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?