The 3Ts Of Prosperity... All Destroyed!

It is indeed disheartening to hear of the plight of our new private airline companies. They have decided to observe a one-day token strike on August 18. And they want some sort of “bailout” from our The State – and somewhere here I kinda tuned off. This is a disaster.

Note that Air India has just asked for a 20,000 crore rupee bailout.

Transportation is the key. This is another disaster in transportation.

Our The State monopolizes roads and railways – and a flourishing private sector in civil aviation was bound to alter the rules of the game. It is my firm belief that our The State deliberately played spoilsport in order to keep its railways in business. This is precisely the kind of ideas that guide the actions of a “predatory state.” The taxes and other fees added to the airfare are extortionist. They invariably add up to more than the airfare itself! It is as if they do not want more and more Indians – who have never flown – to fly. The “evil eye.”

India desperately needs a Revolution in Transportation. We now have cars; we need highways. On the coast, we need modern boats. In the mountains we need modern cable cars. And we need airways too.

If excellent highways are built, and if good policies guide the growth of private airlines, the railways will be outcompeted: for distances up to 1000 km people will take a modern bus on a modern highway; beyond that, they’ll fly. Only then will our State-owned railways be forced to get its act together. Transport is always “multi-modal” – and all the modes compete.

But that is the India I daydream about.

The harsh reality is that we are moving in precisely the opposite direction – towards a Total Transportation Disaster.

In the capital city, New Delhi, the authorities have assumed that the Metro rail is a substitute for roads; a substitute for cars. They do not think “multi-modal.” They have never heard the saying “every great city sits like a giant spider on its transportation network.” That “all roads led to Rome.” They do not see that the road layout of Connaught Place and the Lutyens’ Bungalow Zone, where they live, is a “hubs-and-spokes” design. The rest of the city, which they laid out, is on the pattern of T-junctions.

Methinks our Central Planners know zilch about Transportation precisely because the “theory” in their heads has nothing to do with either Trade or Towns. Their theory is about self-sufficient village economies. This theory is wrong.

In reality, Trade, Towns and Transportation are the 3Ts of Prosperity.

And these guys have screwed up all three.

With God On Our Side

There has been a great big hullabaloo in their parliament over Baloochistan. The BJP and the Samajwadi Party staged a walkout.

A bit too much, isn’t it? – the walkout.

And that too over Baloochistan.

It costs money to keep the Lowk Sabha running. Why waste our tax money and disrupt parliamentary proceedings?

Anyway, while their parliament session ended in noise and confusion, our para-parliament is discussing a very lofty idea: God.

An editorial in Mint, written in the light of a new book by the Dalai Lama, The Leader’s Way, examines the relationship between capitalism and religion. It seems that in this new book, the Dalai Lama has strongly supported globalization and free markets. Unlike Nehru, to whom profit was a “dirty word,” the Dalai Lama has said that the pursuit of economic gain is a “fine aim.”

The editorial then goes on to discuss the relationship between Christianity and Capitalism, from Max Weber’s identification of the “protestant work ethic” – and the free European city – as critical for the growth of western capitalism, right down to Pope Benedict’s recent publication endorsing free markets.

I welcome this book from the Dalai Lama. I have always been an admirer of the Tibetans as traders – whether in woolen sweaters or in momos. I have also always advocated Liberty for chhung, their rice beer. Go to any Tibetan settlement – and I have seen both Dharamsala as well as Kushalnagar – and you will be fascinated by the vibrant market economy there, and the unique skills the Tibetans possess, which they seek to trade. A lot of what they produce is art. It is therefore a welcome development that a moral and spiritual leader of such a high stature has stood on the side of The Market.

Actually, all religions support free markets. Islam is but a morality of traders, not soldiers. The Prophet Muhammad, peace be upon him, was a trader, as was his wife Khadija. Mecca and Medina were both free-trading cities then. The Prophet famously said, “He who makes money pleases Allah.”

On Islam and free markets, I suggest you read the "mission statement" of the Minaret for Freedom Institute, an important Islamic think-tank, run by an Islamic scholar who knows his Austrian economics, Dr. Imad-ad Dean Ahmad. Read his fine paper "Islam and Hayek." pdf file here. Read another important paper by Ahmad titled "Islam and the Medieval Progenitors of Austrian Economics" here.

Hinduism, of course, said it all aeons ago, in just two little words: shubh laabh (profits are auspicious). For the west, this understanding that private gain coincides with social gain had to wait till 1776 and Adam Smith. Shubh laabh is a greater philosophical achievement than the discovery of the mathematical zero, of which we are so proud.

But we could take other important Indian religions: Take Sikhism. I have visited the Golden Temple at Amritsar. The outer courtyard of the temple is a market. There is even an ATM there. Sikhs are hard-working and entrepreneurial. Their religion encourages them to be so. It is a religion that looks down on dependence. And the community looks after those who need help – through the daily langar, where the poor are fed.

Or let us take the Parsees, who are invariably urban traders. Their surnames, like Daruwallah and Sodawallah, reflect the urban division of labour. Their ancient religion surely cannot have anything against trade, since they have always been traders, even before they sought refuge in India. And they too look after their own poor.

Further, very few Parsees and very few Sikhs are poor – because their religions encourage trade and enterprise.

And lastly, what about the Jains? Their religion, like Buddhism, is “non-theistic” – there is no God – and their way of life is based on non-violence. But see them in the practical world, and they are invariably businessmen. Usually fairly prosperous. Trade is Justice. Trade is non-violent. Trade is the Only Way for All. And I have visited Moodbidri, the “Kashi of the Jains,” and quite liked the place: peaceful, clean, orderly, and holy as well.

So take courage. If you are on the side of Liberty, you definitely have God on your side.

The Debate On Amartya Sen Continues

The debate continues in our para-parliament, with Mint today editorializing on the “relevance of Amartya Sen.” This is in the context of his latest book The Idea of Justice (see earlier post). The editors conclude that Sen’s ideas are “full of imprecision and relativity.”

Hayek is indispensable to this debate. And Chandra has provided the most appropriate quote:

Justice has meaning only as a rule of human conduct, and no conceivable rules for the conduct of individuals supplying each other with goods and services in a market economy would produce a distribution which could be meaningfully described as just or unjust. Individuals might conduct themselves as justly as possible, but as the results for separate individuals would be neither intended nor foreseeable by others, the resulting state of affairs could neither be called just nor unjust.

Is it “just” that Sachin Tendulkar earns so much? Or Shah Rukh Khan? Is it “unjust” that housemaids are poor? As are teachers, professors, and journalists.

The welfare statists, led by Amartya Sen, want “distributive justice.” To them The Market is unjust. They call upon The State to correct these perceived injustices.

My point is this: Amartya Sen’s “vision” is an exact replica of Jawaharlal Nehru’s “socialistic pattern of society.” The idea is an economic egalitarianism achieved by State force. This is the very same vision that India has chased for over 60 years – and which lies in tatters.

The Hayekian vision is of a Great & Open Society: a society of numberless individuals interacting freely in markets, exchanging goods and services peacefully among themselves. This is a “catallaxy,” not a “community.” The individuals who engage in market exchanges usually do not even know one another – and it doesn’t matter.

There cannot be economic equality in such a Great Society. As in a free forest, where there are tall trees, short grasses, bushes and shrubs, and vines, so too with the Great Society. Just as each living creature finds a “niche” in the jungle, so too with The Market – we all find “niches.” This is the “social division of labour.” Rewards are uncertain for all. The socialists and welfare statists want to replace a freely growing forest with a landscape of uniformly trimmed hedges - with their Supreme Leader doing the trimming.

Further, the Great Society is one in which there is Competition. There are rewards for those who serve their customers best; and there are punishments for those who do it the worst. Without this “minimum pressure” the catallaxy cannot work. After all, the entire idea is that the Consumer is King. The welfare statists want to eliminate this minimum pressure. Their ideas only create a culture of dependency. They do not encourage enterprise. Amartya Sen has never supported Economic Freedom. Or Free Trade.

Recommended reading: My review of Amartya Sen’s earlier work Rationality and Freedom that was published in the New York Sun in 2003. To read, click here.

Our Parliament... And Theirs

It was good to read that Aristotle the Geek “agrees with everything” I have just written against Amartya Sen’s idea of Justice; and also what I have written on Eminent Domain.

That puts the two of us against three major league editors.

Note that this debate is occurring in a “para-parliament.” This is where actual people are speaking – not their representatives. This is where the real action happens. What people think on issues is the focal matter of “politics”; and real “political influence” is nothing more than the ability to influence public opinion on these issues.

It is here that the ideas of Liberty, Property and Justice – as expounded by the great classical liberals of yesteryears, which form the bedrock of modern libertarianism – are gaining ground.

And these twin debates – one on Amartya Sen’s idea of Justice and the other on land acquisition – are a welcome opportunity to spread these ideas.

The reason why these eminent editors have got it wrong is that they are not consistently “liberal” – in the classical sense. They hold views that do not consistently uphold the inviolability of property because they have not thought things through for themselves, in their own minds. I recommend to them Frederic Bastiat’s The Law.

Private property is what the entire ball game is about. We make India a great piece of real estate.

Which is why we stress land records, not ID cards.

[Jug Suraiya warns that compulsory ID cards will lead to police excesses.]

While all this action is happening in our para-parliament, Chacha Manmohan is going to bare all about Pakistan and terrorism in the Lok Sabha – of which I don’t think he is a member.

Recently, the Lok Sabha passed 8 bills in 17 minutes without debate. Parliament met for just 32 days last year. And almost every day the proceedings ended in an uproar.

Read the news here.

Cha Cha is going to talk to this parliament. A political leader must talk to the people.

Anyway, I am fed up about Pakistan and terrorism. I demand Liberty Under Law for all immediately. What matters is how you survive – which is The Free Market. Yeah, there may be some terrorists, Maoists or other violent creeps out there, but we trust in luck, in god, and in our own .45 Magnums to tackle such creeps. If Mumbaikars had been armed, they would have themselves eliminated the entire Kasab gang in a few hours. The State took a few days. And remember, a gun in the hand is better than a cop on the phone.

So let us forget about Cha Cha and the Lowk Sabha and Pakistan.

Let us think of Liberty.

Spread the news in your own para-parliament.

On Eminent Domain

Legislation on the powers of our The State to “acquire” land that belongs to the citizen for “public purposes” – which, perversely, includes private industrial projects – is The Topic of the day, with two editorials arguing that Mamata Banerjee and the Trinamool are wrong.

Here is the Indian Express.

Here is Mint.

At the outset, I must mention that I have direct experience of The State wanting to acquire the property in which I was living. This was a few years ago, in Goa. A north-south expressway had been proposed. And maps were circulated on its alignment, which showed that our property was sure to go.

It was a horrible feeling. I would not wish it on anyone.

To the editors who have supported “property takings” by State force, my plea is that they must sometimes spare a thought for those dispossessed. Yes, progress and industrialization is a great cause – but none should be made to suffer forcible seizure of property for this cause.

In my book, if the private businessman can acquire only 70 per cent of the land he had planned to acquire, then he must adjust accordingly – and build a smaller factory. There is simply no case that The State should be called in. There is absolutely no “public purpose” here. It is entirely about private enterprise and private purpose.

What is my take on “eminent domain”? This question has come up in readers’ comments recently.

I read a story as a child of a farmer in the American mid-west who had the good fortune to own land smack-bang-middle of a proposed highway. He threw a party when he heard the news. The price paid for his land was much more than market price – the value of his neighbouring farms – and from the proceeds he bought a cottage in the Canary Islands and settled down to a comfortable retirement.

If The State offered such “inducements” to those whose properties it seeks to acquire, even we would have celebrated in Goa when we heard the news that our property lay on the path of an expressway. Maybe we too would have moved to the Canary Islands – which lie very close to Morocco :). Or maybe we would have moved to Jamaica :) :) :).

So that’s my take on eminent domain. Whether it is The State that acquires property or any private party does so, in no case can pure force be used. The only just method is inducement.

The “project-affected persons” should party all night on hearing of their good fortune. Their properties should go for a much higher price than that of their neighbours, whose properties are not affected.

Only this approach can be called Just.

Road-building constitutes a great “public purpose”: we all benefit. Even foreign tourists benefit. No one should suffer for this cause. Compensation should not only be more than adequate, it should be hugely generous.

Even here, I do believe if there are some “holdouts” for reasons of sentiment or faith – as in the case of a shrine or a graveyard – force should not be used, and the road should be re-aligned.

No Misuse of Force: that is the ideal.

A Happy Monday For Liberalism

As West Bengal moves away from Communist thinking, and the Communist Party there is in terminal decline after an uninterrupted reign of over 30 years, it is the Trinamool Congress, a breakaway faction of the Grand Old Party, that is filling up the vacuum. The Trinamool is an important ally of the present government.

However, the Trinamool has recently been seen to be too “socialist” [from now on we shall call such ideas “étatist”]. Mamata Banerjee, their chief, now railway minister, has naturally opposed privatization of State “enterprise” – another fatal misnomer. Many commentators who were happy that The Left were out of the government noted that nothing much had changed with the new dispensation because the Trinamool (and the DMK) seemed more étatist than The Left – who are in terminal decline, thank God.

However, this time around, there is a conflict between the Trinamool and the government that promises to yield fruitful results for those who believe in the inviolability of Private Property: the conflict is over amendments to the “land acquisition legislation.” The new bill allows The State to help private businessmen buy land for their projects, but with a proviso: the private party must buy 70 per cent of the land on his own; The State will assist in the delivery of the properties of the balance 30 per cent, the “holdouts.”

Trinamool is saying nothing doing: the private party must buy all the land he needs on his own, without any support from The State – support, that is, based on the Misuse of Force.

In its lead editorial today, the ToI has labeled the Trinamool stand “populist.” They say the Trinamool is being too “idealistic.” The editors have called upon the party leadership to shun populism and be “realistic.”

In my view, the editors of the ToI are failing to stand up to their professed “liberal” philosophy. This political philosophy, the very antithesis of communism, is based solidly on the bedrock of Private Property. It is therefore a peculiar debate we are witnessing: a party of étatists standing firm by Property; and a “liberal” newspaper arguing the opposite.

Deep down, I do believe that the editors of the ToI are misreading the real “politics” that is occurring in rural India, especially West Bengal, where, after the fiasco over Singur and Nandigram, the average peasant has become firmly convinced of his rights to the ownership of his own land; and further, that The State has no business depriving him of this natural right. Trinamool’s Banerjee is not being “populist” – which is Chacha Manmohan with his NREGA and cheap rice programmes; rather, she is doing what all good politicians must: she is faithfully mirroring the opinion of her constituents.

I am happy at this outcome. It is good for Indian politics. It is good for Bengal. It is good that our long dispossessed masses are waking up to their rights to Property – something the “socialist” Constitution of India does not guarantee.

It means that Liberalism is winning.

Nonsense From Amartya Sen

Professor Amartya Sen is at it again – confusing the idea of justice in order to suit socialists. Sen’s latest book is titled The Idea of Justice, and its release has prompted the ToI to publish a full-length interview with the man in the Sunday paper. The interview reveals where Sen stands, and how much at variance he is from traditional conceptions of Justice.

Sen begins by quoting Antonio Gramsci, whom he calls “a great Italian political leader.” Actually, Gramsci was a great Communist – read about him here – and we all know what communists know about Justice, which is, to them: No Property. Horrors.

After this inauspicious beginning, Sen rambles on and on in support of “human rights,” in support of “social justice,” and in support of the ideas of John Rawls. All this is nonsense-on-stilts.

Towards the end, Sen gives us an idea of the “injustices” he seeks to correct with his idea of justice – and these are:

“… slavery, or subjugation of women, or widespread hunger and deprivation, or the lack of schooling of children, or absence of available and affordable health care.”

Actually, it is State interference in The Market that causes poverty, which results in hunger and deprivation, as well as the inability to afford either schooling or healthcare. Sen’s idea of justice therefore is all about further State intervention. There must be more State spending on education (which is nothing but State propaganda) as well as healthcare etc. Sen is a socialist. Or, more precisely, especially in the Indian context, Sen is a “statist.” An étatist.

What is Justice? Why is it so elusive?

It was Ayn Rand who asserted that “the principle of trade is the principle of justice.” There is Justice in trade because no one has treated the other unjustly.

So what is Injustice?

Violation of Property, violation of Contract, and causing physical or financial injury to anyone, either purposely or by accident – these constitute Injustice.

For correcting these injustices, which are always against individuals and not against The State, what I think best would be a system of fines – to be paid to the unjustly treated individual by the unjust party. This is how “justice is done.”

Indeed, this was the system of Justice among the Anglo-Saxon tribes of old – and Bruce Benson’s The Enterprise of Law: Justice Without The State is an excellent read on the subject. This was Justice without any police. And it worked. I am sure it can work again.

Thankfully, the good journalists of the ToI have also linked another article to the Amartya Sen interview – a story about the real injustices that occur in India. It begins thus:

More than 30 million cases are pending in the courts; the National Human Rights Commission receives more than 75,000 complaints a year [against the police!]; the National Crimes Bureau (NCB) registered 27,000 cases of violence against Dalits in 2006; the NCB also reported 32,481 murders, 19,348 rapes, 7,618 dowry deaths and 36,617 molestation cases.

In the meanwhile, the police are no good, the courts don’t work.

There is No Justice At All.

And Sen is blabbering on and on about “education and healthcare” as constituting real justice. He probably also thinks that the NREGA is “justice.”

I recommend to all Friedrich Hayek’s Law, Legislation and Liberty, especially Volume 2 titled “The Mirage of Social Justice.” Buy it here.

Sen’s conception of justice is just this mirage.

Nonsense-on-stilts.

We Need Roads

As a great advocate of road-building in India, I was naturally attracted to a report in Mint today on comments made by the highway minister on land acquisition for road-building. The report includes a 3-part video discussion that is worth watching.

Isn’t technology great? But remember, there is no technology without Capitalism. Under Socialism there can be only science – not technology. So now that we Indians have some access to high technology and are experiencing its wonders and benefits, let us also raise a toast to Capitalism, which converts science to technology.

But we were discussing land acquisition for road-building. I have three points to add to the discussion:

First, the terminology: I do not like the word “infrastructure” – which includes power, telecom, sewage and what not – when we have the more precise term “roads.” The minister’s title anyway is “roads and highways minister.” Power, telecom, railways, etc. are all specialized areas with their own solutions. Since our task should be to focus on solutions towards getting roads built, we must avoid the blanket term “infrastructure” and use the specific term “roads” instead.

As an aside, I may mention that the term “infrastructural bottlenecks” was in vogue even in 1977, when I was pursuing a BA in Economics in Delhi University. The paper on “Indian Economics” was full of this term. They were planning then; they are planning now. And the infrastructural bottlenecks continue. What a bunch of total duds!

Second: The power of The State to “acquire” land, also called “eminent domain,” is a very serious power, precisely because its use results in the loss of property for some citizens. Such powers should be very rarely used, and compensation should be huge – so there is no cause for complaint. If a person has lost his property to some public cause, the public should be more than happy to make up the unfortunate man’s loss – and more. This is also based on sound economics:

Suppose there is a row of houses, and one house has a “For Sale” sign on it. You can find out the “market value” of this house and acquire it at that price. But suppose eminent domain were to apply to the whole street. All the other houses are not up for sale. To make the owners sell would require a much higher price – and only that would be Justice.

Lastly, methinks they are making too much of a fuss over the hurdle of land acquisition for road projects. Vast swathes of the country is “unowned land.” A highway from Bombay to Cochin could easily be built along the unowned lands of the Western Ghats.

Further, where land is owned in big chunks, a landowner might even collaborate with the road builders by giving up a portion of his land because when the road is built, the value of his remaining land will shoot. Roads raise the value of land. Landowners have much to gain by collaborating with the road builders.

I also think the National Highway Authority of India (note the word “authority” – ugh!) should be corporatised and made to compete with private road builders. As was done with MNTL. Today, NHAI is just a roadblock, not a roadbuilder. It is a State monopolist. We don’t need these monopolies and authorities.

We need roads.

On The Changing Climate Of Opinion

My latest column in Mint is on the subject of morality, the natural order, and civil government. Hope you enjoy it. To read, click here.

I have another read to recommend: Percy Mistry, who recently chaired an important committee on financial market reforms, has written a 2-part article published in the Financial Express, provocatively titled “How to change the country in 1700 days” that is worth reading in the precise sense that pillars of the establishment are writing such things. (Thanks to Chandra.)

For example:

Inevitably, the type of reforms that India needs will transform the role of the state from its current default setting of ‘command-and-control’ over every aspect of Indian life. Such reforms must transform and cure the multiple personality disorder that the psyche of the confused and overstretched Indian state so obviously suffers from.

The reforms Mistry calls for include privatization – and more. He also criticizes the “poverty alleviation” programmes of our The State, saying:

The public and the poor will benefit more by the extended activities of a private sector encouraged to profit from the bottom of CK Prahalad’s pyramid; far more than being patronised, condescended to and often robbed by a state whose minions at the interface of poverty are brutally predatory and criminal.

Read “How to change the country in 1700 days” Part One here; and Part Two here.

There is hope. The climate of opinion is changing. And it is only opinion that rules. Glad to be in the opinion business.

Scoundrels! Rascals! Thieves!

This should be headline news, but I found it tucked away in an obscure corner of the HT website:

72 govt cos accumulated losses of Rs 94,428 cr

This is according to the report of the Comptroller and Auditor-General (CAG), which has been tabled in parliament. According to the news report:

Equity investment in 72 state-run entities has been completely eroded as they accumulated losses of Rs 94,428 crore by the end of 2007-08, more than five times their paid up capital, the Comptroller and Auditor General of India said in a report.

The report, tabled in Parliament on Thursday, said that as on March 2008 "the accumulated losses in these 72 companies were Rs 94,428 crore against equity investment of Rs 15,762 crore as on March 2008, making their combined net worth negative at Rs 78,665 crore".

This included six listed companies, whose accumulated losses were Rs 11,349 crore against equity investment of Rs 1,451 crore, making their combined net worth negative at Rs 9,898 crore, the report said.

During 2007-08, the total outstanding government loans in 46 firms, out of those 72, amounted to Rs 49,926 crore, it added….

As the capital of 46 companies was fully eroded, the recovery of loans amounting to Rs 49,926 crore became doubtful.

In other words, some friends of The State have stolen 1 lakh crore rupees. This money could have built an excellent roads network pan-India.

This is the truth of Indian socialism: they have no idea of “commonwealth”; they are all engaged in stealing public money; they are bloodsuckers as far as society is concerned. They produce nothing of worth. And they are carefully preserved only in order to keep the mythology of Nehruvian socialism alive. Of course, as we now know, our The State will work to keep these socialist myths alive forever by including these erroneous ideas in school and college curricula.

Scoundrels!

Rascals!

Thieves!

Kill This Bill Part 3

Continuing on The Right Of Children To Free And Compulsory Education Bill, 2008, the only editorial I found today is in Mint, where they make the case that our The State is thinking about schools – the input – but not about schooling – the output. The editorial closes with a discussion of negative and positive liberty:

A half-century ago, the Oxford political theorist Isaiah Berlin drew a sharp distinction between “negative” and “positive” liberties. The former are individual rights that require the state to back off. Whether or not that’s easy, such a concept is simple to enforce.

Positive rights, however, require the state to actively intervene to provide services. But this proves trickier: Just expenditure isn’t enough. If India still thinks that just spending money will enable learning, we’ve hardly reformed since 1991.

Long before Isaiah Berlin, it was Frederic Bastiat who wrote that The Law must always be negative. He explained it thus:

The Law exists to prohibit certain actions we all agree should be prohibited. It can do no more good than that. That is why the Ten Commandments all begin with “Thou shalt not …” The Law can only prohibit. The Law only says what we must not do. Everything else is “feasible.” The Law can never say what we must do.

It cannot be The Law that everybody must work, be well fed, or well educated: these are to be accomplished by individuals, through virtuous conduct. These cannot be accomplished through the force of law. These lie within the province of Liberty and individual action.

Bastiat is unmatched in his language and his passion for Justice. The socialists in his times were passing all kinds of socialist legislation like a “right to food,” a “right to work” and a “right to education.” This was France in the 1840s – and it looks quite like Chacha Manmohan’s socialist The State today.

On the right to food, Bastiat asked: “Does the law have lacteal veins within its breast with which to feed the hungry?”

On the right to work, he said it is foolish to maximize “effort”; rather, we must maximize the “results” of the effort. We must think as consumers, of consumption. Work is disutility.

On the right to education, Bastiat was equally clear in his thinking. He asked: “Is the law a lamp of learning?”

Is our The State a “lamp of learning”? – we Indians must ask ourselves today.

And is this “good law”? – all these meaningless and nonsensical rights while Property is not secure.

And Chacha wants to spend 1,50,000 crores on citizen ID cards.

And there are no roads.

And there are no land titles.

And they want to teach socialist theories and values by force to every single child, uniformly throughout the land. Each with his ID card.

This means that our “politics” will never be reformed. Seems like these great “liberalizers” are not “liberal” at all. Indeed, they are sworn enemies of liberalism. If there is any evidence we needed, this is it. As the Mint editorial concluded, “we’ve hardly reformed since 1991.”

PS: I quoted Bastiat from his little booklet, The Law, published in India by Liberty Institute, with my foreword, 15 years ago.

You can download The Law here.

Happy reading. This immortal defence of Property and Liberty, this clear conception of Justice, will be “compulsory reading” in my Institute of Catallactics. It explodes thousands of light bulbs in the head. And it kills “positive legislation.”

This essay is also to be found in my collection, The Essential Frederic Bastiat, published by Liberty Institute in 2007. I recommend this collection to all our youth; indeed, the first essay therein is titled “To the youth.”

Now, there’s an incentive to dump boring socialist economics and “civics” and study the classics of Liberalism – at least the latter are highly enjoyable to read!

Your move, Chacha.

Kill This Bill Part 2

The Right Of Children To Free And Compulsory Education Bill, 2008 is available here. (Thanks to Ramesh Srivats.)

I read what was most relevant.

Clause 7 is on the sharing of financial and other responsibilities. This will be a central government funded and directed programme in the main. What is interesting is Clause 7 (6) which says:

“The Central Government shall—
(a) develop a framework of national curriculum with the help of academic authority specified under section 29; …”

When we go to Clause 29, everything becomes crystal clear. It says:

29. (2) The academic authority, while laying down the curriculum … shall take into consideration the following, namely:—
(a) conformity with the values enshrined in the Constitution;...

This will be Socialist education for all, by force, and at the taxpayers expense.

It will have a high standard of uniformity – the uniformity of error.

I rest my case.

Kill This Bill

The Right of Children to Free and Compulsory Education Bill has just been passed in the upper house of parliament. Even its title makes no sense.

How can a “right to something” be “compulsory”? I am firmly opposed to allowing our confused The State the “right to use force” on kids who hate school. Cadres of education inspectors will go about terrorizing kids who work in homes, tea shops and garages.

And all this for a State-approved “education” that is delivered by the “ideological apparatus of The State”: the School Boards. This is NOT education; this is Socialist Propaganda. It is harmful for minds exposed to it. Ask me – for I came out of The System myself.

Actually, this Bill gives The State the right to use force on private schools. There is a lot of Misuse of Force contained in this Bill.

As I have consistently maintained, our The State should have NO ROLE in education. A free market for all kinds of knowledge is best, delivered by competing businessmen. So a poor kid might try and learn English in 6 months from a private institute.

Further, and this applies especially to poor kids who need to enter The Market early, a broad generalized education lasting 10 years is quite useless, and also a waste of precious Time.

To flourish in The Market a kid needs to know just one thing well: the division of labour implies the “fragmentation of knowledge” (Hayek). A bartender, a waiter, a cook, a street-food vendor, a musician, a dancer, a receptionist, a plumber, a carpenter, an artist, photographer or painter, a butcher, an electrician, a mechanic, a sweeper, a taxi driver – all survive with a separate fragment of knowledge entirely their own. In no case is a long, broad and generalized “education” useful. Those who stick to it and go on to “higher education” have access to only some careers – they may become lawyers, doctors, managers, accountants, engineers, bureaucrats. The Market is much bigger than that. And India must think big if she is to reap the benefits of a predominantly young population: the so-called “demographic dividend.”

Education is a purely “private good”: those who do not pay can be excluded. The Market allows those who possess fragments of knowledge that other people want to sell this knowledge for a fee. The key question, then, is this: Does our The State possess any knowledge at all? Knowledge, that is, that other people want. And, if so, why are they so keen on using force?

No siree. The State at the “commanding heights of the economy” is bad enough. Let us not have the same The State at the commanding heights of education.

Kill this Bill.

Recommended reading: My "Liberate education from The State," available here. There is another related column, here.

Look And Laugh

The Beatles sang a song that went, “I read the news today oh boy, the English army had just won the war.” But after reading the news this morning, a different song came to my head, the great Fela Kuti’s “Look and Laugh.” (See the video here.)

Yeah: Look and Laugh.

First of all, there is this piece on Hillary Clinton and our environment minister not agreeing on emission targets.

I wonder where all she was taken during her trip. One photo shows her arriving at her hotel to a red carpet reception, complete with sari-clad ladies throwing rose petals at her feet.

The rose petals are significant. She must not be given a bumpy ride. So she must know nothing about the actual state of Indian roads. If she did, she would tell Chacha to fix the roads, and manage traffic scientifically – and thereby reduce India’s emissions of green house gases. Instead, she was taken to some green buildings. Of course, green buildings cannot save much energy when those who have to work in them arrive on rutted and pitted roads. Ask me. I drove to Gurgaon yesterday – where the green building Hillary visited is located. Perhaps they took her there by helicopter.

Second: There is an opinion piece today on the Tata Nano. Yes, the 1 lakh rupee or US$2500 car is here. There have been deliveries. The great Indian automobile revolution is on. It is unstoppable. It is gathering momentum. And there are no roads worth the name.

And finally, to crown it all, here is the news that LK Advani of the BJP is launching another “Rath Yatra.” He is planning to hit the non-existent road in his chariot, to “criss-cross the country to meet party workers, seeking to lift their sagging morale and rebuild his own image after back-to-back general election defeats.”

Where are the roads on which this great political leader of Hindutva can "criss-cross the country"?

Look and Laugh?

Or should it be “Hit the road, Jack!”?

You choose the song.

In Favour Of Non-Interference

The prime minister of Pakistan has criticized our The State for “interfering in Balochistan.”

As I pointed out earlier, our The State once supported the LTTE on our own soil.

But that apart, the news also says that Hillary Clinton is in Mumbai – and her The State has “interfered” massively all over the world – including, I dare say, Balochistan.

This is why I am a supporter of Ron Paul, the Republican Congressman from Texas who ran for president on a libertarian agenda. As far as foreign policy is concerned, Ron Paul stands for non-intervention in the internal affairs of foreign nations.

Ron Paul is still in the news, piloting a bill that seeks to audit the US Fed. Ron Paul stands for “sound money” – which means closing down the Fed ultimately.

But it is the foreign policy of “non-intervention” that I was talking about. It should be looked upon as a Principle. In a free trade, free mobility world – Liberty Under Law – each man must “mind his own business.” National boundaries will fade, and national governments in such a world should be constitutionally debarred from both covert as well as overt interference in the affairs of other nations.

South Asia presents a peculiar picture of “interference.” India accuses Pakistan of interfering in Kashmir; they accuse us of the same in Balochistan. Our own record is stained over the LTTE. And then there is the US – interfering in Afghanistan, in Pakistan, in the Middle East, in Israel…. But a lasting peace eludes us.

The good news is that the US State is broke. So they won’t have the means to carry on their global politics. Of course, diplomacy is not politics; it is, at best, “quasi-politics.” Yet, the modern State uses weapons other than traditional diplomacy. This includes secret organizations like the CIA, IB, RAW, ISI and so on. Such organizations have become part of the standard equipment of any modern State. They are never audited, and their activities are entirely secret. I call them “Dirty Tricks Departments.” It is these agencies that carry out “interference” in other lands. Their actions are invariably covert and hidden from view – even of their respective parliaments. Something must be done all over the world about such secret State agencies – especially in times of peace.

Classical liberalism means free trade and peace. Without peace, none can trade. But above all, classical liberalism emphasizes the Rule of Law. Justice is a supreme value. In such a world, there are “civil governments” that act as ancillaries to The Market. They do not carry out “covert operations” in foreign soil. Civil governments must act under law, not be above it.

Yes. I completely agree with Ron Paul. Every nation in the civilized world must base its foreign policy on the Principle of Non-Interference.

Educrats In Disgrace

The All India Council for Technical Education has egg on its face. The news is that “several senior people from the AICTE have been arrested and a case has also been registered against the Chairman.” The charge: Bribery. (Thanks to Chandra.)

The news report, under the by-line of Bibek Debroy, says it is rumoured that the present chairman of AICTE paid money to get his job.

The rot runs deep.

The AICTE is responsible for granting “recognition” to management and engineering colleges etc. It is for this official stamp of approval that bribes are demanded and paid. However, one institute did not pay up. It leveled charges instead. An investigative committee was therefore set up – but its report was buried. These files were opened by the new minister. Hence all the arrests.

Just a fortnight ago, this blog had called for “liberty for the edupreneur.” In that post, we had questioned the need for an “independent rating agency” for educational institutions – that is, if such an agency was part of The State. Liberty for the edupreneur means liberty from the educrat.

The critical point worth noting is that the educrats are not in the knowledge business; they are into State Power.

The only real solution is to get this The State out of education. The present scenario is a product of our collective error in viewing our The State as a fount of knowledge. In reality, all its efforts in this area are directed towards spreading socialist propaganda while keeping truth out of the curriculum. Indeed, just the other day, a professor told me that his university functioned as an “ideological apparatus of The State.”

We Don’t Need This Education.

We Don’t Need Thought Control.

We Don’t Need Bribery And Corruption.

Leave those kids alone!

And let all edupreneurs free.

On Thatcher, Chacha And Air India

As a low-cost civil aviation enthusiast, I still recall the times in which this idea was born: the Thatcher era, with Freddie Laker taking on the “Big Five” - BOAC, KLM, Pan Am, Air France and Lufthansa - on the busy London-New York route, with his "skytrain." It was a thrilling moment. Freddie Laker was one of Margaret Thatcher’s favourite businessmen. She liked the swashbuckling type of adventurer who takes on big competition head on and emerges successful.

Let us now turn to the evil designs of the Chacha Manmohan State and the curious case of Air India entering the domestic low-cost airline business. What does this mean in terms of realpolitik? Allow me to illustrate by means of an incident I was witness to.

During my Mangalore years, something I found clearly noticeable on the streets was a vibrant private bus industry. As a champion of private business, I welcomed this. However, all these private bus owners here are forced to compete with KSRTC – the Karnataka State-owned bus behemoth. This KSRTC (like Air India) runs at a loss. Now, try imaging competing with someone who can afford to run at a loss, year after year.

Anyway, one morning I read the news that KSRTC was launching 50 new buses on the Mangalore-Udipi route, a very busy 50 km stretch of NH 17, on which you can get a private bus every 5 minutes. Which is why none take the train.

The announcement of 50 new KSRTC buses on this route created a big fear among the private bus operators. In the end, their view prevailed, KSRTC withdrew, but not after much lobbying, during which, or so it was alleged, many crores changed hands. I was also told that these bus operators had bought off the Indian Railways – because of their lobbying, the Bangalore-Mangalore rail link had never been constructed!

Note that all this corruption and bribery is rooted in the evil idea that The State should occupy the “commanding heights of the economy.” In a free market, the commanding heights are occupied by consumers. And “civil government” is always an ancillary to The Market. These are the ideas that should be at the foundation of the Second Indian Republic.

Getting back to civil aviation: Try and picture the scene. Some four or five new private sector low-cost and full service airlines have come up – and become the toast of the town. They have redefined flying in India, making it immensely affordable. There has been a dramatic increase in the number of first time fliers. This is progress – because of private enterprise. In the old days when State-owned Indian Airlines monopolised the market, we all took the train. Delhi-Goa on Indian Airlines cost more than Delhi-London on Pan Am.

Yet, unlike Margaret Thatcher, who encouraged Freddie Laker, Chacha’s State has actually worked against these pioneering businessmen. There is onerous taxation; there is the high cost of aviation fuel, monopolistically supplied by The State. There have been some mergers. These businesses are not yet completely out of the woods. And yet, at such a moment of time, Chacha is going to let the loss making Air India “compete” with these truly heroic private businessmen.

I condemn this idea as evil in intent, and against the “common profit of the realm.”

Air India should be sold – lock, stock and barrel.

Ditto for the KSRTC.

Baloney From The Non-Aligned Movement

Chacha Manmohan’s face graces the papers again today. He is now in Egypt, addressing a Summit meeting of the Non-Aligned Movement, a Nehruvian diplomatic initiative that belongs to the Cold War era.

Of what relevance today is the Non-Aligned Movement (NAM)? With the USSR gone over 20 years, ditto the Berlin Wall, you would think that a rag-tag bunch of poor socialist nations would see the light and alter their domestic and trade policies. But no – they would rather stand opposed to Capitalism. All these nations fly the flag of poverty – they say Capitalism is for the rich, and Socialism is for the poor.

Thus, in his opening speech at the NAM Summit in Egypt, Cuban president, Raul Castro, said:

“We call for a new monetary and economic world order... we must restructure the world financial system to take into consideration the needs of developing countries.”

Poppycock!

All the world needs is “sound money” – and while Chacha Manmohan applauds Castro’s speech in poverty-stricken Egypt, back home he is up to the same old mischief.

Here is an ET editorial of today pointing out that Chacha's finance minister is “monetizing the deficit.” In simple terms: He is printing money to pay for whatever our The State buys.

Is this “sound money”? Certainly not!

Yet, the ET editorial ends pathetically, saying that “monetizing the deficit is the right policy.”

So why don’t they recommend this to all the NAM countries: let them all print and issue paper notes as money, in ever larger quantities – and call this the “new monetary and economic world order.” The central idea: We can dispel poverty by producing money. How utterly simple. No one even needs to work. Except the guys at the printing press.

Actually, poor people in poor countries need only one thing in order to prosper: Real Capitalism based on Sound Money and Legitimate Banking. This means free trade, gold, private property and the rule of law.

In an important book, The Anti-Capitalist Mentality, Ludwig von Mises had this to say on the poor nations of the world, like India and her friends in NAM, who want the poor to prosper but suffer from this very same “anti-capitalist mentality.” He said:

"The poverty of the backward nations is due to the fact that their policies of expropriation, discriminatory taxation and foreign exchange control prevent the investment of foreign capital while their domestic policies preclude the accumulation of indigenous capital.”

Such policies are what NAM is all about. These policies, coupled with the “monetization of the deficit,” perpetuate poverty.

In the first place, these policies discourage the formation, accumulation and the investment of Capital. At the other end, this business of monetizing the deficit leads to “capital consumption” – by The State.

Yet, the wages of the poor will never rise unless more and more Capital is invested. This must include foreign capital. The more capital, the merrier.

Poor countries therefore need Capitalism – real Capitalism.

They don’t need all this baloney called NAM.

How Congress Morons Messed Up

In this crucial passage from The Men Who Ruled India, Philip Mason describes the difference between British district administration and that of the Indian National Congress, who had come to control ministries in the provinces after the Government of India Act of 1935. Do read this carefully:

India was a poor country which could not afford luxuries and a [British] district officer had concentrated on essentials – public order, the swift administration of justice, the prompt payment of taxes moderately assessed, the maintenance of accurate land records which would prevent disputes. Those had been the four first things. After them came minor matters: salt, stamps, opium, excise, and all the District Board work – roads, bridges and schools. The rest were luxuries, excellent if you had any time or money to spare when the real work was done.

But by 1939, the emphasis had changed and rural development, co-operative banks and village committees were inclined to come first…. The district officer must add to his innumerable duties the maddening and infructuous business of answering parliamentary questions, the host of subjects included under the head of Rural Development…. It was not surprising that he did not always find it possible to check land records as he used to do, that cases were taking longer and longer to be settled.

That was why to some at least of the service it seemed that it was time to go. Rule of the old kind was running down; districts were being administered in a new way, which might be better, but was not the British way and it did not seem right that the British should go on taking responsibility for direction essentially not theirs.

A district officer might find, perhaps, when he had time to look, that a peasant had been brought into headquarters a dozen times before his case reached even the first formal hearing, or that someone had been forced to spend all he had to defend his holding against some fabricated claim, simply because the land records were not up to date.

As to Rural Development, most British officers would have agreed that a great deal of what was proposed was admirable if the villagers would do it themselves, but they were skeptical about trying to change habits from above – and much of the effort put into the attempt seemed to them wasteful and incompetent. Some suggestions however were not suitable to village life at all, and there was undoubtedly a sickening amount of pretence and self-glorification. It was not – every district officer would agree – that Rural Development was less than important. But it could not be a success without paid staff, properly trained; the training would take time and cost money; it should not be done inadequately and at the expense of justice and public order. And surely, if the tremendous expense of this experiment was to be undertaken, it should be clear where the responsibility lay.

Philip Mason was an ICS officer during this crucial period, serving as Deputy Commissioner of Garhwal in 1936, when Govind Ballabh Pant was his Premier. He records an interesting tale of that period, when a great deal of politicking occurred over – guess what? – the construction of a road.

But do note the word “experiment” Mason uses to describe the Congress’ fascination with “rural development.” This has been an experiment with government that has destroyed the lives of over a billion people: no land records, no justice, no public order, no responsible district administration, all the money being poured into village upliftment – all this, while every city and town has been destroyed.

Just read about Bombay – flooded again, after a highly predictable monsoon shower.

Yes, the Congress has been a huge mistake. And they never learn, do they? I can picture district officers of today throughout India neglecting the essentials – like land records and public order – while spending all their time on Chacha Manmohan's NREGA.

Frankly, I don’t think it will be possible to easily fix the huge mess that India is today. Chacha Manmohan and Sonia’s Congress have got the whole thing wrong. Since every theory of theirs is wrong, their practice is wrong as well.

And they want to teach!

For A Republic Of Fun

I have often written that the prohibition of cannabis (ganja, charas and bhang) is my “pet peeve,” but I think I feel much stronger than that.

Much, much stronger.

We have just heard of the Gujarat hooch tragedy – and of the Gujarat police.

Now think of the scale of adulteration in ganja and charas?

See what the poor people smoke – and you will cry.

See what the young kids buy on the streets – and your blood will boil.

Yes, there is a “public health issue” here. But public health demands that cannabis be free cultivated and freely sold, and that low alcohol beverages like beer and wine be totally delicensed and also freed from tax.

Under present policy, smokers smoke poor quality stuff, and drinkers drink strong IMFL. How can this make sense in terms of public health?

Further, as far as ganja and charas are concerned, I am on the side of the farmers – who live on the verge of poverty today. Their fields are always in remote, inaccessible locations, far from a road, to stay clear of prying eyes. There, the farmer lives in his little hut, no electricity, no irrigation, no modern seeds, no scientific technique – and he is routinely busted. This is Tyranny.

Yes, cannabis must be legalized in India. Free the weed and make it The Crop. Pull out all the apple trees in Kulu-Manali and plant the Noble Herb.

And there is some good news: A group has been formed on Facebook called “Legalize Cannabis in India.” It has been just a week, but over 700 people have joined.

If you feel strongly about this Unholy Tyranny on the Noble Herb, do join, by clicking here.

The basic idea now, as far as I can gather, is to take the matter to court. But let’s see how things progress.

Most Indian economists ignore the tourism industry. It is here that India has tremendous potential. We need world-class roads, of course, but we also need Liberty – to keep the tourist happy. After all, he is The Customer. Tourists come on holidays – to have fun. We desperately need to inject some Fun into our country – not just for the tourists, but for ourselves too. All this requires Liberty – so that entrepreneurs can compete to offer us Fun.

Don’t get me wrong. I don’t smoke ganja for fun. For me, getting stoned is serious business.

Ha ha.

Laputa, I Say!

Yesterday, 33 cops were killed by Maoist rebels in Chhattisgarh, barely 70 kms from the capital, Raipur. Among those killed is the district superintendent of police.

It is not just Lalgarh alone. There is an entire forest belt out there covering much of central India – an area that is poor, inhabited mainly by tribals; an area where something has gone horribly wrong.

I myself enjoyed an evening around a bonfire with these forest-dwellers once. The drums kept beating; we all danced. And drank copious amounts of mahua and handia. Yet, they are not allowed to sell these drinks. I call this Tyranny. I found these people friendly and hospitable. These areas should be on every tourist itinerary – and tourism requires a friendly and hospitable populace. There is much that is lost if vast swathes of the country escape “political order.”

But our The State has nothing much to do with political order. The man on top is an “economist.” He is “planning.” And he is Sonia’s choice, so Sonia thinks that the most important task for The State is to plan the economy and occupy the “commanding heights.”

Chacha Manmohan S Gandhi is off today for a tour of Egypt and France. In France he will be the chief guest on Bastille Day.

Anyway, I think that so soon after Lalgarh, this killing of 33 cops should be viewed by those in authority as a “crisis of legitimacy.” In the political theory of The State, this is one of the crises a State can face; another is a “crisis of finance.” Looks like our dudes on Laputa are facing both. And he’s off to celebrate Bastille!

Laputa, I say!

The Real Problem

Our new Health Minister has advocated late marriages (after 30) as a means towards solving the “population problem.”

He has spoken of unemployment and poverty as caused by our “excess population.” He has even asserted that Naxalism is caused by population pressures.

He is dead wrong – but it is funny to see a “democratically elected” politician hold views that his constituents are a “problem”; further, that their children are a problem; and, going even further, that the birth of their grandchildren should be postponed. For the Common Good, of course.

It takes three words to prove that population is a resource:

Cities Are Rich.

Yes, vacant villages are poor. And villages prosper when more and more outsiders buy land there and settle down. Note that more and more villagers are migrating to cities: they prefer locations where population is high. Thus, we need an urban vision: 500 great cities and 5000 towns. Many along the coast. There is much vacant land there. New urban property would be cheap.

Yes, we need to think of Reality – the Fact that Cities are rich. The Fact that villagers are moving to cities. The Fact that all our urban areas are unlivable. We have just 5 cities; the USA has over 200. Hong Kong and Singapore have huge population densities – and no one is complaining. No one there wants to return to village life.

So if population is a resource, what is the problem?

The real problem is our The State. It causes poverty via inflationism. It perpetuates poverty by swearing under oath that it will never build roads. It aggravates poverty through economic restrictionism, including direct predation. It is a State that practices Economic Repression. This The State is The Problem – not the people.

My advice to India’s youth: Do everything early. Drop out of “education” and enter The Market early. Earn your keep early. Marry early. Have your children and grandchildren early. Retire early. Enjoy a long and happy life with lots and lots of children and grandchildren. Actually, why not great grandchildren too? If you marry late, you’ll never get that far.

Think!

It’s Your Life.

Recommended reading: My essay “Population causes prosperity.” To download pdf file, click here.

On The Gujarat Hooch Tragedy

Blogging was intermittent last week, but I have now relocated to New Delhi. The Outer Ring Road was unpassable – my taxi took a detour – and, if memory serves, the first flyover at IIT Gate was built some 20 years ago. Flyovers have been built every year since – and it seems that this business of building new flyovers continues. This, on an airport road. And what an airport, fittingly named after Indira Gandhi.

Yeah, we need a roads solution, but looking to Kamal D Nutt alone won’t help. We also need local roads. These can only be built by those with local knowledge. So centralization cannot work.

That said, the news of 107 people dying from consuming spurious alcohol in Gandhi’s Gujarat, where booze is banned, came as no surprise. My friend Sarina used to tell of her cousin, a student in Ahmedabad 20 years ago, who died consuming spurious liquor there. I am sure that if the press investigates, they will be able to list the history of such tragedies.

I spent some time in Gujarat – and hated it. Cris Lingle and I even took his US passport to the authorities and bought 10 bottles of beer (they took 2 bottles out of the case!) after filling many forms and also having to go out on the streets to obtain photocopies of documents the authorities needed. In the room inside, I spied a young lad pasting labels on bottles.

Gujarat has to decide its own course – to be high, or not to be high, that is the question. I prefer places like Goa, where there is a bar every 10 yards, with names like Frankie’s Bar, Relax Bar, and so on. My favourite is Mr. Booze. On my way to the airport I had a quick Adam Smith lunch at Lounghino’s. The Adam Smith lunch requires meat, bread and beer. In Goa, I got all three. In Gujarat…

The Adam Smith lunch is based on these immortal words:

It is not from the benevolence of the butcher, the baker, or the brewer, that we expect our lunch, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

That’s it. It is either the Adam Smith Lunch or the Gujarati thali.

News has it that the purveyor of the poisonous hooch has been charged with homicide. Yet, the first law that should apply is Tort: he must pay restitution for the damages he has inflicted upon others. This should be under civil, not criminal law, so judgement should be delivered “on the preponderance of evidence,” not the “beyond reasonable doubt” required for criminal cases. Thus, restitution can be delivered to the victims through quick legal action; and that too, without calling for the police.

That’s right: Justice Without The Police.

I wonder how much the Gujarat police rakes in from bootleggers? One doctor I met said that the highest incidence of liver cirrhosis in Gujarat is among police inspectors.

Anyway, I don’t live there. Nor do I plan to, ever. The Gujaratis must fix their own State.

Recommended reading: My old article entitled “Gandhian Violence.”

On The Budget

I am a bit late in commenting on the Budget, but the rain has been incessant (lovely!) and the power has been erratic (ugh!). But what the hell. I read Karan Thapar’s Sunday column in HT, and he was complaining about power cuts in New Delhi. This is the scene everywhere in socialist India: bijli, sadak, paani. [Power, roads and water.] And you will not find allocations on any of these in the Budget.

There is Education. There is Defence. The Social Sector. Poverty Alleviation. Rural Employment. Fertiliser subsidy. PSU losses. And now, Cheap Rice.

And, for spending on these, there is always a huge Budget Deficit. We have seen such deficits year after year for 60 years, and the only result has been that the value of the rupee has plummeted. Then, there were 1p and 2p coins - that is, coins that mattered, had value, and were circulated. Now, we have 10 rupee coins. Even 50p coins cannot be found. Our "economists" have always supported these deficits, as have the crony business elite. But poverty has not disappeared. If only it could simply by printing money.

Well, here is some good news for those who don't like Budget Deficits.

S&P have announced that India’s sovereign credit rating, which was downgraded to negative in February, will probably be further downgraded in view of the huge fiscal deficit. How much is the deficit?

“Including state government deficits and off-balance-sheet items such as oil and fertilizer bonds, the deficit is estimated to reach about 12% of GDP in fiscal 2009-2010,” S&P said.

Manmohan & Co. don’t have the money. It is silly [non-speculative] to buy their bonds – because they are not “investors” of money; they simply blow it up. They earn no returns on Capital. This is perpetual irredeemable DEBT.

If you possess Capital, you must speculate with it; not park it in government bonds.

If we try and peek into the minds of our rulers, we see in them two clear traits: one, the false idea that the economic resources available to them are limitless; and two, a “politics” that is inherently false too, in the precise sense that it is based on untruth, in that they conceal from the public the real aims (and the real costs) of their policies. They have a secret private agenda that does not tally with the interests of the commonwealth.

As far as the Science of Economics is concerned, all I can say is that this Science is based on three pillars: economic theory, economic policy, and public finance. We know they are zeroes in theory and policy; we now know they are zeroes in public finance as well.

For Highways, Against Railways

Good fare in the Sunday columns: Both Tavleen Singh (here) and Swaminathan Aiyar (here) have expressed serious misgivings with Nandan Nilekani’s ID card project. Yeah, let us kill this stupid idea.

I also enjoyed a travelogue on the Konkan Railway – and decided to write today’s post on railways. Mamata Banerjee’s "socialist" railway budget is fresh news. And the Konkan Railway is the biggest rail project in independent India. Yet, how important are railways in the modern world? To be more precise, since our railways are so outdated, and so badly managed, would we not be better off focusing on highways?

At the outset, let us note that railways came to India in the mid-nineteenth century – that is, fifty years before the automobile was invented. Or seventy years before the Ford model-T and perhaps a century before universal automobile ownership in the West.

Further, let us also note that India in 2009 is witnessing an automobile revolution. This industry may be flagging in the USA, in Europe and Japan, but in India it is growing at a rate higher than the national average. Go to any city or town and you will see cars, cars and more cars. I wrote about India’s automobile revolution in a Mint column some months ago.

I live within shouting distance of a Konkan Railway station. It is like all the other stations of this line, as described in the travelogue: quiet and sleepy. Not many people use these trains. But go to the local bus stand and see the activity. We now have a new bus stand in Canacona, and there are over 20 shops in the complex doing brisk business. There is only one kiosk in the railway station, and I doubt it generates much profit.

This itself indicates that a new coastal expressway is required. The better-off people would use personal transport; the lesser-off people would use modern buses. Modern buses on modern highways can outcompete airways in distances upto 500 kms. They would outcompete our slow railways even over 1000 kms. In my book, therefore, our State railways are not worth much. We need good highways, modern buses and trucks, and more personal transport. This is the transportation solution. Not railways.

The Konkan Railway is actually of no use to the Konkani, who uses the horrible NH 17 for all his commutes. Most of the trains on the line are “through” trains, from Delhi or Mumbai going down to Kerala. It is also an interesting fact that the Konkan Railway earns very little from passenger fares; most of its earnings are from freight, especially that of ferrying loaded trucks from Mumbai to Kerala. Yes, the railways carry loaded trucks! Why? Because the “notional highway” is totally screwed-up. Check out the Konkan Railway website here.

So let us not worry too much about Laloo or Mamata at Rail Bhavan. Rather, let us focus all attention on Kamal D Nutt, now the minister for roads and highways. He must be goaded to perform.

Say Yes To Title Insurance

For quite a few days now, I have been enjoying a history of the Indian Civil Service penned by one of its later members, Philip Mason. Thanks to my donors, I have managed to procure the original two volumes of his The Men Who Ruled India, published in 1953, under the pseudonym Philip Woodruff. In India, the single volume being sold is an unsatisfactory condensation.

What emerges from this reading is that the highest priority of the British government was land records.

It was therefore with a deep sense of regret that I read of what is the legacy of the IAS, socialist successors of the liberal ICS. In an extremely pertinent column on title insurance, Madhumita D Mitra writes:

In the words of one international title insurance major, as a potential title insurance market, India is a car crash. Fragmented land holdings have been left unattended by surveys and settlements almost since the British left this country. Mutations have piled up and land records have not been updated for decades. The present system of recording of rights is only “presumptive” which means that the person paying the property/revenue tax shown in the land/property record is just presumed to be the owner of the property. In case of a dispute, it still requires the courts to establish ownership. Transfer of property deeds may be registered, but such registration refers to the document alone and does not validate the ownership.

The term “car crash” is accurate. Mason speaks of how Congressmen eager to take over The State in the 1940s were like those who want to drive a car without learning how to do so. They caused the car crash.

Do read the full column here. Mitra talks about a proposed government guarantee to property titles – and how private title insurance is a far better idea. Unfortunately, the insurance regulator is playing spoilsport. To quote Mitra again:

For any title insurance scheme to succeed in India, a lot will depend on how progressive and adaptable the government and the insurance regulator are to this new concept. Mr. Philip Oldcorn, CEO of First Title, UK, which is working with the United India Insurance Company on a title insurance product for the commercial market, is appreciative of the concerns of the regulator that it needs to worry about the management of liabilities of the insurers in this niche and brand new area of insurance. Officials at National Insurance Company who failed to get their title insurance product past the IRDA however, feel that the regulator should stick to ensuring that insurers maintain their solvency margin requirements under the law and let the companies mind their own bottomlines.

I wholeheartedly agree. Indeed, private sector title insurance can play the role of an effective watchdog over government title guarantees. The insurance regulator should not block the development of a title insurance market.

Leave Those Kids Alone!

Yesterday, the Union Cabinet okayed the Right of Children to Free and Compulsory Education Bill. It will now be tabled in parliament. Read the news report here. The idea is that kids between 6 and 14 will be forcibly sent to free government schools. Private schools will have to reserve places for the poor.

Yet, as Anthony de Jasay explains in this little book, all “rights” must be based on “obligations.” Where the obligation does not exist, neither does the right. Thus, if a landlord signs a rental contract with a tenant, the latter has the “right” to occupy the property because the landlord has a corresponding obligation to hand over possession peacefully. A worker who signs a labour contract has an obligation to work on the terms specified, while the employer has the right to demand that work as per contract.

Once we understand that all legal rights are meaningful only when backed by matching obligations, we find that the innumerable “human rights” legislated by socialists are all completely meaningless for the precise reason that no one is backing them with obligations. Socialism means the multiplication of meaningless rights. These rights exist on paper only. And so it will be with this new “right to education.”

Further, the words “free” and “compulsory” jar when placed together. If education is delivered to the people free of cost by The State, then no private entity can possibly compete. Further, this free education should be such an attractive prospect that no force has to be used to get kids into schools. This bill wants to use force to provide something free as a right. Like a right to free and compulsory gulab jamuns. This sounds so confused that I wonder what sort of “knowledge” went into drafting this bill. And, it must not be missed, our education minister is a socialist lawyer.

In my book, knowledge is capable of being bought and sold in markets, like any other good or service. There are people with knowledge and people without, just as there are people with potatoes and people without. So just as the people who want potatoes buy them from people with potatoes, so must people who want knowledge buy it from those who have it. My question: What knowledge does out The State possess that it is so desirous of becoming a Universal Teacher?

Think over this question. Think deep.

And know that the country is a mess because of The State.

Why, even the new bridge in Bombay has been cited as an example of “incompetence.”

How can we allow such an ignorant entity to teach?

Recommended reading: My recent article, "De-Mystifying Knowledge," available here.

What Is Happening In Lalgarh?

Our newspapers are not performing their job as far as the Lalgarh Rebellion is concerned: there is total silence today.

From what we know, the central government’s para-military force, the CRPF, has overcome resistance and taken over this part of West Midnapore district, just 200 kms from Calcutta. Yet, the CRPF is no solution. A military takeover is not “civil government.”

And there is worse on the CRPF: They have now been removed from Baramullah in Kashmir. This follows the hideous incident at Shopian where CRPF personnel were suspected of rape and murder. In Baramullah too, public anger against the CRPF was sparked off by their excesses.

If we leave the CRPF and its excesses aside, and look at the local police, here is a report of an “encounter” in Andhra Pradesh, a hub of Naxal activity, in which a top Naxal leader was killed yesterday. And here is another report that claims in its title that Naxals in AP have been "tamed" - though the concluding paras indicate quite the opposite to be true.

Yet, this is also not the “rule of law.” We can usefully contrast the methods of our desi police with the Brits – and this is of a period before there was any policing in India; the Indian Police Act is dated 1861, shortly after the Mutiny. The example that follows is of the 1830s.

In those days, traveling in north India was horribly unsafe because of gangs of Thugs, who would strangle their victims and loot their possessions. Over 20,000 travellers perished every year because of Thugs.

The records speak as follows:

“There were in the years 1831 to 1837 more than three thousand Thugs convicted… More than 400 were hanged, more than a thousand transported for life… Another thousand were awaiting trial in 1837…. But the work was done; that evil was finished.”

Why did the Brits act in this “legal way”? As the same author says, this was “because they stood for the rule of law as against the individual whim that ruled before.” In Mughal India, as Sir Thomas Roe, Ambassador to the Court of Jahangir, recorded in his journals:

“There is no law in India; the Emperor by his own word ruleth.”

The underlings of the Grand Mughal in Delhi had their own way of administering justice when highway robberies occurred: A robust young man from a nearby village would be hauled up and summarily executed on the spot where the robbery occurred. There are reports of executions ordered without even hearing the accused. Yet, this is precisely what has just happened in Andhra Pradesh. It is this that happened to Veerappan. It is this that must be happening in Lalgarh today.

My point is this: There is “rule of law” only when those entrusted with enforcing this law are under the law themselves. This is the ideal of “constitutional government.” This is also the ideal of “civil government.”

What is happening in India today is that the forces of the Central State are doing exactly what the Mughal Emperor’s underlings did in their time.

Yes, the press must re-focus all attention on the Lalgarh Rebellion. Singur and Nandigram were great upheavals in Indian politics. Lalgarh must become one too. We must engage in civil politics with the rebels. We must speak with the ordinary tribals. Mere force, that too from Laputa-on-High, is no solution at all.