Let us begin with the interview with Armando Branchini, executive director of Fondazione Altagamma, a trade body of 74 Italian luxury brands such as Gucci, Bulgari, Fendi and Valentino among others, having collective sales of €45-50 billion. He says that the customs duties on his products are so high in India that people prefer to buy them in Singapore and bring them in - by simply wearing them on their person, like a luxury bag or a watch or shoes or whatever. He says something on the regulation of "luxury brand retail" (some famous 51-49% scheme) - and it sounds ridiculous when you hear that they are willing to invest 100% in their own retail stores @ US$ 3 million per store for 50-60 stores a year! The interview concludes with the statement: "This market and economy is over regulated by the government." Betcha! They're nuts!
The second report is on luxury yachts - and since I have been living on the coast for a long time, it is my view that as the roads and highways are so horrible, free imports of all kinds of boats could allow our coastal cities and towns to decongest and let property and real estate be developed along the coasts. This report says that the Italian luxury yacht-maker interviewed sells 60 a year in Brazil, but only 2 or 3 in India - because of customs duties. We have a 3000 mile coastline! We can have many, many free trading port cities on these coasts. Where are we headed?
Actually, the same applies to luxury cars, to liquors and wines, and to everything else we desire to import. The import duty on cars is over 100% - and this makes no sense since so many MNCs have already set up base here. Does it make sense to charge 100% duty on an imported BMW or Mercedes while charging less for a locally assembled model? Certainly not to the consumer. Nor to the poor manufacturer. Is this some kind of return to the ghastly days of "import-substitution industrialisation"? As with boats and yachts and other luxury goods, the idea of automobilisation should be to see maximum ownership - that more and more Indians own good cars. And by "good cars" I don't mean Tata Nanos. I mean second-hand Mercedes or BMWs. They'd make great taxis - especially when a Bajaj auto-rickshaw costs over 4 lakh rupees (US$ 10,000).
Similarly, we could be big importers of wines, beers and quality liquors - which we don't produce domestically. There are 600 brands of beer in tiny Belgium, for example. What about Bohemian beers? There are so many beers of so many kinds in Germany. And Guinness? Irish pubs, here?
All this could be big business - for importers. A 100% duty on these merely makes the IMFL peddlers rich - while the poor Indian consumer gets screwed. A gourmet restaurant owner once told me she is forced to sell $5 wines for $30! A wine producer from California I once met in Nude Elly complained about our "tariff walls."
The term tariff WALL reflects the craziness of our rulers.
Obviously, with such high tariffs there is little or no trade, so there is little or no revenue. Why do they do it? Obviously, for bribes from domestic cronies. Or perhaps these are called "political contributions" to their parties. All this goes against the "national interest."
Frederic Bastiat was the greatest free trader ever. He put it squarely when he wrote way back then that a State can pursue either the "producers' interest" or the "consumers' interest." In the former case there will be shortages and scarcities. In the latter case, there will be abundance. Then, there will be Supermarkets all over the place with their shelves overflowing with goodies from all over the world, from Japanese saké to everything else that can be called "exotic." Thus, only the consumer interest coincides with the true national interest.
Socialists and communists - who lead trade unions - fool their followers with deluded ideas of a "workers' paradise": but workers are consumers too! Only Capitalism - which is mass production for mass consumption - makes ordinary workers enjoy consumption standards medieval monarchs would be envious of. Socialist, "centrally planned," and communist nations were hell for all consumers - especially their workers, who had to queue up for anything and everything, and where smuggled electronic toys were the rage. India was like that - and North Korea still is. The North Korean ideal is juche - which means nothing else but swadeshi.
Ludwig von Mises added the insight that protectionist producers are all "schizophrenic" - they exhibit "divided selves." They do not see themselves as both producer as well as consumer. They do not realise that while they sell just one thing, they buy everything else. It makes no sense to lose out as consumers. After all, we produce in order to consume. What is the point producing, say, a Bollywood blockbuster - and not being able to buy a yacht or speedboat and zipping off to Alibag after work every evening, just half an hour by sea? Makes no sense to drive 4 hours on a crowded, broken road - in a luxury car!
With unilateral free trade - the abolition of the Customs Department - all Indians will be better clothed, better fed, they will smoke and drink better, drive better, sail better. Everything they do, they will do better. Swadeshi is nonsense - another of those crazy Gandhian ideas that has resulted in Gujarat closing down all her port cities, including Porbandar, where Gandhi was born. Including Surat, where the East India Company first landed.
Gandhi is amazing in this sense, for both Bastiat as well as Adam Smith realised the vital importance of free trade because they lived in port cities: Bayonne in the case of Bastiat, and Glasgow in the case of Smith. And Gandhi was a bania!
I checked the Internet for our list of customs duties and found they have "98 Chapters" on these - different duties for different goods. And there are additional levies on these duties as well - including the famous "education tax"!
We Don't Need No State Education!
We Don't Need No Customs Department!
Song of the Day: Arlo Guthrie's "Coming into Los Angeles" - watch the video here.
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Deal of the Day from Amazon: The Best of Arlo Guthrie.
No wonder Rahul Bajaj and Vijay Mallya are Rajya Sabha MP's. It is a mutually beneficial relationship between the government and these cronies while consumer is screwed driving ugly scooters and drinking awful IMFL.
ReplyDeletekeep up the good work