The one lesson from the Satyam fraud: Do not blame The Market for the character flaws of certain people.
Also note that The Market has its own way to deal with such fraud: the frauds and their company lose their reputations. Share prices plummet. They will never be trusted again. Markets are self-correcting.
Further, the news that our The State has stepped in to arrest the chairman of Satyam should not blind us to the fact that our The State commits far bigger frauds every day. Like the paper money fraud, for example. Or the NREGA. Or the 1 lakh crore “stimulus” just announced. The Satyam fraud is a mere 7,800 crore.
Thus, we can conclude that the punishment meted out by The Market is far more effective than any punishment government can deliver.
Markets possess the means to punish cheats and frauds – and this gives rise to many proverbs, like “cheats never prosper” and “honesty is the best policy.”
I sincerely doubt whether the personnel of our The State ground their careers on any such policy of honesty. State organizations – like the DDA – are dishonest in principle. And there is nothing within The State to correct them. Apart from “democracy”: we can vote once in 5 years to throw the rascals out.
On the other hand, there are millions of honest businessmen – from chai-shop owners to vada-pau sellers. They remain honest because of the harsh discipline of the market. If they cheat, they lose customers forthwith.
The conclusion: The Market is not flawed. Certain players in the market are. And The State is not the solution. For The State is even more flawed. If left alone, The Market inflicts its own brand of harsh punishment to frauds and tricksters. The Market is based on the principle that honesty is the best policy. The State, on the other hand, is not based on any “virtues.” Rather, it is a predatory organization. Thus, the news that the police have arrested the chairman of Satyam should not be interpreted as an act of justice. When we encounter the police in our daily lives we see them as brutes, as corrupt predators. And there is no punishment whatsoever for those who indulge in this predation and corruption.
So let us raise three loud cheers for The Market.
And let us always boo The State.
Market did punish but who lost? Raju and his associates have syphoned money and put probably in real estate. Gullible investors lost, One may brand them now greedy and justify the loss. One school teacher committed suicide in Punjab. But it's also true that Politicians & beaurocrates are more currupt and harmful to society.
ReplyDeletepeople like Raju survive because of the failures of the govt. and there propagated mechanisms of truth.
ReplyDeleteSEBI, ROC and a dozen licensing and regulatory authorities who provide us with those certificates, recognised as the ultimate truth.
Govt. never lies.
There are a million satyams waiting to happen, because of the govt s. and also with their connivance.
if it was not for them, the consumer would be better researched to put his hard earned money.
would you invest in the crook yu know next door?
but if the RBI and SEBI and ROC would clear his docs, you would gladly do so.