.

He wants to get elected by promising poor people free electricity.

But he doesn’t want them to trade freely with foreigners so that they can themselves climb out of poverty.

The other news about him is that he is being accused of “wrecking” the WTO talks.

As long as politicians like Kamal Nath promise to deliver free electricity to their poverty-stricken constituents, the power sector will remain under State control – and all of us will suffer erratic power supply.

And as long as politicians like Kamal Nath wreck international trade, the people will remain poor, and their votes can easily be bought.

Do note something “evil” in Kamal Nath’s political strategy, which is basic to Congressism: keep the people poor, and keep promising them something or the other free – that is, at somebody else’s cost.

This cannot be called “socialism”.

It should be correctly labeled “political clientelism” – that too, of the most perverted kind.

Golden Handcuffs On The US Government

New Delhi: June 10, 2008: 1800hrs
Thank God Americans are finally thinking right and talking of sound money as the “golden handcuffs” to place upon the welfare-warfare US federal government.

Lew Rockwell’s recent speech on the subject is truly worth reading. He sees the US Federal Reserve as the enemy.

He ends with strong words:

“It comes down to this. If you hate war, oppose the Fed. If you hate violations of your liberties, oppose the Fed. If you want to restrain despotism, restrain the Fed. If you want to secure freedom for yourself and your descendants, abolish the Fed.”

The web page contains a link to an excellent interview with Professor Joseph Salerno, an authority on money and banking. Do check out the interview.

Sound money is a must if we are to inhabit a civilized world. As long as central banks exist, central governments will overspend in their own interests, whether welfare (as here) or warfare (as there).

This is the case for “golden handcuffs” on all the governments of the world – a return to gold and silver, sound money that people choose on their own. No more inflation. Steady growth. Falling prices.

Why Socialism Is Sociopathic

New Delhi: June 10, 2008: 1015hrs (Take #2)
Socialists claim to love society, but reality is quite different.

They do not love the society that exists around them: they love the society they have imagined in their cloudcuckooland.

Thus, they actually hate the natural society in which people engage in gainful trades among themselves; what they love is the society that they want to create, to replace the existing society, using the powers of coercion that State control gives them.

This is Jawaharlal Nehru’s “socialistic pattern of society”: it is a vision of an egalitarian order, to be attained by the means of State power.

It is also a rejection of the society that just is.

Ditto with socialist / Gandhian “morality”: they hate the natural order in which people consume alcohol, gamble, smoke ganja and charas, visit dance bars for entertainment and so on. They want all these wiped out.

Wiped out.

They hate what is; they love something else.

Thus, they hate the idea that villagers are moving to cities, for in their cloudcuckooland we are all villagers engaged in “self-sufficiency”. The fact that millions and millions of poor villagers are “voting with their feet” and moving to cities does not move them a bit. They will pursue “rural development”; they will ruin all the cities and towns. This is because of the false vision of society they harbour.

Another example is the BRT corridor bus project in Delhi. The transport planner actually hates the real world situation in Delhi in which most people now own cars.

If more and more people buy cars, then the government should build roads for these cars.

But they cannot do that because in their cloudcuckooland the citizens do not drive cars; they travel in buses.

Once again, they hate what is; they have a vision of something else.

Of course, you could level the same charge against me: that I hate what is and dream of a better world.

But I love society as it is. I do not want to change it. All I would like to do is bring the State under control, take away most of its powers, and leave natural society free.

I hate the State, not society, because the State uses coercion arbitrarily and unjustly.

If society is free, there will be inequality; there will be decadence and vice; there will be business failures – and I want to change none of these.

It is therefore the liberal who really loves human society (although it comprises strangers).

The socialist, on the other hand, is a sociopath.

He damages society.

Sonia, Manmohan And "Indian Economics"

New Delhi: June 9, 2008: 0800hrs
Why did Sonia Gandhi choose Manmohan Pyarey as PM?

The answer, according to me, is as follows:

Sonia believes that the most important function of her government is to “run the economy”.

Thus, an “economist” is the best choice for PM – a position that also involves chairing the Planning Commission.

This is her “instinctive error” – an instinct honed by Congress economics – better known as “Indian Economics” to school and college students.

This is an error according to us liberals because we believe the “command economy” to be wrong-headed in the extreme.

The government is not set up to command businessmen.

It is set up to catch crooks, build roads and not much else.

Because of this error, while half of the country is being overrun by armed Naxalite rebels, while Manipur remains under martial law, while armed insurgents run Nagaland, and while Kashmir is far from a stable peace, Manmohan’s government has decided to teach the unlettered, employ the unemployed, and waive loans given to insolvents. And not much else.

Thus, theory matters.

Wrong theories lead to wrong practices.

Another reason to throw out the “Indian Economics” textbooks.

Teacher Manmohan, Leave Those Kids Alone!

Choose Your Perfection

New Delhi: June 8, 2008: 1000hrs
I am sometimes dubbed an “utopian”, but socialists are utopians too.

How do these two utopias differ? – that is the question I seek to answer in this post.

The socialist utopia is a “perfect society” of equalized incomes, and their chosen instrument is the government.

That is, they will use the powers of the State to set up their utopian perfect society.

How do people like me differ?

My utopia is not a perfect society at all; rather, it is a “perfect liberty”.

This perfect liberty is obtained by allowing human society to flourish in the free market of voluntary individualistic exchanges.

There is a complete absence of the use of force in this natural order of natural liberty.

Understanding this natural order is my “social science”, and it reveals how we are all “rule-following individuals” when we interact in markets.

If at all a government is required, that too at the local level, its only task is to go after the enemies of the natural order of the market – the pirates, robbers and other criminals who use force.

It therefore follows that when we use the expression “rule of law” we mean that the government and all its organs are placed under this law. No one can use force indiscriminately.

To the socialist, “rule of law” means State control of society through legislation. This, while the organs of the State are lawless. (See my “The Real Outlaws”.)

The crucial difference thus is on the idea of State: the socialists look upon the State as something “good”, through which “good things” can be done.

We look upon the State as something dangerous – because it can use force – and which must be kept under tight control.

We look upon the market as “good”, from which all “good things’ come to us.

Which would you choose: the perfect society or the perfect liberty?

Getting the State OUT of Education

I have contributed to the June issue of the magazine Education World, arguing that there must not be any role for the State in either primary, secondary or higher education. The article can be accessed here.

However, one crucial para seems to have been left out. This is pasted below:

The problem we have to solve is that of the transmission of knowledge from one who has it to another individual, who wants to acquire it. The market alone can solve this problem. The State has no ‘collective pool of knowledge’. Indeed, the socialist Indian State is a naked propagandist, and all its attempts at securing a 'uniform standard' in education have only resulted in the uniform teaching of errors.

Anarchy – the complete absence of State control – is vital for knowledge. In an anarchic scenario there will be errors – but only of individual teachers and professors who will be exposed by other academics. And when knowledge is free from government control reputations will need to be earned. This is how errors will be gradually weeded out of teaching.

ATF Subsidy: The Argument Refined

New Delhi: June 7, 2008: 0600hrs
Actually, the subsidy on diesel, meant to keep transport costs low, is totally pointless, given that our road conditions waste much more fuel than the subsidy can save. The encouragement given to diesel engined cars is perverse. Petrol and diesel can be equally priced, and this should be the norm. If roads are built properly, much will be saved on diesel costs, even without a subsidy.

The subsidy on cooking gas is another “false” idea, for the monopolist supplying it has chosen the most inefficient mode of transporting the gas to customers. If gas is privatized, competing firms will pipe it to homes, bringing down costs.

The subsidy on kerosene as fuel for the poor is also meaningless, given that electricity for cooking is unreliable. If the electricity industry is streamlined, the poor could easily afford power for cooking.

Thus, a subsidy on Aviation Turbine Fuel (ATF) is a great idea – if all these other subsidies are done away with. Civil aviation will boom in India – and Indian carriers will out-compete foreign rivals. Tourism will boom too – as the costs of traveling around this vast country are reduced. And the poor will fly!

Win-Win all around.

So let the US and Europe subsidize farmers, or give them incentives to grow corn for fuel.

In India let us subsidize flying.

People’s jets powered by people’s jet fuel.

Stand, Fly and Parachute

New Delhi: June 6, 2008: 1000hrs
I once traveled STANDING in an aircraft. The experience convinced me that “airbuses” for poor people were definitely in the realm of the possible.

My story dates back to 1985. I boarded an air force cargo plane in Chandigarh – and was asked to stand in the cargo hold, holding on to whatever ropes I could find. The plane took off and headed for Leh.

When it landed, the same experience repeated itself: I was standing in the hold, holding on to some ropes.

This singular experience convinced me that air travel for poor people who do not mind standing during the flight is eminently possible.

What with some parachute training, flights could take off from some fields in Bihar-UP and the passengers could parachute themselves down to Mumbai or Delhi, where landing would be unaffordable to the really poor.

How would Raj Thackeray react to bhaiyyas parachuting into Mumbai en masse?

Dunno ‘bout that!

Subsidize ATF?

New Delhi: June 5, 2008: 0900hrs
The blossoming civil aviation industry in India, which has made air travel so much cheaper after 60 years of state monopoly, is set to lose 8000 crore rupees (or 800 million rupees) this year: the news.

The primary problem is the high cost of aviation turbine fuel (ATF) – which is monopolistically supplied by the government, and upon which there are high taxes, which keep on rising.

A secondary problem must be the “congestion” at important airports like Mumbai and Delhi, because of which planes have to keep flying for up to 50 minutes extra, circling the airport, waiting for clearance to land.

In my view, just as the Maruti 800 or the Tata Nano are called the “people’s car”, these new low-cost airlines should be billed as the “people’s airlines” – and encouraged to grow.

In such a large country, competitive civil aviation is the best way to travel – faster, cheaper and safer than railways. They should be allowed to out-compete the railways (which is what happened in the US). Instead, the government is working hard to ensure that Laloo’s unsafe trains remain in business.

My recent Goa-Delhi flight cost 2000 rupees – but taxes added another 2,750 rupees to it, and I had to fork out almost 5k!

There used to be a lot of talk on “cross subsidies” among socialist economists once. That is why diesel was always subsidized, as is kerosene today.

Maybe we should all demand a subsidy on ATF!

Adieu, Sudha Shenoy

New Delhi: June 5, 2008: 0800hrs
The economic historian – and a leading Indian liberal – Sudha Shenoy has passed away, after a long battle with cancer, and the tributes have just started pouring in.

There is a post by Ralph Raico on Sudha and her illustrious father, Professor B R Shenoy, on the Lew Rockwell blog; there is a more detailed academic biography on The Political Economist.

Sudha’s father, BR Shenoy, has gone down in history as the only official economist to pen a “Note of Dissent” to Jawaharlal Nehru’s ambitious Second Five-Year Plan. This is the Plan by which Nehru started “heavy industrialization” under the State. Shenoy was hounded out of academia in India because of his dissent, and died in relative obscurity. Peter Bauer called him “a hero and a saint”.

Sudha followed her father into liberal economics and contributed a great deal to the important discourses of the day – especially the battle with Keynesianism and inflationism. Her Tiger by the Tail – a compilation of Hayek’s writings on the subject – is a must read for every student of Economics.

I never met Sudha Shenoy, but we corresponded – and she guided me in my journeys into economic history and law. I benefited from the correspondence. I will miss the guidance and the warm pen-friendship.

Pyarey Manmohan's Latest Con: A Quota For Gas

New Delhi: June 4, 2008: 1000hrs
It is a sure sign that a monopolist is bullshitting his customers – the people at large – when he institutes a “quota” for the good in question, so that those who consume more have to pay more.

Note that the opposite is true in all competitive markets, where “bulk buyers” pay less.

It is because of monopolists employing the “quota” that there are higher “commercial” rates for both electricity and water.

The same is true for gas – and restaurants pay more than domestic users for the same cylinder.

The government is now proposing a quota of 8 cylinders of gas per annum for all households (at current prices). Consumption of more will cost double.

This is nonsensical – and it illustrates the perils of being governed by socialists and communists who have no conception at all about what may be called the “principles of political economy”.

All our opponents are men without principles.

As I pointed out in an earlier post, the very idea of a “subsidy” on gas is absurd. The gas comes out free from the ground, and the only costs are bottling and transportation. It is because the monopolist has farmed out bottling and transportation contracts that are inefficient that the alleged “subsidy” is so high. Competitive private gas suppliers would install pipelines, save on costs, and make profits – while also giving big buyers big discounts (instead of penalizing them).

So say “No!” to the quota.

And call for free markets – in electricity, water and gas, and everything else.

Privatize every area in which the government is a monopolist.

The first to benefit will be the consumer, who will get better quality at competitive prices.

Whereas the monopolist sells less of the good at higher prices, competitive markets will sell more of the good at lower prices, with better quality too.

As more of the good will be produced and sold, all “non-competing” industries will gain, as this will increase the demand for their products: Say’s Law. For more on this law, a previous post entitled "Monopolies Versus Stratospheric Growth", click here.

And about gas: I noticed that in the western world domestic gas for cooking competes with electricity – which can also be used to power cooking ranges and ovens.

In India, both electricity and gas are government monopolies, and because electricity is totally unreliable gas becomes even more entrenched as a monopolist.

And the really poor get neither gas nor electricity. We see them everywhere collecting firewood.

To set a billion home fires burning, a fire in every hearth, we need complete privatization and competition, to bring in efficiencies.

Nothing less will do.

For now, just say “No!” to the gas quota.

For Karnataka's Urban People

New Delhi: June 3, 2008: 0800hrs
The newly installed chief minister of Karnataka wants to follow the “Gujarat / Modi Model” for developing his far more “advanced” state, what with its capital city, Bangalore, taking a lead in globalization that no other Indian city can match.

Not just software; Bangalore gets all the rock shows; there is a “pub culture”; and the crowd is “cool”.

In Gujarat you get flogged for flogging a beer!

Very backward place.

Later, the chief minister also spoke of the “Atal Behari model”.

Luckily for those who believe in Liberty, we do not have any “model” whatsoever in mind.

In conditions of what Adam Smith called “perfect freedom”, the Individual is supreme; and since all individuals will choose to do different things, no “collective model” is necessary.

My advice to the chief minister is to call for an immediate meeting of the Mayors Council of Karnataka: Yes, they have one, for quite a few years now.

And get cracking on how to run these 6 big cities Karnataka has – which are prized assets.

Mangalore, for example, and Karwar, with their deep ports, could adopt a “Hong Kong Model” and take off into the world of free international trade.

In such an economic environment, coastal Karnataka will outshine land-locked Bangalore; but coastal Karnataka’s potential, even for tourism, is not being tapped today. There isn’t even a decent coastal highway for attracting the tourists who flock to Goa to the beautiful Karnataka coast.

When I first heard of the Mayor’s Council of Karnataka, a few years ago, they were 6 in number, each heading a city. They all saw a clear “urban opportunity” and sought a meaningful role for themselves in the governance of their cities.

Cities, civic institutions of local self-government – let Karnataka take this course.

Enough of panchayati raj, the peasant vote and the sham called “rural development” – whatever the “Model”.

Instead, urbanize aggressively – and well.

Don’t bugger up the cities.

Fix Bangalore.

Give powers to the 6 Mayors.

Fix all your urban areas.

As Morrison screamed, “Save Our Cities”.

Adding, “RIGHT NOW!”

Reject Uniform Civil Code

New Delhi: June 2, 2008: 0800hrs
With the BJP winning Karnataka, there is renewed talk by this party of Hindoos about their pet project: enacting a “uniform civil code”.

In other words, “legislation” will replace traditional “law” and every single Indian’s life will be governed by the majority – read BJP – point of view.

So, whether you are a Muslim or a Parsee or a tribal animist – the BJP knows best, and will show you how.

Such attempts at enforcing “uniformity” where none exists should be strongly resisted in this multi-cultural nation.

This further underlines the dangers associated with equating “legislation” with “law”.

Written law is not really required in a diverse nation where local customs differ widely. The “common law” tradition always placed great faith in local customs and usage, relying very little on written law.

Indeed, until the 1800s, the House of Commons passed very little legislation. Parliament’s only role throughout the period 1300-1800 was to pass the King’s tax proposals, and not much else.

Neither the King nor Parliament “made” Law – but the common law judges “found” law by looking into local customs, traditions and usages.

The BJP is trumpeting the cause of a “common civil code” only because these Hindoos are jealous of Muslims being allowed four wives by their religion. They want to pass legislation that will force them into monogamy.

However, the King of Bhutan also has four wives, and he is a staunch Buddhist. Indeed, Maharani Gayatri Devi was the third wife of Maharaja Jai Singh – and most Rajput rulers had multiple wives.

There are parts of India that are matriarchal and matrilineal. There are other communities which practice polyandry.

There is nothing “uniform” or “homogeneous” about India, and, in my opinion, that is the precise reason why Liberty should be allowed to prevail, so that all local customs and traditions can continue as always.

The lesson: Do not make the fatal blunder of equating “legislation” with “law”. Let us live with “law” as custom has it – the reethi-riwaaz, niyam-saadhan, thour-thareekay, kaydhay-kanoon of tradition. And let us distrust “new laws” being imposed on us from above, which is “legislation”.

Abolish The RTO

New Delhi: June 1, 2008: 2000hrs
My inquiries have revealed that a 10-year old Bajaj autorickshaw that runs on CNG (and possesses a “permit” from the RTO to ply on our city streets) costs 2,50,000 rupees.

My own 7-year old Opel Corsa with a 1.4 litre petrol engine, air-conditioning, power steering, power windows and central locking commands a resale value of not more than 80,000 rupees.

Three Opel Corsas for one Bajaj autorickshaw?

Is that a bum deal or what?

The “permit” to ply an autorickshaw is issued by the Regional Transport Officer (RTO).

If this office was abolished, and there was complete freedom to ply any vehicle for commercial purposes, autorickshaws would be junked.

Passengers would travel in good cars – and taxi drivers would drive good taxis as well.

Win-Win.

If we add duty-free second-hand car imports to this scenario, the road transportation sector would leapfrog into the modern age.

Fleet owners would own fleets of modern cars – like the highly durable Mercedes Benz, the chosen vehicle for taxi services in much of the world.

What about driving licenses? – another power that the RTO has.

Well, car insurance companies can take over this vital function, and since they have a financial interest in seeing that only good drivers get insurance, they will do this job well.

Another great idea from the Antidote blog?

Go on… spread the virus.