Liberty For The Edupreneur

The Economic Times has an important editorial on education, one that calls for an immediate end to the license-raj in the sector. In particular, the editors rubbish the Yash Pal Committee Report, calling it “too socialist,” and draw attention to a note of dissent to that report penned by the Cornell economist Kaushik Basu. I particularly liked this:

Glorious socialist tirades against commerce in education cannot obscure the fact that government-provided education, in schools and colleges, is often so pathetic that to call it education is preposterous.

Tragically, the editors fail to think things through to their logical ultimate conclusions, and call for an “independent rating agency” in education, to be set up by – you guessed it – The State!

That apart, an excellent editorial that calls a spade a spade.

Nothing much else to blog about this morning. The new bridge in Bombay – its being named after Rajiv Gandhi, and Sonia flying in to inaugurate it. Now, what can one say about that?

Or the Liberhan Commission submitting its report on the demolition of the Babri Masjid after 17 years and 8 crore rupees.

All this I can stomach.

But let’s get ‘em OUT of education.

Why I Am Optimistic

Ever since the results of the elections were announced, there has been open soul-searching in both the BJP as well as the Left front. The BJP-RSS-Hindutva equation has been repeatedly challenged. The overall conclusion of the pundits has been that the BJP needs to re-invent itself if it is to survive as a serious contender in Indian politics.

Funnily enough, it is the same story for the Left. Of particular note is an interview with the Communist leader AB Bardhan, where he has talked of “party cadres” alienating the public by acts of bossism, interventionism and outright predation: they cannot be “sharks,” he says. Today, the ToI has commented editorially on Bardhan’s interview, concluding decisively that the communists of India have to morph into social democrats if they are to matter.

But what are the communists and who are their “party cadres”? From Bengal the news is that they are all “armed goondas.” This is why the main opposition to the Communist regime in Bengal is calling for an end to the operations in Lalgarh: because what is actually happening, they allege, is that CPI(M) party cadres, armed to the teeth, are taking over territories vacated by the Maoists. And this is what the average Maoist is like. Both sides are armed. Both sides engage in predatory "politics."

Note the total absence of the “civilian administration.”

It is in this context that the Nilekani 1,50,000 crore rupee agenda of “smart” ID cards for all must be viewed. Here is an interview; and here are some extracts from his recent, and first, book. The card is to be a means by which our The State can “deliver services” to the poor. He cites the example of US Social Security; of European bureaucracies. The very idea is socialist and such ID cards are of no use in practical administration. The only thing that really matters is marketable property titles to land and buildings. Hernando de Soto’s ideas are vital here, not Nilekani’s. But then again, that requires a “civilian administration.”

Note that we have a “civil nuclear pact” with the USA – but we have no “civilian administration.”

Of course, smart journalists are waking up to the fact. Here is an Express editorial on the need for sweeping reforms in our public administration.

However, what really matters in all these discussions is that dreaded word “ideology.” Only classical liberalism believes in private property and free exchange. Only classical liberalism abhors the misuse of force. It is this that must be taught in the academies of public administration.

However, I remain optimistic. We are bound to overcome someday soon. The enemy camps are a shambles.

How About A Ganja Pride Parade?

The newspapers are all full of a gay rights parade held in New Delhi. Very good. India’s gay community must be complimented on their courage. The news report says they marched down the streets shouting “Proud to be homos.” I recommend a reading of Plato’s Symposium. There is a lot in it about homosexual love, which was highly regarded in ancient Greece. In India, homosexuals are the target of criminal law – and this tyranny must end. Let us try and become a civilisation wherein every kind of love is celebrated.

Yet, my pet peeve is another law – the Narcotics & Psychotropic Substances Act, 1985. Because of this ugly piece of legislation, farmers and smokers of ganja-charas have a very rough time. In my travels, I have often come across farmers of the Noble Herb – and witnessed first-hand how much they suffer. Their fields are always remote and inaccessible, to be far from spying eyes. And they never know when the cops will land up to burn their fields. If they manage to harvest a crop, they must sell it for a pittance to a criminal. The criminal then goes on to claim a black-market price from a smoker. The farmer and the consumer both get screwed. The middlemen, which include the cops, make away with the loot. This must end.

What is required is a “Ganja-Charas Pride Rally” in New Delhi, a march from India Gate to Raisina Hill, with thousands shouting “Boom Shankar.” There should be sadhus, smokers and farmers – from Kerala, Manipur, Manali… and all the places where good ganja comes from. This should be an annual event, to be continued until this legislation is repealed.

Funnily enough, most smokers of the Noble Herb are afraid of going public. While I was with the Economic Times, I conducted a debate on the op-ed page on cannabis legalisation. I invited the director of the Narcotics Control Bureau, the head of the department of psychiatry at AIIMS, and for a third view looked for an eminent smoker. First, I invited a prominent journalist who used to smoke in public – but he declined. I then invited a famous Bollywood star who was known to smoke a joint before every take – but he too copped out. Lastly, I invited Upamanyu Chatterjee, IAS officer and author of the bestseller English, August, whose hero is a ganja smoker – but he too declined.

I finally published the debate with just the two views: of the doc and the cop. The doc, the great Devendra Mohan, concluded by asserting there was no medical reason why the traditional bhang ki thandai should not be sold as an alternative to alcohol: Bhola Cola! The cop said that ganja should be illegal because ganja smokers are “untrustworthy.” Absurd. Cops, of course, are trustworthy! Anyway, the fact remains that we smokers must emulate the homos, and march, chillum in hand, to fight for our freedom.

“Boom Shankar, Dushman ko Thang Kar.”

That said, readers are also directed towards my latest column in Mint, available here. It is on the differences between Western and Eastern philosophy – how they are “worldly” while we are “other-worldly.” I particularly liked the illustration by Jayachandran. It shows a Buddha-like figure seated in lotus position silhouetted against the setting sun, with a great big highway leading up to him. Yes, we desperately need highways.

And Liberty.

Chaos: The Bitter Harvest Of Socialism

Among the Sunday columns, Tavleen Singh’s was to my mind the most significant: she is calling for an end to the license raj in education. She emphasises that this must come First in the new education policy. I am in full agreement.

Of course, edupreneurs could go ahead and simply ignore the complex rules and regulations of our The State. One of our problems is that we take these silly rules too seriously. I have in my travels met at least one edupreneur who advertises his management institute as “unrecognised.”

I plan to do so, too, one day when I set up a Catallactics Institute. You don’t recognise Us. And we don’t recognise You. Ha ha.

The entire problem, of course, is “statolatry”: the worship of The State. While we may find it difficult to argue with the use of police power in Lalgarh, we surely do not need such a power interfering in education. In reality, as we all know only too well, the “knowledge” that guides the actions of our The State, like “central economic planning,” is highly suspect. Some of their pet theories, taught in school, college and university, like the “population problem” or the “vicious circle of poverty,” are pure drivel. The State must have no role to play in education.

And the same argument applies to The Market, which is a social institution. This market is driven by private entrepreneurs eager to satisfy discerning consumers. There is private saving, private investment, private profit and private loss. There is no role here for “police power.” The State must be kept out of The Market. All those who follow the laws of Justice – which is trade – should be free from police power. That is Economic Freedom. That is Capitalism.

Note that this is the very opposite of Statolatry. In this view, the government is nothing but police power, a force of compulsion and coercion, whose role in society must be limited by Law – a law that ought to be the Constitution of the Second Indian Republic.

Aristotle the Geek drew me to these thoughts with his excellent post on “Statolatry and Chaos,” wherein he quotes at length from Mises’s Planned Chaos. There is much to be gained by reading his post carefully, for he discusses in depth the disastrous policy of “interventionism.”

Libertarians do not support interventionism in any form. Not in education. Not in religion. Not in The Market. Not in Money. There is Liberty Under Law only when the use of police power is severely restricted. That is the ideal of “constitutional government.” What we possess today is the very antithesis of this ideal: a State that interferes in anything and everything, that produces steel, runs hotels and airlines, monopolises roads, electricity, water, gas, petroleum and whatnot, that even “plans.” Yet it cannot govern. This is why “political order” eludes the nation.

How long will this “planned chaos” continue?

In the meantime, the Maoists are retreating into the jungles of Midnapore, from where they will surely regroup and strike elsewhere. One report says that they are also of the predatory sort, which is inevitable wherever “power flows through the barrel of a gun.” The State too relies on force. But its continuance is based on consent.

A regular district administration must be installed in all the Maoist- and Naxalite-affected districts, which number over 150, spread over one-third of the territory.

This is your only job, Manmohan.

Leave everything else alone.

On Lalgarh, The Brits, And The Bozos

Funnily enough, Lalgarh seems to be off the radars of most newspapers. The little news that is coming through is of the steady advance of the security forces, led by the CRPF para-military. The rebels are retreating. But I would not say that the problem is over. “He who fights and runs away lives to fight another day.”

The real task ahead is to put in place a sound administration. And that’s a tall order for the CPI(M) government of West Bengal and their IAS baboos, who are all “party functionaries.”

In a recent column in Mint I had written that the IAS were the “original sinners in Singur”: they did not possess a land administration. I will now add that they are again the sinners in Midnapore, where the local administration seems to have totally collapsed.

But today, let us learn from history - of the time when Midnapore became one of the first districts to be administered by the Brits. The first officer to be posted there was Harry Verelst, who ought to go down as the founder of British district administration in India. In 1760, three “provinces” came under British rule: Midnapore, Burdwan and Chittagong. Verelst served in all of them, collecting revenue in the first ten years that added up to half-a-million pounds a year. His experience in administering these “provinces” (as the districts were then called) encouraged the Brits to extend their administration further – to a total of 39 districts. And it was the well-experienced Harry Verelst who supervised the process. His instructions to these first district officers reads as follows:

“Amongst the chief effects which are hoped for from your residence in that province… are to convince the Ryot [the peasant] that you will stand between him and the hand of oppression; that you will be his refuge and the redresser of his wrongs;… that honest and direct applications to you will never fail producing speedy and equitable decisions; that, after supplying the legal due of government, he may be secure in the enjoyment of the remainder; and finally to teach him a veneration and affection for the humane maxims of our government.”

These “humane maxims” came from England, where Whigs had been ruling for long, and where “Locke was still a prophet.” It was John Locke who wrote that “where there is no Property there is no Justice.” This is very different from the collectivism of the Marxists who now rule Bengal, who disdain Property and thereby cause Injustice to reign.

It should come as no surprise, therefore, that in his farewell address to the Company’s servants in Bengal, Warren Hastings said:

“It is on the virtue, not the ability, of their servants that the Company must rely for the permanence of their dominions.”

He then went on to add that the British officers in the districts had displayed “gentleness and moderation in their dealings with the native population.” And he praised them for it.

Today, the elite administrative cadres of our The State possess neither virtue nor ability. And they treat the native population with callousness, rudeness, and roughness. The wheel has turned a full circle.

It is in this context that the latest gimmick of our The State must be examined: the appointment of Nandan Nilekani of Infosys as cabinet minister in charge of a universal citizen ID project that is expected to cost 1,50,000 crore rupees. (One crore is 10 million.)

In my book, the first priority should be land titles.

This is how the British began their administration. The history books say that it was a task as huge as “mapping the waves of the ocean.” But it was done – by Verelst, by John Shore, by the great Munro in the south, and by all the rest. Today, we have satellite images – and the task is easy. It is this that the government must focus on, not the bogus idea of one more ID card for the citizenry.

Land titles explain the “mystery of Capital.” They must be Top Priority. Where land titles do not exist, it makes no sense to spend billions on citizen identification. Indeed, such records can be abused if wrong people get to capture The State – like the communal BJP, or the casteists.

The conclusion: We are now governed by bozos.

Against Education Vouchers

To most libertarians, education vouchers are a form of socialism. It is the same The State that controls what is taught; it is the same The State that funds the new system; the only difference is the manner in which tax revenue is spent.

The education voucher is a brain-child of the late Milton Friedman. In India, they are being championed by the Centre for Civil Society through a “school choice campaign.” This cause has been supported in the press by various eminent opinion makers, from Gurcharan Das to Swaminathan Aiyar. It is therefore no surprise that an editorial in the Economic Times should advocate education vouchers.

However, the essential argument in the ET editorial is worth noting, for it clearly displays a socialist-statist mindset. The editors say:

One supposed expert says education is an area of market failure, so the state must make provision. This simply shows how illiterate supposed experts are. Education for all is not a market product at all — it is a non-market service to be provided by the government. Unfortunately this is an area of massive government failure.

The answer lies in a private-public partnership through school vouchers usable in private or government schools. This is not privatisation, it is private provision of a public service through a public-private partnership.

How utterly twisted and contorted! Education is a pure “private good” in the precise sense that it is totally “excludable.” Throughout history, education has been private, and for profit – as with our ancient gurudakshina system in gurukuls.

And do read an interview with the new education minister, from the same paper, where he speaks of the need for urgent reforms in primary, secondary, higher and vocational education, and the universities: he is going to reform them all. And we must believe him.

I think we must do away with politicians and bureaucrats in education. Education should never be a State Subject. This is a very old classical liberal position on the matter.

As Frederic Bastiat, a classical liberal, wrote in his manifesto of 1842:

“If you want to have theories, systems, methods, principles, textbooks and teachers forced on you by the government, that is up to you; but do not expect me to sign, in your name, such a shameful abdication of your rights.”

He added:

“The monopoly of teaching cannot reasonably be entrusted to any but an authority recognized as infallible. Otherwise, there is an unlimited risk that error be uniformly taught to the people as a whole.”

Our socialist State relies on failed knowledge. It teaches errors. It destroys intellects. The only uniformity obtained through State education is the uniformity of error.

On Violence, Peace, Justice And Criminals

Repeated power failures have kept me off the internet for two days – and I have yet to catch up. But there seems to be little news from Lalgarh. My newspaper carried a big photo of the Orissa chief minister laying a wreath at the funeral of CRPF men killed by Maoists. What was also mentioned was New Delhi deciding to ban the Maoists, and call them “terrorists.” Note that the CRPF is a force belonging to the central government. Law and order is a subject that belongs with the state government, not the centre. Further down, it belongs to the district administration. It is here that the failure lies – and it is a failure of immense proportions indeed.

Midnapore, where Lalgarh is located, was one of the first districts in Bengal to be administered by the British. They received a revenue-free assignment of Midnapore in 1760, shortly after Plassey, but before Clive’s Diwani. For nearly 200 years thereafter, British district officers in Midnapore and elsewhere roamed their jurisdictions unarmed and unescorted. Something has gone terribly wrong in these last 60 years.

And as for banning the Maoists and labeling them terrorists, the key point to note is that all communist movements aim at a violent overthrow of the regime. They begin with this violence. Only people like us who believe in free markets begin with peace, with voluntarism, with social co-operation, and profit. In other words, Justice.

The central government banning the Maoists and labeling them terrorist should not blind us to the sheer injustices perpetrated by this regime – injustices which give rise to rebellions like the one at Lalgarh. If one side is labeled a criminal, the other side too is based on the misuse of force, something equally criminal.

Reminds me of the Peter Tosh song, where he says, “There will be no peace, till we have equal rights, and justice.” One verse goes:

Everybody’s talking about crime, crime,
Tell me who are the criminals.

Think about that.

This is a “crisis of legitimacy,” nothing less.

My Sympathy Lies With The Rebels

This blog is continuing to focus on Naxals and Maoists: and the news today is that they have called for a 48-hour strike in 5 states where they are strong: that is, West Bengal, Bihar, Chhattisgarh, Jharkhand and Orissa. The strike is to protest against security forces storming Lalgarh in West Midnapore district of West Bengal.

And, from Lalgarh, here is an in-depth interview with the leader of the People’s Committee Against Police Atrocities.

As he points out, there has been no “political response” from our The State to the crisis: all that they have done is send the jackboots in.

And there is little that jackboots can accomplish:

The jackboots may have taken over Lalgarh but a police vehicle was immediately bombed in Jharkhand, while CRPF personnel were killed in Chattisgarh. Read a story of the overall picture here.

As I have been mulling over this “crisis of legitimacy” faced by our The State, it also occurred to me that two other pet theories of the establishment are being sorely tested in Lalgarh.

The first is the legitimacy of the Forest Department and all their work in “preserving the environment.” It seems the people in these forests have other ideas – which must be heard.

The second is of Chacha Manmohan’s baby, the NREGA “rural employment” bull. About a year ago I had commented on the Amartya Sen crony, Professor Jean Dreze, engaging in “activism” on behalf of the NREGA in Jharkhand, where his principal student-volunteer had been killed. I had said then that such “activism” was peculiar in that it directed the poor towards The State and its dole. The activism I engaged in when in Mangalore, on the other hand, always directed the poor towards The Market. The area where Jean Dreze was active is now Maoist-dominated. I wonder how the local people view the NREGA there. Or the government school. Do they want a dole? Do they want education? Or are they crying out for Justice?

As I considered these matters, it struck me that the real issue facing all Indians is this: Are we on the side of the poor tribals of Midnapore or are we on the side of our The State?

Who is the villain in this story?

In my book, this is not a normal law-and-order problem. It goes much, much deeper. It is about a breakdown of civilian administration. It is about a breakdown of the political process.

It concerns the poorest of the poor – our forest-dwellers.

They have armed themselves with “axes, spears, bows and arrows etc.” while the other side has big guns.

This blog is firmly opposed to all tyranny and all tyrants. It is on the side of the poor tribals. They must have Justice, Liberty and Property.

Tyranny must be ended.

Bharat Sarkaar Murdabad!

Lalgarh... And Calcutta

The news has it that the security forces have entered Lalgarh finally and liberated their police station.

They are claiming a "partial victory."

However, the most accurate picture of the situation comes from this on-the-spot report.

The security forces may have taken over a building, but the fact remains that they are much hated - and the people are going to continue their fight.

Indeed, here is a detailed interview with the spokesperson of the rebels: he talks of meting out "capital punishment" to The State.

He is talking about a Revolution!

Meanwhile, as the jungles burn, here is a tale of West Bengal's capital city, Calcutta, now among the poorest in the India.

Looks like our The State has messed up real bad.

And, of course, they want to Teach!

All Eyes On Lalgarh

Our focus of attention must remain Lalgarh. We are fortunate to have an on-the-spot report from ET’s political bureau – here. It says that the security forces are feeling quite insecure themselves. They are camped 10km from Lalgarh – and their line of retreat has been cut off. The sub-divisional police officer’s jeep has been blown up. The villagers are shooting from within the jungle.

This is nothing less than a Revolution!

And it puts paid to many theories advanced about India – from our supposedly Weberian “rational-legal” district administration to local government and panchayati raj to the nature of our “recognized political parties” all the way to the great god of democracy itself.

And this is West Bengal, one of our supposedly leading states.

I found one comment particularly noteworthy, which came from the spokesperson of the Maoist rebels, quoted here. He says:

"We want the entire Lalgarh to be a liberated zone for the tribals. We want them to have a democracy of their own, a democracy that will be guided by a new and free economy.”

Heck dude, if you want some lectures, in Bengali, on the free economy and its basic laws, on local government, on the errors of socialism and communism, or on Swiss direct democracy, I would be happy to oblige.

I myself had a slight brush with police brutality against alleged Naxalites in Karnataka, during my time in Mangalore. The police shot dead two girls in a forest. Many prominent personages came out to condemn the police, including many university professors. This is how the alienation occurs. And it grows and festers.

Such events must be happening in the Lalgarh area too, for the organisation leading the revolt is called People's Committee Against Police Atrocities. The word “atrocities” must be noted carefully, in the plural. Indeed, I myself once complained to the Karnataka Lokayukta against atrocities inflicted upon me by the state police – but that’s another story. I have every good reason to be on the side of these brave rebels of Lalgarh.

And as far as the district administration is concerned, I am reminded of an IAS officer I met in their Mussoorie academy many years ago, when I had gone to lecture there, who had served as district officer in the area now dominated by Maoists. He told me: “My writ did not run beyond the gates of my bungalow.” The rot set in long ago. This is the bitter harvest of decades of misrule – by socialist and communist politicians.

Lalgarh may indeed be the tipping point.

For once, we are talking about People in the jungles. Real people. Armed people.

The ToI is still blabbering on about the rights of elephants.

Ostriches.

On History... For Honesty

Thanks to my donors, I now have the means to acquire rare, out-of-print books essential for the growth of my knowledge. And so it was that the mailman delivered Frederic Bastiat: A Man Alone, a splendid biography of the great man by George Charles Roche III. Published in 1971 in the US, it has never been reprinted. And Roche, I found out, has been dead six years. A little bird who knew him well told me that he would have been overjoyed to hear that his book had been republished in India, where interest in Bastiat is growing rapidly. If any publisher wants to take on the task, I would be honoured to contribute a foreword. My collection, The Essential Frederic Bastiat, is available from Liberty Institute and the Friedrich Naumann Stiftung Für Die Freiheit. Roche’s biography would make for a fabulous companion volume.

Frederic Bastiat illumined French public life for a brief five years, from 1845 till his untimely death in 1850. Prior to that, he spent a good twenty years as a country gentleman engaged in quiet, private study. It is these deep studies that enabled him to fly the Flag of Liberty so capably during his short public life.

However, what seemed most appropriate for me to narrate in view of our current predicaments in India is the “bourgeois revolution” of 1830, which brought in the reign of Louis Philippe, the “king of the shopkeepers.” Bastiat had welcomed this revolution in 1830, even taking part in a civil militia that took over a local citadel housing the king’s troops – just as most of us welcomed “liberalisation” in the early 1990s.

However, by 1845, when Bastiat stepped into public life, it was obvious to all that this bourgeois revolution had failed. The French had transferred power from the aristocracy and nobility to the middle class – and it is their abject failure that prompted the French to turn towards socialism, which meant transferring power to the workers.

Why did the bourgeois revolution fail? This becomes relevant as “Maoists” and assorted “Naxalites” – all armed – are taking over vast swathes of the country, and have even entered government in Nepal. It seems that this too will soon be India’s fate, for our little bourgeois revolution is also marked by cronyism, corruption, tariffs and all the other methods of clientelism, favouritism and plunder. This was precisely the story in France.

Just as the French bourgeoisie had messed up badly, so have ours. Just as Louis Philippe’s chief minister Guizot was a helpless and quiet soul, unable to comprehend what genuine capitalism meant, so too is Chacha Manmohan – a man who has played no small role in our brief flirtation with market forces.

And so the French had another horrible revolution in 1848. And from then on socialism has been on the ascendant. Frederic Bastiat combated its errors then. As did Mises a century later, and after that Hayek. And still the ugly beast remains with us, increasing its support among the unlettered masses. In the meantime, no one seems to be concerned about what genuine Capitalism means. There is no honesty in public life because there is no honesty in intellectual life.

It is therefore a matter of grave importance that those who want to bring about Capitalism in India do so with Honesty as their bulwark. Bastiat wrote in favour of the Consumer, never the producer. He told the workers that they benefited by working with other people’s Capital – they did not lose. He also, most importantly, stood for Free Competition. It is only with these basic values that we can establish genuine Capitalism in India. If we succeed in doing so, we may be able to convert the masses to the side of Liberty. If not, I am afraid that the country will be taken over by nuts – just as happened in France in 1848, when Louis Philippe fell. There is an important lesson for us in this. Once again, I thank my donors for making it possible for me to purchase this valuable book.

Recommended reading: My speech at the launch of The Essential Frederic Bastiat, New Delhi, December 2007, available here.

On Putting Out Fires

Lalgarh is on fire. So the ToI edit instructs our The State to “put out the fire.”

I saw the police station on tv last night: the gates are closed and it is locked from inside. They say no policeman has ventured out in two weeks.

Actually, vast swathes of the country are “on fire.”

In all these areas, armed force has been used to “put out the fire” – but the human spirit to fight oppression is invincible. This is a historical fact.

These fires have only burned brighter. More force has been used. The fires got even bigger. Force was increased further – and the fires are still alive.

Force and violence can never accomplish much. These are the weapons of the street bully. These tactics have nothing to do with “political leadership”: but, as the same editorial says, these have been the tactics of the CPM and its “cadres.” This is immoral “politics.” Indeed, it is the polar opposite of “politics” rightly understood, which must always have a strong moral content. Recall Ludwig von Mises on “might.” Might is never Force.

The most effective way to put out all these fires raging in India, in Pakistan and Afghanistan, in parts of Africa, and elsewhere, is to encourage everyone to seek survival in The Market. That is where the Natural Order comes from, where “friendly strangers” interact, and where all can gain without hurting anyone. I would argue for free trade, free markets and economic freedom.

There is a likely story on this approach in Philip Mason’s The Men Who Ruled India, about a British district officer in the early days of Company rule, in Bengal, in whose territory there existed two tribes in a state of constant warfare. Peace ultimately prevailed when both tribes were invited to the main market – to abandon plunder and pillage, to begin a life of peaceful exchange. The book contains many such stories of British political officers in the wild frontiers of the NWFP – all Taliban area today. Even then, radical Muslims existed, and created trouble. But The Market brought about peace. The fires were put out.

Sadly enough, there is no “political party” in India to carry this message to the people. Without liberalism there can never be “liberal democracy.”

In our “socialist democracy” the only message is:

The State will give you employment, rice, education, healthcare, housing and so on.

This politicises society. This creates factions who vie for the goodies. The Natural Order is disrupted.

Thus, our The State can never put out these fires.

And this time, in Lalgarh, as in Khejuri and Nandigram, it looks like the bully has been put firmly in his place.

Against Watermelons... And Ostriches

As if to immediately connect with my last post on “watermelons,” Chandra has provided the text on my interview with Leon Louw, a libertarian from South Africa who was twice nominated for the Nobel Peace Prize.

He says sustainable development is nonsense.

He says environmentalists are enemies of the poor.

Read the full text here.

And spread the word.

Chandra also provided us with the details of an interview with a leading light of our The State’s miseducational system, Professor Yash Pal, where he says:

There is no wisdom to be got from outside the country. Whatever is there, is on the net.

Professor Yash Pal opposes foreign universities setting up shop in India. He began his career teaching Physics.

In my opinion, we Indians should wake up to the fact that we are a “backward nation”: that is, if there was a caste system among nations, we would be a backward caste.

The rest of the world is marching ahead; our nation is marching backwards.

The USSR has been gone 20 years, the Berlin Wall has long become rubble.

In India we still have central economic planning, a State that also makes steel, and all that shit.

Our cities are hell holes; every town is a living nightmare; while the administration is generating employment and developing village India.

Even Malaysia is a better place to live. Leave aside Singapore, which received independence in 1965, shortly after the death of Jawaharlal Nehru.

See how nations are on the march?

And then look around at the mess that is India, whose educrats believe “there is no wisdom to be got from outside the country.”

This is the attitude of an ostrich affected with “fatal conceit.”

We can contrast this with Japan of the Meiji period, the 1860s, when they began an earnest catch-up with the technologically far superior west. The Imperial court took on western attire. And hundreds of scholars were sent to the west to learn. Thus, Adam Smith’s library is housed in the University of Tokyo.

I am afraid we as a nation must look upon The State’s educational “degrees” in much the same way that we look upon their other “papers” – the currency note, and the ballot paper.

Worthless.

The Truth About Unsustainability

Watermelons like RK Pachauri, green outside but red inside, who spread the ugly virus of “sustainable development,” believe Capitalism is unsustainable for poor nations.

Actually, what is truly “unsustainable” is our The State.

In a nation without roads, our The State’s huge expenditures on “employment generation,” food and fertilizer subsidies, loss-making PSUs, loan waivers, and other assorted freebies for pals like the MPLADS, which are now going to be compounded with a cheap rice scheme and higher baboo wages – all this is “unsustainable” in the precise scientific sense that this huge burden on the productive few cannot be sustained any further. This verdict of unsustainability is based on sound economic science; not only theory, but also public finance. The State has reached the limits of its ability to borrow. And there is also a limit to its ability to engage in “quantitative easing,” the new term for printing rupee notes and issuing them.

All these expenditures are further unsustainable because The State must be directed towards performing its legitimate role – legitimate in the sense of classical liberals like Ludwig von Mises. Mises disavows anarchism totally. He says that State organization is necessary. His only insistence is that it should be restricted to its legitimate role. What is this role?

Without getting into that discussion, let me just say that our roads suck, there aren’t even decent footpaths in our cities and towns, garbage lies uncollected, our courts system is clogged, our police protect VIPs only, and even our air force fighter jets seem to be crashing with worrying regularity. And our The State is buying 20k crores worth of boilers and furnaces to generate electricity!

So let us be clear as to what exactly is “unsustainable.” Economic growth is eminently sustainable as far as the resources of nature are concerned, but “government growth” is not.

I saw Pachauri and Prannoy Roy engage in a huge diversion on tv last night: a “save the beaches” campaign. The worry is that there will be too many ports, too many hotels, too many mansions, and too much prosperity if The Market is unleashed on our sea shores. Roy was shocked that apart from the 12 major ports, our 7500 km long coastline has over 100 minor ports. He asked his “expert witness”: Isn’t that too much?

I find this amazing from a guy who also owns a business channel called “profit.” If we build a highway 7500 kms long, who can decide how many petrol pumps will come up and where? Or how many dhabas?

Yes, the laws of catallactics predict with apodictic certainty that if India declared unilateral free trade all the action would be along the 7500 km coast. Hundreds of free trading port cities would erupt. Thousands of such towns. There would be a huge migration of rural folk to these new urban centres of international trade. More and more real and live human beings would live better lives.

This is one way to go: To Say Humans Come First.

Then there is the watermelon way: The State Must Protect The Sand.

You decide.

Economic Freedom Comes First!

To a libertarian, especially an Indian libertarian, all this talk about “reservations” and quotas, for women, for Muslims, for Dalits and for SCs, STs and OBCs etc. etc. – is just a whole lotta bull.

Take the Barkha Dutt show on women’s reservation I watched last night. The leading women of India on the show - including Madhu Kishwar, Bachi Karkaria, Kiran Bedi etc. – were largely of the opinion that these have been an excellent feature of our “gram panchayats” and so should be extended further. No one seemed to be concerned about the Principle.

At the bottom of the entire issue lies The Economic Principle: For any woman to be really independent, she must have financial independence. Period. And even women have no argument with this.

It therefore follows that Liberty Under Law, a free trading, free markets, free enterprise economy is in the best interests of All Women. And indeed, all Muslims, dalits, tribals, etc. The “reservations” and “quotas” can only help a few, and require the Misuse of State Power – but the free economy will help all.

Take the case of dancers. A poor girl cannot dance and entertain clients in Mumbai – while all the page 3 actresses make their fortunes dancing on screen. There is some Principle of Law being flouted here – and I hope you see it. Where this Principle does not hold, there can never be Liberty. The Law, which is our safeguard, becomes instead a Tyrant: arbitrary, capricious, unjust.

At no time in Indian history has the nautch-girl been banned. The Mughals, the British, all the princely states – they all patronised them. But in socialist India they are banned – while weighty women talk of “reservations for women in politics.”

It was Franz Oppenheimer who said that there were two ways of survival: one, through The State, which he called the “political means”; and the other, through The Market, which he called the “economic means.”

All these quotas and reservations are about the political means to survival. They can never be of any help to the vast majority, who must seek survival in The Market.

Economic Freedom Comes First!

The Hitch-hiker... And The Bridge

Here in our little Goan village we are spoilt for unspoilt beaches. And the most unspoilt of them lie due south. Last evening we drove down to Talpona and watched a glorious sunset, smoked a mighty spliff, enjoyed some deep conversation, and as it grew dark we took the road back home. I saw a lovely location for The Ludwig von Mises Institute of Catallactics.

Now, there is a small river we have to cross to get to Talpona from where we live. Spanning the river is a short and narrow bridge. The bridge itself is barely 20 metres long, but it is its width that is truly amazing. It is an impossibly narrow bridge. It can barely accommodate our little car. Anything even slightly bigger and wider would have to take the highway, drive another 20-odd km south, and then take the newly laid road to Talpona. The narrow bridge saves over an hour of journey time. But then, no bus can take it.

And so it was that as we approached the bridge, a middle-aged man asked us for a lift. We obliged. And the conversation went something like this:

Hitch-hiker: Thank you so much. It would have taken ages for me to reach the Saturday market at Chaudi if I had to take the bus.

Me: Yeah, you guys need a new bridge.

Hitch-hiker: The government never seems to get around to building it. They have built a huge railway bridge but the road bridge lies neglected.

Me: Bunch of morons. Who takes the train to get to Talpona? There isn’t even a station! How will tourists come here if there is no road bridge? How will the local people get to market?

Hitch-hiker: What do we do? We are tired of pleading our case with the authorities.

Me: I strongly suggest you people get together and raise money to build your own bridge. I will also contribute. I suggest a pontoon bridge, which is cheap. And when the bridge is built the values of all your properties will immediately rise – so the bridge will pay for itself. No loss. Only gain.

Hitch-hiker: Sometimes I too feel there is no point going to the government for anything.

Me: No point at all. The file will go to Panjim, and from there to Delhi – and by the time a decision is taken you would be in the happy hunting grounds. Self-help is the only way out.

Actually, this little enclave in South Goa where we live is a perfect example of the madness of our The State. Here, nature has lavished us with unmatchable beauty. And all that is man-made is ugly – especially The Markets. Chaudi, the central market town, is a shambles. As are the small tourist markets in Palolem and Patnem, the two most popular beaches. All the roads are too narrow – “Goa Constrictors” – and they are laid out in a manner that defies all the laws of road design.

And yet, there is abundant land. And there are lots of lovely beaches. The only solution is a complete overhaul of the roads system, including bridges. All the markets have to be re-designed. Well laid out roads, well laid out markets, and a well laid out central market town – that is my antidote.

This requires local government, based on local knowledge, catering to local concerns and needs. Neither Panjim nor New Delhi can perform this task. Unfortunately, although we do have a municipality, the fact is that it seems to be totally Devoid of Reason. Even at the bottom, our The State is mad.

The only hope lies in local residents taking over the conduct of their own affairs. I hope my hitch-hiking friend spreads the virus. Let us begin with a self-financed pontoon bridge across the Talpona. I am told that these can be built in a few days. So let's just do it. Fast!

When Granddaddy Chuck Comes To Town

It’s the monsoon season in Goa. It rained all night. I woke up bright and early, bathed and changed, and then smoked a mighty spliff in the crisp morning sunlight, among our own wild greenery we call a garden, where every leaf was glistening in the soft sunlight, and my thoughts turned to the great prospects of becoming a grandfather someday soon. And by "soon" I mean in the foreseeable future, not right now.

Yes, today my son turns 22. I sent him an embroidered Hendrix t-shirt and a copy of Plato’s Symposium. The word “symposium” means “drinking party” in Greek. It is a lovely tale of a great drinking party held in the City of Athens circa 350 BC, when the gods were many, and included Eros and Aphrodite, and Dionysus. It is also an insight into the character of the philosopher Socrates, Plato's beloved teacher, described here as a "truth-loving eccentric," while he was alive and kicking – and drinking, and talking: about Love. We have nothing written from the man whom Athenian democracy murdered - for "corrupting the minds of the youth." But that’s another story.

Anyway, my parcel reached yesterday – and Gaurav told me that he was wearing the Hendrix t-shirt, and that a “drinking party” had already begun, which was to remain in continuance right through till Sunday. I am so proud of my boy. He plays great guitar. And he even motorcycled it down here to Goa from Bangalore – and back. On our “notional highways.” These are feats his Motorcycle Papa is very proud of.

But getting back to impending grandfatherhood someday soon, as I sat stoned in the garden, my thoughts turned to a very far-out great-grandfather I once met, and smoked a chillum with. This happened in New Delhi, some ten years ago.

I had a friend we all called “Ustad,” a simple man from the Kumaon, and a smoker. He was a little over 50 then, and already a grandfather. One day I asked him how he began smoking charas. He said that he stole a little from his father’s pocket and smoked it. And never looked back. Now, I knew that his father and mother lived back in a roadless village in the upper Kumaon - "unreal estate" - so I asked, “Does your father still smoke?” Ustad replied, “Yes, he smokes half-a-tola every evening in a big chillum all by himself.” Lonely, but happy – and stoned.

So I made a request to be invited to smoke a chillum with the great-grandfather whenever he was next in town. And that day came soon, because the old man, who was 86, needed some eye surgery.

We all sat in Ustad’s little room, the great-grandfather cross-legged on the bed, with the little great-grandson on his lap. It was an enormous chillum that he wielded in his hands. He mixed half-a-tola of his homegrown charas with desi tambakoo and filled it. And then he asked Ustad to offer him a light. He lit the chillum with a thunderous pull, so much so that small flames erupted from its mouth. Then, passing the gun on to me, he proceeded to blow a cumulo nimbus cloud of charas smoke all over the little boy on his lap, his great-grandson.

And so I thought that I would like to be a grandfather like that. We have a “smoking party” when the child is born.

Sometimes I wonder about the wonder that was Deng Xiao Peng, the communist who turned China around. He smoked 90 cigarettes a day and lived till 95. I do believe it must be the soya sauce. I now have a teaspoon of Kikkoman with every meal. And some ajinomoto too. Who knows? Might work.

Smoking is "risky behaviour."

Wish me luck.

On Delightful Studies... And A Giant

Samuel McChord Crothers wrote that “the scholar in politics breathes the still air of delightful studies.”

I can speak of many of my private studies that have provided me great delight, beginning with Frederic Bastiat, but I must confess that the most delightful of them all has been Ludwig von Mises’ Human Action: A Treatise on Economics.

Note I say that my “study” was “delightful”; indeed, exceptionally so. And it is the word “study” that lies at the root of the word “student.” All that students are supposed to do is study. If you are a student of economics, management or accounting, I recommend that you make a private study of Mises’ Human Action. The book is a masterpiece that demolishes everything mainstream economics stands for. It establishes a new science of economics based on rock-solid epistemological principles: apriorism, subjectivism, and individualism. There is no mathematics. There are no pictorial diagrams. This is what he himself called "logical economics." So take a print out, pick up a highlighter, have an excellent dictionary handy - and study, with great delight!

What a giant the man was!

Ludwig von Mises’ words below, from a chapter in Human Action on “The Role of Ideas,” offers us much to ponder on, as it concerns something we rarely think about, viz., thinking.

So do read it carefully – and think over each sentence.

It is always the individual who thinks. Society does not think any more than it eats or drinks. The evolution of human reasoning from the naive thinking of primitive man to the more subtle thinking of modern science took place within society. However, thinking itself is always an achievement of individuals. There is joint action, but no joint thinking. There is only tradition which preserves thoughts and communicates them to others as a stimulus to their thinking.

However, man has no means of appropriating the thoughts of his precursors other than to think them over again. Then, of course, he is in a position to proceed farther on the basis of his forerunners’ thoughts. The foremost vehicle of tradition is the word. Thinking is linked up with language and vice versa. Concepts are embodied in terms. Language is a tool of thinking as it is a tool of social action.

The history of thought and ideas is a discourse carried on from generation to generation. The thinking of later ages grows out of the thinking of earlier ages. Without the aid of this stimulation intellectual progress would have been impossible. The continuity of human evolution, sowing for the offspring and harvesting on land cleared and tilled by the ancestors, manifests itself also in the history of science and ideas. We have inherited from our forefathers not only a stock of products of various orders of goods which is the source of our material wealth; we have no less inherited ideas and thoughts, theories and technologies to which our thinking owes its productivity. But thinking is always a manifestation of individuals.

(From Ludwig von Mises’ Human Action, 4th Edition, Chapter IX, “The Role of Ideas”, pp. 177-178, pdf file here.)

The sentence that I would like to emphasize today is this:

However, man has no means of appropriating the thoughts of his precursors other than to think them over again.

Yes, Mises has gone, and we have no other means of keeping his contributions to our thoughts alive other than by reading his books and thinking his thoughts all over again; making them a vital part of our “mental furniture.”

This is a task for individuals. There is no “collective thinking.”

As I started off saying, Mises was a giant.

If you master his books, you can aspire to be a giant too.

On IKEA Opting Out Of India

I have always been a big supporter of allowing FDI into Indian retailing. Read my old ToI article on the side of liberty here.

I am therefore extremely disheartened to read the news that the great European furniture design company, IKEA, has shelved its plans to enter India. The nation has lost 1 billion dollars in FDI. For a poor country, this is extremely bad news. Poor countries need Capital, without which productivity cannot be raised. If productivity is not raised, wages cannot rise.

Why did IKEA opt out? According to the news report, the obstacles placed in its way by our The State were insurmountable. This included the stipulation that they must have an Indian partner. What nonsense! We already have many MNCs in India with Indian partners – and there is nothing much to say for them. Honda has for long been tied with Hero Motors and SIEL. And in insurance we have Tata- AIG and Bajaj-Allianz. These partnerships make no sense. In either case, they must not be forced by State policy. Remember, it is the Misuse of Force that must always be opposed. That is why the libertarian ideal is Liberty Under Law. If foreign firms operate under law, our The State should have nothing to complain about. Just collect the taxes, build the roads, and stay out of all our faces.

On IKEA’s operations in India, the news report says:

IKEA has been sourcing many materials from India and employs around 11,000 in this operation, while it claims to be indirectly employing another 60,000. This outsourcing business is estimated at around Rs 1,900 crore.

This figure could have quadrupled if Bharat Sarkaar did not operate as One Big Roadblock.

As I have always maintained:

Rukawatein Hatao, Gareebi Apnay Aap Hutt Jayegi.
Remove the obstacles. Poverty will vanish on its own.

In India, quality furniture is hard to find. And it is either hideously expensive or just hideous. IKEA furniture is based on classic Swedish design, good looking, and quite inexpensive. If a giant in the business like IKEA were allowed to enter the Indian market, there would be all-round gains – especially for the consumer. There would be even greater gains if the timber trade was left to market forces.

I visited an IKEA store in Germany. It was an eye-opener. The store was enormous. I went through each of the floors gaping open-mouthed at the many wonders on display – and the amazing prices at which everything was offered. I bought a few small knick-knacks because anything bigger would have been impossible to carry back on the aircraft. And I have two memories of the visit that I would like to share.

First: When I returned from my IKEA visit, my Frankfurt-based cousin Arpitha, with whom I was staying, asked me what I thought of the store.

I replied: I would like to tie a rope around the store and drag it to India.

Everybody in the house laughed. They all agreed with the sentiment. They said that whenever they visited a supermarket, this was their precise sentiment too: Tie a rope around the store and drag it to India, where nothing much is available.

Laugh about it – but do note that the politicians in Delhi do not share this sentiment. Of course, they shop-till-they-drop whenever they visit the West. An Indian diplomat once told me that much of his time was spent escorting Indian politicians around on their shopping expeditions.

What rogues!

Second: After having gone through all the floors of the IKEA store I finally landed on the top floor, where there was a self-service restaurant-café. It was lunch-time, so I took a tray and wandered around looking at all the goodies on offer. Finally, finding one meaty dish interesting, I asked what it was. “Venison,” replied the lady behind the counter. I had a double helping.

Yes, both timber and wildlife can be harnessed by market forces to benefit everyone. Today, both are under the control of Jairam Ramesh and the Forest Department.

What a waste!

Naxals Have More Sense Than Chacha

AK Singh’s comment yesterday, on how politicians run PSUs, based on his own personal experience, deserves to be placed on the main page. So here goes:

As the son of a former public sector employee, I witnessed first hand how the ministers charge bureaucrats for the cushy jobs, use any company vehicles as their "baap ki jageer", award contracts to their favoured parties, keep their mistresses/relatives in the guest houses, and constantly harass the few honest left among the corrupt.

Thirty-eight years of service in the public sector left my father a bitter, cynical man who can't view anything in a positive light. There must be a special place in hell for people who do this to a man.

The first point he makes is that ministers take money for appointments. That is, these PSUs are auctioned to the highest bidders. Of course, we all know that politicians take money for all government appointments, as well as transfers and postings, beginning with police constables. It surely cannot be that PSUs are exempt from this.

But what does this mean for theory?

Under socialist theory, “collective ownership” is the Great Ideal. However, as reality indicates, all these PSUs are actually “private property” being ruthlessly exploited by those who “claim to represent the public.” In other words, the very idea of collective property is false.

Indeed, this conclusion is upheld by Singh’s very next sentence, where he says that company vehicles and guest houses are “baap ki jageer” (father’s property) for our socialist politicians.

So there we have it: PSUs are Private Properties of Politicians.

Socialism is a Fraud on The People.

Yet, I do believe roads are genuine collective property in the sense that they can be used by all. None can be debarred from them. If all the PSUs were sold, we could easily finance a toll-free, world-class (i.e. of GERMAN standards) highway network.

The Indian Express lead editorial today is on roads. But they are talking of “private-public partnerships,” which they admit is unfeasible where traffic projections are low. Such partnerships delay projects indefinitely – we all know why.

Then there is a highly relevant ToI story on roads which warns that tolls are going to rise – for 2-laned roads, for 4-laned roads, for bridges, et. al. This is double taxation. Further Fraud.

There is also a report in Mint that talks of the “food subsidy” bill going up to over Rs. 70,000 crore. Our The State is going ahead with a “food security law” – as if The Law has “lacteal veins within its breast with which to feed the hungry,” as Bastiat quipped. These bozos in our legislatures do not know the purpose of law, which is to prohibit certain acts – like murder, rape, etc. The law is “negative.” The “right to food” cannot be law in any meaningful sense. This is mere gimmickry. Further Fraud. Another nonsensical “right.”

I am therefore of the view that Chacha Manmohan S Gandhi is playing a wily game. The Left have gone, but he is happy with the DMK and Trinamool opposing privatisation – because his “baap ki jageer” will remain.

Under Chacha, roads will never be built as they should – out of tax revenue, free for all users.

And I would like to see an investigative report on Kamal Nutt’s tribal constituency in Madhya Pradesh, which has been returning him to parliament for 29 years. He is now roads minister. How are the roads in his “baap ki jageer”?

In the meantime, here is an interesting investigative report from the Hindustan Times on our Naxalites, who have taken over parts of West Bengal. Yes, they are building roads as top priority. They are not providing subsidised rice to anyone.

More power to the Naxals, I say!

For Total Privatisation

News has it that the daughter of the DMK Supremo, Karunanidhi, who is a Rajya Sabha MP, has opposed “disinvestment” in PSUs.

(How they hate the word “privatisation,” which we all love so much.)

The news report says:

DMK chief M Karunanidhi’s daughter and Rajya Sabha MP, Kanimozhi, speaking on the motion of thanks to the President’s address on Monday, signalled the government could not count on her party’s support for its disinvestment plans, and should avoid the temptation of selling stakes in state-run firms for generating revenue.

“The government should not look at sell off as an option for generating revenue. The country has been following the socialist model and the government should stay with it,” Ms Kanimozhi later told ET. The DMK accounts for 18 members of parliament and is the third-biggest constituent of the ruling UPA.

What is the real reason for this?

After all, we all know that the DMK is a close-knit family business – there is Kanimozhi, there are the Marans, and there is MK Stalin, now deputy CM.

This is not Socialism; it is Familyism. Society does not own the PSUs; the Family owns them all.

Of course, in this respect the DMK is much like the Congress, or the National Conference.

The real reason for this phenomenon is not hard to find.

Any “socialist” system of State ownership of industries always ends up as a system in which the “party” controls everything.

These PSUs contribute to the party kitty in many ways: first, those “managers” who get to run the PSUs pay for their privilege – there are “kickbacks”; second, these managers also recruit party workers in a typical “jobs for the boys” arrangement with the Supremo; and thirdly, they offer huge scope for other forms of patronage.

No Socialist Supremo would like to lose his control of State-run enterprise.

Of course, poor “society” loses.

All the PSUs lose money – Our Money.

We learn the hard way that Society and Party are different things.

(Just as State and Society are different.)

A genuine “political party” does not run businesses. All it controls are some departments of government that provide a few public goods and services - that too, only when it is in office. Such a party claims to “represent” the people who support it. In the case of the DMK, as with the Congress, the party does not actually represent anyone. Rather, it buys support at election time by offering freebies to the poor. The DMK has offered the poor colour TVs.

This is the ugly story of Indian Socialism. And this will continue for another five years, for the same news report says that the Trinamool has also opposed disinvestment - just like the Left. I think Sonia and Manmohan must be happy with their allies.

There is thus only one way to clean up Indian politics:

Total and Complete Privatisation.

On The One Single Lesson

Central economic planning cannot work. Period.

If there is One Single Lesson we can draw from the works of Ludwig von Mises and his student, the Nobel laureate Friedrich Hayek, then this is it.

Any economist who has absorbed this One Single Lesson will refuse to work for any planning body.

So who, or what, is Montek?

And who, or what, are these other bozos who have joined Montek at the Planning Commission?

Bozos, nothing else.

Read the news here.

Now, if this One Single Lesson is to figure in the curricula of India’s schools and colleges, secondary and higher education both must be taken out of State control. Today, the doctrines of central planning occupy centre stage in school and college curricula, with an entire paper on “Indian Economics” being devoted to this nonsense.

Which brings me to the other bit of news today, on noises emanating from the ministry of human resource destruction. The news says that the UGC and the AICTE will be abolished, and that our The State will:

“… create an independent National Council for Higher Education (NCHE), which will take over the academic, accreditation and financial functions of the [existing] regulators…”

Methinks all that will happen is that the bozos of the UGC and the AICTE will take over this new body, which can never be truly “independent.” Since this body will oversee academic curricula, the One Single Lesson mentioned earlier will never be taught to any Indian student.

Actually, this is the real legacy of Chacha Manmohan: the continued legitimacy of socialist economics and its institutions, like the Planning Commission. The most useful function Chacha performs for the Nehru-Gandhi dynasty is this: He keeps their overall ideology respectable. This is done by keeping the One Single Lesson out of the syllabus.

In a nutshell, the One Single Lesson goes as follows:

From Mises: Socialist planners can never perform “economic calculation” because they do not deal with market prices. It is interesting that Deepak Lal started off as an estimator of “shadow prices” in our Planning Commission. The experience told him that he was attempting the impossible – and it is this experience that made him a confirmed classical liberal. He is currently president of the Mont Pelerin Society.

From Hayek: Socialist planners can never centralise knowledge, which is “fragmented” in nature, with every actor in the social division of labour possessing his little bit. The market economy works for this precise reason: it allows society to use all the knowledge that each participant possesses. The central planner can never centralize this knowledge and replace The Market. He will always fail. He will fall victim of the “fatal conceit of reason.” It is interesting that Nehru’s chief planner, PC Mahalanobis, whose portrait hangs in the LSE, was a statistician. Read Hayek’s brief paper here.

This is about all the “knowledge” planners possess: statistics without prices. Thus, for example, the planner can say how much electricity was produced or how much coal was mined – without any indication of profit and loss. He can then advise on how much more coal should be mined, so that even more electricity can be produced – but once again without any idea of profit and loss.

This is the failed knowledge Montek & Co. rely on.

This is the failed knowledge that the ministry of human resource destruction peddles in order to kill the intellects of our bright youth.

So there, at least YOU know the One Single Lesson.

Overall, A Complete Lack Of Principles

While surfing the web this morning, I participated in an ET poll on whether our The State can actually make slums vanish in 5 years. I voted “No.” In the comments box I wrote that it is impossible for our The State to feed, house and employ the vast majority. Where are the resources? And if our The State does not have the resources, should official policy not be to let The Market free and invest only in those areas where private capital is not forthcoming – like roads?

Anyway, speaking of resources, I found this Reuters story on how fiscal prudence is being given the go-by this year, because our The State is targeting higher growth. It is as if “economic growth” is a State Subject. As is “development.” In reality, both growth and development are Market Subjects. Both require entrepreneurs, private saving, and private investment.

Indeed, as the Reuters story cited above says, the huge borrowing programme of our The State is already raising long-term bond yields and will eventually crowd-out private investment. Interest rates will rise. So will inflation. There will be neither growth nor development if our The State is allowed to continue on its chosen path.

There is no alternative but to cut down The State, balance the budget, and liberate the entrepreneurial classes. This means free trade, free markets, and complete economic freedom based on the inviolability of Private Property. There is no other way by which The Poor can be employed, housed and fed.

However, the news also has it that the new commerce minister, the man who has replaced Kamal Nutt, is not a free trader, but a neo-mercantilist. Here he is promising a big “stimulus” to exporters. What about importers? Are we to continue exporting without importing? Looks like the new man is nothing but a Kamal Nutt clone. So expect more of the same on the international trade front. After all, the boss man is the same – Chacha.

Thus, I must confess that I do not harbour high hopes from the Chacha Manmohan State 2.0: these guys have all their fundas wrong. They are stoned on the idea that they have unlimited resources – the mythology of Keynesian economics – and that they can and must do anything and everything. They are neo-mercantilists. They are also socialists. A horrible combination.

It is this thinking that percolates down to lower rungs of our The State. Thus, here is the Karnataka chief minister promising to subsidise 50 Kannada films each year. He has just “donated” 5 crores of Our Money to a Kannada film academy.

The conclusion: Our rulers lack Principles.

But you already knew that, didn’t you?

The Road To Greater Tyranny

What would it be like to live in a country where The State has taken on the task of feeding and housing the masses, the vast majority?

What kind of country would this be, where millions and millions are dependent on State handouts?

In either case, this is the immediate future of India.

The poor will get rice for 2 rupees a kilo, and they will receive housing in both urban as well as rural areas – from the Chacha Manmohan sarkaar. The goal: A slum-free India in 5 years. Read the news report here.

But how can our The State dole out benefits to the vast majority other than by taxing the productive few to the hilt? It is surely no co-incidence that a senior civil servant has written arguing for higher taxes on the well-to-do, inviting, among others, this piece of sharp criticism .

In other words, the idea of feeding and housing the masses is nothing but a road to greater tyranny – in the form of heavier taxation.

Reminds me of a kind of beggary we often see – a healthy dude taking around a blind or lame guy, begging in his name. This is what our The State is doing. Its only claim to legitimacy is the poor. These poor people cannot be left to markets, it says.

Of course, if you visit the poor in the slums, you will see that they rely entirely on the market for both food as well as housing. The State might give them rice or wheat cheap, but the poor also buy vegetables, dal, cooking oil, spices and fuel. And water. Rice may be 2 rupees a kilo, but potatoes come at 12 rupees.

They also buy mobile phones. They have cable tv.

And as for the dwelling in the slum, they pay rent to slumlords.

Therefore, at a deeper level, we must ask ourselves the question: Why is urban land so expensive in India? Surely it cannot be that there is a shortage of land, for India is a huge country. Travel around Delhi, Calcutta, Bangalore, Bombay or Madras, and you will see vast open spaces. If these open spaces were connected to the city by good roads, the supply of urban land would increase and its price would fall. This would benefit the poor.

Further, if we look at the socialist policies of our The State, we find the culprit: they have a monopoly on urban land as well as urban roads. This dual monopoly operates as a double whammy. It is destroying all our cities.

Then there is rent control, without which the poor could easily rent cheap rooms. This is very important for poor people, who cannot buy homes. For them, there must be a vibrant market for cheap rentals.

In a liberated, free market scenario, with private sector real estate development, and a vibrant rental market, the poor would be much better off – if roads are built. The central problem with Chacha’s idea is that the State monopoly over urban land would continue. This would be fatal. Chacha is also devoid of a roads' vision - "hubs-and-spokes" etc.

Note how in 40 years, the Delhi Development Authority (DDA) has failed to house even the people of the middle class, and the price of their shoddy housing has only sky-rocketed. DDA clones exist in all our cities and towns today. They are The Problem.

In our socialist heydays, it was the common belief that State monopoly over land and housing would benefit the people. This idea has been proved wrong – even for the middle class. Thus, there is no chance that the continuation of such policies will benefit the poor. The State will only politicise outcomes, building politicised “vote banks.” There will be more and more uglification of our cities and towns – as with the DDA. There will also be political consequences because of open “clientelism.”

The best way to look at it is by comparing housing to other areas where State monopoly has withered – as with phones and airlines. Today, because of markets, everyone has a phone. Today, the cost of an airline ticket is affordable. When only Indian Airlines ruled the skies, it was hell. We must therefore have free markets in housing too. Note that the idea of cheap “nano homes” has already popped up in the minds of housing entrepreneurs.

To conclude: I find it horrifying that our The State has taken upon itself the task of both feeding as well as housing the vast majority. I find it horrifying that it thinks it can accomplish these tasks. I also find the prospects of living in such a country horrifying, for it will be a huge tyranny.

A good society is one in which people are free to make their economic achievements in markets; where The State exists only to act against enemies of The Market. Thus, under Chacha, we are not progressing; we are going back to an even worse kind of Socialism.

Against RK Pachauri

Today, June 5, is World Environment Day, and so the Times of India leader article is by the scientist RK Pachauri, who recently shared the Nobel peace prize with Al Gore for his work on “global warming.” Pachauri’s article of today deserves careful scrutiny, for it is nothing but a litany of errors. If these errors are translated into official policy, India will remain poor and backward forever. For the central theme of the article is the call for more and more State action. Pachauri, it becomes obvious, hates The Market. He loves our The State.

Pachauri starts off with a bang:

“The first and most important change that the new government at the Centre ought to address is shifting the pattern of development itself.”

Now, this is something that I would agree with, while arguing for free markets. But Pachauri thinks differently. He is for “sustainable development” – which means continued State interference in markets. He says, in the first para itself, that the basic problems are caused by “blind aping of everything that defines lifestyles in the developed countries.” He lists his targets for attack:

“The unregulated growth of shopping malls, each guzzling several megawatts of electricity; the unsustainable exploitation of our groundwater resources, driven essentially by heavy subsidies on the price of electricity for farmers; and incursions into tribal areas and agricultural or forest lands for setting up industrial projects…”

Actually, Pachauri’s office is bigger than any mall: the Habitat Centre in New Delhi. I am confident that the central air-conditioning system in Habitat “guzzles” more electricity than all the malls in Gurgaon combined.

But that apart, it does seem perverse to argue against projects in tribal areas. Surely “sustainable development” does not mean that all agricultural and forest (unowned) land remain frozen in their current use. Indeed, it is well known that one of the biggest corruption rackets in India is the “permission” given by our The State to use agricultural land for non-agricultural purposes.

I would argue – Let The Market Decide. Let landowners be Free. Pachauri is batting for the other side.

Pachauri then throws a wild card into the ring: he calls for “distributive justice,” the great idea of Socialism. He says Naxalism is caused by “the growing disparity between rich and poor, symbolised by the insensitive and vulgar display of wealth by the rich in our society.”

The dude is a “watermelon”: green on the outside and red inside.

And he is not just any kind of red: he is an étatist. His next para is all about State action required to promote green energy, strengthening the pollution control bureaus, and saving the tiger as “an economic and cultural imperative.” Of course, in the meantime, I just suffered a 2-hour power failure this morning, which is why this post is late. Most people in India do not have energy – neither electricity, nor cooking gas. Most people do not own cars. Which is the way to proceed? What is “development”?

Pachauri goes on to call for Gandhian “rural development,” and strengthening the “delivery mechanism” of the – you guessed it – civil services. It seems in the utopia of sustainability, baboos will “deliver.” Not markets, but baboos. Sheer nonsense.

The rest of the article babbles on about the need for an “external assistance programme” by which India can assist poorer nations. What rot! He calls for action by our The State on global warming – or “climate change,” as he prefers to call it. Never mind the fact that they could not predict the arrival of this year’s monsoon correctly. Even with their “supercomputers.” Pachauri concludes by calling for a united political response to his agenda – the BJP and the Congress should combine to bring this about.

Thus it becomes obvious that the votaries of “sustainable development” are enemies of prosperity. Thereby, they are enemies of the poor. They do not want to raise consumption and living standards in India. They do not want free trade and free markets. They want State action. They idolize baboodom.

Actually, prosperity is eminently sustainable.

It is poverty that is unsustainable.

Think about that.

Recommended reading: My article on the Al-Gore - IPCC agenda, titled "Just Hot Air," available here.

On The IAS: Chacha Manmohan's Bozo Brigade

We knew it all along, of course, but now it’s official:

India’s bureaucrats are the WORST in Asia. Read the news here.

The rankings, from most efficient to least efficient bureaucracies, are as follows:

Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines, Indonesia and India.

There they are, the IAS & Co., right at the bottom of the heap.

And to think that the ICS in British times was one of the world’s best. What did the ICS do that was so different?

For one: they did not do too many things. As Philip Mason says in The Men Who Ruled India:

“The ICS focused on roads, railways, bridges and canals – this was the mixture, very good for the child, to be given firmly and taken without fuss.”

Note how roads come first.

The IAS chose a different ideology – to do anything and everything, from feeding the poor to producing steel. And they abandoned their core tasks – roads, law & order, and justice, including, especially, accurate land records.

The ICS was trained in Haileybury – on the principles of classical liberalism.

The IAS academy in Mussoorie still clings to a garbled Marxist-Ricardianism.

So whaddya expect?

Anyway, I am extremely glad that the IAS knows they have hit the bottom. This should prompt them to re-think their political economy.

Why should classical liberalism produce a good bureaucracy? The answer to this question was most eloquently provided by Frederic Bastiat, who wrote that the ideas he espoused would NOT make The State weak. On the contrary, a State that performed limited functions would always be strong, because the people would not clamour to it for anything and everything. Such a government would have just a few tasks to perform, and if it did these satisfactorily, the people would have little to complain about, and the personnel of the State would occupy a high position in the estimation of the public.

This requires an intellectual revolution, which should begin at the IAS academy.

That is their only was out.

On Learning... And Laughter

Thanks to LRC, I got the link to a Reuters story on US treasury secretary Tim Geithner’s visit to China. This portion is noteworthy:

"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.

His answer drew loud laughter from his student audience...

Chinese students are smart!

Ha ha.

Wonder how long it will take desi students to laugh loudly at our finance ministers and central bankers.

And talking about students makes me wonder why so many are going to Australia. Could there be a direct link between Indian students going overseas and restrictions on private sector higher education in India? Vipin Veetil, writing in, seems to think so. He, of course, laughed at his professors, dropping out of the Delhi School of Economics; that too, after topping the BA. He is now studying in Europe. Perhaps if we had a school of economics here, where the right stuff was taught, students like Vipin would have stayed back. And laughed.

Anyway, if the goal is to see students laugh loudly at officials and their pronouncements, government education must be done away with.

I would love to see students laugh at “rural development.”

In China they are building new cities all the time – and all along the coast. There is nothing called “rural development” in China. All efforts are aimed at urbanisation.

However, the good news is that in India today there are voices of reason and sanity calling for an end to the sham of rural development, saying that cities and towns must take the lead in the economic development of the nation. Read Pramit Pal Chaudhuri in today's HT here. He concludes with a chilling statistic:

The last census shows that over 50,000 villages have been abandoned.

Indeed, my own trips in rural India have revealed that most villages are peopled by the elders – and unmarried girls. The young and able are all in the towns and cities, trying to earn money.

There is no mystery in this tendency. It is indeed predicted by the laws of Praxeology: the division of labour is greater in highly populated cities and towns as compared to sparsely populated villages. As Adam Smith wrote, "The division of labour is limited by the size of the market." Where markets are bigger, there is greater specialization: you cannot be a receptionist, plumber, taxi driver or even chai-wallah in a sleepy, underpopulated village.

Thus, the “economics” that our The State teaches and practises goes against some of the oldest insights into the market economy. The division of labour features in the first chapter of the Wealth of Nations. Some Greek philosophers had also noted it.

There can never be a rural utopia of village republics.

The idea must be laughed at.

Laugh, Indian students. Laugh.

For Internationalism... And Capitalism

Heard bits and pieces of Obama’s speech on the bankruptcy of General Motors last night on tv – and my overall impression was that it did not sound like Capitalism.

Sounded more like the Volkswirtschaft – the “national economy.”

Corporatism, not Capitalism.

Methinks the US is headed down a wrong path.

Ditto with the racist attacks on Indian students in Australia. This kind of xenophobia is antithetical to Capitalism – which always seeks to include “friendly strangers” into the overall order. Australia is a penal colony. It is an advanced, developed nation today only because of Capitalism. Yet is seems that the basic values of a free market order do not exist there. This is only because of a narrow “nationalistic” mindset, which breeds many politicians with anti-immigrant views – like Pauline Hanson, who made big news some years ago. Their counterparts in India are Raj Thuggeray’s MNS and the AASU – who are “sub-nationalistic.”

Funnily enough, I don’t think the history of the past, of ancient empires and kingdoms, tells of any instance of the politics of narrow identities overriding the broader economic interests of the community, which depended on including “friendly strangers” into the market order. In ancient Greece, for example, there existed the institution of xenos, or “guest-friend,” who escorted a foreigner around the city, and looked after his tradeables. In the Rajput principalities of Rajasthan, a similar function was performed by hereditary charans and bhats. Foreigners were viewed as a great resource – of new knowledge, products and processes. They were buyers; they were sellers. They were always welcome. Ancient market cities were full of many kinds of people: this is true of ancient Rome, Venice, the City of London, and also of Mecca.

The story of the Parsees, who came into Gujarat as refugees some centuries ago, and who are now India’s leading business community, and as “Indian” as anyone else, illustrates the point that people are a vital resource. They should never be turned away. This should be the watchword of modern Capitalism.

If western nations are moving away from true Capitalism, this is all the more reason why a country like India should champion its basic values. No one put its basic tenet across better than Adam Smith, who wrote:

Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and his capital into competition with those of any other man, or order of men.

This is the Capitalism to believe in.