Vote Motive, Profit Motive, And Arundhati Roy

Arundhati Roy’s latest raises questions about Democracy – very “Hoppean questions,” as the LRC blog put it. Consider this extract:

What we need today, for the sake of the survival of this planet, is long-term vision. Can governments whose very survival depends on immediate, extractive, short-term gain provide this? Could it be that democracy, the sacred answer to our short-term hopes and prayers, the protector of our individual freedoms and nurturer of our avaricious dreams, will turn out to be the endgame for the human race? Could it be that democracy is such a hit with modern humans precisely because it mirrors our greatest folly--our nearsightedness?

Public choice theory has long ago analyzed the “shortsightedness effect” in government policy-making in a liberal democratic setting: that is, how governments invariably choose to spend on projects whose short-term benefits are high, even if their costs are also high, while never spending on projects whose benefits are in the future. Indeed, even without this theory, common experience tells us that politicians do not think beyond their terms.

How then do we get the “long-term vision” that Arundhati Roy is seeking? Note that “central planning” is based on ideas of a “collective long-term vision,” and the key quality such a planner is supposed to possess is the ability to see ahead. Roy admits that these planners and their democracy have failed to think ahead.

How do free societies think ahead? How do free societies provide for the future?

In a free society, the critical function performed by entrepreneurs is “provision for an uncertain future.” You get everything “on demand” in free markets only because entrepreneurs have planned ahead, trying to successfully guess your needs, and provided for them. It starts raining, and – lo and behold – the nearest shop stocks umbrellas. A sudden thirst hits, and the very first shop you come across stocks cold drinks and mineral water. In Goa, you’d get a beer too – but Delhi is quite different because The State monopolistically sells beer here, and cannot perform this function as well as free entrepreneurs would have.

There is a lesson in this: that a society governed by Private Property and Free Exchange is best able to provide for the future and also husband scarce resources – because it provides each individual with incentives to do so. In such a society, individuals think far ahead, and even provide for their succeeding generations. Under socialist planning, especially if accompanied by inflationary finance, there is “capital consumption” and consequent “de-civilization”: the future becomes bleak.

Of course, Roy would not agree, for she hates the idea of free markets and free enterprise violently. She says:

What happens now that democracy and the free market have fused into a single predatory organism with a thin, constricted imagination that revolves almost entirely around the idea of maximizing profit?

Actually, the profit motive is an innocent motive, for at its root lies the desire to serve the consumer better than the competition.

The real ugly motive is the Vote Motive – the title of Gordon Tullock’s 30-year old primer on public choice. Arundhati Roy should read this little book to understand the flaws in liberal democracy. She will then obtain insights by which to analyze the predatory nature of our socialist democracy. Download a free pdf here.

For social order we need Law. For survival in free society we need free markets. For thinking ahead and providing for the future we need entrepreneurs.

Where does “democracy” fit in? At least, in India, we all know that the real outlaws are the politicians and their henchmen. They contribute to social disorder, they ravage the public treasury, they contribute nothing of worth. They are invariably tax parasites.

Compare these parasites to any entrepreneur – someone who satisfies your needs.

What a world of difference between the Profit Motive and the Vote Motive.

I hope Arundhati Roy gets that.

Air India... And A Historic Opportunity

True to form, our Chacha State keeps moving from crisis to crisis – the latest being the pilots’ strike at Air India. The state-owned airlines' annual losses exceed Rs. 7500 crores and its borrowings are over 15,000 crores. That is, in a market economy such a firm would have closed down long ago. Other, more efficient, airlines would have taken its place.

However, under State-ownership, this company of losers is allowed to remain in operation and, what is more, “compete” with efficient private players.

How can anyone compete with a firm whose losses are underwritten by The State? In reality, Air India has been “outcompeted” long ago. The private airlines have won the battle ages ago. However, the losing party keeps coming back into the fray with taxpayer support.

This is “unfair competition.”

There is a case made out for legal action – and the decision should apply to all PSUs: that they inject unfair competition into markets.

I witnessed this raw power of loss-making transport PSUs in Mangalore, when the State-owned bus company announced the deployment of 50 additional buses on a busy inter-city route. This set the cat among the pigeons of the private bus operators. They had to “lobby” hard to get rid of this unfair competition. In effect, they were blackmailed by a loser.

Ditto for Air India announcing tomorrow that it will run 50 low-cost Mumbai-Delhi flights a day.

No one will be able to compete.

And, instead of encouraging enterprising businessmen, our society will be encouraging tax parasites.

I suggest legal action at the Competition Commission. Indeed, if I recall right, the commission is empowered to take up such issues suo moto. It should do so.

This crisis of The Chacha State can then be turned into a historic opportunity to get rid of the entire public industrial sector. Total privatization. The entire proceeds, which represents the “commonwealth,” should be invested in a world class, pan-India, toll-free roads system. This means additional taxation will not be required for the purpose.

But look at the matter in any way you like, you will arrive at the same result:

=> How can a private school compete with a “free” government school?

=> How can the steel industry be competitive if the loss-maker SAIL dominates the market?

The conclusion to draw is “when the king trades, the people become beggars” – an old Gujarati proverb, I am told.

I leave you with this thought:

“A government does not exist to conduct the affairs of men. It exists to administer justice among men who conduct their own affairs.”

It is time to get rid of The Total Chacha State.

Aspects Of Our Cruel Socialist Tyranny

A brave Nepali lad has been sentenced to 10 years of Rigorous Imprisonment for carrying a little less than 2 kilos of charas in Goa - and there is a hash cafe in Amsterdam called "Goa."

(Read my old spoof on ganja-charas in Goa.)

This sentence of a lower court was upheld by the high court of Bombay and Goa – the same high court that has refused to hear the 15-year old PIL of the Indian Liberal Group challenging the socialist monopoly made of Indian democracy by the Representation of the People Act, as amended by Indira Gandhi.

Injustice heaped upon injustice.

My chillum friends and I would be happy to buy the 2 kilos and smoke it all in one sitting right in front of the court.

High Outside A High Court!

Poetic.

As if on cue, the LRC blog has a vital post today on cannabis legalization. It concludes:

…here is who we are up against in the fight to legalize marijuana: the military industrial complex, big oil, big pharma, big alcohol, big tobacco, the prison system, the logging industry, the textile industry.

Legalize it.

More important:

Set that poor Nepali boy free.

Away with your Tyranny!

And Boom Shankar!

Speaking of our tyranny, Mint has an important editorial today on the decline of our political parties. They say that, for our political parties:

The new brand seems to be the family name, a marketing strategy that till now had worked in the case of the Nehru-Gandhi family alone, but has now become successful down to every local election.

In other words, it is all about personalities and (temporary) loyalties – and not ideas and issues. The editors conclude:

…what started as a liberal parliamentary system after Independence is now threatening to degenerate into a sort of neo-feudalism, especially at the sub-national level.

In the meantime, the Bombay High Court sits for 15 years on a PIL vital to injecting issues and philosophy into Indian politics – while sentencing a poor Nepali for 10 years RI. Note the R in RI: these guys are CRUEL.

By sitting on ILG’s PIL the cruel high court has also sentenced every Indian classical liberal and libertarian to the political wilderness – for 15 years and running. SV Raju of ILG has aged before my eyes; some of his associates have died. They might as well all have been in jail - which is the direct of way of dealing with political opposition usually employed by tyrants. Our tyrant, Indira is India, chose Legislation.

The cruel high court keeps sitting on the file challenging this Legislation.

I have often suggested a mass demonstration outside this cruel and unjust high court to demand an immediate hearing of the ILG PIL. And someone please bring two kilos of good Nepali charas along.

Scene 2: Germany

Our situation in socialist India, ruled by the arch-socialist second-termist but unelected Chacha Manmohan S Gandhi and his NREGA and Right to Education, Right to Food etc. – all meaningless rights – can be contrasted with Germany, where Angela Merkel’s CDU has come into power with the support of the classical liberal Free Democratic Party (FDP). The Express today has an editorial on this happening. Her earlier coalition partner, the “social democratic” (read “socialist” and “welfarist”) SPD has lost support, and is now seated in opposition. Merkel is now in a position to make far-reaching reforms towards free markets and lower taxation; the latter is good for Germany because the share of government consumption goes down while private investment is stimulated. Germany is not going the way of the USSA. We are.

Now, the FDP, Merkel’s free market ally, like all German parties, has a propaganda arm – the Friedrich Naumann Foundation Für Die Freiheit, funded by the German taxpayer according to the share of the vote. So, now, their funding will increase. This foundation is active in India, and is a good friend of all us liberals and libertarians – of all ages. They help publish our books, they train us in liberal principles (we have an alumni association), host conferences and events, and in many other ways assist the great cause of spreading ideas of liberty throughout our land.

See how “legit” the Friedrich Naumann Foundation is.

And see how “illegit” we are.

Tyranny!

On Kashmir, Justice, And The Total Central State

There are two items in the news today that refer to Kashmir – and these are of great significance to theories of the “Role of State.” Historically, the Kashmiri people have never thought deeply on this issue. Sheikh Abdullah was a Communist; he sided with Nehru because of the latter’s strong views on State Socialism. Srinagar’s city-centre is named Lal Chowk after Moscow’s Red Square. And we all know what the Commies did there.

The first news is of the mess up of crucial evidence in the Shopian double rape-and-murder case. Two young women, one pregnant, were raped and murdered some months ago in Shopian, allegedly by security personnel. Investigations into this ghastly crime have been thwarted by indecision over whether the Kashmir police or the central government’s CBI should be in charge. Finally, the case was given to the CBI, who have just revealed that the vaginal smears sent for forensic examination were not those of the victims. The bodies are now to be exhumed. Violated in life; violated in the grave. And this is nothing new from Kashmir. If anything, it is an old story.

The second item in the news on Kashmir is that the Central government has sanctioned money to build a new university there (and another for Jammu). The university will have “instructional and research facilities in emerging branches of learning like information technology, biotechnology and nanosciences.”

If our typically clientelistic politics is any guide, this university will employ clients of the Central State, their intellectual bodyguards, people who are more dangerous to society than the rapist-murderers in uniform. If I recall my conducted tour of Srinagar, the city already has a university. And, anyway, the critical knowledge that is missing from this beautiful valley is that on the “Role of State.” I suggest private effort to build a school of social science.

Which brings me to our Question of the Day: Does the administration of Justice fall within the legitimate role of The State? And what about “education”? And what if we discuss these questions with special reference to Kashmir today?

I spoke in two colleges in Srinagar, one a women’s college, and the other the famous Amar Singh College. In both I was impressed by the students and the faculty. There are lots of very bright people there.

This impression from institutions of learning was further reinforced by the many shikara-rowing salesmen I interacted with from my houseboat deck: these people are great businessmen too. Their biggest talent lies in keeping tourists happy – and tourism is more important for their economy than “information technology, biotechnology and nanosciences” put together. This requires peace. And that requires reflection on the question of the “Role of State.” This is the burning issue of the day.

While discussing this question with reference to Kashmir, it must be noted that these unfortunate people now suffer from the attentions of the Total Central State in New Delhi. There is no Mayor of Srinagar. And the chief minister is a puppet of the Central State. The J&K finance minister told me that 90 per cent of his budget comes from Delhi. This does not include the huge amount spent on the insecurity forces. While discussing the Role of State, we must also discuss the Principle of Subsidiarity – the idea that local self-government must come first.

I am confident that when these discussions take place, the vast majority will hold that The State is required for Justice – and not for Education. Even those who insist that both these subjects fall under the legitimate role of the State will be forced to admit that Justice is the more important role and education is less so.

I will therefore conclude with a mighty sixer over the long on fence:

There is a way by which we can get Justice Without The State; and that is, victims must be allowed to collect their own evidence and prosecute their own cases. The State Police monopoly over investigation, prosecution and punishment can be broken.

Recommended reading: Bruce Benson’s The Enterprise of Law: Justice Without The State. Buy your copy here.

Eminent Voices Against Indian "Democracy"

If you have about half-an-hour free this bright Sunday morning, do tune into my appearance on The Scott Horton Show on Antiwar Radio. I talk about India’s democracy being restricted to “socialist” parties, urbanization in India, the need for the State to build roads, Kashmir and more. Click here to listen to the show.

In effect, I have hugely lowered the prestige and legitimacy of India’s socialist “democracy.”

As luck would have it, on this bright Sunday I am joined by three eminent columnists in ridiculing Indian democracy. This feels good. I am not alone.

The first of these columnists is Meghnad, Lord Desai, who contrasts political practices in Britain with India and finds that in India “political parties do not possess a rank and file.” This sentence says it all:

Parties select candidates with no reference to local members or with any rules being obeyed. Local constituencies do not interview candidates nor do they vote to choose them.

Lord Desai then makes a deep comment about politics and political parties in India today:

Parties are… a temporary collection of local satraps who will gather their troops for the election battle and if one party won’t have them they will migrate elsewhere.

In other words, our democracy is a sham, and our “socialist” political parties are not like political parties elsewhere in the world. They operate from high above, and have no real connect with the people.

This is, of course, clearly visible these days, as Rahul Gandhi tries to get “in touch” with poor villagers. It is obvious that a huge gulf separates Rahul Gandhi from his constituents.

Interestingly, Lord Desai ends on a pessimistic note. He writes:

How long this process can go on without totally corrupting Indian democracy is an open question. Some may say that this is the true reflection of our culture, an Indianisation of western democracy. If there are no serious political parties but only fragments which float independently and come together temporarily for election, where is the political debate about issues rather than personalities?

There are of course too many parties and no party controls its members any longer. To reform this system, you need someone inside who can see that this decay must be stopped. I doubt however that there is any force now that can do this.

Read Lord Desai's column here.

The second columnist who merits our attention is Mrinal Pande, writing about Lucknow and its “stone gardens” – the numberless statues erected by Mayawati. She says Mulayam had done much the same during his tenure as chief minister. And that Lucknow is ruined. What is noteworthy is her assertion of what exactly ruined Lucknow and UP: she puts the blame squarely on “social justice.”

The subtitle to her column reads:

India’s social justice revolution has not changed ruling norms: It has created autocrats from other castes

Note the word “autocrat.” Read Mrinal Pande's column here.

This cannot be Democracy.

As to our collective future under these autocrats, Manas Chakravarty has written a delightful spoof on India’s “family democracy” – where Indira the Eleventh comes to power, where Sharad Pawar the twenty-fifth becomes her minister, as does Abdullah the umpteenth and so on and so forth.

A great spoof indeed.

So I am not alone in holding Indian democracy in contempt. Makes me feel good.

Get Real On the Dollar, Chacha

Chacha Manmohan S Gandhi has asked G-20 leaders not to withdraw their stimulus packages; he has also asked for more funds for the World Bank.

I wonder where Chacha gets his “market intelligence” from. Does he, indeed, get such information at all?

This morning, I found this little gem on a major multinational bank:

HSBC bids farewell to dollar supremacy

The report goes on to say:

"The dollar looks awfully like sterling after the First World War," said David Bloom, the [HSBC] bank's currency chief. "The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100pc of GDP," he said.

Crucially, China and rising Asia have reached the point where they can no longer keep holding down their currencies to boost exports because this is causing mayhem to their own economies, stoking asset bubbles. Asia's "mercantilist mindset" of recent decades is about to be broken by the spectre of an inflation spiral.

In the meantime, in the USSA, the pressure is on to audit the Fed – and then shut it down. LRC today has this series of videos of a Congressional hearing on the Fed. Watch Ron Paul in action, and Tom Woods too. Incidentally, Woods studied under Murray Rothbard.

Further, Ron Paul’s new book, End The Fed, is topping the charts. In the final analysis, the real battle is over public opinion. And public opinion is veering towards sound money. People are seeing that central banking is fraud. A change is in the air.

We are winning!

What should libertarian strategy be for the future? The great philosopher Hans-Hermann Hoppe offers this excellent advice in an interview available here:

First of all, they [libertarians] must develop a clear class consciousness, not in the Marxian sense, but in the sense of recognizing that there exists a clear distinction between taxpayers (the exploited) and tax consumers (the exploiters). Politicians as agents of the state live parasitically off the labor of taxpayers. Accordingly, instead of admiring them or seeking their association, politicians (and the more so the higher their rank) should be treated with contempt and as the butt of all jokes, as emperors without clothes. The political class and their intellectual bodyguards, teachers and professors, must be delegitimized as self-serving frauds, and democracy in particular must be attacked as an immoral system in which the have-nots vote themselves the property of the haves. Political activities, if they are to take place at all, should be restricted to the local level and be motivated by decentralist or better still secessionist objectives.

Chew on that.

On The Moon, The State, And Gold

So it seems that our The State has found water on the moon – while the water supply is erratic in New Delhi. Really, such news leaves me cold. As if on cue, the Communist leader Sitaram Yechury, in his HT column of today, writes about – you guessed it – astronomy!

Destroy this world and think about outer space.

And, talking about Science & The State, here is a must see video I got from LewRockwell.com, on the swine flu shot. It can cause paralysis. In 1976, when there was another such hysteria over swine flu in the USSA, anti-flu shots were made mandatory – and thousands suffered.

The Lesson: Beware of any “science” that is State-sponsored. From water-on-the-moon, to swine flu, to global warming / climate change, to green energy, to the “population problem,” to Keynesianism and central banking.

The State is in serious error on every count.

So let us forget the water on the moon, and reflect on the ghastly mess on Planet Earth, all caused by the duds meeting in Pittsburg right now.

The biggest problem humanity now faces is purely economic – thus central to human survival – and that problem is fiat paper currency.

Here is investment guru Marc Faber saying, “Fed Will Destroy Dollar, Buy Gold.”

And here is our very own Nidhi Nath Srinivas with a blog post on gold mining companies and their current strategies. She writes that they are all bullish on gold.

Of course, silver is advisable too, since it is relatively undervalued now.

So, forget the moon.

Get out of government paper.

Rebalancing The USSA

500 street hawkers were “evicted” from Chennai – while the entire focus is on the G-20 meet in Pittsburg. However, I will not recommend the editorial in the Economic Times, which reads like propaganda and not informed analysis. Indeed, the pivot of their argument is a patently false proposition:

“Boom and bust are an integral part of free-market capitalism.”

This is what Keynesians, who idolize The Total State and its Funny Money, believe. Economists of the Austrian School oppose this view, and hold that governments create bubbles and booms with easy money and cheap credit. This causes “malinvestments.” Hence the inevitable bust. The solution is real capitalism and sound money: Gold. Private money.

The Mint editorial on the G-20 is a far better analysis. It begins by presenting the USSA’s core concern at the G-20 meet: “Rebalancing.” This is the Obama Agenda:

“The US emphasis is on what it calls the “rebalancing” of the global economy: It wants to reorder global consumption and savings in a way that it saves more and China consumes more.”

This is plain nonsense. Even if US households save, the deficits and borrowings of Uncle Sam will render these savings meaningless. Peter Schiff discusses this in a recent vlog. Do watch it, and note the sincerity and moral fervour in his voice.

Smart Americans are getting wise to Uncle Sam’s hypocrisy. Here is what one smart college student and his professor accomplished, to win a "generational theft contest" sponsored by Pajama TV to determine how much Obama’s deficit and stimulus packages would cost each college graduate in the future:

Gavin and Ed…. tallied the cost of 2008 and 2009 government programs like TALF, TARP, FHA mortgage relief, assorted corporate bailouts and various stimulus packages, to name a few. That spending spree came to a whopping $10,825,400,000,000. Then, they crunched the numbers to determine what each college graduate will be taxed to help repay this deficit. Their calculation -- $148,035 each!

Read the report and watch the video here.

Methinks the USSA should “rebalance” itself.

What should the rest of the world do? As Peter Schiff says in the vlog cited above, the rest of the world should tell Obama that they will no longer lend money to the USSA, and will therefore no longer subscribe to US Treasury bills.

This will force Uncle Sam to end his profligate ways, and the whole world will be better off as a result.

Uncle Sam, Rebalanced.

For Unilateral Free Trade, Against Reciprocity

The key to appreciating the doctrine of unilateral free trade lies in looking at the department of our The State that enforces protectionism and economic autarky with its guns: The Customs Department.

Is this a socially useful department or is it just one huge obstruction, a rukawat?

What harm will occur to society if this rukawat was abolished? You get to carry all your goodies and walk straight out of the airport.

Not only that, every shop becomes in effect a “duty-free shop” because the shopkeeper can stock duty-free imported goods.

Indeed, the entire landmass becomes the world’s biggest duty-free shopping area.

Great for tourism – the biggest industry in the world.

However, the enemies of such a liberated market order are not only the customs sharks, they also include politicians and diplomats who subscribe to the doctrine of “reciprocity” in trade relations between countries. This doctrine is nonsensical at many levels:

Firstly, nations do not trade; individuals do. And when individuals trade, reciprocity is meaningless. Every decision to buy, and every decision to sell, are independent of each other – and in all cases there is full competition. No one buys specifically from those whom he sells to.

Two examples I offered in an old article advocating unilateral free trade go like this:

Let us forget about the politicians and diplomats for a while, and imagine we are all shopkeepers in a big marketplace. I own a bar that also serves non-vegetarian food. Now, the tailor-master next door is a teetotaller and a strict vegetarian. He never gives me custom. The last 20 years that I have known him, he has never spent a paisa in my establishment. But I always go to him to get my shirts and trousers stitched. Am I doing something stupid? After all, he is the best tailor in town. Should I get my new suit stitched by that very drunken tailor, my very good customer, the last to leave my bar every night, whose hands shake a lot?

Similarly, the government of France disallows the entry of Alfonso mangoes. Does that mean we should not import French wines and cheeses? If we unilaterally open up trade, we gain by being able to consume French wines and cheeses; and the French lose by being forced to consume horrible mangoes from Venezuela, thanks to trade restrictions imposed by their stupid government. If politicians and diplomats stall trade in order to 'bargain' in the interest of the mango business, they will cause losses to all our wine and cheese importers (and consumers).

In yet another article I look at the fisherman who “imports” fish from the sea duty-free. What harm can occur if big ships and big airplanes full of imported goodies unload their cargoes in India?

[I must thank Chandra for unearthing these articles and posting them on the internet, for they are no longer on the newspaper’s website. This was a monthly “Antidote” column I wrote for The New Indian Express on Sundays, for about two years, 2007-8.]

Frederic Bastiat is the only economist I know of who argued tellingly against the customs department and also against the doctrine of reciprocity – which guides the failed “Whither Trade Organization.”

Two of Bastiat’s essays against reciprocity can be found in my The Essential Frederic Bastiat, which you can download free here. There is an entire section titled “Bastiat: The Free Trader.” I recommend that you read the entire section, and then, the whole book.

Away with the customs department!

Away with inter-governmental negotiations over trade!

Let India declare free trade unilaterally.

For Roads, More Roads, And Even More Roads

My column in Mint today was originally titled “Transportation must come first,” and it discusses the historically irrefutable links between transport, trade and urbanization – which is “civilization.”

In this column, I have maintained that, whereas The Market can take care of all other modes of transportation, The State must supply roads. A pan-India top quality toll-free roads network must be built at State cost for all taxpayers.

Why do I call for State action in this area?

First, we pay taxes. There is a cess on petrol, and a cess on diesel, both dedicated to the Central Road Fund. There are a host of other taxes we pay – and get NOTHING from our The State to show for it. The toll roads of today are a form of “double taxation.”

Further, a huge amount of public money is stuck in loss-making PSUs. If these were privatized, and the entire proceeds dedicated to road construction, we would all be much better off.

As for private businessmen, they will build roads only where traffic is heavy. Thus, they will not be able to cater to the road requirements of the entire landmass.

There is another factor: the low level of car ownership in India, below 10 cars per 1000 people on average. Private businessmen cannot recoup their costs where car ownership is so low.

So what kind of a road network do I have in mind?

First, real highways that do NOT provide access to roadside properties, but are meant for swift movement only.

Second: “Truckways” parallel to all these highways for hauling freight. This will also keep the highways safe. With such excellent roads, tourism will grow.

Third: local roads connecting every property in the district.

Roads, roads and more roads.

Swaminathan Aiyar often speaks of the economist Robert Chambers who told him, 30 years ago, with reference to India:

“If I had money, I would build roads. If I had more money, I would build more roads. If I had even more money, I would build even more roads.”

I fully endorse this view. I would do the same. Roads are the solution to all our problems.

Look at it this way: Today, the socialist State owns a car factory, a scooter factory, and a cycle factory.

Socialists are NUTS!

Aspects Of Congress Politics

The fate of Shashi Tharoor after his Twitter message on “cattle class” and “holy cows” was perhaps predictable, given the political culture of the Congress party. This is a political culture of quiet sycophancy, of being “low profile,” of being a peculiar kind of modern-day courtier. Tharoor voluntarily joined this party – which is a centralized, socialist hierarchy. He has written books in praise of Jawaharlal Nehru, and should be assumed to be a socialist of the Congress kind. On his return here from New York, after a long career there as a tax-free baboo in the UN, he wrote a Sunday column for the ToI for long – but it was utterly banal stuff, much like his Twittering. Much ado about nothing. Thereafter he joined politics and contested elections on a Congress ticket – and won, so good for him. He was immediately made a junior minister of diplomatic affairs – whatever that means. And then the fatal Twitter. There was also a big fuss over his taking up rooms in a 5-star hotel. This is one story of the Congress party, of their leading newcomer.

The other story of the Congress party is of Kalawati, the poor woman to whom Rahul Gandhi kept alluding in his much-interrupted Lok Sabha speech. Thereafter, it seems much was done by The State to make Kalawati’s life easier. However, all this attention made her famous – and she has decided to cash in on that and join politics. But not the Congress!

Now, this is the really interesting part. Kalawati is a beneficiary of Rahul Gandhi’s direct attention and State-sponsored patronage. In theory she should remain “loyal” to The Party. But she is not. One report said she had joined the Bharat Swatantra Party of Sharad Joshi (this made me smile) but this editorial in the Express says something else. Whatever, the important thing is that she opted out of the Congress hierarchy.

Perhaps there is a difference between how the Congress is perceived on the ground and how the average middle-class voter views the same party. For the latter, the Congress appears as a “good” party, but there is not much holding up the party from the ground. In the days of the “freedom struggle” the Congress enjoyed mass support. Today, the vast masses are alienated. The middle-class types hang on. Perhaps because there is nothing else to hang on to: the BJP and the Commies are both darker shades of black. This explains Tharoor’s joining the Congress – it seemed the “legitimate” thing to do to enter Indian politics.

There are two questions that arise from the above discussion: first, and most importantly, when madmen talk about giving “direct cash” to the rural poor through smart cards, will centralized and hierarchical political parties not leverage this opportunity to “employ” the poor for political assignments? Will the taxpayer then not be subsidizing the recruitment of political cadres? Imagine the all-India command-and-control structure of a centralized, hierarchical political party doling out cash through a centralized IT-system to millions of cadres throughout India. This cannot be “politics.” But it is: Sharad Joshi once told me that free-market parties like his don’t get enough votes because the other party candidates offer jobs. Now, they will offer cash through the ATM - to their henchmen.

Tell me, really, is this “politics”? From Shashi Tharoor to Kalawati to the NREGA, it seems to me that the Congress is up to no good. They are bereft of ideas. And they have no mass base at all. In all probability, they are investing in an IT system and NREGA-type “socialism” in order to buy support at public cost. This should not be allowed to happen. It makes no economic sense, in law it is plunder, and as for politics, it is fatal. It smacks of a scheme by Professor Moriarty.

I suspect Shashi Tharoor will quietly give up Twittering – which is “politics.” He will be silenced.

I won’t.

Who Should Teach Law?

The ministry of human resource destruction and the ministry of law are at loggerheads over which of them has the power to direct legal education in India, the Times of India reports. Both ministers are “trained lawyers.” Who is right?

I hold that The State has NO ROLE in any education, and especially not in education in The Law.

Anyway, how good is our “legal system” today under State direction and education? There are over 30 million cases pending in the courts. There is corruption. The country is ruled by injustice and most people have lost faith in the legal system. Property rights are not secure. There is no relief in torts. How can the overseers of such a decrepit legal system take charge of the education of lawyers?

It is instructive to look at history, and how legal education began in England, with many “Inns of Court” being established in the City of Westminster, where the courts were also located. In his history of the common law, Professor AR Hogue says that these inns were all “private corporations.” They were essentially hostels where students of law lived, where the decisions of the courts were quickly made available, for discussion, debate and learning. It was unthinkable that the King of England would run the inns of court. Today, there are just four or five of these inns left – but once there were many. And their stories are not always happy ones:

I read of one such inn that was burning. The Lord Mayor of London came to the inn in order to help douse the fire with his men – but was refused entry because he was carrying his “Civic Sword.” The inn, like all the other inns, was located in the City of Westminster, beyond the gates of the ancient City of London – so the Lord Mayor had no business being there with his Civic Sword held aloft. The help was refused and the inn burned down. This is legal independence - right up to the bitter end.

Indeed, law and legal education never had much to do with the King, or The State in common law England. Ditto with ancient Rome. There is the case of Bracton, the great 13th century English judge who wrote a famous treatise on the laws and customs of England, comparing himself to legendary Roman jurists like Ulpian: disinterested private scholars in the law.

In fact, that is the ideal: that those with legal disputes to settle go to private experts (lawyers) who are scholars in the subject – especially, they possess the knowledge of past decisions in similar cases. There is no role made out for The State to tinker with the processes by which these private scholars and entrepreneurs are trained. As with the Inns of Court, education in law should be a private sector affair, with all the necessary competition.

Lastly, let us not forget that our The State teaches “constitutional law.” And this constitution does not protect private property.

I would say the constitution is such only because the minister of law is confident of his control over legal education.

In my Mangalore years, many of the students who befriended me were students of law. Two of the brightest ones opted out of practicing law because they saw the profession as inherently corrupt. And I did teach them enough for them to be aware that much of their received wisdom was nonsense. They both opted for “social work.”

Anyway, if they are somewhere out there reading this, here is news from Manipur that is a little unsettling for those who believe in “social work” and NGOs. I quote:

“If you see a new house in Manipur, it either belongs to a militant or to an NGO.”

The report says NGOs are part of the problem in lawless Manipur.

Why is there so much lawlessness in India? I believe there is only one reason: The State is in control of legal education. As in Economics, where we need a new private school of Catallactics, so too in The Law, we need private schools of legal education.

One thing our The State has got completely wrong is The Law. They cannot be allowed to teach the subject. And, anyway, this is not what the common law is all about.

Both ministers, both “trained lawyers,” should be told to take a walk – into the sunset.

In Defence Of The Anarchist Ideal

Those who poke fun at anarchists, like TK Arun of the Economc Times in his recent blog, and then go on to denounce “corporate crime” as a good reason for The State to preside over The Market, fail to understand that civilized man is a “rule-following animal.” If most people were not such – that is, if most people, the majority, were crooks – there would never be the possibility of any social order. No “government” would be possible – although a State might exist.

Now, it is doubtlessly true that right through our lives we get all our needs satisfied by businessmen, on The Market, and emerge quite happy, without recourse to any policeman, magistrate, or judge. This is the “natural order.” This is The Hope. I am sure even TK Arun cannot deny this. How many times in your life have you been to a court or a police station, TK?

Now, it is doubtlessly also true that there is evil in the world, and there are all kinds of horrible monsters out there. What does the anarchist say about dealing with them?

Torts.

That is, all crimes are crimes against individuals (not crimes against The State) and “if you are guilty, you will pay.”

This takes care of Union Carbide, adulteration of food, drink, medicines and so on. It takes care of traffic accidents. It sets up powerful inducements to be careful about other people.

So Torts, Property and Contract: a “private law” world among peaceable rule-followers – the majority – is what “anarcho-capitalism” is all about. And all the rule-followers are armed. There is widespread “private provision of security”: just as every locality in New Delhi is guarded by private security guards today. Luckily, despite TK Arun, we are heading there.

TK writes of corporate criminals, but does he truly think that our socialist The State is not a criminal organization itself? Let us take the example of widespread adulteration in markets that TK mentions:

I can personally testify that adulterated ganja-charas is sold in New Delhi, masses consume these, and no mainstream journalist discusses this huge atrocity. This is going on under the gaze of our The State.

The only hope for good quality is brand names – The Market.

And here is fresh news that the Central Government Police killed 30 Naxalites.

I guess we should call this Internal War. There is certainly no “politics.” There is no “local government.” What is the meaning of “democracy”? Remember, Rousseau was Swiss. His statue sits proudly in Geneva. Surely even Rousseau would not stoop to call our very Indian tyranny “democracy.”

And where are the Mayors?

Where is the political basis for free-trading and self-governing cities and towns?

The report says that the Naxalits have killed 10,500 people in eight years. During these eight years 1,000,000 people were killed on our streets, and many more maimed for life. The central police look on. They now have "specialists" in anti-Naxal operations but they don't have specialists in traffic management. If the Naxals are pissed off with our The State then, hell, so am I.

No, no TK. Our problem is our The State, this gross tyranny. Anarcho-capitalism is an ideal – and we all must have ideals. If anything, it is a great ideal, for it reposes faith in ordinary humans – and not the extraordinary humans who must be the Central Planners of a Socialist Commonwealth. As a libertarian bumper sticker goes: “The more you are a tyranny, the more I am an anarchist.”

And as for “Ponzi schemes”: fiat paper currency is the biggest Ponzi scheme in the world.

Here is a nice piece from The Economist on the man who started it all, John Law, in early 18th century France.

I hope this answers TK adequately. Let us now turn to the ToI whose leader article today is by the USSA-based professor of economics, Arvind Panagariya, who argues in favour of direct transfer of cash to “the poor” instead of “workfare” under NREGA.

As Frederic Bastiat put it:

“The plans differ; the planners are all alike.”

Will this reduce the number of beggars on our streets?

Where is the money going to come from? From me? From us? From you and me? From the printing press? Show me the money.

Is it not preferable that we create conditions of Liberty Under Law, encourage enterprise, and urbanize aggressively – thereby “including” the rural poor in an urban “inclusive growth.”

Today, street hawkers have a tough time surviving in our city and town markets.

I certainly don’t want a single tax farthing of mine going to “the poor” under any such government scheme backed by modern IT technology. I oppose the idea itself, as founded on theft, on the usurpation of the many. It is a gross misuse of tax revenue.

Aravind Panagariya should watch some Wild West movies. No one was guaranteed anything. And it worked. That is what built AMERICA – The Land of the Free, the Home of the Brave.

And look at the USSA now, with the “Illfare-Warfare State,” the Imperialist Central State, the endless imperialist wars, the cronyism and bailouts, the funny money, the trade unions, the rampant socialism. This is not the old America at all. And it is a disaster precisely because of ideas of the kind Professor Panagariya is advancing.

Give me the Wild West any day. The California Gold Rush was peaceful and orderly, based on homesteading and property rights.

Luckily, the Americans have Ron Paul and Peter Schiff – and both solemnly swear by the ideals of the US Constitution.

Isn’t it funny that I cannot do the same for the Indian Socialist Constitution?

Think about that.

The more you are a tyranny, the more I am an anarchist.

Makes complete sense to me.

The Entire Iceberg

The lead editorial in the Economic Times today, on rising inflation in India, has an eerie title: “Iceberg’s Tip Now Shows.” However, they conclude:

At this juncture, monetary tightening by lifting policy rates will not be the appropriate measure to check inflation. Experience in the recent past shows that the RBI has had little success in containing food inflation with its monetary stance. Surging food prices can be contained only by improving supply and attacking hoarding. Monetary tightening could prove counter-productive to credit growth and reviving growth. Yet, the central bank will need to remain vigilant, as managing excess liquidity arising from an anticipated gush of foreign capital inflows could harden rates.

Meanwhile, in the USSA, where some people have seen the entire iceberg, the Wall Street Journal blog of Sudeep Reddy, who covers the US Fed, has an interview with Ron Paul titled “Audit the Fed, then end it.” This quote is telling:

What is a dollar? We don’t even know what a dollar is. There’s no definition for a dollar. There’s never been a time in law that said a Federal Reserve note is a dollar. That’s the basic flaw. There’s no definition for money. We’ve built a worldwide economy on a measuring rod that varies every single day. That’s why it was fragile, and that’s why it collapsed. There was no soundness to it. So that’s why you have to have a stable unit of account.

If you live in a primitive society, you’d trade goods. And if you wanted to advance, then you would trade a universal good, which would be a coin. But we’ve become sophisticated and smart and say, ‘Oh, you don’t have to go through that. We’ll just print the money. And we’ll trust the government not to print too much, and distribute it fairly.’ That’s often just a total farce. People are realizing that it is.

We need to ask ourselves the same question:

What is the rupee?

Only then can we think of how to contain inflation, which is a tax on the poor, which redistributes wealth away from savers to borrowers and which, in countless other ways, destroys the character of society and promotes "de-civilization."

Today, currency notes are “property titles without property.” Yet, with “legal tender” laws, these propertyless notes are used to gain possession of real properties. When the propertyless notes increase, while the real properties don’t, inflation is bound to occur, accompanied by a redistribution of wealth away from those who get to use the new money last – like the guy who cashes in his fixed deposit next year.

I hope you now see the whole iceberg.

Much Nonsense, On Very Big Stilts

There is a news report from Guwahati today that tells of government coercion on medical doctors in order to force them to serve in rural areas. I have written on this in an earlier post, which I find quite satisfactory for the current occasion, so I will refer my reader to that.

Today, I will focus on another piece of news: a report on the Stiglitz Commission appointed by President Sarkozy of France to find out a way to measure happiness and well-being, so as to replace the standard measure of GDP. Amartya Sen is also a member of this commission.

To begin with, such statistical measures are only required by central economic planners. Sarkozy, Stiglitz and Sen all talk this language of statism; they are opposed to free markets. In the report cited, Sarkozy is quoted as saying:

In the speech presenting the findings of a committee headed by Nobel Prize-winning economist Joseph Stiglitz, the president said new measures are needed in the wake of the financial crisis, which was triggered by an over-reliance on free-market principles. "If the market was the solution to all problems and was never wrong, then why are we in such a situation?" asked Mr. Sarkozy. "We need to change criteria."

Stiglitz and Sen must have influenced the French president to think along these totally erroneous lines. And I wonder how much these two Nobel laureates in economics received from the French taxpayers for their wrong-headed opinions.

First: The financial crisis did not occur because of “over-reliance on free market principles.” There is a worldwide recession today only because governments interfere with money and credit, thereby creating bubbles that invariably burst. The real mischief is not the bust; rather, it is the boom – a government creation. Sound money and legitimate free banking are the only solutions to this.

Real Capitalism.

With real capitalism, The State has no role to play in the market; there is a Market-State divide; and The State has only one role in society, which is to bring outlaws to book. This requires judges, policemen and magistrates. No economists are required. No economic statistics either.

The classic example of such a policy is colonial Hong Kong, where Sir John Cowptherwaite refused to set up a bureau to collect statistics fearing that these may fall into the hands of some evil economic planner some day. And see how the little island flourished.

Further, as far as the utility of statistics is concerned, there are unbridgeable differences between economists of the Austrian School and the rest, who subscribe to “positivism” – by imitating the method of physics, which is measurement. As an adherent of the Austrian School myself, I can only laugh at the attempt by economists to “measure happiness.” And surely “per capita happiness” must be a meaningful average!

Much nonsense, on very big stilts.

On Commonwealth, The Word

There is a big fuss going on about New Delhi’s unpreparedness to host the Commonwealth Games next year. In this context, I am in full support of Rajesh Kalra’s opinion in the ToI of today: Cancel the games. Spend public money more usefully.

And what is “public money”? Why, that is “commonwealth,” of course. So let us leave the silly games aside and talk about the political concept of “commonwealth.” What does it mean? What does it signify?

The word “commonwealth” is rare in modern political discourse, but it has a proud history. Oliver Cromwell took the title “Lord Protector of the Commonwealth” for he did not want to be king. But the term is much older, and has often been expressed as “common profit of the realm.” These are the ideals that used to guide government action once upon a time in Merrie Olde England.

The idea was that, while we are all busy pursuing our own interests in the market – each minding his own business – the government, without favouring any particular interests, looks after and invests in those areas that yield “common profit.” This is the idea of “commonwealth.”

Now, the history of independent India is a history of special particular interests gaining, while zero investments have been made in assets that would have delivered “common profit” – like roads. The particular interests that have gained are the crony businessmen, the bureaucracy, the public sector managers, the Stasi police, the labour elite, and so on. Not a single thought has been given to the idea of “commonwealth.”

Thus, in my opinion, even if the Commonwealth Games stadia and other physical works had been excellently constructed, New Delhi does not deserve the prestige of hosting a celebration of this hallowed political concept. New Delhi has NEVER acted in the interests of our “commonwealth.” This The State of ours has always been partisan to particular interests. New Delhi should hold the World Crony Games. That is what they deserve.

What is the way out?

Well, Leonard Cohen put it best, in his Villanelle for our Times:

Not steering by the venal chart,
That tricked the mass for private gain,
This is the faith with which we start,
That men shall know commonwealth again.

Amen.

On "The Pursuit of Happiness"

William Faulkner, eminent American novelist, and Nobel laureate, said this about the US Constitution, which guarantees the "the inalienable right of man to life, liberty, and the pursuit of happiness."

He says: What the Founding Fathers meant by "pursuit of happiness" was:

"... by "pursue" they did not mean just to chase happiness, but to work for it. And they both knew what they meant by "happiness" too: not just pleasure, idleness, but peace, dignity, independence and self-respect; that man's inalienable right was the peace and freedom in which, by his own efforts and sweat, he could gain dignity and independence, owing nothing to any man.

The "Illfare State" is un-American.

If we want to be a better country that the USSA we must reject the Illfare State.

Yes, the "inalienable right to life, liberty, property, and the pursuit of happiness." No charity. Dignity. Self-esteem.

Read the full article of Willaim Faulkener's here.

I heartily recommend it.

A Big Boo To Their "Austerity"

Today, what tops the news is an “austerity drive” on the part of our The State. The two ministers in the foreign affairs department have been asked to check out of 5-star hotels. Ministers have been asked to fly economy. Whaddya make of all this?

This is not just insincere, it is nonsensical. Bull!

There are scientific reasons why governments always waste money.

In the first place, governments never “sell” any of the services they provide. Thus, there is no “profit and loss” account in public services like policing, garbage removal or roads. In India, where we suffer from an over-arching socialist The State, the huge losses of PSUs like Air India, SAIL et. al. are additional proof of this tendency in government to waste resources.

Further, for anything that the government provides – including education – the task is performed by bureaucracy. This is the only organizational method of government. Since they do not sell their services, all that bureaucrats hanker after is a bigger share of the budget for their departments. Bureaucrats are “budget-maximizers.” They have no other interest.

This is hammered home by modern “public choice theory,” but it was also apparent to the ancients: In his Arthashastra, Chanakya says:

“The king’s servants are like fish swimming in a pond; in both cases, there is no way of telling how much water the fish consume.”

How do we control how much The State spends?

Well, theoretically at least, the one method for doing so is Democracy, by which “representatives of the taxpayers” limit The State’s resources and also exercise oversight on the departments of government that spend this money.

This theory of Democracy is rendered naught by fiat money: When the government can simply print money, it is no longer dependent on taxpayers, nor on their representatives. This is the reason why “pork barrel politics” has become the norm all over the world: the representatives of the people no longer oversee taxation and spending; rather, they become conduits by which government largesse is conveyed to their constituents. This is why Democracy the world over has become a haven for tax parasites. The culprit is fiat paper currency.

To top it all, the biggest issue in all our financial markets, the biggest challenge before our central banksters, is the massive borrowing programme of the government: the insatiable socialist State wants 4.5 lakh crores to blow up.

Austerity?

Or Sound Money?

A Democracy Rigged By And For Nikammas

Khushwant Singh’s column in the Sunday HT, titled “Nikamma Number One,” referring to LK Advani’s fall from grace with the RSS, also reveals the sorry truth that we are a “democratic” country without any political party that believes in Liberty.

On the BJP-RSS link, Khushwant Singh says:

An important omission in the analysis of the rapid decline of the BJP is the role of the RSS. The BJP took its ideology from the RSS. Islamophobia was its motivating factor as it was of militant right-wing organisations like the Shiv Sena and Ram Sena. An increasing number of people no longer subscribe to this ideology. Membership of these parties has dwindled.

Mohan Bhagwat’s assertion that the RSS includes members of the minority communities, including Muslims, has to be taken with a large dose of salt. While he decides on replacements for Advani and Rajnath Singh, he should also take a closer look at the factors which have contributed to peoples’ disenchantment with what all these parties stand for and the readiness with which they resort to violence to achieve their ends.

It is also true that those who believe in Liberty detest the use of force and violence. We idealize a voluntary society, where all exchanges are freely entered into, without coercion. This is a political-cum-economic ideology that has nothing to do with religion – although, as I have recently blogged, there is no religion in the world that opposes free markets.

Anyway, the sudden demise of the main opposition party to Chacha Manmohan’s populist excesses is worthy of note. This, when it is quite apparent that the Congress is also devoid of genuine political leadership. Chacha is a baboo, Sonia is a housewife, and Rahul is a non-entity. It is amazing that the UPA has a second term in office, and this undoubtedly has a lot to do with the fact that the BJP has gone down the drain. What worked for Chacha was the TINA factor: There Is No Alternative.

Intelligent, secular-minded Indians must wake up to the fact that this is a worthless and meaningless democracy if classical liberals and libertarians are legally debarred from forming a party and contesting elections. As long as this continues, the government of India will remain in the hands of one nikamma or the other.

I spent last evening with two “young liberals” discussing Margaret Thatcher’s Britain. But Thatcher was legit. Ron Paul is legit. Here in India, only Advani, Modi, Mamata, Pawar, DMK and the Commies are legit. This is the “unseen” tyranny. We cannot see a political party of liberals because the Congress has rigged the competition.

What do we do?

Protest, I say.

On Street Vendors... And Kaushik Basu

My morning began with a nasty piece of news from Bangalore, about street vendors being “evicted” by the city authorities. The report mentions a street vendor policy of the NDA in 2003, and of the UPA in 2006 – but neither policy has worked. Our street vendors, the smallest businessmen of the country, are a hounded and harassed lot. It does not comfort the soul to read that Forbes has placed 20 Indian companies on its worldwide list of successful businesses. What good is this when there is no market access for the poor?

In my book, economic freedom must come first – especially for the poor.

As I surfed the web for other interesting topics to blog about, I chanced upon Kaushik Basu’s column in today’s HT. Professor Basu is a student of Amartya Sen and is chairman of the economics department at Cornell University in the USSA. His column begins by pouring scorn on Adam Smith. According to Basu, Adam Smith "placed self-interest on a pedestal." Basu says that “modern economics” – must be the stuff he teaches at Cornell – has demonstrated that “altruism, personal integrity, and appropriate social norms and institutions are vital for economic development.”

Adam Smith, in the Wealth of Nations, did put self-interest on a pedestal. This is the only basis for trade among strangers. We do not get our lunches from the benevolence of those who supply us. Smith added that he never saw much good accomplished by those who purported to trade in the public interest – like Air India or ONGC. Or any other PSU for that matter. This is incontestable.

However, to do justice to Smith, in an earlier work, A Theory of Moral Sentiments, he put “sympathy” on a pedestal. This was what the German Historical School dubbed “das Adam Smith probleme.” Smith was a moral philosopher. He saw sympathy and self-interest working together in the human soul. Basu omits mentioning this.

Further, modern economics, especially the “public choice school,” led by the Nobel laureate James Buchanan and Gordon Tullock, have used the concept of self-interest to analyze governments, politicians and bureaucrats – and found them all self-serving. This is why the public choice school has concluded that “government failure” is more rampant than “market failure.” Kaushik Basu, of course, misses out on these intellectual developments in economic science. Although public choice theory is over 30 years old, it is still not taught in the Delhi School of Economics. Must be self-interest at work – the self-interest of our sarkaari self-serving socialist academics.

But we were talking about the “eviction” of street hawkers in Bangalore. In this connection, Basu is worth quoting at length. He writes:

In India, today, there is worry about our high growth not being sufficiently inclusive, and leaving segments of the population abysmally poor. Some clues to this lie in our neglect of non-economic factors. Consider the simple act of trying to bring marginalised people into the mainstream of the economy. This is, of course, something that we should aim for; but, if this is done without giving these people basic education, a sense of their fundamental rights, a modicum of understanding of how the modern economy functions, and also some basic health facilities, there is a risk that they will get no benefit by being drawn into the market economy, and may actually lose out.

Whaddya make of this? Claptrap?

Basu wants us to give these hordes of evicted street hawkers “basic education, a sense of their fundamental rights, a modicum of understanding of how the modern economy functions, and also some basic health facilities…”

I would suggest we give this “basic education” to the bureaucrats and politicians of Bangalore, Delhi, Calcutta, Bombay, Madras et. al. The street vendors are smart enough. And honest too. It is the authorities who are predatory. If, as Basu says, “altruism, personal integrity, and appropriate social norms and institutions are vital for economic development,” then these values should be taught to the personnel of our The State. It is they who need to learn.

In my book, we must amend the Constitution of India to make room for Mayors of cities and towns. The amendment should also contain the “duties” of these mayors, which should include overseeing the smooth conduct of ALL businesses in the city or town, including, most importantly, street hawkers.

When Singapore became independent in 1965 (after Nehru’s death) there were 2,50,000 street hawkers in the city-state. They are all part of the tax-paying middle class today. The same can – and must – happen here.

Against Trade Unionism

The pilots’ strike at Jet Airways is hogging the editorial pages today. And this gives me an opportunity to discuss what libertarians think of trade unions, and their most potent weapon – the strike. Or, what occurs more often, the strike threat.

In the first place, it must be noted that trade unions and their methods can never raise the wages of workers in general. They raise wages in particular areas only, for certain chosen workers who belong to the combination – while keeping the rest of the workers excluded. They are therefore promoters of particular interests alone; they are against the general interest.

What galls libertarians most is that trade unions are legally authorized to use force – against workers, against the management, against workers who break the strike. According to libertarian philosophy, no one should be allowed to use force in markets. Further, there is no reason to believe that a free market for labour is not in the best interests of the entire working class. Trade unionists are a labour elite who represent a privileged constituency of labour. They should never be seen as truly representative of workers as a “class.”

Let us examine the libertarian view on trade unionism in the light of the present strike by Jet Airways’ pilots:

At the root of things lies the “contract” between every individual Jet Airways pilot and his employers. Since every pilot has signed such an individual contract with the company, they are all individually bound to deliver their services as per contract. The pilot can demand pay as per contract; and the company can demand work as per the same contract.

Today, it is the pilots who are violating their individual contracts and not delivering work as they should. This is against Law as commonly understood. It was therefore not surprising to hear that, within 24 hours of the strike, both the Left parties and the BJP “had come in support of the strike and the right of the pilots to form a union.” They want to inject politics into everything; they want to politicize a purely legal matter relating to the enforcement of contracts.

I read three editorials on the pilots’ strike today: The ToI is the most illiberal, supporting “collective bargaining” on the one hand and yet trying to oppose the strike; the Express contrasts the cabin crew with the privileged pilots; while Mint goes the whole hog and asks whether all our labour legislation is outdated.

I think it is Mint that has hit the nail on the head. At the core of the issue is the matter of legislation – and the privileges thereby conferred to unions. This is something that began in the West – and has ruined the West. Let us dump this as we try and build a new, competitive India.

What would airline pilots do without unions? Why, they would simply join which ever airline paid more. That is, their wages would be determined by market forces, not politics. And that would be in the best interests of all, including ALL pilots.

Recommended reading: The works of WH Hutt. In particular, The Theory of Collective Bargaining, available here. After reading this, go to The Strike Threat System: The Economic Consequences of Collective Bargaining, available here.

On Our Urban Disasters

TK Arun’s column in ET today, titled “No more Gurgaons, for climate’s sake,” is above all an admission of the fact that a brand new city like Gurgaon has failed. Arun uses Marxist terminology to describe Gurgaon – great “superstructure” but no infrastructure. Indeed, not even a central business district.

To me, the disaster that is Gurgaon is best appreciated by looking at Sikandarpur, the old village that lies on the Mehrauli-Gurgaon Road. If you travel on this road from Mehrauli, Sikandarpur occurs shortly after you cross the border into Haryana. In the old days, the M-G Road went straight through Sikandarpur, Now, the road by-passes the village altogether. And our crazy authorities are building the elevated tracks of the Metro Rail right through Sikandarpur. In other words, Sikandarpur Market is now totally inaccessible. This means Sikandarpur has been effectively killed.

Our The State knows nought about cities, and only pretends to develop villages. You see “urban villages” all over south Delhi – Zamrudpur, Adhchini, Katwaria Sarai, Hauz Khas village, Masoodpur, Mehrauli… and so many more. These are all hell-holes today.

Not that the “city” areas are any better. As with Gurgaon, so with south Delhi, all the “posh” residential localities have been laid out by the private real estate firm DLF, with our The State supplying the internal roads. It is these roads that are badly designed. Because of this, even the posh areas of south Delhi are unlivable today. If TK is calling for “no more Gurgaons,” I am calling for no more Delhis.

But urbanization must proceed at full pace. TK says that in the next 15 years, India’s urban population will grow by 200 million. That is, more than 20 per cent of the total population will move from villages to cities. For them, there must be new cities and towns, and good, livable cities and towns.

The greatest challenge India faces today is urbanization. It is therefore astounding that all our central planners continue to have their heads buried in village India. The flip side of "rural development" is nothing but urbanization. A village “develops” when it urbanizes – and becomes a town. This should have happened to Sikandarpur. This should have happened to Zamrudpur, Adhchini, Katwaria Sarai, Hauz Khas village, Masoodpur, Mehrauli… the lot.

Of course, Gurgaon and NOIDA both happened as spillovers from Delhi. TK is worried about energy use and climate change – but such a huge urban agglomeration at such a location as Delhi is in itself a bad idea because of the weather. In Delhi, for 8 months of the year, you need air-conditioning. And for the rest, you need heating. I would prefer smaller cities coming up where the climate is mild. Only this would reduce our energy consumption. If we declare unilateral free trade, the western ghats would be an ideal place to locate many new port cities. And their satellite towns. There is nothing now between Bombay and Goa, and nothing between Goa and Mangalore. There is lots and lots of empty land, rivers, beaches and mountains. This is an area with tremendous potential.

Yes, Gurgaon has failed. But so has Delhi. So has Bangalore, Bombay, Calcutta…. The fault lies in the heads of those occupying the “commanding heights.” These heads should roll.

Tyranny!

What is the true purpose of Law? I posed this question to a 4th year student of Law, who spontaneously replied, “Law is an instrument of social control.”

Actually, law exists in order to PROTECT everyone. That is why people have revered the law in the past. Even today, people confuse anarcho-capitalism with lawlessness – and are terrified of living without law.

We need good laws in order to protect ourselves, our properties, and our future plans. These good laws comprise property, contracts and torts – and nothing more. And all this is “private law” – in the sense that a rent contract or a sale deed are “law” because two private persons have signed it and are therefore legally bound by it.

Things are different with Legislation – which should never be confused with Law. Legislation is man-made and it is an interference in the lives of the citizenry. It is legislation that has become an “instrument for social control,” and vast powers have been created to further this evil agenda. This is all that Democracy has achieved, what with the horrendous idea of “parliamentary sovereignty.” In Europe, right up to fairly recent times, and right through the Middle Ages, the idea was of a sovereignty that lay in the law. The Law was Above the King. The King ruled under God and the Law. Now, parliament is above law – and that is why we suffer from what Bruno Leoni called “inflated legislation.”

This idea of a socialist democratic The State that tries to “control” a society that it does not protect is brought home by this story on the Ahmedabad Stasi that a reader linked to on the comment form yesterday. The reader wrote how robberies, burglaries and traffic chaos mark life in Ahmedabad, and how the Stasi Police are resorting to “social control” instead of performing their legal duties. If these were performed, the people would be better protected.

Instead, the Stasi are covering up their obvious failures by playing “moral police” during the religious festivities currently underway. The Stasi are particularly against lovers. They will not allow lovers the liberty to express love in public.

My question: Are lovers “good guys” or “bad guys”?

And are cops meant to go after good guys or bad guys?

Well, so there you have the answer: Our legal system, built on Legislation, and our administrative system, empowered by loads of “subordinate legislation,” do NOT protect us. The entire State apparatus is built to exert “social control,” mostly of a perverse kind, as in this particular instance.

They do not protect.

They only want to control, to bully, to intimidate.

This is the naked face of Tyranny.

India's Magna Carta Moment Arrives

Let us be completely dispassionate, and only resort to cold reason – for the news today requires sober reflection.

First, from the west, Gujarat, comes the news that a magisterial inquiry has concluded that the Gujarat Police murdered four young people in cold blood. Here is a news report; here is a video story.

The conclusion:

Our The State is violating our Right to Life.

This is a serious charge indeed.

Let us now turn to the east, where, from Calcutta, comes the news that the prestigious Rajarhat IT Park is being cancelled because the land was being illegally “acquired.” For whom: Well, the usual suspects, Infosys, Wipro etc.

The conclusion:

Our The State is violating our Right to Property.

This, too, is a very serious charge.

In Gujarat, the ruling political ideology is that of a “majority community”: the individual, the minority, matter little.

In Bengal, the ruling political ideology is of a “collective” – and here too the individual, and most certainly his property, matter none at all.

Bad ideas have consequences.

We must instead think of catallaxies, of individuals, of strangers, exchanging goods and services freely, under the laws of private property, contracts and torts - laws which arose among the people themselves, and do not require legislation. This is the world of "private law."

Note that in both the top stories in the news today - from the west and from the east - of murder and misappropriation - it is The State that is breaking The Law.

We are therefore at a critical moment in constitutional history – when The State has to be placed under law. This law, of course, being Several Private Property, beginning with one’s body, one’s life, and what one produces or homesteads.

Such law is the only solution to the problem of social order, given the fact that the one institution with a monopoly on force – The State – is violating law.

It is this The State that must be placed under a law that it did not legislate.

Cold reason therefore indicates that India has reached a critical point: the choice between collectivism and individualism, the choice between private property and collective property – like Air India, of course.

They have just put 5000 crores down that hole.

This too is a violation of Property: for these are public revenues being stolen.

Once again, this is a dereliction of “democratic” responsibility – for the idea is to “represent” the taxpayer: these guys represent tax parasites.

And Air India will “compete” with private low-cost airlines. Read Captain Gopinath’s excellent piece on the fabulous prospects of the civil aviation sector in India, prospects which are dimming because of our The State, and its baby, Air India.

5000 crores for Air India? You could build an elevated ring road around Delhi with that money, I think. What a senseless The State. Every action galls.

What galls me most, of course, is that these guys control “education.”

I remain optimistic, because I see the country waking up slowly to another principle by which to conduct its common affairs, one based on the inviolability of private property.

Liberty Under Law.

More importantly, The State Under The Same Law.

Magna Carta time, my fellow citizens.

Outsiders Must Be Welcomed

A reader wrote in a few days ago asking for my opinion on policies that disallow “outsiders” from buying property in many parts of India. Such policies are in place in much of the north-east, in J&K including Ladakh, and perhaps elsewhere as well.

To put it bluntly: Such policies are economically ruinous, and should be struck down by the courts as illegal.

Let us look into the legal aspects first: Such policies violate the right of the property owner to sell to the highest bidder. Thus, such legislation should be struck down by the courts as illegal.

Economic ruin is also an outcome of such policies – because it is outsiders who will bid the highest. The local property market can never take off if such bans are in place. Any area that is run by such policies can never become a great piece of real estate.

It is vital in this context to understand that “outsiders” are an essential component of the free market economy – and they are beneficial. Within India, if we examine the real estate markets of Bombay, Delhi or Bangalore, we will surely find that the success of the city’s real estate market is driven mainly by “outsiders” – people from other parts of India, and people from other parts of the world. If these people are kept out of the real estate market, very few properties will change hands. The market will dry up.

My reader, who was in Ladakh when this question struck him, mentioned that defenders of these bans cite the need to keep out “Russian and Israeli MAFIAS.” This is sheer nonsense. If foreigners violate our laws, then they must be made to answer for it. But this does not mean it is sensible to ban ALL foreigners from the real estate market. And ban all Indians from outside the state as well.

Indeed, I found such nonsense very much in the air in Goa, where foreigners are allowed to own property after necessary clearances. Indian citizens are allowed to own property in Goa freely. No Goan has lost from these liberal policies. If anything, Goa has a vibrant real estate and construction industry. The average Goan property owner gains from this as the value of his property keeps rising.

However, even in Goa, voices are raised against “outsiders” – against Indians from other parts of India; and against foreigners as well, especially the “Russian and Israeli mafia.” Yes, even in peaceful Goa, the word “mafia” is used to taint Russian and Israeli businessmen. Yet, these voices are invariably those of locals who want to preserve Goan “culture.” But Goa’s culture has evolved over centuries, with much intermingling with outsiders. Calling an end to this evolutionary process, on false grounds, is certainly mistaken.

To conclude: The market economy has nothing to do with ideas of “community” – the idea of a people bound together by close ties and a common culture. For that, we must revert to tribalism. On the contrary, the market economy is a “catallaxy” – where people trade with strangers. And the more strangers the merrier. Policies that keep strangers out and force people to trade amongst themselves are foolish. They should be summarily scrapped.

Thoughts Occasioned By An Electric Car

The cute Hyundai i10, the second-highest selling small car in India, is going electric. The petrol version of this car is currently manufactured at Hyundai’s Chennai plant for both the Indian as well as the world market. The electric version will be produced next year, initially for the Korean market, where – and this is the interesting part – the government has tax incentives in place for electric cars.

Frankly, I’ll always drive petrol. And I am against official policies that promote anything as “socially desirable.” Even the electric car will need electric charge – and some power plant somewhere will be burning coal to produce that electricity. I have also written in favour of a Indo-USSA “clunker deal”: allow our poor people to automobilize fast by buying every American gas-guzzling clunker for peanuts.

My argument is that our poor people must have cars today, so they produce more wealth for themselves today, in order to hand over more wealth to future generations – who will only then be able to face environmental challenges adequately. If we remain poor today, we remain poor tomorrow.

It is also true that electric cars are getting better every day. There are already many cars with hybrid engines being sold commercially. All cars are becoming more fuel-efficient. If we begin automobilizing our masses in full earnest now – through a clunker deal with the whole world – I am confident that these very people will buy brand new fuel-efficient cars someday soon, and their children will buy the most advanced cars in their own time.

But getting back to the i10: I would much prefer electric i10s darting about our streets than the pesky CNG-driven Bajaj auto-rickshaw – a vehicle that I do not consider “roadworthy” in any sense of the word.

My investigations in Delhi have revealed that a second-hand auto-rickshaw sells for over 200,000 rupees or US$5000. A modern car, second-hand, costs much less. Why are auto-rickshaws so expensive? The answer: They come with a “permit” to operate from the RTO. It is for the permit that the old auto-rickshaw is valuable. This permit system must go.

This is evidence that our The State’s dalliance with environmental causes is totally insincere. Environmental clearances are just another regulatory bottleneck for business – and a boon for baboodom. The Coastal Zone Regulation Act is also a tool for bureaucratic empowerment and for the dispossession of beachside property-owners. The State has also taken over forests – to protect tigers – but forest guards and forest-dwellers have divergent interests. There is endless conflict in our forests. And as far as automotive emissions are concerned, our nightmarish traffic, our pot-holed streets, and all these CNG auto-rickshaws, all combine to reduce efficiency. We waste fossil fuels in megatons.

This The State is also an enemy of the environment.

Recommended reading: My Four Wheels For All: The Case For The Rapid Automobilization Of India. A free download is available by clicking here.

On Ganja, Bangalore, And Amsterdam

This is the kind of news that pisses me off: “Four men arrested with 70 kg ganja.” These four decent guys, carrying a decent smoke, were from Andhra Pradesh. I have smoked Andhra ganja – and I recommend it highly. They had traveled to Bangalore to sell their stash – and fell foul of our foul desi Stasi. Thousands of decent Bangaloreans were denied a good smoke. Lose-lose-lose-lose kind of game.

To really understand the dimensions of this lunacy, let us examine things in the light of Jean-Baptiste Say’s “Law of Markets.” This law says that “the sale of X gives rise to the demand for all non-X.” So if the 70 kilos of ganja were to be sold, at about 5 lakhs as the report says, this 5 lakhs would have been used to purchase everything else other than ganja. The four men might have bought four motorcycles – but in this case, their only motorcycle was seized by the Stasi. These men might have bought beer, clothes, shoes, iddlis and what not. All these businesses have lost.

The Lesson:

Every businessman has an interest in seeing that all non-competing goods sell. This is the only way to ensure that the catallaxy hums with full energy.

[To learn more about Say’s Law of Markets, and its implications for the global recession, and free trade, read my recent column here.]

The great European City of Amsterdam possesses such a catallaxy. Every street is lined with shops, and there are huge markets for street vendors as well. Everything is legit: the hash cafes open at 0900 hrs; there are casinos, there is a legal red-light district. The city hums with commercial activity even at night, for great cities never sleep – my first day began at a hash café at 0900hrs, and ended at the Late Night Bar at 0400 hrs the next morning. What an adventure.

Bangalore goes to sleep at 2230 every evening.

The Stasi play Wee Willie Winkie.

The Sheeple Tolerate All This Injustice.

Ban the police, as this song says.

Two Columns... And A March

My column in Mint has been published today. It demolishes the concept of “social justice” so beloved of étatists like Amartya Sen, Jean Dreze and their good friend Chacha Manmohan S Gandhi. Read it here. If this link does not work, try here.

Let us revert to the idea of an “equal justice,” so beloved of all classical liberals, including the early Whigs. Recall that British civil government in India was based on this idea of an “equal justice” – where there are no special favours shown on anyone; all are equal before The Law.

So there is another problem classical liberals and modern libertarians have with the Constitution of India, for the Preamble mentions “social justice.”

Perhaps there is no solution other than a Second Republic.

Moving on, the most interesting – and disturbing – read I encountered this morning was this article on LRC on the USSA using “mercenary soldiers” in its foreign wars. This quote is telling:

“The increasing use of contractors, private forces, or, as some would say, ‘mercenaries’ makes wars easier to begin and to fight – it just takes money and not the citizenry,” said Michael Ratner, of New York’s Center for Constitutional Rights. “To the extent a population is called upon to go to war, there is resistance, a necessary resistance to prevent wars of self-aggrandizement, foolish wars, and, in the case of the United States, hegemonic imperialist wars.”

I am confident that the world – especially our part of the world – would be a much better, safer and prosperous place if the USSA ended all its wars, including, most importantly, its “war on drugs.”

Which reminds me: Here in Delhi we have now established the Dhooan Club (“dhooan” means "smoke" in Hindi) and we are fast progressing towards organizing a Ganja March.

However, since stoned people don’t enjoy long marches – like Mao’s or Gandhi’s – our march is going to be very short: from the CR Park #1 Market to the Shiva Temple – barely 200 yards. We will smoke in the Market, we will smoke during the March, and we will smoke in the Temple – and then disperse peacefully. The idea is to drum home the point that what is allowed in the Temple is not allowed in the Market.

We have not yet finalized a date, but stay tuned and you will get the news as soon as everything crystallizes.

Onwards, patriotic ganja warriors!

Let us fight for freedom.