Onions - And Kleptocrats

Onions are in the news because crop failure has resulted in high retail prices. Our The State responded by immediately banning exports. I thought this quite insane because, if crops have failed, there is not much to export anyway. Thereafter, it seems our The State woke up to its folly and abolished import duties on onions - which is the sensible thing to do, not just for onions, but for everything else as well. But then, after freeing imports (of only onions), true to form, our The State messed up - badly.

According to this report in Mint today, our The State has directed three State-owned firms to undertake all the onion imports required. This means that these State-owned companies will spend taxpayer money - without any concern for profit and loss. This is essentially a "kleptocratic" idea - for it will inevitably lead to gross corruption. Remember that the current CVC was indicted for corruption in a similar scam - he imported palm oil for the Kerala "public distribution system" to tide over a shortage.

What I find most entertaining is that two top-ranking IAS officers have been named in the above report for having taken this decidedly kleptocratic decision. They are cabinet secretary K M Chandrasekhar and commerce secretary Rahul Khullar. The report says Chandrasekhar is "personally monitoring the situation, [and] earlier in the day asked the commerce ministry to 'speed up' onion imports to augment domestic availability." And as for Khullar, he is quoted as saying, “I met CMDs of three public sector companies MMTC, STC and PEC and asked them to look around for import contracts (for onion).”

I find it hilarious that a cabinet secretary - the senior-most IAS officer in the land - should think that his job lies in "personally monitoring" the onion trade. Is he getting "tweets" from dealers all over the land? And who is he trying to kid?

After all, there is an IAS officer in Delhi who runs all the booze shops. Does he "personally monitor" the trade? Ask any hapless consumer and he will tell you that his favourite brand is often unavailable at his local shop.

Only competing private traders can be possessed of the "knowledge" required to solve the onion shortage problem. They will each seek to "buy cheap and sell dear" - and by their combined actions, conducted under conditions of open competition, they will wipe out the shortage and flatten retail prices. Since import duties on onions have been abolished, it is these private traders whose private capital and energies should have been unleashed. Instead, these top-ranking IAS baboons have ordered "public capital" and "public enterprise" to monopolise imports.

Indeed, if imports had always been free, the current crisis would never have arisen, because all these private traders would have found it profitable to begin importing long ago. Each one of them, with his "personal monitoring" of onion prices here and there, would be alert to wide differentials far earlier. Here again, the idea that a central mind can better perform market functions fails. And it fails in a critical area - thinking ahead. Always remember these words of Mises:

The social function of the entrepreneur is to make provision for the uncertain future.

Our "centralised mind," after all, woke up only after lots of news reports and even public outcry. They also claim to be "thinking ahead" - at least for the five years of their five-year plans. But if you look into anything that is being monopolistically planned - like roads, electricity and water - you will find a shortage. Like Bajaj scooters in the bad old days. And on the other hand, if you look for anything that is being free traded, like scooters today, you will find abundance. I had thought that, by now, our knowledge-based administrative elite would have learnt something that would affect their philosophical position on the market-state debate. Yet, it is plain that they think like communists.

Thus, it seems quite apparent that the IAS is part of the problem - the problem of "knowledge failure" that characterises our The State. Their precise role in our system of government lies in rendering knowledge-based policy advice to the representatives of illiterates. However, it is obvious that they themselves are suffering from "acute economic illiteracy."

To these accursed kleptocrats, I offer some words of Pascal that Peter Bauer was fond of quoting: "Struggling hard to think clearly is the first step to moral conduct."