Kaushik Basu, formerly of Cornell University in the USSA, and student of Amartya Sen, is now Chief Economic Advisor to the Government of India. Today, Mint is carrying a brief report on a paper he has penned on the "food problem": the fact that grain is rotting in government godowns while poor people are (supposedly) starving. I say "supposedly" because we are not receiving any reports of starvation deaths - and such reports haven't appeared in many decades. Allow me to quote the opening paragraph of the article on Basu's paper:
The government has been pulled up by the Supreme Court for allowing foodgrain to rot in its godowns while the poor go hungry. The judges have ordered the food to be distributed free. In response, the Prime Minister has said it’s impossible to supply free food to the 37% of the population below the “poverty line”. Who’s right, the politicians or the judges? Kaushik Basu, chief economic adviser at the finance ministry, has in this paper said that it’s perfectly possible to feed everyone in the country and the problem is the faulty food procurement and distribution system.
Methinks the only "perfect" way to feed everyone is via The Market. To me, there is NO ROLE for our The State in the business of food. If you visit our urban slums, you will find many vendors of food there - vegetables, fruit, fish, meat, snacks, tea and so on. Why should our The State be called in to waste truckloads of scarce tax revenue on this? And waste it is, for Basu is quoted as saying:
In the case of India, the release has fallen well short of procurement. The statement by a senior member of this government that, when it comes to hoarding, it is the government of India that leads the pack is not off the mark.
Why should our The State "procure" grains at all? Basu does not answer this question. Instead, he calls for "better procurement policy" and "better distribution policy" - including food coupons. Disastrous ideas, I think. I believe in a "policy-less government."
Frankly, I am sick to death of this paternalism our The State exhibits - and anyway, it is quite phoney. Our The State is actually inflating the currency - hurting everyone, especially the poor. To my mind, our The State needs to be drastically cut down - and the Ministry of Food as well as the Food Corporation of India must be abolished. And many more ministries besides. Once we have the budget under control, once we have taxes cut down, once we have nullified the public debt (and contracted no further debt) - only then can The State be made to perform its basic function of building roads. Basu is quoted in the last para of the report as saying:
Basu points out that we have, in the name of caring for the aam aadmi [common man], created a system where neither poor consumers nor poor farmers benefit. Worse, the present system creates wrong incentives that “hold back large segments of the population in agriculture, who actually deserve to move out to industry and manufacturing”.
Well, the division of labour cannot proceed unless there are good roads between areas of agricultural production and the markets for the produce, which are invariably in cities and towns. There is no other way. And there is no money for roads because of all this foolish spending. Basu knows that this spending on "food security" is foolish, for the report says:
On 1 April, the stock of wheat and rice with the government was 202% of the minimum needed under the buffer stock norms, at a time when price rise was forcing the poor to cut back on food. Basu points out scathingly: “If the reserves are never to be used, they may as well not be there.”
So let us get down to basics: Human beings "economize." They spend scarce resources on their most pressing needs and leave lesser needs unsatisfied. The State must do the same.
But just think about it: What if Roman Emperors had decided to "feed the poor" instead of building roads? What would have happened to their Empire? What would have happened to trade between all the regions? What would have happened to the Treasury?
So I agree with Basu where he says:
“If the reserves are never to be used, they may as well not be there.”
Yes, put an end to this "food security" nautanki tamasha (theatre of the absurd), this ugly joke on poor people in a poor country without any physical infrastructure whatsoever. With an infrastructure of roads, with cheap second-hand cars imported duty-free, and with ECONOMIC FREEDOM, the poor will feed themselves very well. Indeed, they will clothe themselves, house themselves and even enjoy recreation - just as they all possess mobile phones now. Adam Smith believed that the "system of Natural Liberty" would lead to "universal opulence." There is no other way. Their only hope lies in The Market. Let our The State build roads - and if they cannot do so, let us stop paying taxes altogether, abolish The State, and build the roads ourselves.
PS: For more posts on Kaushik Basu, including some critiques of his Hindustan Times columns, search this blog under his name.
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