Karnataka - And A New Constitution

The shameful happenings in Karnataka politics are an occasion to reflect on India's Constitution. The BJP chief minister has already been indicted for nepotism and corruption. The governor, a CONgressman, has written to Nude Elly asking for the dismissal of the state government - and the chief minister is now threatening a mass agitation. It is CONgress vs. BJP: both corrupt, both headquartered in Nude Elly, both "socialist" - but not "secular." Hah! 

In the meantime, as anywhere else in India, all the cities and towns in the state are a mess. Bangalore has gone down the tubes - despite its wealth. And Karnataka is a huge state, possessed of immense natural resources, including a 300-mile long seafront. India's only gold mine is located here.

To begin, let us understand that over-centralisation has to go. A Second Republic must be built from the bottom - based on self-governing and free-trading cities and towns, run by mayors, independent of all higher authority: the Principle of Subsidiarity. Only those subjects that these mayors cannot handle must be handed to higher levels of government - first, the state, and then, the centre. The pyramid must be inverted.

Today, the system is "corrupt by design." What is this "political design"?

The way I look at it, if you join Indian politics, you can get elected either to the state assembly as an MLA, or to the central assembly as an MP. If your party is in office, you can try and become a minister. In which case, you will have a budget - a huge amount of "funny money" to foolishly spend. This is how you "recover your investment": everyone knows it costs a fortune to get elected, and no one spends that kind of money for nothing in return. No one is interested in "public service." This is the crux of the problem.

This problem is an India-wide problem. This is true of tiny Goa. This is true of the new "small states" - like Jharkhand, Chattisgarh and Uttaranchal. This is true of West Bengal, too, where the newly elected government will find it impossible to restore Calcutta - a great city that the Commies have destroyed. But then, Nude Elly has been destroyed too - despite the fact that the city is a full-fledged "state" of this so-called federation. Just today, I read of a report damning the Delhi Development Authority (DDA) - the land monopolist. Bangalore has a BDA - a DDA clone. Mangalore has one too. 

Note that both Bangalore as well as Mangalore fork out enormous sums in taxes - almost all of which goes to the centre. Then, from Nude Elly, the funny money "trickles down" - and these cities get nothing. There are mayors in Karnataka - six of them - but they are powerless as well as budget-less. The tenure of a mayor is just one year.

Now, it must be acknowledged that the spending priorities of Nude Elly are all wrong. Money is simply wasted by the powers-that-be in Nude Elly - from MGNREGA to the Army in Kashmir and Manipur, to all kinds of undeserved - or even foolish - subsidies. We are being sucked dry - paying road taxes on automotive fuels, and then paying tolls on "notional highways." Double taxation! And then Nude Elly wants to give free rice and wheat to "the poor" - and "free and compulsory education," too. What nonsense!

Two important points: 

First: If we Indians want to survive, we must understand that our only hope lies in a Free Market. With a free market, we can earn our keep. Without it, we are doomed. That is, we must not expect anything from our The State. Only  sycophants hang around these ministers. To that extent, we must oppose taxes. We must oppose Big Government - especially Big Government Spending. I have an earlier post on this. They do not "stimulate the economy" with their spending - which comes from taxation, borrowing and printing paper notes. Rather, they simply "consume capital." They cause inflation - which sucks us dry, too. Ludwig von Mises - and not John Maynard Keynes - ought to be our guide. As Mises wrote, quite categorically:

History does not provide any example of capital accumulation brought about by a government. As far as governments invested in the construction of roads, railroads, and other useful public works, the capital needed was provided by the savings of individual citizens and borrowed by the government.

Second: Small political units are the best. India in 1947 comprised over 650 "princely states" as well as some French and Portuguese enclaves. There was no problem. Mysore, for example, was much better run by its Maharaja. Look at it now - under either the BJP or the CONgress.

We must think, therefore, of small political units - like "free cities." The basic advantage in small political units is that these perforce have to be free trading. Anything that a free city needs must be "imported." No protectionism will be tolerated by the citizens of a free city. Europe survives pretty well with dozens of small, independent states, including "city states" like Monaco and Lichtenstein. In an earlier age, between the 13th and 17th centuries, a host of European cities formed the free-trading Hanseatic League. Arnold Toynbee called theirs an "aborted civilisation" - but here in India, such a civilisation can be reborn. Even Africa is composed of many independent nations - and some are doing rather well, like Botswana.

To me, the idea of powerful centralised states covering vast areas - ours is a sub-continent - is dangerous. Power corrupts. Ours is corrupt by design. If we want to end all this corruption, we must design everything anew. 

That is: 

First, a free market and laissez faire, laissez passer Capitalism, which must include Private Property as well as Sound Money. 

Second: Subsidiarity - so that taxes are paid to mayors for specific goods and services. 

And lastly, a "private law society." This last idea has been very well explained by Hans-Hermann Hoppe, so do read it carefully. I too have written a brief column advocating a private law society.

The problems of Karnataka politics cannot be solved by a changing of the guard - because here the fence eats the flock: Predatory State. The only solution is to get rid of this present Constitution.

A Second Republic beckons.