Principles: Theirs and Mine (Take #3)

As a slew of Nobel laureates tour India, Mint lets out a yawn.

Yet, what Amartya Sen said woke me up.

Speaking at IIT Madras, Sen supported the practice of government-mandated “reservations” for SC/ST/OBC etc – the bane of India.

Not far from where he spoke, indeed, less than a hundred kilometers away, poor villagers are protesting government takeover of their meager acres to “promote industrialization.”

And there is a link between the two – and the link is the “socialist principle”: which is, to take from one and give to another. This is Robin Hoodism: the principle of the predatory State.

But it is no “principle” – in the sense that no “general rule” can be derived from it.

As Hayek said, “Welfare admits to no general rule: some will place it here, and some will place it there.”

Amartya Sen wants to place it here, and the land-grabbers of the Tamil Nadu sarkaar want to place it there.

Which is why I insist that politics is nothing but a clash of principles.

The liberal principle is “To Each His Own” – and this is a very sound principle upon which to base The Law of The Land.

Place the socialist principle On High and you have "universal plunder": The State becomes "that grand fiction by which everyone tries to live off everyone else."

With "To Each His Own" there is No Plunder. There is The Law that Protects Every Individual.

As an aside, there is news of corruption in the Nobel academy.

The Economics prize should anyway be suspect, since it is awarded by the Swedish Central Bank. History has it that this was the first bank in the world to practice the fraud of fractional reserves. The Bank of England, that very English corruption (and Keynes was English), was modeled after the Swedish bank. They award the Nobel prize in Economics.

Joseph Stiglitz, another Nobel laureate touring India these days, delivered the Lakdawala Memorial Lecture in Delhi. Professor Lakdawala was a “great” central planner of the distant past. Here is this Nobel laureate singing the praises of Keynes in today's Economic Times.

Principles, I say!

In the meantime, our The State has gifted 4.5 million US dollars to Harvard University to set up the Amartya Sen fellowship. Talk about cronyism. Or the “philosopher-king.”

But what is our The State doing, (mis)guided by this philosophy?

The news has it that the chief statistician of our The State is going to construct two new statistical indices: one, the Index of Infrastructure Growth; and two, the Index of Infrastructure Utilization.

In a nation without roads!

This is a case of “misproductive bureaucracy” – that is, what is “produced” by these baboos has no utility; on the contrary, it imposes “real costs” on those it purports to benefit. The citizens would be better off if this bureau was closed down and with the savings some real roads constructed.

Note: Central planners need statistics. We don’t.

Principles matter.

And if you want to read an excellent article based on sound principles, here is Kaushik Das’ “Fiscal Stimulus is no Answer” from today’s Mint. Taking a principled Austrian stand, Das argues for real savings leading to real investment. Policy prescriptions are: cut taxes, balance the budget, and allow people to save.

What the Keynesians are saying, give a boost to consumption with higher government spending and low interest rates, attempts to cure the disease with the very same quack medicine that caused it in the first place.

Principles!