On The Ignorance Keynes Fostered

The other day, I had the occasion to discuss Obama’s “stimulus package” with a leading designer and was not at all surprised to hear from him the confident assertion that all would be well soon because the US is “pumping so much money into the system.”

Of course, Obama will not be pumping in “money.” He will be pumping in fiat paper notes that are debt masquerading as money.

So let us take the extreme example: Suppose gold was money in Goa, and miners discovered lots of gold underground. If all this gold was introduced into circulation, would the Goa economy be “pumped up”?

When I offered this example to my designer friend, he hemmed and hawed for a while and finally concluded that the end result would be a fall in the price of gold, which amounts to the rise in price of everything else.

He was forced to concede that the end result of pumping in paper dollars would be much worse than increasing the amount of gold in circulation, if gold was money.

My designer friend then asked me the most interesting question: Why do so many learned people advocate increasing the money supply?

“Ignorance,” I replied.

This ignorance has been brought about by Keynesian teachers and textbooks. In an earlier age, before Keynes, when classical liberalism ruled, such errors in thinking would never have occurred.

For example, let us take Richard Cantillon’s “Essay on Commerce” published in 1730, about 50 years prior to Adam Smith’s Wealth of Nations.

There is a chapter in Cantillon’s book entitled “On the increase and decrease in the quantity of hard money in a State.” Money was “hard” in 1730, and Cantillon discusses the effects of an increase in the quantity of gold.

Cantillon begins by saying:

“If Mines of gold or silver be found in a State and considerable quantities of minerals drawn from them, the Proprietors of these Mines, the Undertakers, and all those who work there, will not fail to increase their expenses in proportion to the wealth and profit they make: they will also lend at interest the sums of money which they have over and above what they need to spend.

All this money, whether lent or spent, will enter into circulation and will not fail to raise the price of products and merchandise in all the channels of circulation which it enters.”

But Cantillon does not stop here. He goes on to say who will lose and who will gain from this inflation. This is a very important point: that there will be losers too in this process. Cantillon refers to John Locke having “clearly seen that the abundance of money makes everything dear, but he has not considered how it does so. The great difficulty of this question consists in knowing in what way and in what proportion the increase of money raises prices.” It is Cantillon who was the first classical liberal to elucidate this process. He says:

“If the increase of actual money comes from Mines of gold or silver in the State the Owner of these Mines, the Adventurers, the Smelters, Refiners, and all the other workers will increase their expenses in proportion to their gains. They will consume in their households more Meat, Wine, or Beer than before, will accustom themselves to wear better cloaths, finer linen, to have better furnished Houses and other choicer commodities. They will consequently give employment to several Mechanicks who had not so much to do before and who for the same reason will increase their expenses: all this increase of expense in Meat, Wine, Wool, etc. diminishes of necessity the share of the other inhabitants of the State who do not participate at first in the wealth of the Mines in question. The altercations of the Market, or the demand for Meat, Wine, Wool, etc. being more intense than usual, will not fail to raise their prices. These high prices will determine the Farmers to employ more Land to produce them in another year: these same Farmers will profit by this rise of prices and will increase the expenditure of their Families like the others. Those then who will suffer from this dearness and increased consumption will be first of all the Landowners, during the term of their Leases, then their Domestic Servants and all the Workmen or fixed Wage-earners who support their families on their wages.”

Thus, as with gold, so with Keynesian “pumping money”: those who get to spend the new money first will gain, while those who get to spend it last will lose. Those who are savers, and those who live off fixed incomes, will lose the most. Inflation is thus a hidden tax on the poor. Increasing the money supply redistributes real wealth. There are many losers in the process - especially among the poor. This was the understanding in 1730 AD.

We can therefore concur with Hayek who said that the greatest mischief done by the Keynesians was that they obscured from living memory an understanding of money that existed 300 years ago – and which has to be painstakingly reconstructed. You can read Cantillon here.

Also read how the Russians are contemplating a return to the gold standard here (thanks to LRC).

Sound money, hard money, sunnah money – that is the way forward.

Away with Keynesian hogwash.

Against Lord Desai's Proposal

Meghnad, Lord Desai, in his latest column, has called for “a new world economic order.” The idea is to revamp the IMF. Lord Desai notes:

“Since the breakdown of fixed exchange rates in 1971, we have had a dysfunctional IMF and no oversight of global financial problems. The developing countries got nothing but bad advice and a lot of bullying from the IMF.”

What happened in 1971 was that the US dollar de-linked itself from gold and became a fiat paper currency. Then, one ounce of gold was US$35. It is over US$900 now. People in the know expect gold to cross US$2000 an ounce over the next two years.

What can a revamped IMF do? And what is the exact “revamp” the IMF needs?

Lord Desai admits that economic power has shifted since the days when Keynes & Co. created the Bretton Woods system. Western powers like the US are now debtors, and the creditors are in the east, mainly China. Lord Desai says:

“China has to state its conditions for the reform of IMF. The main need is for extra resources for the IMF and the rich countries are bankrupt. China will have to foot the bill.”

What will the new IMF, funded by China, accomplish? Here, Lord Desai says:

“In principle, the world needs a mechanism whereby surplus financial reserves of nations need not all be put in US Treasury Bills but can form the basis of a global reserve asset. Thus the billions of Chinese, Japanese and other Asian economies’ surpluses can be banked with the IMF, which can loan it out to deficit countries. Of course, it needs to get a better economics tool kit than the one it has been using, which has harassed developing countries for decades.”

Lord Desai concludes that the “IMF can begin to perform the task of oversight of global financial flows and of helping the deficit countries in a way which does not kill the growth process and hurt the poorest people.”

Lord Desai’s parting shot again invokes the poor: he says that the new world economic order he contemplates “must be an order which never again neglects the needs of the poor.”

I think that the poor can look after their own interests best. And they can do this most easily when the commodity we use as money is in their own hands, beyond the manipulations of their governments. When central bankers inflate, the poor lose. It is unthinkable that the power to inflate the world should be given to a revamped IMF, which will work like a central banker to the whole world. Where national central banking has failed, a global central bank can only do worse. And in such a regime the poor will remain poor forever.

I such moments of crisis, the option always exists for calling for a “higher power.” Where the world’s central banks have failed, there is thus the call for a supra-national central bank.

And there is the other option: close down all central banking and let money be the commodity that people spontaneously choose for the purpose. Only “sound money” can be a safeguard for the poor. With sound money, their savings will never be eroded. The poor will steadily accumulate capital. Their consumption will improve. Their investments will increase, And they will gradually climb out of poverty. Indeed, as Ludwig von Mises said, “In an unhampered market economy, there is no poverty of the kind we see today, especially in the anti-capitalist parts of the world.” True capitalism is based on sound money. Lord Desai wants a global fiat money to replace national fiat money. This can never help the poor.

Lord Desai’s false concern for the poor is aptly brought out by this news from Bangalore:

First: Governor’s car knocks down motorcyclist.

And second: Cops sell unclaimed body for research.

This is precisely what a revamped IMF will mean for the world’s poor.

On Advani's Diversionary Tactic

LK Advani has just fired his first salvo in the run up to the elections – and it leaves me unimpressed. Advani’s bug-bear seems to be the secret hoards of rich Indians in tax havens abroad. If he is elected to power, he will get these hoards back and fund all the roads, schools, etc. that he and his party wish to provide for the Indian people via our The State.

It is almost as if the rest of us do not pay enough taxes to fund these roads, schools and whatever.

What happens to this tax money – the cess on petrol and diesel which is supposed to go into the Central Road Fund, the education cess, income and corporate taxes, service tax, VAT etc.?

Advani, as the leader of the opposition, is supposed to keep an eye on how the government uses our tax money. This money is being misspent on the NREGS, the army occupation of Kashmir and Manipur, the loss-making PSUs, the bloated salaries of the misproductive bureaucratic class etc. These are matters that the two major political parties should debate. Advani is diverting attention to tax havens abroad, by pointing to the fish that got away. What about the fish that are already in the net? What is the government doing with all the tax revenue that it has already collected?

In either case, a good country and a good economy are one in which The State does not command a major proportion of the citizens’ assets. These citizens pay a small portion of their assets to The State as taxes, and in exchange receive from The State some public goods and services. The rest of the money is kept by these people to invest in businesses. This is what creates jobs. If The State commandeered all the citizens’ productive resources, all this money would be wasted. The citizens would have nothing left over to invest. And The State would consume this money, not invest it.

If I had to pen my manifesto, then I would declare my intention to make India completely tax free for 10 years. During this time, a small government would be supported through the receipts of total privatization of all PSUs. This money would also be enough to finance a world class roads and highways network, pan-India. There would be no import duties, no income and corporate taxes, and no indirect taxes either. All the people would be able to keep their money and invest in businesses. The economy would boom.

Deep down, Advani and Manmohan seem to have a secret pact to keep certain matters off the election debates. This explains the hoo-hah about hoards in tax havens abroad. The central idea behind Advani’s blustering is again totally socialist – soak the rich. The rich are the problem. We will take from the rich and give to the poor – the same old dreary song.

The nation will NOT be better off with more tax revenue. The nation will be better off if rich people can save their surpluses and invest them freely in businesses. This will create jobs. This will spur growth.

The government needs to downsize, sell off its assets, and provide basic public goods and services – like roads. It is a shame that there are only two expressways leading out of New Delhi, one a 4-km road to Noida, and the other a 25-km stretch to Gurgaon – and both are toll roads!

This amounts to double taxation.

The leader of the opposition should be shouting hoarse about this blatant double taxation. Shouting about Swiss accounts is just a diversion. The real issues lie untouched.

And the real issue is this: We are already being taxed to the hilt – and double taxed as well. And we get NOTHING in exchange. Fix that, Mr. Politician. Don’t jabber about talking nonsense.

On Our Mad And Scary Politics

It looks like no one has been impressed by the Congress party’s manifesto.

Here is Mythili Bhusnurmath of the Economic Times likening it to the Mad Hatter’s Tea Party. She concludes:

“On the face of it, this [manifesto] is the height of irresponsibility. At a time when fiscal mismanagement and the global slowdown have ruined our public finances, one would have expected some maturity from the two main political parties. Instead, what do we have? Outright, irresponsible behaviour! Fortunately, as the Hatter would say, nothing is manifest in our manifestos! Welcome to the Mad Tea Party!”

Rediff has this report on senior economists who have found the Congress manifesto “scary.”

Mad and scary?

Nothing is manifest is this manifesto?

Where is the country headed?

In the meantime, there is this report on the Election Commission seeking to appoint “poll ambassadors to woo young voters.” The story reads:

The Election Commission is keen to rope in film stars and popular sportspersons like cricketer M S Dhoni with "non-political background" as Poll Ambassadors to motivate young voters to exercise their right to franchise. "People should know that exercising their franchise is not only their right but also their duty so the Election Commission has mooted the idea to seek the help of stars to attract young voters," Election Commissioner S Y Quraishi said in Ranchi on Saturday.

Dhoni as Poll Ambassador? – asking the youth to vote, as their “duty.”

But vote for whom?

Oh, I forgot. We must “shut up and vote.”

And is this the constitutional role of the Election Commission? Are they supposed to conduct elections or also act as ideologues of India’s socialist democracy?

Let us not forget the ugly episode of Navin Chawla – which proved that the EC is highly politicized.

What I find astounding in all this is the fact that there is no candidate and the biggest party’s manifesto is “mad and scary.”

And the EC says voting is our “duty.”

My advice to our youth: Think!

And don’t go to the polling booth like dumb sheep.

This socialist democracy is a Race to the Bottom – with every party promising freebies to the poor, with money they do not have, with money they will need to print.

This is mad and scary alright.

On The Rule Of Incompetents

Professor Arvind Panagariya has just written of the “fall of the holy trinity” – how the dream team comprising Manmohan, Montek and Chidambaram has failed India, the Indian people and the Indian economy.

Talk about their total failure is now quite rampant: here is an ET editorial of today on how the government’s borrowing program is going to backfire. The editorial notes:

“Government’s failure to manage its finances prudently, despite the golden opportunity presented by booming revenues in the first four years of UPA rule, is going to cost us dear.”

Niranjan Rajadhyaksha’s latest column in Mint focuses on the bond market, which he says has “spooked.” He writes:

“The Indian economic policy debate is at a dangerous crossroads. Fiscal caution has already been thrown to the winds—and there is now a growing clamour for equally irresponsible monetary policy. The total government deficit is now close to the levels that pushed us into a full-blown macroeconomic crisis in 1991.”

He concludes:

“The problem here is that an unacceptably large fiscal deficit has spooked the bond markets and will most likely crowd out private sector borrowing when the economy recovers.”

In simple terms: Our The State is Broke. If they try and borrow money, interest rates rise. If they engage in printing money, this will spark off inflation and further financial instability. Yet, they have announced a skew of spending programmes, more giveaways, and more freebies – all with money they do not have.

And they don’t have the money to build roads.

The conclusion is stark: The “holy trinity” of Manmohan, Montek and Chidambaram have let the nation down.

There are three aspects of economic science that anyone senior in government must be conversant with: the first is economic theory – and theirs sucks real bad. The second is economic policy – and theirs sucks real bad once again. And the third is public finance – and here they suck real bad a third time. Looks like ignorance rules the land.

India is being mismanaged. These “experts” at the helm have just been ciphers and yes-men. They have not stood up for any principles. They have muddled along – and now the economy is exactly where it was in 1991.

What really gets my goat, considering the mess the nation is in, is paying taxes to these morons to fritter away on petty politics. The other day we had a splendid meal at a restaurant in Panjim. The bill was a modest 160 rupees, VAT was about 20 rupees, and the waiter was tipped 10 rupees. I concluded that the owner of the restaurant probably made a profit of 20 rupees. For this he had to work real hard, supervising every aspect of the restaurant’s functioning. The waiter also works hard to get tipped. But our The State collects 20 rupees, double the hard-working waiter’s share, for doing precisely nothing. All these taxes are spent in Kashmir, on the NREGA, the wasteful fertilizer and food subsidies, and on other freebies for the poor – which, of course, never reach the poor.

The conclusion: The destiny of 1 billion people in is the hands of incompetents.

This Doctor Is A Quack - Take # 2

The Congress party has released their manifesto. They have promised a massive expansion of the employment guarantee scheme (NREGS). They have also “pledged to enact a right-to-food law providing for 25 kg of rice or wheat per month at Rs 3 per kg to every family living below the poverty line (BPL) in rural and urban areas.” The quote is from the news report, which can be accessed here.

Is this the purpose of Law? Does The Law exist to provide food to the poor?

There is a photo accompanying the news report of Chacha Manmohan S Gandhi with his Soniaji at the release of this manifesto. Note that neither are politicians. He is supposed to be an economist, an expert. She is all that is left of the Gandhis.

But what kind of economist is Chacha? I daresay he is not an economist who knows how Prosperity happens. All he knows is Poverty – and the assumption he holds is that poverty is incurable. Of course, if poverty was incurable, the entire planet would still be in the Old Stone Age. America, Europe, Australia, China, Singapore, Hong Kong… all started off poor. How did they strike it rich? What can India learn from their experience? Chacha does not ask himself these questions. He sees Poverty – and he thinks that the best thing that can be done for the poor is another government program.

To put this another way: Chacha has no dreams for the people. His dreams are only for the bureaucracy, of which he is a senior member. He wants the bureaucrats who are now responsible for the implementation of the NREGS to be responsible also for the “right to food law.” The Congress manifesto promises to release large sums of money to these worthless bureaucrats, in the hope that some of this money will reach the poor. Fond hope, indeed. All that will happen is that bureaucrats will strike it rich. The poor will remain poor. And the tax payer will get no roads worth the name. The manifesto is entirely silent on roads, power and water – the bijli, sadak and paani the people are crying out for.

All three are government monopolies.

Note how socialists like Chacha only scheme of taking from X to give to Y: be it the NREGS, food security, or reservations. The manifesto is gung-ho on reservations. Ugh.

But the just role of government is only to act against outlaws. The government exists to secure the liberties and properties of all law-abiding people within their jurisdiction. A redistributive socialist State is nothing but a band of robbers. And now it seems that they are led by a quack masquerading as an economist.

In my book, the poor need no help from The State. Rather, they too need The State off their backs – complete economic freedom. With complete economic freedom, free international trade, low taxation, sound money (the manifesto is silent on this too), and a Rule of Law based on the Inviolability of Private Property, every poor person’s ability to provide for himself will improve. This is how the west got rich.

And as for The State – they should build roads. This will spur urbanization, new cities and satellite towns will mushroom, and everyone who is poor today will get richer, because the winds of urban commerce will fan his face. We must have a dream for the people. The Congress manifesto does not.

Adam Smith dreamt of "universal opulence."

On The Tata Nano... And A Car For Every Indian

As a committed free trader, that too of the unilateral variety, I find little to cheer about the launch of the Tata Nano, the world’s cheapest car, with its 623 cc engine. To me it sounds too much like “import substitution industrialization” – the term that was used by my Economics professors in college to describe what we now call “cronyism.”

After all, used car imports will deliver cheaper cars with bigger engines to our people. 623 cc means no air-conditioner. It means the impossibility of carrying a family of 4 uphill – even over a flyover. Note that Tata trucks are all underpowered and overloaded. The Nano will be more of the same. I advocate duty-free imports of used cars, trucks and buses.

As Milton Friedman noted on his visit to Bombay in the early 60s, a second-hand Buick was selling there for over 2000 US dollars. And he had himself sold the same model in the USA for just 22 dollars!

To quote Friedman:

“Automobiles provide a striking example of the economic waste produced by this [import substitution] policy. In the name of restricting ‘luxuries’ to ‘save foreign exchange’, the importation of automobiles from abroad is in effect prohibited, whether these are second-hand or new. But at the same time, new automobiles, copies of foreign makes, are being produced at very high cost in small runs under extremely uneconomic conditions at four different plants in India. These are available by one channel or another for the ‘luxury’ consumption it is said to be desirable to suppress. Many of their components are imported, and many of those [components] made in India use indirectly imported materials. The result is that not only is the total cost of the amount of motor transportation actually produced multiplied manifold, but even the foreign exchange cost is probably larger.

The results are most striking in the market for second-hand cars. A car that I sold for $22 before I left the US (a 1950 Buick)was being quoted in Bombay when I was there at Rs 7,500 to Rs 10,000 or $ 1,500 at the official exchange rate and over $ 2,000 at the free market rate. Clearly, the sensible and cheap way for India to get automobile transportation is to import second-hand cars and trucks from abroad. Aside from the direct saving through getting cars cheap, this would have the great indirect advantage of promoting technical literacy, using the abundant manpower resources of India, and conserving capital. But India in effect says, ‘We are too poor to buy second-hand motor vehicles, we must buy new ones’!”

Note that the Tata Nano relies on Bosch fuel injection: almost all essential components are imported.

Apart from the nonsensonomics of banning used car imports, we Indians must also note that there is a great deal of nonsenspolitics involved in the Nano. Recall Singur and the misuse of “eminent domain” for the Tatas. And recall that it is Narendra Modi who has finally picked up the Nano project.

An interesting and thoughtful article by Shiv Visvanathan compares Sanjay Gandhi, Narendra Modi and Hitler. All three supported a “people’s car.” And all three used violence as their political means.

I have written a monograph on automobiles for Liberty Institute. It envisions a country where each citizen has a car. It champions duty-free used car imports. It argues that the best automobile policy is no policy – let trade and markets, and the consumer, decide. Let the consumer be the king, not the minister or his crony. The paper, entitled “Four Wheels For All: The Case for the Rapid Automobilization of India” can be accessed here.

Enjoy the read.

On Printing Money... And Liberal Democracy

Ever since the US crash, or “meltdown,” or whatever-you-may-call-it, the Keynesians have ruled public opinion. The public has been bombarded with Keynesian views recommending massive government spending as the way out of the crisis, the Nobel laureate Paul Krugman leading the charge.

However, the tide seems to be turning: an editorial in Mint, titled “Fed operates printing press,” says that “the US Fed’s moves to pump huge amounts of money into a shrinking economy can destroy the value of the dollar.”

As the editorial very correctly points out:

“Pumping huge amounts of fresh money into a shrinking economy could lead to a fall in the external value of the currency and increase inflationary expectations. You do not have to be a monetarist to realize that extra money supply can destroy the value of a currency, either against other currencies (devaluation) or against a basket of goods (inflation).”

Note that inflation amounts to “incremental confiscation” of people’s property – an effect brought about by falling purchasing power. The US dollar’s purchasing power has declined by more than 90 per cent since the Federal Reserve system was established in the early 1900s. The story of the Indian rupee is much worse.

But we were talking about democracy and the vote.

My question is this: How can “liberal democracy” be sustained if The State has the ability to create money out of thin air?

Liberal democracy is designed in such a way so as to achieve a “balance of power” between the executive, the legislative and the judiciary. If the executive can create money out of nothing, it can buy up all the support it needs. It can buy up the legislature. This is precisely what “pork barrel politics” is all about. The “representatives of the people” – who are supposed to represent the people as taxpayers – morph into “representatives of tax parasites” and become conduits of State largesse. Democracy is killed by central banking and fiat paper notes masquerading as money.

Of course, things are much worse in a centralized socialist pseudo-democracy.

In the US, some states like Montana are coming out with sound money legislation, aimed at bringing back gold and silver coinage. The realization that fiat money is Evil Incarnate seems to be finally dawning in “the Land of the Free.”

May this understanding dawn in our Land of the Unfree as well.

The editorial in Mint will help.

This editorial in the ToI will not.

The Ugly Vote Motive

Why do some people ask us to vote for them? Is it because they are selfless souls who yearn for the greater good? Or is there an ulterior motive at play here?

For the rest of us, the only motive that powers our behaviour is the profit motive. We seek economic gain by serving our customers better than our competitors.

Yet, the theorists of "democratic socialism" decry the profit motive and call it immoral. Jawaharlal Nehru once told JRD Tata, "Don't use that word profit in my presence, Jeh. To us, profit is a dirty word."

Quite naturally, Nehru's legacy is a nation whose political leadership is solely based on the "vote motive."

Sonia, Manmohan, Advani, Modi, Jyoti Baboo, Laloo… none of them have ever made profits.

And they all seek the vote. Their very survival depends on it.

What do these people "gain" from winning votes? What is the pot of gold that lies behind the "vote motive"?

For one, there are vast budgets. Chacha Manmohan routinely doles out astronomical sums towards various "schemes": 30,000 crores for ABC scheme, 40,000 crores for BCD scheme… and so on. Not a single Indian businessman can play around with such massive sums. Laloo as railway minister is heading a business far bigger than any Tata company. This gives him economic clout in the market. He "profits" by winning votes.

If we study the finances of our political class, if we look at their declared assets, we see that they all "profit" from the vote.

The system of democratic socialism is corrupt by design.

What is the alternative?

The only alternative is a free market economy based on the inviolability of Private Property. Every citizen in such a nation seeks survival by making Profits. Further, the political credo of such a nation holds that the profit motive is Moral: Shubh Laabh. This requires a new, moral politics, based on the Morality of Markets and Profits. Unfortunately, this is illegal in this land.

Thus, the "good guys" are easily identifiable – they make profits.

This also helps us identify the "bad guys" – those who make no profits and only seek votes. The "vote motive" is what is really immoral.

Also note that our corrupt, bloated, tyrannical and useless bureaucracy is also powered by the vote motive. Whoever wins the vote becomes the bureaucrat's master. He then gives the budget to the bureaucrat to spend. Keeping a cut, of course. The bureaucrat is not a "public servant": he is the minister's servant. Bureaucracy exists to spend money as per rules. Bureaucrats "profit" in the same manner that the politicians do – via the vote, in this land of "democratic socialism."

Recommended reading: Gordon Tullock's "Vote Motive." To download the 30th anniversary edition of this introduction to "public choice theory" click here.

What this book proves is that there is widespread "government failure" under democratic regimes. We need to keep this in mind as we think – think! – of a better India.

Enough of democratic socialism.

Shut Up And Think, TAAQ

There have been a series of comments and counter-comments between me and the Bangalore-based rock band, Thermal And A Quarter (TAAQ). These can be accessed here.

The latest comment by BLM, probably another band member, has made me decide to bring the discussion to the main page, as a separate post.

The crucial question is this: Should we vote?

As a libertarian, I insist that those of us who believe in free markets, free trade, liberty and property, should NOT vote. The reason for this is simple: We are not allowed to compete for votes in this socialist monopoly of a democracy. The Representation of People Act restricts democratic participation to those who swear by socialism. Since we are avowedly anti-socialist, we are debarred from forming political parties and contesting elections. Why should we vote in such a system?

Note that SV Raju of the Indian Liberal Group has filed a PIL against this provision of the RP Act more than 10 years ago, but the Bombay high court is yet to hear it! Why should we vote?

This should answer TAAQ’s comment asking me to stand for elections. I am debarred from the contest because of my political views.

If we want genuine competition between political philosophies and political principles, we must mobilize public opinion on our side – and reject socialist democracy. Hence my endorsement of the NOTA vote – None Of The Above. But TAAQ is unwilling to support NOTA. They just want us to vote – for some socialist or the other. This is senseless.

I stress the word “senseless”: in any true democracy, the voter is assumed to be intellectually capable of voting for the right candidate and policies. The voter is assumed to be possessed of reason. The oft-used term “the wisdom of the voter” is not loose speech. But do our “registered” political parties attempt to appeal to the voter’s reason? No, they don’t. The Congress’ appeal is to The Dynasty, the BJP appeals to Religion. The voter is considered a dodo. This is not a genuine democracy at all. Indeed, with all the “seat sharing” and “elite accommodation” that is going on, it is obvious that there is no genuine competition between the recognized political parties. The entire game is rigged.

TAAQ does not see this. Indeed, their song “Shut Up And Vote” is addressed precisely to the dumb dodo of a voter. TAAQ agrees there is NO CANDIDATE. This means they are ordering us to vote only so as to keep up with the ritualism.

As for the USA: they have a Libertarian party there. And the great libertarian Ron Paul contested for the presidency as a Republican party candidate. And have the Americans got things right by voting Bush out and Obama in? I don’t think so. With his multi-trillion dollar deficit, Obama is going to kill the US dollar. Watch this Peter Schiff video. As Leonard Cohen sang, “Democracy is Coming – to the USA.”

TAAQ confessed to having composed their song “Shut Up And Vote” in response to a “brief.” In journalism, we call this a “command performance.” As I said, this song is not from the heart nor from the mind. It is just an ad jingle – and a rude one at that. It cannot work. You cannot compose a jingle that says “Shut Up And Drink Coca-Cola.”

As for our national anthem: I hate it. It is a glorification of The Leader – “nayak jaya he.” It is not a song about the nation and the people. And there is no “nayak” any more. Sure, Tagore composed it for George V. But those who have misappropriated this song for boosting their own egos have achieved precisely what the song is about: they have glorified The Leader while at the same time destroying The Nation and the lives of The People. Or should I say “sheeple.”

BLM agrees that rock is anti-establishment. That rock is about rebellion. He then says TAAQ is rebelling against “stupidity.” Who is being stupid in this scenario? Are those who are disenchanted with our democracy stupid? Are those who are standing on the sidelines and cribbing stupid? Is it stupid to reject ALL socialist candidates? Or is it stupid to vote – for one of the above – especially on the urgings of a pro-establishment “rock” band?

I rest my case. TAAQ should be told to Shut Up And Think.

All I Wanna Say...

These are the sort of news reports we Indians have become used to reading every day. All these are from today's papers:

In Bangalore, a bus was set ablaze after a motorcyclist was killed

In Ahmedabad, a state transport bus ran over 5 little schoolkids

In Jaipur, after over 2 dozen people were killed on the roads in 2 months, a committee was set up to prevent road accidents, but no major recommendations emerged except, you guessed it, "educate the people."

In my book, roads and road safety must come first.

Over 1,00,000 people die on India's roads every year – and the automobile revolution is already on us.

Funny how no political party is talking about this important issue.

As the "seat sharing" nonsense indicates, this is not genuine competition between political parties; this is "elite accommodation." They have an agreement among themselves to ignore certain issues. Roads and road safety is one of them.

Whom do we vote for?

Song of the Day: Michael Jackson – "All I Wanna Say Is That They Don't Really Care About Us." Hear a great remix here.

On Dumb Editors... And Dumber Rockers

The news that the World Bank has spoken against the National Rural Employment Guarantee Scheme (NREGS) has attracted wide attention. The World Bank says that the NREGS acts as a hindrance to rural-urban migration – which should actually be encouraged if we are to meaningfully tackle widespread poverty.

It is interesting that the Economic Times, in an editorial today, has lambasted the World Bank and supported the NREGS. Our good old Reichwing press all over again.

In terms of basic economic theory, the NREGS makes no sense. Governments tax and spend – or print money. If this money is used to “create jobs” in one area, then it simultaneously destroys jobs in another. If taxpayers don’t pay taxes and spend their money themselves, they too create jobs – and these jobs are created for those who satisfy discerning consumers. NREGS jobs produce nothing worthwhile. They are just “workfare” schemes.

Further, in one avatar or another, the NREGS has been with us for more than three decades. It started off as the Jawaharlal Nehru Rozgaar Yojana, became the Indira Gandhi Rozgaar Yojana, and now it is the NREGS. For 30 years “employment generation schemes” have achieved nothing for the poor. Rather, they have converted the district administration into a “spending bureaucracy”: before this, they were “collectors” of tax revenue, and offered a title deed against taxes paid. The famous “steel frame” was corroded by these employment generation schemes.

All this money should be spent elsewhere – especially on roads. The term “infrastructural bottlenecks” has also been with us for more than 30 years. We do not have roads because all the revenue is being wasted. Without roads, our cities are overcrowding, and satellite towns are not growing. This hurts the poor – who seek niches in the urban market economy.

Unlike the Economic Times, which is flying the pirate’s flag – the NREGS is the “flagship programme” of our The Pirate Ship of State – Mint has come out with a thoughtful editorial today, arguing for spending on real infrastructure. They too quote the World Bank:

The World Bank’s chief economist Justin Yifu Lin said recently, “The only mantra now is to remove infrastructure bottlenecks so that the economy is ready for a high growth path when global revival takes place.”

I am all for closing down the NREGA and suchlike schemes, privatizing all the PSUs, and investing the entire Public Treasure in roads. But I repeat myself. This is the only way we can catch up with China, now leagues ahead of us in every way, as this article argues.

However, the sad story is that not one of our political parties is talking this language. Whether Tweedledum wins, or Tweedledee, or Tweedledumber, central spending policies are going to be the same. The PSUs will stay. The infrastructure of roads will never be built.

I therefore find the new song of the Bangalore rock band Thermal and a Quarter titled “Shut Up And Vote” exceedingly stupid. There is no one to vote for. Indians needs the None of The Above Vote – NOTA.

Thermal and a Quarter should be asked to Shut Up And Think.

On Our Artery... And Chacha's

Today, we are traveling from our quiet village in south Goa to The City. And that is Panjim, the capital of Goa, a quaint Portuguese city on the river Mandovi, 70 kilometres to the north. Shops! Restaurants! Retail Therapy!

All along, we will be traveling on the “notional” highway #17, the central government’s only capital investment in Goa. This road is verily the “lifeline” of Goa. However, if a medical analogy is deemed appropriate, this ain’t no healthy lifeline. 70 km will take over 2 hours. NH #17 is a constricted and clogged artery – like Manmohan’s before surgery.

Let us begin our journey from here to Panjim at Chaudi, the only market town in south Goa. NH #17 is the “main street” of this town with the highway doubling up as an urban thoroughfare. The road-sign outside Chaudi says: “Cochin 720 kms.” For those driving to Cochin, Chaudi is a clog in the artery. As far as the people of Chaudi are concerned, their Main Street is overcrowded and unsafe. Lose-Lose for everyone.

As we take the NH #17 from Chaudi to Panjim, we first pass a 8-km-long “ghat section”: thereafter it continues to be hilly and forested for another 15-odd kilometres. Lush greenery, paddy fields, fresh air. Bliss! The road surface has recently been relaid – after bus drivers and owners blocked the highway in protest. Thanks to this protest, the drive through is most enjoyable these days – unless you get stuck behind a truck or a bus. The highway is just two-laned: one side is for those going up, the other side for those going down. And there are bends every 100 yards. You dare not overtake. So, the conclusion remains the same: the artery is clogged and constricted - like Manmohan’s before surgery.

Exactly halfway between Chaudi and Panjim, we pass through the City of Margao, Goa’s commercial capital. And you must have guessed it, the notional highway goes right through the City!

After Margao, the terrain is more or less flat till Panjim, and there are commercial developments all along the highway – like Verna, the “industrial area.” The Hyundai dealership where we get the car serviced is right on the highway. There are speed-breakers every now and then, and very heavy traffic. There is a T-junction without lights where the airport road meets the NH # 17. This portion of the drive is extremely unsafe.

So, the story remains the same: the highway is “main street.” It doubles up as an urban thoroughfare. It is clogged and constricted – like Manmohan’s before surgery.

And nothing is likely to change soon. The central planner’s over-hyped “golden quadrilateral highway project” does not pass anywhere near Goa.

As an urban thoroughfare, NH # 17 is also horribly unsafe. Newspaper reports say that one Goan is killed on this road every day, on average, usually on a 2-wheeler. Goa needs duty-free second hand car imports – 4 Wheels 4 All. Safety. But we were talking about The Road and not The Car.

Since the central planner who has bequeathed this notional highway to Goa is also the Central Teacher, let us inquire into Road Theory. What does this important Subject call a real highway?

According to Road Theory, all roads fall into three basic categories:

=> First, at the lowest level, are the Access Roads, meant for people to get in and out of their individual properties.

=> Second are Connector Roads, which also provide “access” to roadside properties, but whose major role lies as “connectors” to highways.

=> At the top are the highways – which DO NOT PROVIDE ACCESS AT ALL.

Rather, real highways are meant for Swift Transportation from one City to another City: their Only Purpose is MOVEMENT.

This means that there are No Real Highways in India.

The entire national highway system is a HOAX.

Central planning is a HOAX.

The National Highway Authority of India (NHAI) is just another ugly monopoly.

What do we do?

I dunno. I’m just the piano player, hammering away at these keys.

I also paid the “education cess” – our collective tribute to the mind of the Great Central Teacher and Planner From Most On High, Herr Doctor-Professor Chacha Manmohan S Gandhi, PhD.

The Song: Roadhouse Blues, of course!

“Save our Cities – Right Now!”

Against The Forest Department

We tend to forget about the Forest Department, the biggest enemy of India’s poorest people, our forest-dwellers.

But this little piece of news highlights the fact that our forests are rich, and forest dwellers should be too.

The news says that the police spends 10 lakhs to guard a sandalwood tree worth 1 lakh.

This particular sandalwood tree is in the compound of the Bangalore high court. It is the property of our The State so our The State is guarding it.

Yet, our The State’s legislation goes far beyond this: The legislation on the matter says that ALL sandalwood trees are the property of our The State. And so they all must be looked after by the forest department and the police.

Now think of the poor forest dweller: If he possessed Liberty Under Law, he would plant some sandalwood trees himself, look after them himself, guard them with his life, cut them down in maturity and sell them and, with the proceeds, buy an SUV or send his son to Harvard, or both.

When the sandalwood don Veerappan was murdered by the Karnataka police in cold blood, I was the only journalist to comment on the fact that, had it not been for legislation that gave all the sandalwood to The State, Veerappan would have been a respectable sandalwood businessman.

Note that sandalwood need not grow in forests alone. The tree can be grown in cities – as in the Bangalore high court compound. Indeed, sandalwood could grow anywhere on the western ghats. The forests where Veerappan was active occupy territory that belongs to Tamil Nadu, Karnataka and Kerala. The entire area can grow sandalwood as a perfectly legitimate business.

And why sandalwood alone? There are various prize timbers that can be grown here. Coffee planters in Coorg told me of rosewood and ebony that grows wild on their estates – but they cannot sell them because legislation says they all belong to the forest department. Ditto for mahogany, another highly prized wood.

In our little cottage in south Goa, we have a tall teak tree growing right in the middle of our garden, but we cannot cut it down without the permission of the forest department. Read my old post on this senselessness here.

It is the silly environmentalist who looks upon the forest department as a “wildlife protector.” The forest dweller sees the same department as a forest exploiter, as an enemy of the forest dweller.

All this natural wealth belongs to the people, not The State. The people should be free to farm these trees and sell them. This will also help preserve the species – there will be more sandalwood, more ebony, more teak, more rosewood and more mahogany if these trees were farmed.

The same applies to wildlife species too, as I pointed out in an earlier post. There will be more deer if they were ranched – and venison was legal.

The wealth of the forests belong to the forest dwellers. They need Liberty Under Law.

It is the forest department that must be cut down.

The Note... And The Vote

A small item in the news yesterday deserves closer attention.

It goes:

Extreme bearishness in the bond markets forced the Reserve Bank of India (RBI) to call off an auction of Rs 12,000-crore worth government bonds. Bond dealers said that all bidders must have sought a yield higher than what was acceptable to RBI.

The report concludes:

This borrowing is a part of RBIs borrowing calendar although it has decided to issue bonds of a shorter tenure. This has furthered hopes that RBI will subscribe to the bonds, which were to be issued on Friday. Although such a move would be favoured by the bond market and send prices soaring, it would end up monetising the deficit, push up money supply and increase the pressure on inflation. It would also worsen the government’s credit profile and risk a downgrade.

All this indicates that Chacha Manmohan S Gandhi has squandered the opportunity he had 5 years ago, when tax revenues were soaring and the boom was on. Instead of bringing order to the government’s finances, all he has done is pour more and more money into “leaky bucket” schemes like the NREGA – the rural employment guarantee scheme.

The writing on the wall is therefore very easy to read: the rupee will fall, inflation will rise, and the economy will go into a tailspin with a downgrade (which will put off foreign investment).

Meanwhile, finance ministers of the G-20 are meeting to discuss the mess, but all the noises are about strengthening the IMF. Look carefully at the photo accompanying the news story: India is being represented by Montek, an IMF man.

I spoke at length last night with a friend in the markets, and he suggested that 6 months down the road, the US dollar will also nosedive. Like all sensible people, he suggested gold as the best option for safeguarding private wealth from the depredations of the world’s central banksters. Of course, this blog has been advising its readers to buy gold for a long time now. The first such advisory was on Diwali last year, when gold was anywhere between 11,000 – 12,000 rupees per 10 gms. It is well over 15,000 now. It will go up even higher.

In that Diwali advisory I had quoted Jim Rogers: "Get out of paper assets and into real assets, including gold."

Indeed, I will go further than that, saying borrow up to your limits – and invest everything in gold. Just as you borrow to invest in a business expecting returns higher than the rate of interest you pay on your borrowings. With interest rates running at a low now, gold will yield returns far higher than the interest you will pay. I any case, the monetary and banking system as it exists today rewards borrowers while penalizing savers. So borrow.

Think about it.

While these are serious matters to do with money and markets, and therefore worthy of the politician’s attention, it does seem ridiculous that, as elections approach, the latest gambit of the BJP in Karnataka is to oppose the installation of a statue of Charlie Chaplin. Their battle-cry: The safeguarding of Indian culture, nothing less. I fervently hope that our dumb masses see through these dumb games and refuse to vote for the dumb BJP.

Then whom should they vote for? The rest are also klutzes. I support the idea that is gaining popularity – the None of the Above or NOTA vote.

Remember my Urdu poem?:

Manmohan pyarey
Tu ne kya kar dala re
Tere note hai jaali
Tere vote bhi jaali
Aur tu ne jaali note aur jaali vote
In dono ki chakkar chala li.

The entire System is a Fraud.

Break Free, Goa

It is the cashew season in Goa – and this is how the fruit looks.

Note how the nut hangs outside the fruit. The nut is the valuable part. Most people simply break off the nut and throw the fruit away. Even the monkeys here do not fancy the fruit.

However, for the locals here, the cashew fruit is a godsend: it is used to prepare the alcoholic drink feni. During the process of distilling feni, another drink is also made, and sold, and that is urak. I prefer urak to feni: it is lighter, smells less, and quite smooth.

Both urak and feni are sold under brand names, but unbranded bottles are also available. Funnily enough, these are usually better.

A 750 ml bottle of urak or feni, fresh and unbranded, costs about 60 rupees retail. If you prefer a brand backing the drink, you pay anything between 75 and 100 rupees. This should be the poor man’s drink throughout India.

Over the past 2 weeks, I have killed a couple of bottles of urak – and loved it. And I wished we could get it in Delhi. Or Bangalore. Or anywhere else on the Landmass of India. But the truth is that, because of some strange excise rules, feni and urak are not available anywhere in India outside Goa.

As a wise man recently put it: India needs to practice free trade with herself.

All this makes me wonder why Goa should consider itself a part of India at all.

While the rest of India is busying itself choosing another prime minister, Goa would be better off seeking independence. Why belong to a “union of states” in which you cannot sell what you produce?

Goa is further hurt by import restrictions: the foreign trade policy of Goa is imposed by the baboos of New Delhi. So Goa exports iron ore and imports nothing. If Goa declared itself a free trade area like Dubai, it could use its locational advantages to its own benefit. World class shopping is also good for tourism, Goa’s biggest industry.

To me, therefore, all the fuss about a new PM is pointless. Central economic planning needs a strong centre. The free market does not. In a free market, people trade based on their advantages.

Goa has many advantages. It should use them.

On Individualism, Once Again

My recent column in Mint, “In Defence of Individualism,” has attracted some critical responses – which is a good thing.

Aristotle the Geek has lambasted one such criticism, here.

In this post, I would like to answer to another response, which appeared in the “Letters to the Editor” column (scroll down to the bottom of the page). This letter, from one Surendra Mohan, reads as follows:

Sauvik Chakraverti’s article, “In defence of individualism” (Mint, 5 March), is beautifully written. But human life cannot just be compartmentalized between “we” and “I”. There are innumerable shades of grey that lie between black (“we”) and white (“I”). Individualism is eminently successful in our economic life but beyond that, an emphasis on community (“we”) is surely desirable. In a way the current crisis sweeping the world is because of the total reliance on “I”-minded thinking.

Actually, the idea of “community” lies at the root of Communist romanticism – the “commune.”

In reality, there is no such thing. Even the “joint family” has disintegrated, long ago. The Ambani brothers are at war with each other, and the same is true of most business families. Indeed, the term “sibling rivalry” – which goes back to Cain and Abel – emphasizes the fact that life is competitive.

We must therefore choose between the real Self – the “I” – and the mythical commune, the “we.”

Of course, Mr. Mohan is dead wrong when he says that “the current crisis sweeping the world is because of the total reliance on “I”-minded thinking.” The US Fed, which caused the crisis, is a part of the US State – “wee the sheeple.” All central banksters are the same. If “we” was abolished from legal parlance, and only the “I” was recognized, every individual would choose to accept as money whatever hard commodity he wanted, and money would always be sound. Recessions would never ever recur.

It is therefore noteworthy that a senior economic journalist has confirmed our worst fears – that central banksters have no Theory to back them. Theirs is a Practice that is not based on Knowledge. This is the emptiness of “We.”

Another person who has delved into these matters is Sitaram Yechury, the communist MP. In a column in the Hindustan Times today, titled “Our Singularly Plural Ways,” Yechury adopts a line made famous by Amartya Sen, that we Indians possess “plural identities.” Utter hogwash.

The word “identity” signifies something unique and individual – the “I.” Thus, your unique fingerprint or your DNA “identifies” you. These show how you are “not identical” to anyone else. This is why your “identity card” is uniquely yours, and yours alone. Amartya Sen is playing havoc with language – a typical trait of the propagandist. Yechury has fallen into the same trap. His column therefore makes no sense whatsoever. His central point is this:

“While the debate on identity as ‘given’ or ‘chosen’ will continue, the recognition of multiple identities is important to determine social policies.”

Of course, these “social policies” are the redistributive measures of communist governments aimed at “vote banks” that possess a “collective identity” that is conjured up by The State for its own, nefarious purposes.

The only alternative to this blatant injustice is the Primacy of the Individual, his inalienable rights, and the inviolability of his Property.

This Individual is possessed of an Identity that is Unique.

We see these unique identities all the time – especially among celebrities like rock stars, movie stars and the like. They always try to be “different.”

That is the way to be.

On Babur... And The Weather... And Exodus

I have just read Amitav Ghosh’s review of the Baburnama, an essay included in a collection titled The Imam and The Indian. It is a brilliant review of this classic work, the diary of the Emperor Babur, founder of Mughal rule in India. I found Amitav Ghosh’s conclusion, in particular, hugely enlightening: the fact that these were “men of the steppes” who had never seen The Sea.

Ghosh finds it “baffling” how, down to Aurangzeb, who exhausted himself and his treasury trying to conquer a plateau, none of the Mughals looked at the sea as a source of wealth and power. “Their emissaries to Persia generally took the difficult and dangerous overland route rather than the much easier seagoing one,” Ghosh writes.

Ghosh concludes that the decisive battle of those years was not Babur’s with Ibrahim Lodi at Panipat in 1526, but that between the Portuguese and the combined navies of the Sultans of Gujarat and Egypt, and that of the Hindu king of Calicut, off Diu in 1509. After that, all the real “action” was seen on the coasts, with the French, the English, the Dutch and even the Danes – following the Portuguese – setting up “factories.” All this while the Mughals, “men of the steppes,” looked for more “acres and revenues” – for more and more Land: indeed, the massive Deccan Plateau.

Says something about our rulers today sitting in New Delhi, like Chacha Manmohan S Gandhi, a sardar from west Punjab, and his anti-commerce minister, The Great Kamal Nutt, whose constituency lies in land-locked, poverty-stricken Madhya Pradesh.

Like the Mughals, the rulers of India today are all “landlubbers” who have never “seen” the sea, never thought that there was much more to rule than the Land. That the earth is 70 percent Ocean; that the source of wealth and power is The Sea.

Living in Goa in 2009, after traveling the Konkan and the Ghats for a few years now, I think that the Portuguese “cherry-picked” the best portion of coastal India while leaving The Land to the Mughals. Or to the Brits – like Curzon, who divided Bengal and shifted the capital to New Delhi.

Food for thought, what?

Having said that, let me now add a few additional points from the Baburnama, aspects of the book that Ghosh has neglected to mention. These throw light on the nature of rule under the Timurid princes like Babur, who thought it was their pesha to rule over a realm with The Sword.

When Babur conquered Bhira, he ordered his chief scribe to convey to the people the following: “The possession of this country by a Turk has come down from olden times. Do not give way to fear or anxiety. Our eye is on this land and its people, not on raid and pillage.”

A curious aspect of Babur’s character is revealed in his diary entry on the conquest of Kala Nour. After the battle is won, and his generals take over the fort of the defeated khan to search for all precious objects, Babur himself goes to Ghazi Khan’s library, and immerses himself in some “scholarly books” he finds therein.

There is an entire section in the Baburnama on the conquest of Delhi. Here he writes about the people, their clothing, the fruits like the mango and banana, the flora and fauna. He does not seem particularly impressed by the Land and the people he had conquered. He talks about how even candles were not in use in Hindostan! How cooked food was not sold in the bazaars.

Babur also talks about The Heat – and, now that Holi is over, everyone in Delhi is getting his air-conditioner serviced. Think of The Heat in Delhi and Agra of 1526, without ACs, without fans.

On this Heat, there is an entire section in the Baburnama titled “Disaffection Among My Generals,” in which he tells of many among his nobles who wanted to return to the cool mountains of the north, with all that they could loot from Hindostan. Babur shut them off with a spirited speech, recorded in full in his diary, in which he stood by the same “morality”: that as a Timurid prince who has conquered territory with The Sword, it was his Duty to Rule – not pillage and plunder. That was not his pesha, his vocation.

Babur was not a "roving bandit." He was a Stationary Bandit par excellence.

Khwaja Kalan, his great general, while leaving Delhi for cooler climes, inscribed on the wall of his Delhi house the following:

If safe and sound I cross the River Sind,
Blacken my face before I wish for Hind.

Babur felt insulted, and fired back:

Give a hundred thanks to Babur, the generous Pardoner
Has given you Sind and many a kingdom there;
If you have not the strength for their Heat,
If you say ‘Let me feel the cold,’ Ghazni is there.

Of course, Khwaja Kalan, also a “man of the steppes,” had never heard of Portuguese Goa, and so took the overland route to cooler climes – Kabul or Kandahar or wherever.

While in Poona some years ago, I attended a Son et Lumiere show at the Shanivarwada fort, where the story was told of one of Aurangzeb’s generals, sent there to battle Shivaji, who preferred not to fight, but to camp permanently at Chakan, 50 km away. After 6 months of this paid vacation, one of his lieutenants asked him what he was up to. The reply: “Let us just sit back and enjoy the weather here. If we win we will be sent to Kabul or Kandhahar – the Cold.”

Funny how the weather is great on the Konkan and the Ghats all year long. We never use the car AC in southern Goa. If the power fails, sea breezes keep us cool. There is no hard summer; there is no hard winter; it is shorts and t-shirts right through the year. And it rains a lot – but the monsoon is infinitely better than The Heat.

If you are one of those unfortunates living in Delhi, the landlocked Capital City of the “landlubbers” who rule The Land, buying his booze from a sarkaari theka, I hope this post has given you much to think about. About the important question called Physical Location: Where Do I Live?

Even Curzon, who founded New Delhi, had a palace in Mashobra, high above Simla, to beat The Heat.

No one ever set up Permanent Residence in Delhi. It is a city with a horrible summer, a bone-chilling winter, and no rains at all. And it has Land all around it. The city possesses no locational advantages, nor is it in any other way particularly blessed by Nature. It should not be a major centre of human habitation. Babur willed that he be buried in Kabul, in his favourite garden.

One thing Babur also noted about Hindostan: The ability of the people to vacate a city and set up a New City somewhere else in record time.

Think about that… the Sea… the Konkan… the Ghats… a New Amsterdam… a New Jerusalem… busy ports… bustling bazaars… hundreds of “hill stations”… catallactic energy in all markets… sound money and free trade… no recession from here to eternity… Life!

The Song: Why, Bob Marley, of course: Exodus.

Approaching Tranquility

The director of Alliance Francaise was arrested in Kulu-Manali with 250 grams of charas. The French embassy quietly whisked her out of the country. No news about the quarter-kilo of hash: Who finally got to smoke it? Good question, what?

Manali charas is one of the world’s finest. In Europe, some years ago, I found Morocco brown selling at 3 euros a gram, while pure Manali was 13 euros a gram.

Hash should be The Crop in Kulu-Manali. The farmers there should uproot all the apple trees and plant hash.

Himachal Pradesh can then import great apples from China, while selling them a much better smoke than the tobacco they are hugely addicted to. Deng Xiao Ping smoked 90 cigarettes a day!

In the meantime, there is a loophole in the legislation that farmers, dealers and smokers can exploit. The legislation stipulates what is a “small quantity” – and those who possess this small quantity do not face punishment.

In the case of charas the small quantity is 100 grams, while the commercial quantity is one kilogram. For ganja the small and commercial quantities are 1 and 20 kilograms respectively.

Farmers, dealers and smokers should thus package the stuff accordingly. Ganja should be passed on in bags of 999 grams, and charas in packets of 99 grams. This will keep the customer secure – and happy. The tyranny of the police will end.

As far as the dealers are concerned, they should openly stock 10 packets of charas, of 99 grams each, or 20 bags of ganja, of 999 grams each. The dealers will then not fall foul of the legislation on “commercial quantities.”

Win-Win.

In India today, hash and ganja are sold in miniscule quantities. The typical quantity is a "tola" - about 10 grams. A homeopathic dose.

I was told that in Jamaica, dealers offer tourists ganja in HUGE BAGS. We need HUGE BAGS in India too.

So that is my Antidote of the Day: bags of 99 grams of charas and 999 grams of ganja, sold openly, smoked openly, carried openly – and no police.

Tranquility…

North Korea Is Just Like Us

The news that the North Korean supremo, Kim Jong Il, has been re-elected to office should be carefully read by all those who support Indian democracy, although it is a socialist-fascist monopoly in which liberals cannot participate.

Note how the news report says that the North Korean parliament is basically a “rubber stamp.”

And compare that to our own Lok Sabha, which met for just 32 days last year, and passed 8 bills in 17 minutes without debate; indeed, amidst a “din” – as reported here.

The IHT news report on North Korean democracy says that candidates for election are “handpicked” by the ruling Workers’ Party (what a lovely name!): actually, the situation is much the same in India, what with “seat sharing” among all the parties. In India, candidates do not emerge from the people; they are handpicked by higher echelons of the political hierarchy.

With pre-poll alliances between political parties and the resultant “seat sharing,” there is no real “competition” between parties and candidates. Rather, what emerges is ONE great big political CARTEL.

Hence the “rubber stamp” Lok Sabha. Hence a political executive that is above The Law, and above Parliament too. Note that the political executive emerges from the Lok Sabha – and that prime minister Chacha Manmohan S Gandhi was never elected by the people.

Seems quite like North Korea to me.

And do not forget that the North Koreans have just launched a satellite, and have a space programme as ambitious as ours. They have nuclear weapons too. And the North Korean State controls “education.” The North Korean people are extremely poor, their society is devastated, but they have a glorious and powerful "democratic" State. Ha!

Just like India.

And in North Korea, as the news report points out, Kim Jong Il is grooming his son to succeed him – quite like our own Rahul Gandhi.

We in India must take further note of the fact that our Election Commission is deeply politicized. The current chief election commissioner is close to the BJP – and he advised the government to sack another commissioner, who is close to the Congress. Since the government is Congress-led, the advice of the CEC was rejected. Indeed, instead of the sack, the Congressman in the EC has been named as the next CEC! Read the news here.

Cartel?

Thus, the news that a Competition Commission of India (CCI) has been constituted should be greeted with howls of derision. The body is supposed to act against cartels and its approval will be required for all acquisitions and mergers. In reality, all that is required for free competition is open entry into all markets. In India, most markets are closed. Civil aviation is a case in point: the sector was wide open and there was full-blown competition until the government killed it by raising taxes on aviation fuel to sky-high levels, thereby forcing most low-cost airlines into mergers. If competition barely exists today, it is the civil aviation ministry that is to blame.

Further, it is our The State that runs monopolies and cartels – as in steel, as in roads, in electricity, in water – and even in booze shops in Delhi, where the competition commission is headquartered.

The conclusion: Our The State is nothing but a bundle of lies and deceit. It is run by a political cartel, one which includes the top bureaucracy. They call it “democracy” but it is much like East German and North Korean democracy, very far removed from the basic democratic ideal – that power must be diffused, not centralized. Overseeing this democracy is a politicized Election Commission, comprising politicized bureaucrats. Ditto with the new Competition Commission.

Pretty ugly, huh?

Establishing The Rule Of Law

The question I will seek to answer today is this: How do we move from our present socialist-fascist democratic goondacracy to the harmonious world of Natural Liberty Under Natural Law?

The answer to this lies in another question: Who will “govern” the land in such a Natural Order?

The answer: No one. Only The Law will govern. It will be “an Empire of Laws and not of men.”

Which raises yet another question: How will The Law be established?

It is here that Politics comes in. But what is Politics? Is it what we see today, when goon squads and criminal tribes ask for our votes? Or is it something higher, something moral and civilized, something so sublime that Aristotle was prompted to write a book on it?

Aristotle called Politics the “master science.” The only alternative to Politics is civil war – which must be rejected. We must use the Master Science to arrive at the establishment of Natural Liberty Under Natural Law.

As Bernard Crick says in his penetrating analysis of the nature of political rule:

"The moral consensus of a free state is not something mysteriously prior to or above politics: it is the activity (the civilizing activity) of politics itself."

It is in this sentence that the answer to our first question is revealed. The purpose of politics is to establish this “moral consensus.” And what is a moral consensus if not The Law – which tells us what is forbidden?

Our task therefore is to engage in free politics aimed at establishing this moral consensus – on The Law. The aim: to establish a political community in which we feel a sense of belonging based on the common recognition of the same rules. As Hayek wrote, it is common rules agreed to by all that creates a sense of community. This leads to a successful political order.

Today, we are not a successful political order because the criminal tribes that masquerade as political parties do not recognize common rules. Over half the territory is under Naxalite control. There is secessionism in many parts. And terrorism too. Democracy has failed to establish a successful political order. There is widespread unrest; there is widespread discontent. The “politicians” are playing the proverbial fiddle while India burns. They are singing the same tired old songs. They have no new ideas; the have no vision of the future. They profess to no principles: theirs is just a clash of personalities. No “moral consensus” can arise from such politics, for all that is being aimed at are the loaves and fishes of office.

The task before us, those who believe in establishing the Rule of Law, is to garner public opinion on our side – and nothing more.

In the final analysis, it is opinion that governs.

Today, opinion is on the side of democracy. Yet, this is rapidly changing. An important article by a retired professor of IIM-A in Mint today argues for the so-called “negative vote”: the right of the voter to vote against all candidates. He calls for the right to cast a None of the Above Vote – or NOTA. It seems that even pillars of establishment thought are now waking up to the ugliness of reality. This is a very good sign.

Note that while I say we libertarians in India need to engage in Politics, I have not said that we need “political organization.” Our enemies possess political organization: they are all “machine politicians.”

Libertarians, on the other hand, can dispense with political organization. As in market exchanges, so too in Politics, there must be Individualism. We need thousands of Individuals to spread the virus of Natural Liberty Under Natural Law.

To begin with, the NOTA vote must be supported. Let us cast the NOTA vote en masse. Once we have done so, thereby undermining the legitimacy of our democracy, let us then, as Individuals, preach the alternative gospel – of Liberty Under Law, of the Inviolability of Property, of Natural Justice. This must become the New Public Opinion.

The rest will naturally follow.

Have faith.

We shall surely overcome someday.

Why We Don't Need Democracy

As India gets ready for the meaningless ritual of voting – a choice between Tweedledum, Tweedledee and Tweedledumber – it makes sense to ponder what we actually seek to achieve through the democratic method.

At the outset, let us note something that every beat constable and every magistrate, throughout the country, is perfectly aware of: that those who work for political parties, and those who contest elections, are all “outlaws” in the strict sense of the term: they are habitual breakers of The Law.

We all consider it to be a “good thing” when the Rule of Law is upheld and a politician (or his errant son) is booked for violating The Law. We are all anxious to see that this happens most of the time. Unfortunately, because the police is under political control, this is rare.

So we must choose: It is either “democracy” or The Rule of Law. We cannot have both.

Indeed, when some of us speak of “governance” (as opposed to “government”) we refer precisely to this elusive Rule of Law. We call for a government that will provide governance. And by that we mean a political system in which No One Is Above The Law. We want a government that is impartial and unbiased, one that does not allow anyone, however high and mighty he may be, to escape The Law.

Of course, this is a pipedream when politicians pass legislation binding on us all, when bureaucratic agencies empowered by “subordinate legislation” do the same in this “democratic” system in which netas and baboos consider The Law to be something that they have created, and not something that they are Under. These netas and baboos are NOT bound to be Under The Law. They are creators of laws, rules and regulations that “wee the sheeple” are under. The netas and baboos, as makers of law, consider themselves ABOVE THE LAW. This is the reality of Indian Democracy.

The critical error: While democracy in theory is all about “representation,” democracy in practice is about CREATING LAW. All this is “new law.” All these new laws are on the side of Tyranny.

Read my old post on my meeting with Baroness Margaret Thatcher, entitled “Tyranny, She Cried.” This is how a giant among liberal politicians views our socialist monopoly over democracy.

On Tyranny, let us take a small example from the papers today: 100 people, including 40 foreigners, have been arrested by the Bangalore police for partying in a farmhouse. The charge: Liquor was served to them without a valid license.

Is this The Rule of Law?

Or is this Unlaw – the rule of arbitrary diktats?

And is this not hugely excessive: Why arrest 100 people when it is the host alone who is “guilty” of the charge?

I have recently published a post on “Property, Liberty and The Law” (available here) in which I made the crucial distinction between “law” and “legislation.”

With “democracy” all we get is more and more legislation. This is the cause of unlaw. This is the root cause of tyranny. This is why the netas and baboos are Above The Law.

Another recent post was titled “The Purpose of Law’ (available here) in which I said that the only purpose of Law is the protection of all Individuals and their Properties. In this post, I showed how we in India, the sheeple, have NO PROTECTION at all under the Law. The Law has become an instrument of coercion, and is in the hands of thieves, bullies, and tyrants.

A third recent post to which I would like to draw my reader’s attention is the one entitled “Ban The Police,” (available here) in which I showed how we can secure our protection much better without this State Monopoly on Public Security, Investigation, Prosecution and Punishment.

Of course, my reader will have a question: How do we move from here to there? That is the task of Politics, correctly understood, which aims at establishing a “moral consensus” in a community, based on the common recognition of the same rules, which are binding on all.

This is the “purpose of politics,” correctly understood. We do not have such politics in India. All politics here is immoral, behind closed doors, conducted by criminals. All the “political parties” are criminal tribes. In our democratic theatre of the absurd, politics is never a clash of principles. It is just a clash of personalities – the “leaders” of these criminal tribes.

I will discuss the underlying issues of a moral and open politics in greater detail tomorrow. In the meantime, do ponder over the central message of this post: that the choice we face is between Democracy and the Rule of Law. We cannot have both.

Recommended reading: Hans-Hermann Hoppe’s “Democracy: The God That Failed: The Economics and Politics of Monarchy, Democracy, and Natural Order.” To order a copy of the book, click here.

This blog is on the side of “Natural Order” – based on rules we already follow. That is, Natural Law, Natural Justice, Natural Order.

Liberty Under Law.

No legislation.

No police.

No tyranny.

No arbitrary diktats.

Liberty!

Sacrificing Our Children At The Altar Of Our The State

As elections near, our Reichwing Press is going ballistic urging people, especially young people, to vote.

Vote for whom? All our “political parties” are quasi-criminal gangs. They have no principles; they have no real ideology. They are all corrupt to the core. Their leaders are all “pragmatists.” Why should our idealistic youth be encouraged to vote? Why not encourage them to boycott elections? Wouldn’t that teach the old fuddy-duddies like Chacha Manmohan and Advani a good lesson?

However, what really got my goat was an ad on UndieTV last night, which featured parents promising to vote with their hands placed on their children’s heads. “I swear on the head of my child that I will vote,” they all said.

What kind of bullshit is this?

We are being encouraged to sacrifice our children at the altar of our The State?

Just as Abraham was asked to sacrifice his son, Isaac.

God was testing Abraham's obedience.

Is our Obedience being tested by our The State?

Abraham obeyed God. These parents are obeying the Reichwing Press!

Leonard Cohen, the great Canadian poet and songwriter, composed “The Story of Isaac” to warn against those who will sacrifice one generation for another. Here are the lyrics. Very powerful indeed, so read them carefully.

The door it opened slowly,
My father he came in,
I was nine years old.
And he stood so tall above me,
His blue eyes they were shining,
And his voice was very cold.
He said, I’ve had a vision
And you know I’m strong and holy,
I must do what I’ve been told.
So we started up the mountain,
I was running, he was walking,
And his axe was made of gold.

Well, the trees they got much smaller,
The lake a lady’s mirror,
We stopped to drink some wine.
Then he threw the bottle over,
Broke a minute later,
And he put his hand on mine.
Thought I saw an eagle
But it might have been a vulture,
I never could decide.
Then my father built an altar,
He looked once behind his shoulder,
He knew I would not hide.

You who build these altars now,
To sacrifice these children,
You must not do it anymore.
A scheme is not a vision,
And you never have been tempted,
By a demon or a god.
You who stand above them now,
Your hatchets blunt and bloody,
You were not there before.
When I lay upon a mountain,
And my fathers hand was trembling
With the beauty of the Word.

And if you call me brother now,
Forgive me if I inquire,
Just according to whose plan?
When it all comes down to dust,
I will kill you if I must,
I will help you if I can.
When it all comes down to dust,
I will help you if I must,
I will kill you if I can.
Have mercy on our uniform,
Man of peace or man of war,
The peacock spreads his fan.

The portion in bold is inscribed on the front page of my book, Antidote: Essays Against The Socialist Indian State (Macmillan India: 2000). This song is very dear to my heart.

To hear the song, click here.

My message to the youth is this: Reject the old. Reject the aged. It is their mistakes that have bequeathed this Predatory State upon us. It is the aged of today who deified Gandhi and Nehru, who worshipped State power. They claim to have “fought for freedom” – but their legacy is just Slavery.

Reminds me of another great song – Bob Dylan’s “The Times They Are A’Changin’” – where he says:

Come mothers and fathers
Throughout the land,
And don't criticize
What you can't understand,
Your sons and your daughters
Are beyond your command,
Your old road is
Rapidly aging.
Please get out of the new one
If you can't lend your hand
For the times they are a-changin'.

Go sing that to the aged, to Chacha Manmohan S Gandhi and Advani, to Laloo and Sharad Pawar – all the PMs-in-waiting.

To watch a young Dylan sing this song, click here.

Don’t allow yourself to be sacrificed at the altar of our The State.

Your life is yours alone.

Tell your parents what Kahlil Gibran wrote in The Prophet:

“Your children are not born to you, but through you.”

It’s Your Life.

For Theory... Against Vikram S Mehta

It is “market day” for all of us in this pretty south Goa village – and therefore a good day to appreciate Theory. It is theory, after all, that is the crucial link between sensation and perception. We all see the same things – the sensations are the same – but we perceive differently because of the different theories in our heads.

Gandhi saw the world through his cute glasses (which have just been sold at an enormous price to, ironically, India's biggest daroowallah). He theorized that villagers like me would be better off in self-sufficiency. His theory was upheld by our The State. All our central planning and rural development has been conducted, for 60 years, based on the theory that villagers are self-sufficient, and cities and towns are unnecessary. Planners created the “rural-urban divide,” all over this vast sub-continent, by not connecting villages to cities and towns with good roads. There are no roads in India.

Let us now shift to reality. Today is “market day” for us villagers here in south Goa. But where is The Market?

Answer: The Market is in the small Town of Chaudi, on the “notional highway” #17. It is 3 km from our house. And there are roads. And we have a car.

If you go to Chaudi today, you will find it flooded with buyers from a 10km radius – that is, all these villagers depend on the Town Market. This is because of the Theory of the Division of Labour, which Gandhi sure as hell didn’t know anything about. We are NOT self-sufficient. We are all Specialized – even in a village. We buy; we sell. And for almost all our needs, we must go to the nearest Town Market. I buy fruits and vegetables, meat and fish, provisions, cloth, building material, electronic goods, medicines, gift items – almost everything – from the Town Market. In cases of “market failure” in Chaudi I have to go to the City Market.

I go to the City of Margao, 35 km away, for ground coffee, utensils, garden implements, higher order building materials, paints, shoes, fancy foods like olive oil, medical services like the dentist…

Gandhi, through his glasses, did not “see” this – only because his brain did not connect the sensations conveyed by his eyes with the correct Theory. Not only the Theory of the division of labour, but also Central Place Theory, crucial to our understanding of Urban Geography, which explains how city and town markets arise spontaneously at a place smack-bang-middle of a hinterland peopled by villagers. Roads are essential to the success of this urban market order. Without roads, no one can reach The Market. They cannot make “economic achievements.” They are condemned to poverty. And what is poverty but self-sufficiency.

India is poor because of Bad Theory.

I therefore find much to be critical of in Vikram S Mehta’s latest column in The Indian Express, entitled “A Few Wrong Men,” on the financial crisis gripping the world today, in which he talks of a new book, a historical biography of the powerful bankers and central bankers who brought the world economy down in the 1920s. In this newspaper article, Vikram S Mehta begins and ends his piece by exhorting his readers to live “without theory.”

He begins by quoting Benjamin Disraeli against Theory – and Disraeli was a political “pragmatist,” which should be a bad word. Yet, that age has gone down in history as the Golden Age of Classical Liberalism synonymous with Gladstone, Disraeli’s great rival. Disraeli is all but forgotten today. That era is now known as the Age of Gladstone, whose death in 1898 marks the end of liberalism in Britain, the end of Victorian greatness, and the rise of the Labour Party.

The central point to note is that the Classical Liberalism of Gladstone was based on solid Theory. There were Principles. It is but natural that a pragmatist like Disraeli would scoff at Theory.

Mehta, of course, contradicts himself, in the opening paragraph, where he says of the book he has just read:

“It is a narrative that communicates the enormous power of political and economic decision makers and the enduring damage that they can wreak through incompetence, short termism and a lack of understanding of how the economy operates.”

How can we understand how the economy operates Without Theory, as Mehta advises us to? The only other way is through History, including Statistics. Yet, neither history nor statistical data can be understood Without Theory.

To understand the current financial crisis, we need Austrian Business Cycle Theory. We need to know Political Business Cycle Theory too. To understand the economy and how it works we need Praxeology and Catallactics. Mehta is condemning the world economy to the unprincipled manipulations of ignoramuses when he says that decision makers should be devoid of Theory. He is calling for pragmatism - a bad word in politics.

As a Libertarian, I stand for sound Theory. And Politics Based on Principles derived therefrom.

I found Mehta’s CV here: He is currently the chairman of the Shell Group in India. He began his career as an IAS officer (1978 batch). He then re-invented himself as an oil economist in London. He returned to India to work with an oil PSU. The CV records his education as follows:

“Mr. Mehta has a BA (Hons) degree in Mathematics from St. Stephens College, Delhi University, an MA Economics from Magdalen College, Oxford University and an MA from the Fletcher School of Law and Diplomacy, Tufts University.”

Stay far away from these universities, dudes.

On My Flag

We’ve been caught up in discussions on money and banking, and The Law, for far too long. Let us now turn to far more serious matters – The Flag!

Ganja!

No Dope, No Hope.

Gimme Hope, Joanna!

I just got back from an expedition to “score” some ganja. As I drove slowly through the meandering country lanes of southern Goa, roads that are best called “Goa Constrictors” because of their narrowness, shaded roads lined with trees, no potholes, a modest country cottage here and there, some shops, a small hotel, a mosque, a temple, I passed by a drunk villager. He looked staggeringly done for at 10 AM!

And Ganja is illegal!

Here I am. Stoned. I smoked a big spliff there, bought some stuff – and hope it’s the right stuff – and drove back safely home, through the narrow and winding Goa constrictors. No one was hurt. Drank some water to cure the “cottonmouth” and here I am, writing.

And look at all the drunks.

And Ganja is Illegal!

Actually, this is even worse for public health. The market is pushed underground and there are no Brand Names to ensure Quality. People smoke bad stuff – this is particularly true of Delhi – and this is bad for public health. And do note that it is the “public” that smokes it: in Delhi, I can assemble a posse of autorickshaw drivers, rickshawallahs, bus drivers, tea shop owners, petty shopkeepers and the like – who smoke Bholaynath Ki Buti All Day Long. And they mostly smoke bad stuff.

This is not true of Amsterdam.

Where the “good bank” came from.

And yeah, the stuff I picked up is not the “right stuff.” Actually, I don’t mind paying for the right stuff to a Brand – like, say, Bhola Brand Manipuri Ganja, just as I pay for my Darjeeling tea. Or Mahesh Brand Malana Cream. In this unbranded business, two “good guys” get screwed: the farmer and the smoker.

I know what it feels like as a consumer who attempts to make voluntary exchanges in a black market. But I have also seen the pitiable condition of Farmers of the Noble Herb. I have seen this in the hills, I have seen this in the plains, I have seen this on the Western Ghats, where I now live. If the business was legal, these farmers would be driving SUVs.

And I would be Stoned Immaculate, focusing my mind and my valuable Time to other things, and not have to engage in this plea for cannabis legalization.

The “opportunity cost” of this post is the post that is “not seen”: I would then have written a longish post on roads, highways, expressways, the hub-and-spoke pattern.

But recall Say’s Law:

The Sale of X Creates the Demand for all non-X.

If this business were legal, the Farmers of the Noble Herb would use their increased incomes to buy up lots of other goods – from colour TVs to frost-free refrigerators, from SUVs to Scotch whisky. All other businesses have a Stake in advocating policies that keep all businesses Free: What I call Liberty Under Law.

This is the ONLY “common cause” that all businesses have. For any monopoly (which is always enforced with State action) lowers market activity, thereby hurting all other non-competing businesses. What is true of Monopoly is even truer for a Restriction - another misuse of State power. Closing down the dance bars of Bombay took business away from the makers of Finlandia vodka. Actually, all non-competing businesses lost. Even the pink chaddhi wallah lost.

Every businessman should be interested in free markets in all non-competitive businesses – for they are the source of his consumptions (so he is interested in competition) and also the source of all his Demand (so he is interested in Liberty For All).

Actually, all the “politics” of our chambers of commerce go against the members’ correctly perceived Individual Interest. They support each others’ privileges, and they never cry for Liberty - the end of all Restrictions Imposed by State Power.

Monopolies and Restrictions dampen the entire market catallaxy: the vital Energy that drives all businesses, powered by Consumers.

Now think of Amsterdam.

And Think of Consumers here of the Noble Herb, many of them foreign tourists. All Unhappy.

The Song: Ban The Police.

Prescription Of The Bush Doctor.