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.