The Mystery Of Banking - 2

I was going to take the discussion one step further, but a reader has written saying that he does not understand how credit is created out of thin air. I will therefore pause to review this important point. It is crucial to a correct understanding of what will follow.

Let us return to the goldsmiths of London, in the era before bearer paper notes came to be circulated in markets as money substitutes. All paper notes in this age have a name on them. These notes cannot be circulated. No goldsmith in this age would issue more notes than the gold he had in stock. The note is a liability. And there is no incentive for increasing liabilities. All notes are therefore Property Titles Based On Real Property: Gold.

Enter the bearer note. And paper becomes money. And some goldsmiths find that their papers have “gained currency” and are widely trusted and circulated.

Now, someone turns up at the office of one such goldsmith asking for a loan of 1,00,000 pounds sterling. The goldsmith does not have that much gold in his reserves to lend. He therefore thinks of something crooked.

He lends out 1,00,000 pounds sterling in PAPER.

He will earn interest although NO CAPITAL is being lent.

We now have Property Titles Without Property. The chap who gets the loan uses the notes to “buy” assets. There is thus a “redistribution” of assets.

As for the crooked goldsmith, his liabilities (notes) are greater than his assets (gold) – but he is gambling on all notes not coming up for redemption at once. If they do, he knows he will be caught out, because the claims to property exceed the property.

At this stage, The Law is perfectly clear. The paper note is a debt, and is payable on demand. If any goldsmith defaults, he goes to a debtor’s prison, where he is put on a diet of bread and water till his properties are sold and his debts repaid.

The crooked goldsmith does not like this Law. And, for him, and some of his friends, the profits from lending out mere paper are too alluring. They therefore think of a scheme called “central banking.” They pool in a percentage of their reserves in the central bank that will be “lender of last resort.” The idea is that all banks will not crash together. And whenever any one has a problem, the central banker will step in. In the meantime, their banking cartel, all members of the central bank, will earn interest by lending out PAPER. Credit will NOT be based on Capital.

Yet, this is NOT a legal solution to the problem. The problem in law is the existence of Property Titles Without Property. These exist because credit has been de-linked from Capital. That is, credit is being created out of thin air – and this thin air is being lent out at interest. Real properties are being redistributed. This is the game that is afoot.

Of course, any such scheme is prone to crises, as the multiplication of Property Titles Without Property is inherently unstable. However, when The Law is jettisoned, the only recourse available is State Force.

With central banking, monetary nationalism, and The State as the sole issuer of currency notes, The Law is hijacked by the crooks.

This makes The Law ineffective. Once Property Titles Without Property become “legal,” the banksters are allowed free rein. Within a few hundred years, all currency notes, throughout the world, become Property Titles Without Property.

The “real robbery” that occurs is when these currency notes are used, as “legal tender,” to take over “real” goods. There is a “redistribution” of real assets. Borrowers gain; savers lose. The resulting inflation causes further redistribution.

The critical error is in The Law, which has always been based on Property. With central banking, the name of the game becomes property-less papers. And the game is one of constantly increasing the supply of these papers. How can The Law cope? It cannot. It was therefore pre-destined that the US dollar would finally break all ties with gold – as happened in 1971.

In other words, the peculiar problem of our age is that The State and The Law are on the side of crooks. Force is being misused. What should be illegal is legal. This is inevitable when The Law is no longer based on Property.

Recommended reading: An Islamic scholar’s judgment on paper money. Note how the basic understanding is simple, based on judgments of the past, all looking at the matter from the viewpoint of Property.

I will continue the discourse on money and banking tomorrow.

The Mystery Of Banking - 1

To understand the mystery of banking and credit creation, let us go back in time to when the first goldsmiths of the ancient City of London issued paper notes against gold deposits. These were nothing but “warehouse receipts”: the paper note had your name on it; it promised to pay you the amount of gold mentioned, on demand; and it was signed by the goldsmith.

The paper note was a Property Title Based On Real Property.

In time, as the number of goldsmiths grew, they discovered the magic of “bearer notes”: the gold could be claimed by anyone holding the note. These notes became “paper money”: they circulated in the markets. Clearinghouses evolved to sort out inter-goldsmith balances.

This first paper money was also a Property Title Based On Real Property.

Enter the crooked goldsmith. Once his notes had “gained currency,” and were widely accepted, the crooked goldsmith realized that he could make “loans” by just issuing paper: that is, paper that was not backed by gold. He could create credit out of thin air. This is how modern banks create “deposit money”: they open a current account in the loanee’s name and “deposit” money into it.

Deposit money created by banks begins the process of credit creation based on Property Titles Without Property.

This is why Peel’s Banking Act of 1844 failed. The paper currency issued by the Bank of England was made redeemable on demand, but banks created so much deposit money that redemption had to be repeatedly suspended, until it was finally abandoned. (Without a debate in the House of Commons, as Rothbard records in his history of economic thought.)

Understand the crux of the problem: The Rule of Law, which is based on Property, cannot work where the claims are more than the properties. When the crooked goldsmith issues more notes than the gold he holds, the precise legal problem is but this: there are more claimants to gold than the stock of gold.

Actually, this is also the precise problem with today’s “toxic paper” in the USA. As Hernando de Soto writes:

“… the primary cause of the current economic crisis: the trillions of dollars of "toxic paper" on the balance sheets of financial institutions. This poisonous paper is scaring off potential creditors and investors who lack the legal means to understand what this paper signifies, how much there is, who has it and who might be a bad risk.”

It is “property-less paper” (derivatives pyramided on debt) that is the root cause of the current crisis.

De Soto says:

“Governments have debased paper by carelessly allowing into the market a biblical flood of financial instruments derived from bad mortgages nominally valued at some $600 trillion or more than twice as much as all the rest of the world's legal paper, whether it represents cash, traditional financial assets, or property, tangible or intangible.”

This is the pyramiding of debt based on property-less property titles. 600 trillion dollars worth of debt based on the “real property” of just 19 million physical homes. The solution is not “recapitalizing banks” or “government spending”: the only real solution, which De Soto endorses, is sorting out these papers, a painstaking process, so that each individual paper is tied to a precise individual asset, or to nothing, as the case may be.

We need a Rule of Law solution to banking, the industry that supplies money, because without it banking will not be very different from gambling. We need a Rule of Law solution that ties papers to real Property, for this is the only moral course The Law can take. If we have this solution, we have Sound Money as well as Laissez-Faire Banking. We also have secure depositors – for The Law must, above all, protect the depositor.

I will discuss these ideas tomorrow.

On Friends In The News

Today is market day, so the daily post will be up only by 1300 hrs.

Till then, read about some of my friends who have made it to the news today.

First on my list is Sanjiv Kumar Agarwal of the Good Governance India Foundation. He has filed a PIL in the Supreme Court on the Right to Property. The Supreme Court has now asked the Centre to file its reply to the petition. The news report says:

"The Bench issued notice to the Union law ministry seeking its response to the PIL, which challenged the constitutional validity of the 44th Constitutional Amendment, 1978, on the ground that it was violative of the basic structure of the Constitution."

A brief history of the "politics of the constitution" is available on Aristotle the Geek's blog, here.

Second: Bibek Debroy and Laveesh Bhandari are in the news for having released a report on their joint study of conditions in communist-ruled West Bengal, wherein they have concluded that conditions there are worse than Bihar and Jharkhand. The news report says:

In its conclusion, the report said “what we have just described as the five key diseases are perhaps not the diseases at all. They are symptoms. The key disease is somewhere else. It is the Left Front itself. The Left Front government is like gangrene. It cannot be cured. It has to be excised out.”

Lastly, there is an excellent feature on Rediff on the world's freest economies, based on the World Economic Freedom Index, where India ranks 123rd out of 179 countries in the list; and is placed under the category "mostly unfree."

The World Economic Freedom Index is the libertarian challenge to the World Bank's Human Development Index (in which, too, India is ranked very low). The HDI tells you what The State must do. The EFI stresses the fact that The State needs to Get Out Of The Way.

The world's most prosperous countries are not accidentally also the freest. Rather, prosperity is the effect, Freedom is the cause.

Till 1300hrs then, when I will be back with the first part of a series on credit creation, legitimate banking, and the Rule of Law.

On Property, Paper Money And Democracy

I have just devoted two posts to discussions of the link between Property and Liberty (here and here). It was shown that the Most Perfect Liberty Under Law can be obtained for all Individuals only when Property is inviolable.

Who is violating this Principle of Justice?

The State.

Of course, they are doing much worse than that. They are actually robbing us of our properties. This is accomplished through the fiat paper money system. Let us see how:

Note that, as of now, total government borrowings exceed total household savings – and one editor finally seems to have woken up to this fact. We save; they spend. And what do they spend? Paper money, which is “legal tender,” and which cannot be converted into anything. This paper currency note is thus a “property title without property.” In market exchanges, because of legal tender laws, these propertyless notes can be used to “buy” real goods, which are “real property.” The State is therefore presiding over a monetary system by which it “acquires” real goods and services while offering meaningless papers in exchange. Even our brave soldiers are paid for their services with meaningless papers.

Now, recall the fact that we save, while they spend. As they spend more and more, and their meaningless paper notes increase in volume, there is inflation – which robs us of our savings.

Lose-Lose for Wee The Sheeple.

The solution: First, we must SEE THE EVIL that is irredeemable fiat paper money. We must see that we were better off under a barter system, when we exchanged a real good for another real good – like potatoes for fish. We now exchange potatoes for worthless paper.

Money must be hard. There must be a real Property underlying a paper note. The State, in this instance, is violating Property once again.

Of course, The State is also violating Contract. If you SEE a 100 rupee note (with Gandhi’s face on it) you will find a solemn “promise” written upon it, signed by the central bankster (as in gangster), a “promise to pay the bearer,” on demand, real money in exchange for the paper note. If the central bankster cannot pay, he should be in prison: a debtors’ prison.

Irredeemable fiat paper money is therefore a fraud upon the people. Legislation like Fera and Fema are further fraud, which “render the law guilty of the very crimes that it is meant to punish.” The only solution is a clear understanding of the Principle of Property, which should be The Law. It is noteworthy that a leading Muslim scholar has judged paper money to be “Unislamic.”

Propertyless money is not only a fraud on the people, it is also the prime contributor to the destruction of the very meaning of Democracy, which seeks to represent the taxpayer. “No Taxation Without Representation” has always been the rallying cry of Democracy. However, with irredeemable fiat paper money, our The State buys up all the representatives, thereby converting them into “representatives of tax parasites.” It is no wonder then that the current Lok Sabha hardly ever met, and when it did, there was pandemonium. No serious business was transacted. Democracy degenerated into ritualism.

Further, our The State has announced a series of “sops” for the voters with an eye on the coming elections. These sops will only make the poor poorer. We must see through these schemes of our The State.

In a future post I will discuss the creation of credit, which is another big fraud today, because of central banksters and their fraudulent “fractional reserve system,” which is based on the pyramiding of debt and which adds to “property titles without property.”

What is worth reflecting over, in the meantime, is that democratic politics is NOT the solution. We only need Rule of Law based on the Inviolability of Property. We must not change the government; we must change the rules of the game. Then governments may come and go, but none can cause mischief. Incidentally, this is also what the Taliban seek. They cry for “adl” and “insaaf.” Both words mean Justice.

On Property And International Trade

In my previous post, I discussed how the inviolability of Property is the Key to Liberty. In particular, I discussed immigration restrictions. I showed how no immigration official should be allowed to stop anyone from occupying his own Property, including rented property, on foreign soil.

In precisely the same way, Property is the Key to free international trade.

Let us examine how:

First, just as a farmer is free to grow whatever crop he chooses on his fields, which are his Property, so too is a shopkeeper entitled to stock whatever he chooses to in his shop, which is his Property.

Let us now suppose that one such enterprising shopkeeper wants to set up a store called “Beers Of The World.”

He then places orders for great German beers, Bohemian beers, Dutch beers, Belgian beers, English ales and Irish stouts. He pays for his purchases, so these become his Property.

Suppliers now ship all these diverse beers to him.

How can a customs official stop his Property from reaching his shop? Under the Rule of Law, the customs official cannot intervene. These foreign beers belong to the shopkeeper, and they must be allowed to reach his shop.

We are therefore possessed of a Rule of Law solution to free international trade and free international mobility. In both cases, Politics is unnecessary. We do not need a WTO. We do not need politicians and bureaucrats and their “trade negotiations.” We have Liberty Under Law, based entirely on the inviolability of Property. This also means the end of Cronyism: the misuse of the customs department by politicians to set up “tariff walls” for the benefit of domestic businessmen. All markets are international; all markets are fully competitive; and all markets are open. The Consumer is the King. The politician has no discretionary powers over The Market.

Note how Obama is using his discretionary powers to restrict trade and immigration. Our external affairs minister is making loud noises against US protectionism, saying that it will harm US firms. The editors of the Indian Express are echoing this sentiment, saying that “the US’s support, explicit and implicit, for protectionism is deeply disturbing.”

Both the minister as well as the editors are, of course, being deeply hypocritical. No one in human history has hurt the cause of free international trade more than Kamal Nutt, our anti-commerce minister – at the WTO they call him “the one-man roadblock” – and neither the foreign minister, nor the “economist” PM Chacha Manmohan S Gandhi, nor the editors of the Express have ever objected, by saying that Nutt was hurting Indian importers and Indian consumers. They are now “playing politics” – a despicable game in which The People invariably lose.

The solution: Property.

The result: Liberty.

The Song: Push The Tempo!

On Property, Liberty And The Law

We have just discussed the idea that the purpose of Law is to protect. It therefore follows that Legislation is not Law. Legislation is an interference. It takes away Freedom. It empowers the minions of The State. It is an instrument of social control – and is therefore the prime instrument of Socialism, which seeks to perform “social engineering.” All the schemes of social engineers are effected through Legislation.

If you want to study this idea further, I suggest Bruno Leoni’s “Freedom and The Law.” This book influenced Friedrich Hayek, whose “Law, Legislation and Liberty” broke new ground, as compared to his earlier work, “The Constitution of Liberty,” a book that Margaret Thatcher swore by.

The future of freedom, which we aspire to, can only be achieved if we restrict Legislation to where it justly belongs: and that is, the regulation of the arms of the government. Legislation should cover the tax bureaus, the police, the civilian administration. This is the “public law.”

The citizenry are therefore free from Legislation. They inhabit the “private law” world of Property, Contracts and Torts. These fall within “civil law” and require no legislation.

Of these, it is Private Property that is the sole guarantor of Liberty. When Legislation cannot interfere with Private Property, when Property is inviolable, we are all Totally Free. Let us proceed with a few examples:

=> Take the dance bars of Bombay, closed down by legislative fiat. If Property is inviolable, then the bar is the Property of the owner or lessee; the girls dancing are Proprietors of their own bodies; and the customers have temporary property rights by paying for the right of admission. If this example is followed through, X-rated films and theatres showing such films are free. As are adult magazines. As are casinos.

=> The farmer, who owns his fields, is also free to grow ganja, or charas, or opium, or coca – and he can sell these to merchants. These then become the Property of the merchants, who sell them to users, who own their bodies, and who also own the drugs they want to consume. No legislator – and hence no crooked policeman – can interfere.

I invite my reader to think things through for himself. He will discover that anything and everything will be totally legit as long as Property cannot be violated by Legislation.

I will offer the example of immigration restrictions imposed by legislative fiat. These too can be seen as violative of Property. If I buy a house (or even rent a hotel room) in the US, Europe, Canada or Australia, then I have a right to occupy my Property and the immigration official at the airport should not be able to deny me this right.

Thus, if we want Liberty Under Law, we must put Legislation where it belongs – the “public law.”

And we must uphold our claims to Private Property – which should be inviolable, immune to legislative interference.

This is the secret to a lasting Liberty.

Downgraded... As Predicted

I read Kaushik Das' column in today's Mint with great interest.

It is titled "Understanding The Fiscal Mess" and it predicted that India's sovereign credit rating would be downgraded because our fiscal situation is dismal.

Kaushik has just written to me saying that this has indeed happened: Standard & Poor's have, less than an hour ago, revised the outlook on the sovereign credit rating of India from stable to negative.

Kaushik is an adherent of the Austrian School of Economics, probably the only one with such a theoretical understanding in the Indian market. He is an economist with Kotak Mahindra Bank.

The column, and the correctness of the prediction therein, are proof that the Keynesians are a bunch of bozos.

In case you want to compare, read Pulin B Nayak's column in the ToI of today, supporting Keynesian bullcrap. Professor Nayak teaches at the Delhi School of Economics, and is a "government servant." So you know where not to go for higher education.

Congrats Kaushik. Well done.

Ban The Crooked Police: The Song

My earlier post, "Ban The Police," elicited a response from a reader, who contributed an Indian rap song to go with the widely perceived sentiment.

So here it is: The Indian rapper Blaaze, singing "Ban The Crooked Police."

The context is entirely Indian.

Enjoy, spread the virus, and push the tempo!

Music Is My Weapon.

The Purpose Of Law

The other day, I came across a young lad, known to be bright in school, who had secured admission to the prestigious Symbiosis School of Law in Pune. At the time of our meeting, the dude had already undergone three years of training in The Law. In order to test his fundas, I posed him a simple question:

What is the purpose of The Law?

His answer: The Law is an instrument of social control.

You cannot get it more wrong than that. Indeed, I do think that this fine young man is well on his way to joining our "illiterate bar."

The correct answer is: The Law Protects Us All.

People value law, and are scared of anarchy because they confuse Liberty with lawlessness, only because they feel that, without The Law, they would be at the mercy of every bully who came along. Unfortunately for them, The Law itself has been taken over by bullies. The Police are nothing but a bunch of bullies. As are the legislators, who use their powers for the purpose of "social control." And the professors of Law are all on the side of the bullies. They justify injustice. They teach their students to be slaves of The State. They know nothing of Liberty Under Law.

A Rule of Law Society is based on three pillars: Property, Contracts and Torts. Each of these pillars of The Law are meant for the protection and safety of the citizen. With his Property protected by Law, the citizen is secure, his possessions are securely his; and not only that, when he wills his property to his descendants, these descendants are secure and protected too. No bully can interfere and hijack property. As John Locke wrote in 1690: "Where there is no Property, there is no Justice."

Thus, Singur and Nandigram are examples of bullies – or should I say thieves – taking over The Law. Likewise with Indira Gandhi's "nationalization" of coal mines, banks, insurance and Air India. In all these cases, to use Bastiat's words, "the Law is guilty of the very crimes it is meant to punish."

The Constitution of India must therefore be seen as an instrument for the benefit of thieves, for it does not protect private property. This is one pillar of The Law we Indians do not have.

Similarly, contracts are a means of protecting the individual who signs an agreement with another. People make long-term plans with others on the basis of signed agreements (which are solemn promises – or "covenants" in the old language) and The Law exists to see that these promises are kept. Note that contracts are "private law" in the precise sense that two private parties signed the contract, and it is binding on them both. The Law exists to protect these private parties. For example, take a rent contract: the lessor must hand over possession to the lessee under Law; and the lessee must pay his rent on time. The Law of Contracts protects them both.

In India, rent control legislation, labour legislation, and currency legislation all make a mockery of solemn contracts. So this is another protection we do not possess under Law. The bullies have taken over the land.

The purpose of Tort Law – which is the oldest law – is entirely the protection of the individual and his properties. If anyone causes damage or injury to anyone else, he must pay damages. In India, this vital pillar of The Law simply does not exist. You may be hit on the road by a car driven by a reckless driver, and break a few bones, but under our The Law, you can claim no damages as compensation. You may go blind drinking illicit hooch – but there is no damage that the bootlegger will be forced to pay you. Your building may collapse in the rains, but the builder will not pay damages. In all these instances, the criminal law will take over, the police will be called in – and these bullies will extort money from the tortfeasor, as in the case of the Bhopal Gas Tragedy, or the Uphaar cinema fire.

Wake Up!

We in India are NOT protected by The Law. In our land, none of the three pillars of Liberty Under Law exist. All Law is confused with Legislation – and all this legislation is aimed at "social control." This is why I say that bullies, tyrants and thieves have taken over The Law. This includes the professors, who are on the side of tyranny.

And what about this dude in Symbiosis?

Well, I saw a t-shirt the other day that said: "I was born intelligent, but education ruined me." I'll buy him one.

Ban The Police

The institution of the Police is fairly recent. In England, the “bobby” came about in the 1830s. In India, the Police Act is dated 1861: incidentally, the same year that Rabindranath Tagore was born. Tagore dreamt of a land “where the mind is without fear and the head is held high.” The Indian police inspire fear. They are an instrument of political control. As far as the citizenry is concerned, they are useless.

Things were much better in ancient times, when there was no police. Among the Anglo-Saxon tribes, for example, there was no “criminal law.” All crimes were torts: that is, they were all crimes against the individual; there were no crimes against The State. (There was no The State.) Thus, if you caused injury to any person or his property, you had to pay damages. Restitution, not retribution. The victim got Justice.

The Norman kings changed all this. In order to collect fines to augment their treasuries, these kings listed out more and more crimes as crimes against the king. This caused the natural order to collapse. Before this, the Anglo-Saxons policed themselves. There was an incentive to catch a tortfeasor. But after the Normans took over, the people told the king to catch the criminal himself, if he wanted to collect the fine. Gradually, criminal law expanded its scope. Finally, there was a Police.

In the old days, prosecution was the individual’s prerogative. He collected the evidence himself and argued his own case. But with more and more crimes listed as crimes against The State, the government took over the task of prosecution too. In time, The People became dependent on The State for investigation, prosecution as well as punishment. All this punishment was at the cost of the taxpayer – including the punishment in a government jail: retribution, not restitution. The victims got nothing. Justice, as originally conceived, went out of the window. So did Liberty – as more and more consensual acts were labeled as “crimes against The State.”

Yet, it is worth asking The State as to what precise injury is caused to it when I smoke a joint or gamble or visit a brothel. Indeed, The State is not injured in any way by any of these acts. In fact, the minions of The State profit from these acts being labeled criminal. The Police runs the black markets. And there is no Justice. And there is no Liberty.

Recommended reading: Bruce Benson’s “The Enterprise of Law: Justice Without The State.”

Ban The Police!

I Am A Rastaman

Tomorrow is Mahashivaratri, a night dedicated to Lord Shiva. Millions of pious Hindus will celebrate this day, particularly in Varanasi, Shiva’s city. Indeed, so numerous are the devotees here that the district administration has to make elaborate bandobast, the details of which are reported here.

The Lord Shiva, of course, is the god of cannabis. Tomorrow is Boom Shankar Night. But cannabis is illegal throughout India. Makes you think of political concepts such as State and civil society. In India, the criminalization of cannabis indicates a State than is out of sync with civil society. It is like beer being outlawed in Germany.

What about Hindoo politics? I visited LK Advani’s blog this morning, but found no mention of Boom Shankar on this holy day. Advani has been home minister, and this ministry, which controls the police, runs the illegal racket in cannabis. His boss, Atal Behari Vajpayee, has a holiday home in Manali, a district famous for its charas. Neither can be oblivious to the fact that the criminalization of cannabis hurts the farmer, hurts the smoker, and only benefits the police. Advani is still talking about a Ram temple in Ayodhya. But Ram was just a king; Shiva is Mahadev, the greatest god of the Hindus.

All this reminds me of a time, several years ago, when I was living in Delhi’s Chittaranjan Park, where the only temple is a Shiva temple. A group of young boys called upon me one morning asking for donations for this temple. I told them to bugger off. Why should I donate to a Shiva temple when I cannot get decent ganja legally?

Why can’t Varanasi, Haridwar, Rishikesh and Gangotri – all of which are cities dedicated to Shiva – not be like Amsterdam? Why should alcohol and tobacco be legal, while the holiest of herbs is criminal?

As a lover of cannabis, what I find particularly revolting about our current laws is that I, as a buyer, am made to feel like a criminal. I have to associate with criminals to get my stuff. And it is on record that I have had to endure ceaseless harassment from the police when doing so. So much so that I have almost dropped out of the cannabis scene. Tomorrow night, I will not be celebrating. No Boom Shankar for me. Not if it is criminal.

I despair for the Hindus. All pious, all cowardly.

And I have all respect for the Rastafarians. At least they champion ganja. And they demand respect for the smoker of this holy herb. The Hindoo could learn a lot from the Rastaman.

Like “Get Up, Stand Up.”

Thoughts On "Market Day"

Saturday is “market day” for us in this Goan village. Today we drive to the nearest town, where vegetable vendors come from far-away places to sell their stuff, and buy up stock for the forthcoming week. Makes you realize why towns matter to villagers. In this village, nothing much is available.

The experience also drums in the lesson that there is a “natural order” in the market economy because everyone follows the golden rule that “possession indicates property.” Of course, they do not know that they are indeed following rules. They all act “between instinct and reason.” But there is a “natural order” here: there are no cops “maintaining order.”

But market day means that I have to hurry up with my morning post. Thankfully there is already a lot for my readers to go through: do check out the comments of the “comrade” and Aristotle The Geek’s detailed refutation here.

We are fortunate that today we also have access to a speech by Vaclav Havel, president of the Czech Republic, at the European parliament. As a representative of a nation that suffered greatly under communist rule, Havel emphasizes the concerns his countrymen have over a European Union that is getting more centralized as well as protectionist every day. Havel says that the EU should have just two functions: one, removing barriers to trade; and two, public goods that cannot be provided for by member nations acting alone or jointly. He deplores the fact that the EU is headed in the opposite direction. He says:

“… the present economic system of the EU is a system of a suppressed market, a system of a permanently strengthening centrally controlled economy.”

He also deplores the protectionism that is rife in the EU. He finds it hilarious that the EU has imposed a 66% import duty on candles from China. It is as if Bastiat’s Candlemakers’ Petition has become reality.

Do read the full speech here. This is the kind of politics we need in India. We too should put communism and socialism firmly behind us.

How do we do that?

I have often suggested a “jail bharo andolan” as a protest against the provisions of the Representation of Peoples Act that outlaws liberal political parties from contesting elections in our nation. I now have an incentive for those who will land up in jail following such protests. A news report says that high quality ganja is being sold in jails. I am a witness to the fact that the ganja available outside jails is of very poor quality. So let’s do it. Let’s fill the jails. At least we can enjoy a good smoke at the end of the day!

Boom Shankar!

On Our New Visitor, The "Comrade"

Mr. Comrade has poured his elaborate thoughts out before us, in his many comments to my previous post, and this requires a response.

Let me begin with a quote from Mr. Comrade:

"In communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic."

Communism is thus not about the Individual choosing what to specialize in, in the social division of labour. "Society" decides for him. The Great Economic Czar of Planning Decides. This is a Prescription for Disaster.

And where is this "ideal society"? - not in Soviet Russia, not in China; indeed, not in West Bengal or Kerala or Tripura.

Only private property empowers the Individual. Without it, all are dispossessed. And private property is a "natural law": the fish in the fisherman's net are taken to be his property by all, even though the ocean has not given him a title deed to his catch. The golden rule we all follow in markets is that "possession indicates property." If all property was declared to be held in common, the "comrades" would strip every shop bare and take everything they desired in the name of "brotherhood." It is this brotherhood that is a dangerous idea: the communists idealize "society;" and in their ideal society, the Individual becomes a mere cipher, a statistic, a nothing: "wee the sheeple."

And comrade should ask a worker in a car factory, working with Capital he does not own (advanced robotics) whether he would prefer to be with a hammer and sickle, which are his own property.

Indeed, this is why our comrade talks of "alienation": in reality, we are all competing individuals. It is futile to conceive of a great "society" wherein we love all our neighbours: "shiny happy people holding hands." In truth, we will always be competing with them. Life is Competitive Individualism. Communism sacrifices the individual at the altar of society.

And I sincerely doubt whether either Chile or New Zealand will ever revert to communism. Actually, I even doubt whether the avowedly communist parties of West Bengal or Kerala will ever attempt to realize the property-less world of our Comrade, wherein "society decides what we produce."

I hope Comrade will find his points answered above. I also hope he will no longer bother this blog with his nonsense. Talk to your kind, Comrade. Don't push your propaganda where it don't belong. I want no more long comments from you. Stay out of this forum. This is a libertarian blog. Libertarians do not bow their heads to "society." Libertarians stand up for themselves. We decide what we want to produce and sell, and what we want to buy. We carry our own guns, and protect our own properties. And we do not lead dumb masses to their ruination. Stay out, Comrade. You are not welcome here.

On Our Pirate Ship Of State

Our corrupt, malfunctioning, centralized and socialist State hides behind the label “democratic.” Just as East Germany was the German Democratic Republic. So it is fortunate for us that some NGOs and think-tanks have taken the initiative to investigate the character of those who claim to be “representatives of the people.”

For example, the cover story in the latest India Today is on the declared assets of our MPs and MLAs. The editor-in-chief of the magazine, Aroon Purie, summarizing the findings made by Liberty Institute says:

“Of the 215 Rajya Sabha members for which we have data, 105 are crorepatis. Of the 522 Lok Sabha members, 135 are crorepatis.

"Members of legislative assemblies seem wealthier than many of the MPs. The top five MLAs across the 30 states are worth Rs 2,042 crore. Uttar Pradesh has the richest chief minister and 113 crorepati MLAs. One indication of how this money has been accumulated is that of 150 wealthiest MLAs, 59 don’t even have a PAN card!”

He concludes that our democracy only shows the “dubious link between money and power”: many of these representatives of the people have shown their assets to be rising by over 500 per cent in the last 5 years!"

The cover story, available here, is entitled “Assembly of the rich.” A more apt title would have been “Assembly of the corrupt.” Rich people must produce something before consuming. These corrupt representatives produce nothing but consume everything. This is very far removed from the democratic ideal.

And there is worse: Here is the story of an SMS service that has been launched that will tell you whether your sitting MP is a criminal or not.

And here is yet another story of a study that has discovered the fact that 24 per cent of sitting MPs are criminals.

Of course, the coup de grace on Indian democracy has been delivered by none other than the Speaker of the Lok Sabha himself: Shaken by unruly demonstrations within the “august house,” the Speaker cursed the MPs, saying he hoped none would ever win an election again. He added that none of them deserved the extra allowances given to them to attend parliament. He said that, according to him, parliament should be adjourned sine die. Read the full story here.

All this evidence indicates that our The Ship of State is nothing but a “pirate ship.” We must think hard as to how we can get out of the jam we are in. Elections are just months away.

In my view, we must uphold the Rule of Law. The Law must be above Democracy. The ideal: “An Empire of Laws and not of Men.” None should be above The Law. This should be the goal of liberal politics.

Unfortunately, the Times of India continues to represent the muddle-headed point of view. A front page story today says that the government’s “stimulus package” has worked, and key sectors are showing a turnaround. In reality, as Rothbard said, we are faced with “a robber who justified his theft by saying that he really helped his victims, by his spending giving a boost to retail trade.”

The editors of the ToI must be adherents of the Zimbabwe School of Economics.

And that is The Choice.

It is either Zimbabwe. Or a New India.

You decide.

Get An Illegal Gun, Dude

When I was young, there was a little ditty we guys would sing:

This is my rifle,
And this is my gun,
This is for shooting,
This is for fun.

However, it seems that in India, you cannot have both.

It is either one, or the other.

The district spenders (not "collectors") of Madhya Pradesh, where lawlessness is rampant, issue gun licenses only to those who undergo vasectomies. If you are sterilized, our The State will grant you a gun license. If not, no gun for you.

Of course, our The State is not known to keep its promises – observe the meaningless promise on the currency note with Gandhi's portrait on it. So there are many residents of Madhya Pradesh who have lost their guns without getting rifles in exchange.

Read the full story here. And think of the poor sods whom the local administration has cheated. These are those who are not "protected" by the police anyway. These are people who need to travel on dangerous routes, where armed dacoits, Naxals and their ilk roam free. In much of Madhya Pradesh (and Chattisgarh, Orissa and Andhra Pradesh) our The State does not exist. (And maybe that's a blessing, which we need to build upon.)

What do we do?

I suggest that you get an illegal gun and keep it for your own safety.

As Abhijeet Singh of IndiansForGuns.com has commented on this blog, legal guns cost anywhere between 1,00,000 and 2,50,000 rupees in India – and that is, after you get a gun license.

If you buy an illegal gun, you pay not more than 25,000 rupees.

There is thus no incentive to own a legal gun.

While in Delhi, I had the occasion to discuss guns with many friends who live in the countryside. They all said that, back home, they kept an illegal gun nicknamed "addhi": this is a shotgun with both the barrel and the stock sawn off. So it was half the size of a shotgun – hence the name "addhi," which means half. They said the "addhi" costs 3000 rupees. Now, that's a gun even everyone can afford.

And you don't lose your other gun either.

Win-Win.

(There is a fascinating article on the illegal gun factories of Uttar Pradesh here.)

On Gambling, Goa, And The Taliban

This is the sort of news we have grown quite accustomed to reading:

"Gambling den raided by police, 40 held"

And it brings to mind the bullshit the old textbooks of "development economics" contain: they say that the people of India are "risk averse," hence unsuited to Capitalism. In such risk averse and backward societies, it is claimed, The State must play a big role in business.

I would say that if this contention is true – that the people are indeed risk averse – gambling should be encouraged, not outlawed.

Of course, in reality, the people of India are great gamblers. There is matka and satta everywhere in India. There is "teer" in the tribal areas of the North-East: that is, keen gamblers exist even in our tribal societies. In north India, during the run up to Diwali, everyone gambles, for it held that the goddess of wealth, Lakshmi, favours those who take risks with their money. Unfortunately, our The State always plays spoilsport – as in this current instance.

Sitting in Goa, the one place in India where Liberty rules, I find all this vastly amusing. When you wait for your luggage at Goa's Dabolim airport, you find that the conveyor belt is done up like a casino table. The luggage conveyor at this airport is, in fact, an advertisement for a local casino. And casinos are big business here. They are run by legitimate businessmen, unlike in the case above, where the "gambling den was being run by notorious anti-social elements of the town." This is the choice we have before us. If gambling is encouraged, businessmen are encouraged; if gambling is illegal, anti-socials and criminals take over.

This time, on our way home from the airport, we stopped at Margao to buy provisions. As I parked the car in a narrow gully I noticed a little kiosk around which people had gathered. Further investigations revealed the kiosk to be a matka outlet, where people were placing 10 rupee bets for the chance of winning 90 rupees. There were even some women placing bets.

This is Goa: there are casinos for the rich; there are casinos for the poor. The rest of India can either go the way of Goa, following the "Goa Model of Liberty," or they can go the way of the Taliban, the way of Gujarat, the way of Delhi (where the police shot and killed a gambler on Diwali some years ago.)

And talking about the Taliban reminds me that these guys are taking over Pakistan. If we want to challenge their political ideas, the Goa Model of Liberty is a powerful antidote.

That is, Hindootva is no answer to the Taliban, for these Hindoos are just another set of tyrants. It is Liberty that is the best political response. Liberty allows every Individual to "pursue happiness" as he wishes. And good luck to him if he decides to gamble.

On Mistaken Opinions

The Times of India, in a lead editorial aggressively titled “Act Now,” has strongly supported Obama’s “stimulus package” and recommended that our The State do the same. The academic authority on which the editors have based their advice is Paul Krugman, the latest Nobel laureate in Economics, who is an avowed Keynesian.

Yet, almost 300 years ago, thinking on matters such as the effects of an increase in the supply of money, was infinitely clearer.

For example, let us take the case of Richard Cantillon (died 1734). In his famous Essai sur le Commerce, Cantillon starts with the discovery of new gold and silver mines. He then proceeds to show how this additional supply of the precious metals first increases the incomes of all persons connected with their production, how the increase of the expenditure of these persons next increases the prices of things which they buy in increased quantities, how the rise in the prices of these goods increases the incomes of the sellers of these goods, how they, in their turn, increase their expenditure, and so on.

Cantillon concludes that only those persons are benefited by the increase of gold and silver money are whose incomes rise early, while to persons whose incomes rise later the increase of the quantity of money is harmful.

That is, 300 years ago, it was quite clear to thoughtful minds that increases in the supply of precious metals did NOT “stimulate” economic activity. It was also clear that this increase in (hard) money harmed certain sections of the populace. If increases in the supply of gold and silver are NOT uniformly “good” for the economy, surely increases in the supply of irredeemable fiat paper money must be much worse.

Thanks to Keynes, Krugman and their followers, this clear understanding is lost today, and must be painstakingly reconstructed. I hope the editors of the ToI will be prompted to STUDY such matters, so that their highly influential opinions are on the side of truth. The paper’s motto, after all, is “Let Truth Prevail.” Keynesianism is a bundle of lies.

Let us now turn our attention to another editorial, this time in the Indian Express, in which the editors have applauded an 80,000 crore rupee (800 billion) government project to build houses for the urban poor. I would rather spend the 80,000 crores on roads leading out from our overcrowded cities and towns into the hinterland, which is vacant. Only this will increase the supply of urban land, bringing it within the reach of the poor. Note that in New Delhi, where the editors are located, there are only two toll-roads leading out: one, a 4-km toll-road to Noida in UP; and second, a 20 km toll-road leading to Gurgaon in Haryana. If there were toll-free roads to Alwar, Panipat, Sonepat, Saharanpur, Ghaziabad, Meerut, Agra and so on, the housing problem would be solved by the private sector. In my book, therefore, The State should build roads; the private sector should build houses. On the other hand, if The State does not build roads, and builds houses for the poor instead, the cities will be even more overcrowded, the price of urban land would go up even more, and both rich as well as poor would suffer. The editors of the Express should therefore re-think their advice.

Students of Economics should also read Christopher Lingle's latest column in Mint, on the "false logic of rate cuts." He shows how the effect of near-zero interest rates will be fatal for the economy. That is, Keynesianism is dead wrong.

A Battle Won, Another To Go

The citizens of the City of Bangalore must be congratulated for winning the battle against Hindoo fascism. People came out in droves to celebrate Valentine's Day, the pubs were full, the police on guard, and the Hindoos were sent to jail by a BJP government. The pink chaddi campaign was a thundering success. Liberalism and modernity won the day.

Let us now turn our attention to another, even more important battle: the battle against central banking. As in America, so too in India, there has been huge over-investment in real estate.

Here is a news story on a Goldman Sachs report on the real estate sector in India requiring a major correction.

Therefore, the news that our The State is "infusing" billions into its own banks should come as no surprise. Government banks in India, just like Fannie Mae and Freddie Mac in the US, have taken a big hit by extending huge loans to real estate projects. This "infusion" of new money into these banks represents loot on the part of our banksters. Their cronies have taken loans they cannot repay; our The State, by pumping more money into these banks, is merely subsidizing bad loans. They are robbing their own banks. Loot.

Thus, the advice of the chief economist of the IMF, to further lower interest rates and thereby increase the supply of money, should be seen as very wrong advice. Ideally, real estate values should be allowed to fall. The malinvestments should be liquidated. We in India must not do what the US is doing under Obama, who will destroy the US dollar with his 800 billion dollar "stimulus." We are in danger of going the same way. Our The State has also announced a similar "stimulus" of new paper money.

Friedrich Hayek's 1932 preface to his "Monetary Theory and the Trade Cycle," originally published in German in 1929, the year the Great Depression hit, is worth quoting 80 years later, because the vital lessons in economic theory have not yet been learnt. Hayek says:

"It is a curious fact that the general disinclination to explain the past boom by monetary factors has been quickly replaced by an even greater readiness to hold the present working of our monetary organization exclusively responsible for our present plight. And the same stabilizers who believed that nothing was wrong with the boom and that it might last indefinitely because prices did not rise, now believe that everything could be set right again if only we would use the weapons of monetary policy to prevent prices from falling. The same superficial view, which sees no other harmful effect of a credit expansion but the rise of the price level,
now believes that our only difficulty is a fall in the price level,
caused by credit contraction.

"There can, of course, be little doubt that, at the present time, a deflationary process is going on and that an indefinite continuation of that deflation would do inestimable harm. But this does not, by any means, necessarily mean that the deflation is the original cause of our difficulties or that we could overcome these difficulties by compensating for the deflationary tendencies, at present operative in our economic system, by forcing more money into circulation. There is no reason to assume that the crisis was started by a deliberate deflationary action on the part of the monetary authorities, or that the deflation itself is anything but a secondary phenomenon, a process induced by the maladjustments of industry left over from the boom. If, however, the deflation is not a cause but an effect of the unprofitableness of industry, then it is surely vain to hope that by reversing the deflationary process, we can regain lasting prosperity."

For the layman: Suppose we are in a cowrie-shell economy. And we find a hoard of cowrie shells on the beach one day. Will this find stimulate the local economy? Or will the value of cowrie shells fall – inflation?

What if our currency is gold coin. And miners discover a rich haul of gold, and all this gold is "infused" into circulation. Will this act as a "stimulus"? Or will gold prices fall – inflation?

With fiat paper money, the situation is much worse. As Hayek said, in another book, the fiat paper money inflationists have got hold of "a tiger by the tail."

So don't get deceived. Oppose banksterism. Fight for sound money. The health of the economy, by which we all seek survival, is at stake.

Between Wine... And Urine

Elections are due in a few months. And the Indian voter has no choice:

=> Here is finance minister Pranab Mukherjee of the Congress party swearing by Gandhian socialism with a "rural focus."

=> Here is LK Advani of the BJP swearing by Gandhian socialism, rural development and "swadeshi."

=> And here is an editorial on Prakash Karat of the Communist party (Marxist) swearing by Nehruvian socialism, the vast public industrial sector et. al.

If there is something lacking in this picture, it is "vision." All these political formations are sticking to a failed vision. Every single aspect of this Gandhi-Nehru vision is a failure.

=> Rural development has failed. The villagers are all moving to cities. And the cities are hell-holes. Panchayati Raj has failed, and we have no Mayors either.

=> The public industrial sector has failed. Instead of ushering in a "socialist pattern of society" based on Equality, the public sector has become a haven for a rent-seeking class of parasites. This includes the trade unions – which is why Prakash Karat is so hung up on Nehru.

=> Swadeshi has also failed. We Indians are better off today because of foreign businessmen. This cannot be denied.

=> The centralized State and its "central economic planning" have also failed. There are no roads in India. No local self-government either. The entire apparatus of our The State has failed – and this includes the once respected bureaucracy. The socialist tools of government have to be replaced.

The nation must think anew – but the political bosses are loath to do so. This means that we will continue to muddle along, making the same old mistakes. We will never change course.

And there is the other way: free trade, free markets, economic freedom, private property, sound money, individual rights, and the rule of law. This will also mean total privatization – and the investment of all this money in an excellent roads infrastructure. Only the liberals and libertarians champion this other way – but they are debarred from contesting elections. What do we do?

Before getting into what "we" can do, allow me to say what "I" am going to do. I have been requested by Satyajit Dey of the Liberal Youth Forum to pen a "liberal manifesto." This should be ready in a few days and it should soon become a public document. This is my small contribution to the great cause of Liberty, Peace and Prosperity.

So what can "we" do? First, let us all go through the liberal manifesto and see if we agree with its "vision" and its basic tenets. If we do agree, then a political struggle is called for. This is all but natural when political visions collide.

If there is an apt metaphor by which I can convey my message of today, then it is this: we as a nation can either drink wine, or we as a nation can go on drinking cow's urine. Nehru and Gandhi are the "holy cows" of the establishment. And socialism, rural development, panchayati raj, swadeshi, the public industrial sector et. al. are but the urine of these holy cows.

So it is either wine. Fine wine. Or urine.

You choose.

On The Duds Who Built Gurgaon

The other day, a real estate agent drove me to see a new development in Gurgaon, Haryana, very close to Delhi. It was a prestigious Tata Housing project called Raisina Heights in Gurgaon's Sector 59.

Unfortunately, the Haryana Urban Development Authority (HUDA) had forgotten to build a road to Sector 59. We had to therefore drive the last 3 or 4 kilometres through dirt, past a little village that had no main street. All around the village, new houses had been built in a haphazard fashion – since the village did not possess any internal roads. How can there be internal roads when there is no main street?

As we approached the site, we passed parcels of village land that had been "acquired" by HUDA. The greatest asset of the poor villagers is their land. HUDA is developing the area in such a way that the owners of this extremely valuable land get nothing out of it. HUDA is keeping the villagers as poor as possible, deliberately. HUDA is also cheating the rich.

At the Tata Housing site, the model flat I got to see was luxurious – and that is putting it lightly. The bathroom has a Jacuzzi. A 3 bedroom flat measuring 3000 square feet was priced at around Rs. 17,000,000. Big money. The price of the flat included a steep "development charge" that was to be paid to HUDA. This parasitical and predatory agency of The State was robbing both the rich as well as the poor. And I do believe it has totally destroyed Gurgaon. As we drove around, it became obvious that there had been massive over-building, and that property prices here were surely headed for a nose-dive.

At the Tata Housing site, I was taken to witness the fact that construction was in full swing. I saw a huge pit in which cranes, earthmovers, and hundreds of construction workers were at their job. This was the underground parking lot. I wondered as to how all this equipment was moved to the site. After all, there was no direct road. Sector 59, Gurgaon, was a figment of HUDA's imagination. Not a single internal road had been laid. I was told that the flats would be ready for occupation in 2 years. I wondered whether the roads would be ready by then. There seemed to be a distinct possibility that HUDA officials would seek bribes before building the roads. I decided that Raisina Heights was not worth investing in. We returned to Delhi.

There is an excellent book on urban development in India during British times by Anthony D King that I enjoyed reading many, many years ago. The Brits build many new cities and countless hill-stations in their time, using the latest concepts in town-planning. There is a picture in this book of Simla being developed. The first thing the Brits did was to lay out the streets and the ubiquitous "mall road." The private properties were built thereafter. HUDA is doing things the other way around.Thus, there are malls, but no Mall Road. The malls are all on the highway to Jaipur!

Yes. All these "urban development authorities," throughout India, should be closed down. They are but land and road monopolists, exploiting their dual monopoly position. India needs a new model of participatory institutions of urban local self-government. The current model is a disaster.

Yet, it is worth thinking: Which fool would destroy his own city? Even bees and ants, who live in colonies, protect their colonies. These morons destroy theirs. Duds.

I have an earlier post on Gurgaon, available here.

Read "The White Tiger"

I found Aravind Adiga's The White Tiger unputdownable. It is an excellent novel, very well crafted, and it is completely on the side of the vision libertarians have for India. To be sure, it is totally anti-socialist, and it portrays the horrors of village life with a brutal realism. It also shows how the Indian city is a hell-hole. It showers scorn on the village school and the schoolteacher. It pokes fun at the Indian police. It also sticks its middle finger out at Indian "democracy." I recommend it to one and all.

Now How About Khadi Chaddis?

Pink chaddis have been sent to the BJP's goon squad that opposed Valentine's Day and threatened violence upon all those found celebrating it. And these seemed to have had their desired effect. The goons have backed down.

Yet, these goons are but the lowest of the low in the party hierarchy. What about those at the top?

Here is the old man LK Advani, calling for "swadeshi."

Addressing a conclave of cronies, Advani said:

“India needs neither a free-for-all Capitalism nor a freedom killing Communism, but a swadeshi model of democratic and integral human development.” He was addressing the FICCI annual general meeting.

The cronies must have cheered.

Note how this sounds exactly like Nehru's "mixed-up economy." Also note the word "democratic." They all hide behind this label. We have the vote, while they have our The State.

Advani, indeed, is but a reincarnated Nehru. The report cited above continues:

In his address, Mr Advani also said there was a need to strengthen the public and the private sector. “There is no place for dogmatism in favour of or against either, since both have to be strengthened.”

He has, of course, called for "Gandhian socialism" – and an editorial in the ToI today politely tells the BJP that it needs "rebranding."

I would suggest that we all get real on what the BJP is all about. According to me, the BJP is about:

=> closed minds
=> closed borders
=> rural development, panchayati raj and associated bullshit that dreams of an India of "model villages"
=> a vast public industrial sector
=> cultural fascism

All these are profoundly illiberal doctrines.

According to my suspicious mind, this ugly episode of the Sri Ram Sene in Karnataka had all the blessings of the party high command. Muthalik was trained in Maharashtra, and the BJP wants to set up a Maharashtra-style Shiv Sens or MNS in Karnataka as well. They are fascists. They are communalists. They are socialists. They want to control our The State to further their own, private agenda. That agenda is entirely backward looking: they look back to ancient India, they look back to Gandhi, they look back to Nehru. They do not look forward at all.

What do we do? We who believe in liberty and Capitalism, in cities and civilization, in free trade and a borderless world, in peace, and in modernity.

I suggest a "khadi chaddi campaign."

Let us send wagonloads of khadi chaddis to Advani & Co.

Let Chaddi 2.0 be our answer to Swadeshi 2.0.

The colour? Why, saffron, of course!

Happiness @ One Rupee

It looked like an ordinary pack of gutka or paan masala. But "Ananda Munakka" was different. A Dutch tourist handed a packet to me with the words: "You have one of these in the morning and you are happy the whole day." She wanted to know what it contained. I told her that "ananda" meant "happiness".

The contents of the packet were listed in Hindi, which she could not read. Nor could I, for the lettering was too small. She got me a huge magnifying glass.

As I scanned the list of ingredients, I found the words "Shudh Bhang – 15%". Trust a Dutch woman to find it! I told her it contained 15 percent pure cannabis. She was overjoyed. I read out the other ingredients:

Munakka – 40% (crushed dates)
Mishri – 40% (natural sugar crystals)
Jeera – 1% (cumin seeds)
Dalchini – 1% (cinnamon)
Lavang – 1% (cloves)
Kali Mirch – 1% (black pepper)
Heeng – 1% (asafoetida)
And, of course:

Bhang (shudh) – 15%

The Dutchwoman said it was her last packet of Ananda Munakka. She had bought 10 for a rupee each, and had enjoyed them. She added that it was now banned, so the cost had gone up to 2 rupees a pack. That is, from 2 US cents to 4 US cents.

I would have liked to eat the entire contents of the packet, but since it was her last I asked for a small piece to taste. It was pure bhang alright – but probably closer to 50%!

We discussed the merits of Ananda Munakka for the next half-hour. Yes, it was a cheaper high than bidis, cheaper than feni, cheaper than gutka. And it was not injurious to the health at all, unlike all the others. It was manufactured in Kanpur by NIT Pharma, an ayurvedic medicine establishment. It deserved to be the toast of the town.

The Dutchwoman requested me to buy 1000 packets for her if ever I came across them. I promised to do so. I also decided to buy 1000 for myself, since pure bhang is better than the bush grass and horseshit hash you get in the black market. Three years of ananda for less than US$20. I would popularize Ananda Munakka among my friends, and also among the poor ganja smokers I know, who spend loads of good money on third-rate stuff.

Yet, it is perhaps typical of the ignorance that rules our The State that Ananda Munakka has been banned.

Things would have been better in Babur's time. In the Babur Nama, a copy of which I possess, the founder of the Mughal dynasty records many experiences under bhang (which he called "maajun"). In one of these, he wandered into a field of wild flowers and counted the colours. He found 48 colours in all. And he wrote that he loved the feeling of floating on a cloud which maajun gives. The later Mughals were all alcoholics, but the early ones were entirely maajun eaters. Babur writes about his experiences with alcohol, which he began using late in his life, and which he finally gave up, preferring to stick to maajun.

So I am going to town to check out all the ayurvedic shops for Ananda Munakka.

I suggest you do so too. And if you find ananda, let me know.

What else can give you happiness for one rupee?

On Brainless Politics

The issue of a fitting response to the BJP goon squad that attacked and beat up women who visit pubs seems to have been settled:

The leader of the group is being sent hundreds of pink panties. Beating up women is an act of cowardice; those who do such things are what we call "kapurush." They deserve pink panties.

But the BJP has other Paleolithic ideas to offer our people: Here is the story of the "cow protection department" of the RSS planning to introduce soft drinks containing cow urine! Surely, this is taking Hindoo cow worship to absurd heights.

So what exactly is the BJP? Is it a serious political party offering an alternative to the Congress? It seems to me that the BJP is very much the same as the Congress in terms of actual government policy. The BJP supports a public industrial sector; the BJP supports economic nationalism and autarky; the BJP believes in Gandhi – who was a Congressman.

The only real difference with the Congress is on how to win the Hindoo vote. Here, the BJP is still talking about the building of a Ram Temple in Ayodhya. And, of course, there are its gangs who oppose foreign culture, Valentine's Day, pubs, dating and alcohol. And now we even have cow urine. If we add them all together, the BJP's agenda is backward-looking and totally illiberal.

Indeed, the BJP are fascists using the methods typical of all fascists: hark back to a lost "golden age"; identify an "enemy" responsible for the loss of ancient glory; and mobilize lumpens to eliminate the enemy and return to the golden age.

We are indeed fortunate that this backward-looking agenda is not going down well with our forward-looking and freedom-loving people.

What I would like to see in Indian democracy is a party that appeals to the voter's intellect – that is, a party that does not appeal to emotions or faith, but to the mind.

Note that the Congress does not do so either: the Congress' appeal to the voter is in terms of "loyalty" to a family name, the only "brand equity" they possess. With both the major political parties avoiding intellectual appeal, democracy is meaningless. The idea behind democracy, after all, is that the voter is intelligent. It is anti-democratic to restrict electoral competition to such brainless parties. The conclusion is therefore stark: it is not the people who are dumb, but the politicians and their parties. Hence the pink panties. Hence the cow's urine. Hence the Ram temple. Hence the Nehru-Gandhi dynasty.

India is slowly waking up to the ugly reality of its brainless politics. Let us see how things proceed.

Do Not Cancel Protests

News has it that the Sri Ram Sene, the goon squad that attacked women in a Mangalore pub, and who threatened to disrupt Valentine's Day celebrations, is facing political isolation. Everyone and his uncle is distancing himself from the activities of these thugs.

Here is a news report that quotes the union home minister, P Chidambaram, saying that the Sri Ram Sene has "crossed limits." The same news report quotes the chief of the RSS saying that they have no objections to the Sri Ram Sene being banned.

There is also another news report that quotes the police commissioner of Bangalore assuring the citizenry of full police protection of pubs, card shops, and lovers.

My question is: Why did they take so long?

Was this just a "political experiment" to test the waters, so to speak? And when the waters turned choppy for our desi Taliban, thanks to a citizenry that dared to take to the streets and teach these rogues a lesson, the entire establishment beat a hasty retreat.

Take Chidambaram or the police commissioner, for instance.

The Mangalore pub attack occurred on the 24th of January. Almost three entire weeks have passed since. Could the union home minister as well as the local police top brass not have condemned these hooligans and reassured the citizenry earlier? Why were these people allowed to go on threatening the public? I do believe that the entire establishment was waiting to see the public reaction. If the people had remained mute, the thugs would have been welcomed into Hindoo politics. Recall that the BJP rules Karnataka.

Even now, all that Chidambaram has said is that these thugs have "crossed limits." Note that he did not say that these bozos are criminals who have broken The Law.

Ditto with the police commissioner: he sat on the sidelines while the Sri Ram Sene went on and on with their Hindoo rhetoric. And it is only when the public organized themselves to protest that he finally spoke out. The truth seems to be that the law and order machinery is hopelessly politicized. They do not want to enforce The Law; they just want to "play politics" with law and order.

So what should the good, freedom-loving citizens do?

My earnest advice is: Don't Back Down.

Continue with the planned protests. And carry hockey sticks for your own protection. Take to the streets in large numbers to teach a lesson to those who seek to impose their Paleolithic thinking on you, and that too, with violence. Do not cancel your protests.

And may the force be with you.

Play Hockey With The Fascists

There has been another attack on women who visit pubs – this time in Bangalore.

It is therefore heartening to hear that free citizens of this fair city are forming a human chain on Valentine's Day to peacefully protest against the moral policing that BJP goon squads, hand-in-glove with the local police, have unleashed upon the state.

The protest is being led by a professor of IIM-B, and there will be human chains formed in many parts of the city to allow freedom-loving people to vent their anger against those who seek the Talibanization of Indian society.

But as this latest attack shows, the enemies of Liberty are violent people. Non-violent protests against such people is risky. There is no telling what will happen on V-Day if the goon squads attack peaceful protesters. There is no telling which side the police will be on.

Whereas I certainly do not suggest violent protests, I do believe that, given the violent nature of the enemy, citizen protesters should look for ways to defend themselves in case of attack. I therefore suggest that every single citizen participating in these human chains be armed with a hockey stick. The hockey stick is cheap, handy, easy to wield, and an excellent weapon in such situations.

So speak softly, but carry a hockey stick.

That is my suggestion.

Actually, in the BJP's fascist agenda, there is deeper motive behind their opposition to "foreign culture." Let us not forget that the Swadeshi Jagaran Manch is an integral part of the BJP. Their fascist ploy therefore goes deeper: they seek to isolate India from the winds of international commerce, maintain a "national economy," and hand over a closed market for exploitation by their cronies. Note how many of our cronyists, from Ratan Tata to Anil Ambani, are salaaming at the altar of the BJP.

Therefore, there is much more to achieve through these citizens' protests. Talibanization is small-scale fascism compared to the deeper agenda of economic nationalism. Today's modern Indian is better off compared to 20 years ago only because the country has opened up somewhat to global trade. We are all better off because of videshi businessmen. The BJP says we cannot love foreign goods – and that is just like saying we cannot love the partner we choose.

The next public rally must therefore be in favour of unilateral free trade.

As long as foreign goods and foreign culture are freely allowed into our land, the fascists will be on the back foot. The fascists want a closed society and a closed economy. And closed minds. This is the method in their madness. They must be defeated.

Ooooh... Aaaah... Ouch!

Pain is a terrible thing. Ask me, I suffer from occasional bouts of sciatica. Now, no one I know suffers from this disease. So no one close to me "knows" my pain. The pain is in my mind, and only I can feel it. And it is a terrible thing. Which is why the philosophy of avoiding pain and pursuing pleasure should not be dismissed as "hedonism". It is a Law of Reality.

Now, just as pain is a subjective affect – only I can feel my pain – so is pleasure. Last evening, after a long time, I smoked a deadly spliff and got "stoned immaculate". I was so happy. It was such a great pleasure. And I feel sad that almost no one I know "knows" this pleasure. I am happy that Michael Phelps knows what "stoned" feels like. The poor chap has lost some advertising contracts. So, I sing the Peter Tosh song, "Legalize it, I'll Advertise It."

Don't miss the point: Such a great pleasure is a criminal offence under "democratic legislation" in almost the entire world. It becomes obvious that pleasure is a subjective affect: all the legislators of the world do not "know" a pleasure called "stoned."

So how can we be Free?

The only way in which all human beings can pursue pleasure and avoid pain is under a Rule of Law that gives them the Liberty to "pursue Happiness" their own way. Since each of us finds pleasure in different things, it is only under conditions of Liberty Under Law that each and every Individual will be able to enjoy his life to the fullest.

We have therefore arrived at a solution to the "avoid pain and pursue pleasure" riddle: this must be left to the abilities and faculties of every private Individual.

What then is The State?

The State is the monopolist over the use of legitimate force. And there is something force cannot accomplish – and that is, force can never produce pleasure. The only use of force is to inflict pain. The State is thus an agency meant solely for inflicting pain upon outlaws. It has no "positive" purpose. We are a society living in pain, barred from pursuing pleasure, only because we wrongly estimated what The State can accomplish. We still believe it can and should teach. Aah! If only knowledge could result from the use of force.

On Those Who Have Learnt Nothing

In the run up to the next general election, India's two main political parties, the Congress and the BJP, have declared the ideas they hold in common: and that is, both are opposed to Capitalism.

The Congress has declared that it still swears by the Nehruvian model of central economic planning; and the BJP has said that it stands for the Gandhian model of economic development.

The only other political formation in India are the Communist parties. They are, of course, haters of Capitalism.

This means the Indian voter has no choice: All the political parties in this socialist democracy are anti-capitalist. There should be a liberal party campaigning for Liberty, Free Trade and Free Markets – but that is not allowed by legislation. This is a loss for The Voter. He cannot choose between competing political and economic philosophies.

Yet, looking back over the last two decades, it is obvious that everything good that has happened for the average Indian is only because of entrepreneurs, including foreign entrepreneurs. We now have mobile phones, cars, colour TVs, music systems, computers, low-cost airlines and whatnot only because of comparatively free markets.

Indeed, all the areas of stark failure are those controlled by our The State – like the railways, electricity, roads, water and so on. Note that bijli, sadak and paani – the voter's lament – are ALL under State control. These are all being "centrally planned."

If the Nehruvian model of central economic planning continues, the voter will never get bijli, sadak and paani. Recall that pre-1991, nothing much was available in Indian markets. When I was in college in the mid-70s, a 5-year old Fiat 1100D sold at more than the price of a new one because the new one came with a 10-year waiting period.

If I can vividly recall those horrible times, I am sure geriatrics like Chacha Manmohan S Gandhi can remember even more. We value old people because they have experience. In this instance, the old people seem to have learnt nothing during their long lives. They do not want India to progress. They want to take India back.

Of course, the BJP leads the race as far as taking India backwards is concerned. Their favouring a "Gandhian model of development" means more of "rural development," panchayati raj, and all the associated hogwash (including prohibition of alcohol). We have tried these for 60 years – and failed miserably.

India needs to look back only to see its mistakes – and Nehru and Gandhi were mistakes. India needs Free Trade and Free Markets – and a vigorous Urbanization. We need Mayors in every city and town – not panchayats. And we do not need any "model of development": we just need Liberty, which every Individual can utilize to develop himself. The idea of Free Markets is that each Individual is free to take the path that he chooses. This Individual is the Architect of his own Destiny. This is why Freedom matters so much. We Indians need to fight again for Freedom – because the geriatrics in the established parties want State Control only because they want to Control The State.

Young Indians, beware! Wrong idea destroyed the lives of two generations of Indians. If you want to secure your future and that of your children, and theirs, do not allow these illiberal ideas another reign. Gandhi and Nehru must both be unceremoniously dumped.

Get Up, Stand Up

Now that a central government minister has given the call for a "pub bharo andolan" (fill the pubs protest) and a civil society group has called for a similar protest on Valentine's Day, the question that we must ask ourselves is this:

Would all this politics of protests have been necessary if the goons had been dealt with firmly by the police?

After all, who has broken the law?

=> Pubs are not illegal.

=> Shops selling V-Day cards are not illegal.

=> It is not illegal to walk arm in arm with your beloved.

It is, however, illegal to forcibly enter pubs and beat up women. It is illegal to threaten innocent law-abiding people with violence on account of their personal choices (which do not harm any third party).

Thus, if the police only did their job, we would all be free, and we would not need to spend time and money on "politics" in order to defend our ways of life.

The conclusion is stark: Our policemen are also politicized schemers, acting along with these goon squads, anxious to cultivate some measure of political influence of their own. In Karnataka, the BJP rules the roost, and the goon squads are their property. A politicized police knows that. They know that their pathway to promotions and plum postings lies in cosying up to these goons. And where the police do not protect the lives, liberties and properties of the tax-paying citizens, the latter have no option but to take to the streets.

In other words, the police are but another goon squad. They offer no worthwhile services to the tax-paying citizenry. This is the only reason why the citizens are forced to resort to politics in order to defend their lifestyles.

Yet, there may well be a silver lining to this dark cloud. If the citizens' protests defending pubs, alcohol, V-Day etc. are big, well-attended and widely reported, both the police as well as the political party goon squads will be taught a major lesson on the freedom-loving spirit of the modern Indian people.

So I repeat my advice to the youth: Stand Up For Your Liberties!

And do it RIGHT NOW – when the threat to them looms large.

Teach the political goon squads a lesson.

And teach the police a lesson as well.

May The Force Be With You.

On Love... And The Goons

Predictably, the debate over “pub culture” has now spilled over to the celebration of Valentine’s Day.

This is a day when young couples express their love for each other – but such romantic love is anathema to those who believe in “arranged marriages.”

As the old song goes:

Love and marriage,
Love and marriage,
Go together like a horse and carriage…

But not in India.

The goon squads do not approve of love. They only approve of marriage. Of course, they are fully entitled to their views, and they can use their freedom of expression to convince others, but I am appalled by their threat to use force on those who do not subscribe to their Paleolithic thinking.

Here is the news report from Bangalore on what the chief goon of this fair city says is in store for all loving couples there. I quote:

“Those guys and girls exhibiting public display of affection on Valentine’s Day, beware. At a meeting on Wednesday, chaired by Sri Rama Sene leader Pramod Mutalik, Sene decided to arrange marriage between dating couples. For that, it has formed five teams. They will roam around Bangalore with a video camera and turmeric stub. If they find young couples dating, they will force them to wed on the spot. “The couples will be taken to a sub-registrar’s office to solemnise the marriage,’’ T S Vasanth Kumar Bhavani, Sene’s Bangalore city president, told TOI.”

In an interview available here, the chief goon is quoted as follows:

“We will not allow Valentine's Day celebration as it is not part of our culture. We will take the help of the police and college students to ensure that nobody celebrates Valentine's Day.”

This is dangerous. Not only will they use force, they will also use the force of The State to back them up. This means the goons control The State. We cannot expect the Rule of Law anymore. What do we do?

An old Hindi song says it all: Jab Pyaar Kiya Tho Darna Kya.

Don’t be afraid.

Fight.

Don’t let these goons dictate your lives.

As a wise man once wrote: “Liberty requires Courage. Free people stick their necks out.”

So stick your necks out. Walk hand in hand with you love. Display your affection in public. Don’t back down.

At stake is the very idea of modern India. If the battle is lost, you will have only one option left: Placing an ad in the matrimonial columns. That is, don’t love; just get married. Horrible.

So Fight for the Liberty to Love. Don’t allow these goons to dictate your lives.

Millionaires... From Our Slums

Some months ago, I attended a grand convention of India’s liberals during which one of the speakers, an eminent editor and journalist of yesteryears, pronounced from the podium, with complete aplomb, that “consumerism cannot be good for India because the poor do not consume.”

Here is a news story on Dharavi, Mumbai, the world’s biggest slum, which says that the annual turnover of all the small businesses that serve the slum-dwellers exceeds 3000 crores, or 30 billion, rupees.

The report also tells the tale of a real “slumdog millionaire” – a Dharavi resident who started off selling vegetables house to house and is now the proud owner of many businesses, from a phone booth to, you guessed it, a beer shop. I simply love such stories. They truly inspire.

And I have seen this in Delhi too. If you visit the slums and look around, you will see innumerable businesses operating successfully. There are barbers who conduct operations in the open air. There are many tea shops and vendors of bidis and the like. There are small provision stores. I even found a doctor’s chamber. The sign outside advertised the fact that the doctor was a Bengali!

Where there are so many people, there are bound to be entrepreneurs who cater to their needs. These days, slums are serviced by cable TV operators, and the provision stores sell mobile phone recharge coupons.

The poor consume, and their consumption is increasing. There is a lot of “gold at the bottom of the pyramid.”

The rags-to-riches story of the vegetable vendor of Dharavi has many parallels in Delhi. There used to be a chap in Defence Colony market who sold roasted peanuts off a cart. He now sells that and other salted snacks from a little shop he bought in the very same market. There is, of course, the well known story of the chaat-wallah on Shah Jahan Road, who is a millionaire many times over.

It is indeed amazing that a journalist should be blind to the market economy in which the poor operate. The reason could well be that when we speak of Capitalism and Free Markets, we are all focusing on Davos, on the WTO, and on the Birlas, Tatas and Ambanis. These hog the limelight. And it is deemed that Capitalism is only for them, and not the poor. For the poor, it is said, and believed, we must have State Socialism. The State must “help the poor.” There must be “redistribution.” There must be a “safety net.”

Nothing could be further from the truth.

What the poor need is Free International trade – so their consumption rises. They need Property Titles – so they discover the solution to the “mystery of capital.” They need Sound Money – so inflation does not tax them. And they need our The State off their backs – so the health inspector does not go around collecting bribes from every tea shop.

If we proceed in this direction, there will be many, many millionaires who will emerge from our slums.

On The Side Of Modernity

The good thing about this debate over “pub culture” is that it has clearly shown Indian society to be divided between two competing claims: on the one hand, there is the Hindoo claim to tradition; and on the other, the claim of the westernized elite to modernity.

(This longish report from Mangalore, where the goon squads struck recently, tells the tale well.)

The mass of the people are placed between these two contesting claims – one looking back, the other looking forward.

But while the traditionalists are misusing force, including State force, and are therefore “political,” the modernists are not. The reason for this is not hard to find: the traditionalists are lumpen elements, drawn from the lowest rungs of politics and political parties, while the modernists are an elite. They are therefore few. They lack political strength – which is numbers.

But that does not mean that the modernists cannot win the battle. They are superior in every way to these goons. The real battle is the battle for public opinion – for it is opinion that finally rules. And in this battle, the goons can scarcely compete effectively with elites.

But this battle must be fought. It is not only about a “way of life” – the good life, if I may add – it is, most importantly, about the subjugation of women. In Mangalore, the goons beat up the women. They want all Hindoo women in sarees, demure, serving dinner dutifully to their (drunken?) husbands. This stereotypical Hindoo woman is their ideal. This may hold appeal to some village women, but it is not the way in which Indian women have been progressing in their long march to Freedom.

Take western attire: the urban young Indian woman is never seen in a saree today. This trend is also reflected in the movies coming out of Bollywood. I just saw an interesting Hindi film called “A Wednesday,” in which the female lead is a television news reporter – always in western clothes. In reality, women TV anchors are never seen in sarees – not since the days of Doordarshan. If we look at the airlines: Air India and Indian Airlines have stewardesses in sarees, but in every single private airline, the air hostess is dressed in modern western wear. And she seems to be loving it.

As the above examples show, the culture of the Congress also rejected the modern west. Indira Gandhi always wore a saree, as does Sonia Gandhi today. The Congress’ claim to fame was a rejection of everything western, including, of course, alcohol. India’s westernized elite must therefore opt for another kind of politics, something very different from party politics.

I suggest the “public actions of free people.” Those in favour of western attire and pubs, especially women, must dare to go out in public defending their dress sense and their way of life – against all comers. They must Fight for their Freedom on the Street. And their men should Fight alongside.

So put on your blue suede shoes, your jeans and your T-shirt with attitude, ladies – and hit the pubs.

And if I were the bartender I would definitely say “this beer is on the house.”