An editorial in Mint today talks of the fourth anniversary party of Chacha Manmohan S Gandhi’s “flagship” National Rural Employment Guarantee Scheme (NREGS) – a party that was celebrated “with gusto” by Chacha and his supreme boss, Soniaji Gandhiji, the Queen Bee of the CONgress hive of hornets.
Interestingly, the editorial reveals that two rats have abandoned this sinking ship. Jean Dreze, professor emeritus of sociology at Delhi University, a great champion of NREGS, and Aruna Roy, the NREGS “activist” who campaigned for the Right to Information Act which is designed to run parallel with NREGA, both boycotted the party. We live in interesting times, folks.
As an economist, however, I maintain that State-funded employment is sheer nonsense; indeed, it is pure theft. If the State pays for the labours of the rural poor through taxation of urban tax payees, it must never be forgotten that the abolition of these taxes would generate far more real employment as the urbanites would spend their earnings themselves, on goods they value. If they saved their money in commercial banks, and the banks lent out these funds to entrepreneurs, a lot of genuine employment would be created.
What is happening under NREGA is even worse: the scheme is being funded through inflation. The Chacha State is printing paper notes (“quantitative easing” is the new term they are employing), calling these notes “money,” and funding this nonsensical politics of welfarism.
Now, inflation is a hidden tax on everyone – including the poor. What sense does it make when all poor people throughout India pay more for sugar, dal and tea, while a small fraction of the rural poor get handouts?
Further, it must never be forgotten that this Total Chacha State is a destroyer of urban jobs. We are an economically unfree country. Much of what is “not seen” in urban India are businesses that have never opened – because of the Total Chacha State’s restrictions on enterprise. Rakesh Wadhwa’s casino in Kathmandu employs 1300 people. There are no casinos in India, save sunny Goa. We do not have a nightlife industry. Bollywood films are big business but poor girls (and boys) cannot boogie live in bars. The talent contests on television show how much music and dance talent exists all over India – but none of this talent has scope for employment in urban India. And Chacha is busy “generating” employment in the boondocks.
The real purpose behind Chacha and Soniaji Gandhiji’s “scheme” is political. These funds are spent at sub-district levels on the advice of local politicos, CONgress vermin of the lowest rung. These funds are handed over to their henchmen. Goons get this money. BureaucRATS get their share of the booty.
The urban taxpayer is therefore funding political recruitment. When we next see a Congressman with his large band of “supporters,” we should realize that NREGS funded this support, not adherence to any political ideology or cause, or even personality. NREGS is nothing but political corruption, another attempt to fool the people.
I therefore found another article in Mint today noteworthy, where the author talks of “not guns or butter, but roads and dal.” Yes, she is right. Say no to guns, and say no to the NREGS too. Let us fund roads. And stop the printing presses, so we can all afford dal.
Is economics of the nation devoid of the political principles? Employment guarantee might seem flawed from a perfectly economic sense..but the fact remains that "liberalization" with high GDP growth though was successful in increasing the contribution of service sector to the GDP percentage has miserably failed in bringing about job redistribution.. we dont need less state intervention.. we need the right kind of state intervention..
ReplyDelete"What sense does it make when all poor people throughout India pay more for sugar, dal and tea, while a small fraction of the rural poor get handouts?"
ReplyDeleteI would like to point out that in states like AP, where even dal, rice etc. is highly susidized, the so-called poor people have to work for a week or two on NREGS projects to get their entire months supplies subsidized. How is this helping the economy in any manner??
Why is it OK for the municipality to clear the garbage but not run schools? Why is one public service OK, but the other not? I am not trolling here...this is an honest questions - I have the same question when you argue passionately that the government should build roads and cities, but not anything else.
ReplyDeletei agree with everything that has been said in this post. Everyone knows that NAREGA does not work, yet no politician can dare to speak against it. why? Because policies like NAREGA fetch votes. I have been to rural areas where people are totally in support of it.
ReplyDeleteEven the urban population, that is being taxed to death votes for the promoters of NAREGA like policies. People love slogans and platitudes, they hate facts...
the idea of achieving a free and fair society is impossible. The ideologies that promote enslavement will always be popular. people love to have a dictator who will rob them of their hard earned money and in payment offer a few kicks on their butt.
There is no hope for a better tomorrow because majority of the people will always subscribe to some sort of leftist or religious fundamentalist type of ideology. Hence it is futile to aspire or aim for higher goals.
the idea of an ultimate truth is nothing more than a delusion and a figment of imagination. that is why i say cynicism is the most valid state of mind. The world started with a big bang and it will end with a big whimper (a leftist whimper, to be precise)...
@Anustubh: What is the "right kind of intervention"? Have they not tried them all? And have they not all been miserable failures? Have they all not had "unintended consequences"? Have the good intentions of the interventionists not paved the pathway to hell?
ReplyDeletePlease enlighten this forum as to what new kind of good interventionism you support?
This comment has been removed by the author.
ReplyDeleteI will again try and reiterate my position here. Please do not singularly attribute inflationary pressures India faces today to the rural employment schemes. Government has not acted with prudence when it came to trade policy and that is in part one of the major factors responsible for the way dal, chawal prices have risen. I am not a blind supporter of state intervention, but neither am I believer of free market fundamentalism. (It does not matter who I am, for the facts must speak for themselves and ideologies must be ignored, we dont need the emotional comments like the ones Mr Verma has posted).
ReplyDeleteToday the fact remains that agriculture contributes to only 25% of GDP yet is responsible for 55% of jobs in India. WHY? Government failure. Failure to create skilled manpower. But does this mean we need to minimize the role that state can play?
We also have a situation where 55% of children are under nourished ( more than 1 in 2). Fact remains that in a democracy the economics will be dictated by the ability to garner popular support. Given the obligation of the government to channel the gains to India to Bharath such policies will remain politically necessary and viable for obvious reasons. The best way forward is to ensure their efficiency and reduce the pilferage.
@Anustubh: You have deleted your comment, unfortunately, but I have it on my mailbox, and will only reproduce your conclusion here, where you say:
ReplyDelete"The best way forward is to ensure there is efficiency and reduce the pilferage."
This desire of yours has nothing to do with economic theory, and everything to do with electoral politics and "public administration." Let us leave the politics aside.
What kind of public administration do you envisage that will accomplish what you want it to? Please enlighten us. Will these administrators be angels from heaven?
There is no doubt that leftist ideology leads to loss of freedom and poverty on a massive scale. But it continues to be popular.
ReplyDeleteWhy? That is because the leftist ideology happens to be the illegitimate offspring of altruism. And majority of the people are born with an altruist gene. They are compassionate and have a sense of pity. They want to help others, be charitable.
But the thing is that altruism is the most evil concept. The ruthless creators of Soviet Union were all altruists, who had a perfect society in mind reached through the firing squad, the torture chambers and mass murder.
Only a society based on logic, reason and science can lead to a free and prosperous society. But altruists don’t want it to be that way. They want to illogically and unreasonably come out in help of others.
If others won’t accept their help, the altruists unite and form a leftist gang, which starts indulging in an orgy of altruism. They extort from one group of people to help some other gang. This process goes on till society gets bankrupted, like it has happened in states like West Bengal and Bihar or in countries like Cuba, North Korea, Soviet Union.
The point is that the leftist forces can never be defeated, as long as majority of people want to compassionate and full of pity. For another million years majority of people on this planet will continue to rot under leftist regimes.
There is nothing anyone can do about it. As humans are born with an altruist gene, we are prone to leftist ideology. We can have small pockets of capitalism in the world from time to time, but majority of us are going to rot in poverty and hopelessness.
My point of view might sound pessimistic, but it is truth.
"neither am I believer of free market fundamentalism"
ReplyDelete---
Fundamentalism is a political concept that applies only to faith based entities - like leftist ideology and religion.
An entity cannot be free and fundamentalist at the same time.
Anyone who thinks that a market can be fundamentalist, does not know what he is talking about.
Free market is based on logic, reason and personal choice.