On The News... And A Confession

Yeah, their pants are still on fire: here is news that the West Bengal administration has admitted that its operations in Lalgarh have been a failure. Note that this news has not been published in any of the major newspapers. Strange?

There is also a statement made in parliament by the petroleum minister that is noteworthy: he has clearly stated that “the age of nationalization is gone.”

And good riddance, I say.

Mint has also published the transcript of the discussion they hosted on infrastructure. Today, they have put up the transcript of that part of the discussion that pertained to land acquisition and “eminent domain.” I read it, and I think the panel is in broad agreement with my earlier post on the subject.

But what I really want to discuss today is this:

Who is to be responsible for “development”? The Individual, or The State? Libertarians say give the Individual his liberty – and he will “develop” himself. Étatists of all hues call for State action.

This debate lies at the core of “development economics.”

There are those who believe that the poor of the Third World possess adequate economic skills and only need Liberty Under Law to prosper – thereby taking the entire nation on the highway to “development.” The greatest thinker of this school is the late Peter, Lord Bauer.

At the other end stands Gunnar Myrdal, Nobel laureate (he shared it with Hayek!). Myrdal believed that the poor of the Third World are hopelessly so. They are unable to take “rational” economic decisions in markets, and so need public authorities who would function as an “intellectual-moral elite” and take these decisions on their behalf: planners.

This is how central economic planning in the Third World received intellectual legitimacy. The socialist Indian State presented Gunnar Myrdal with a high public honour. Hayek and Bauer were kept out of the classrooms.

Now that you know this, you can easily see which side Amartya Sen is on. And Manmohan. Indeed, their insistence on State education reveals the same mindset: that The State comprises an “intellectual-moral elite” while the people are dumb and dumber.

Actually, I heard someone in London say that “a bania can buy from a Jew and sell to a Scot and still emerge with a profit.” We Indians are the world’s greatest traders. Indeed, we now own all the cornershops in London, the capital city of a people Napoleon dismissed as “a nation of shopkeepers.” There is an Asian pop band in London called Cornershop.

In India, there are various skills that people already possess that are denied entry into the market: street-food is just one example. Music, dance and the performing arts are another. This is a “repressed economy.” The poor need Liberty – not “education.”

If I may record who was my first influence, who it was that made me an ardent supporter of Liberty, then I must say it was Peter Bauer. At the first Freedom Workshop of Liberty Institute in 1994 I presented a paper titled “Bauer Power: Getting the State out of Development.” I may not have heard of Bastiat – but Bauer I had devoured. It was only at the second workshop that I first heard of Bastiat – from a dentist! The rest is history.

Bauer’s works are peppered with close observations of the Third World, and the markets, cities and villages there. There are acute observations made in Africa, in India and Pakistan, in Malaysia and elsewhere. If you are an aspiring economist, do read Peter Bauer. In particular, I recommend The Development Frontier and From Subsistence to Exchange. The latter has an introduction by Amartya Sen in which Sen grudgingly admits that Bauer got it right on population – that this was a resource and not a problem.

I also wrote an essay in honour of Peter Bauer that can be accessed here. It will tell you how much I have personally gained from studying the works of this great classical liberal, the greatest development economist ever.