Central economic planning cannot work. Period.
If there is One Single Lesson we can draw from the works of Ludwig von Mises and his student, the Nobel laureate Friedrich Hayek, then this is it.
Any economist who has absorbed this One Single Lesson will refuse to work for any planning body.
So who, or what, is Montek?
And who, or what, are these other bozos who have joined Montek at the Planning Commission?
Bozos, nothing else.
Read the news here.
Now, if this One Single Lesson is to figure in the curricula of India’s schools and colleges, secondary and higher education both must be taken out of State control. Today, the doctrines of central planning occupy centre stage in school and college curricula, with an entire paper on “Indian Economics” being devoted to this nonsense.
Which brings me to the other bit of news today, on noises emanating from the ministry of human resource destruction. The news says that the UGC and the AICTE will be abolished, and that our The State will:
“… create an independent National Council for Higher Education (NCHE), which will take over the academic, accreditation and financial functions of the [existing] regulators…”
Methinks all that will happen is that the bozos of the UGC and the AICTE will take over this new body, which can never be truly “independent.” Since this body will oversee academic curricula, the One Single Lesson mentioned earlier will never be taught to any Indian student.
Actually, this is the real legacy of Chacha Manmohan: the continued legitimacy of socialist economics and its institutions, like the Planning Commission. The most useful function Chacha performs for the Nehru-Gandhi dynasty is this: He keeps their overall ideology respectable. This is done by keeping the One Single Lesson out of the syllabus.
In a nutshell, the One Single Lesson goes as follows:
From Mises: Socialist planners can never perform “economic calculation” because they do not deal with market prices. It is interesting that Deepak Lal started off as an estimator of “shadow prices” in our Planning Commission. The experience told him that he was attempting the impossible – and it is this experience that made him a confirmed classical liberal. He is currently president of the Mont Pelerin Society.
From Hayek: Socialist planners can never centralise knowledge, which is “fragmented” in nature, with every actor in the social division of labour possessing his little bit. The market economy works for this precise reason: it allows society to use all the knowledge that each participant possesses. The central planner can never centralize this knowledge and replace The Market. He will always fail. He will fall victim of the “fatal conceit of reason.” It is interesting that Nehru’s chief planner, PC Mahalanobis, whose portrait hangs in the LSE, was a statistician. Read Hayek’s brief paper here.
This is about all the “knowledge” planners possess: statistics without prices. Thus, for example, the planner can say how much electricity was produced or how much coal was mined – without any indication of profit and loss. He can then advise on how much more coal should be mined, so that even more electricity can be produced – but once again without any idea of profit and loss.
This is the failed knowledge Montek & Co. rely on.
This is the failed knowledge that the ministry of human resource destruction peddles in order to kill the intellects of our bright youth.
So there, at least YOU know the One Single Lesson.
Sunday, June 7, 2009
Saturday, June 6, 2009
Overall, A Complete Lack Of Principles
While surfing the web this morning, I participated in an ET poll on whether our The State can actually make slums vanish in 5 years. I voted “No.” In the comments box I wrote that it is impossible for our The State to feed, house and employ the vast majority. Where are the resources? And if our The State does not have the resources, should official policy not be to let The Market free and invest only in those areas where private capital is not forthcoming – like roads?
Anyway, speaking of resources, I found this Reuters story on how fiscal prudence is being given the go-by this year, because our The State is targeting higher growth. It is as if “economic growth” is a State Subject. As is “development.” In reality, both growth and development are Market Subjects. Both require entrepreneurs, private saving, and private investment.
Indeed, as the Reuters story cited above says, the huge borrowing programme of our The State is already raising long-term bond yields and will eventually crowd-out private investment. Interest rates will rise. So will inflation. There will be neither growth nor development if our The State is allowed to continue on its chosen path.
There is no alternative but to cut down The State, balance the budget, and liberate the entrepreneurial classes. This means free trade, free markets, and complete economic freedom based on the inviolability of Private Property. There is no other way by which The Poor can be employed, housed and fed.
However, the news also has it that the new commerce minister, the man who has replaced Kamal Nutt, is not a free trader, but a neo-mercantilist. Here he is promising a big “stimulus” to exporters. What about importers? Are we to continue exporting without importing? Looks like the new man is nothing but a Kamal Nutt clone. So expect more of the same on the international trade front. After all, the boss man is the same – Chacha.
Thus, I must confess that I do not harbour high hopes from the Chacha Manmohan State 2.0: these guys have all their fundas wrong. They are stoned on the idea that they have unlimited resources – the mythology of Keynesian economics – and that they can and must do anything and everything. They are neo-mercantilists. They are also socialists. A horrible combination.
It is this thinking that percolates down to lower rungs of our The State. Thus, here is the Karnataka chief minister promising to subsidise 50 Kannada films each year. He has just “donated” 5 crores of Our Money to a Kannada film academy.
The conclusion: Our rulers lack Principles.
But you already knew that, didn’t you?
Anyway, speaking of resources, I found this Reuters story on how fiscal prudence is being given the go-by this year, because our The State is targeting higher growth. It is as if “economic growth” is a State Subject. As is “development.” In reality, both growth and development are Market Subjects. Both require entrepreneurs, private saving, and private investment.
Indeed, as the Reuters story cited above says, the huge borrowing programme of our The State is already raising long-term bond yields and will eventually crowd-out private investment. Interest rates will rise. So will inflation. There will be neither growth nor development if our The State is allowed to continue on its chosen path.
There is no alternative but to cut down The State, balance the budget, and liberate the entrepreneurial classes. This means free trade, free markets, and complete economic freedom based on the inviolability of Private Property. There is no other way by which The Poor can be employed, housed and fed.
However, the news also has it that the new commerce minister, the man who has replaced Kamal Nutt, is not a free trader, but a neo-mercantilist. Here he is promising a big “stimulus” to exporters. What about importers? Are we to continue exporting without importing? Looks like the new man is nothing but a Kamal Nutt clone. So expect more of the same on the international trade front. After all, the boss man is the same – Chacha.
Thus, I must confess that I do not harbour high hopes from the Chacha Manmohan State 2.0: these guys have all their fundas wrong. They are stoned on the idea that they have unlimited resources – the mythology of Keynesian economics – and that they can and must do anything and everything. They are neo-mercantilists. They are also socialists. A horrible combination.
It is this thinking that percolates down to lower rungs of our The State. Thus, here is the Karnataka chief minister promising to subsidise 50 Kannada films each year. He has just “donated” 5 crores of Our Money to a Kannada film academy.
The conclusion: Our rulers lack Principles.
But you already knew that, didn’t you?
Friday, June 5, 2009
The Road To Greater Tyranny
What would it be like to live in a country where The State has taken on the task of feeding and housing the masses, the vast majority?
What kind of country would this be, where millions and millions are dependent on State handouts?
In either case, this is the immediate future of India.
The poor will get rice for 2 rupees a kilo, and they will receive housing in both urban as well as rural areas – from the Chacha Manmohan sarkaar. The goal: A slum-free India in 5 years. Read the news report here.
But how can our The State dole out benefits to the vast majority other than by taxing the productive few to the hilt? It is surely no co-incidence that a senior civil servant has written arguing for higher taxes on the well-to-do, inviting, among others, this piece of sharp criticism .
In other words, the idea of feeding and housing the masses is nothing but a road to greater tyranny – in the form of heavier taxation.
Reminds me of a kind of beggary we often see – a healthy dude taking around a blind or lame guy, begging in his name. This is what our The State is doing. Its only claim to legitimacy is the poor. These poor people cannot be left to markets, it says.
Of course, if you visit the poor in the slums, you will see that they rely entirely on the market for both food as well as housing. The State might give them rice or wheat cheap, but the poor also buy vegetables, dal, cooking oil, spices and fuel. And water. Rice may be 2 rupees a kilo, but potatoes come at 12 rupees.
They also buy mobile phones. They have cable tv.
And as for the dwelling in the slum, they pay rent to slumlords.
Therefore, at a deeper level, we must ask ourselves the question: Why is urban land so expensive in India? Surely it cannot be that there is a shortage of land, for India is a huge country. Travel around Delhi, Calcutta, Bangalore, Bombay or Madras, and you will see vast open spaces. If these open spaces were connected to the city by good roads, the supply of urban land would increase and its price would fall. This would benefit the poor.
Further, if we look at the socialist policies of our The State, we find the culprit: they have a monopoly on urban land as well as urban roads. This dual monopoly operates as a double whammy. It is destroying all our cities.
Then there is rent control, without which the poor could easily rent cheap rooms. This is very important for poor people, who cannot buy homes. For them, there must be a vibrant market for cheap rentals.
In a liberated, free market scenario, with private sector real estate development, and a vibrant rental market, the poor would be much better off – if roads are built. The central problem with Chacha’s idea is that the State monopoly over urban land would continue. This would be fatal. Chacha is also devoid of a roads' vision - "hubs-and-spokes" etc.
Note how in 40 years, the Delhi Development Authority (DDA) has failed to house even the people of the middle class, and the price of their shoddy housing has only sky-rocketed. DDA clones exist in all our cities and towns today. They are The Problem.
In our socialist heydays, it was the common belief that State monopoly over land and housing would benefit the people. This idea has been proved wrong – even for the middle class. Thus, there is no chance that the continuation of such policies will benefit the poor. The State will only politicise outcomes, building politicised “vote banks.” There will be more and more uglification of our cities and towns – as with the DDA. There will also be political consequences because of open “clientelism.”
The best way to look at it is by comparing housing to other areas where State monopoly has withered – as with phones and airlines. Today, because of markets, everyone has a phone. Today, the cost of an airline ticket is affordable. When only Indian Airlines ruled the skies, it was hell. We must therefore have free markets in housing too. Note that the idea of cheap “nano homes” has already popped up in the minds of housing entrepreneurs.
To conclude: I find it horrifying that our The State has taken upon itself the task of both feeding as well as housing the vast majority. I find it horrifying that it thinks it can accomplish these tasks. I also find the prospects of living in such a country horrifying, for it will be a huge tyranny.
A good society is one in which people are free to make their economic achievements in markets; where The State exists only to act against enemies of The Market. Thus, under Chacha, we are not progressing; we are going back to an even worse kind of Socialism.
What kind of country would this be, where millions and millions are dependent on State handouts?
In either case, this is the immediate future of India.
The poor will get rice for 2 rupees a kilo, and they will receive housing in both urban as well as rural areas – from the Chacha Manmohan sarkaar. The goal: A slum-free India in 5 years. Read the news report here.
But how can our The State dole out benefits to the vast majority other than by taxing the productive few to the hilt? It is surely no co-incidence that a senior civil servant has written arguing for higher taxes on the well-to-do, inviting, among others, this piece of sharp criticism .
In other words, the idea of feeding and housing the masses is nothing but a road to greater tyranny – in the form of heavier taxation.
Reminds me of a kind of beggary we often see – a healthy dude taking around a blind or lame guy, begging in his name. This is what our The State is doing. Its only claim to legitimacy is the poor. These poor people cannot be left to markets, it says.
Of course, if you visit the poor in the slums, you will see that they rely entirely on the market for both food as well as housing. The State might give them rice or wheat cheap, but the poor also buy vegetables, dal, cooking oil, spices and fuel. And water. Rice may be 2 rupees a kilo, but potatoes come at 12 rupees.
They also buy mobile phones. They have cable tv.
And as for the dwelling in the slum, they pay rent to slumlords.
Therefore, at a deeper level, we must ask ourselves the question: Why is urban land so expensive in India? Surely it cannot be that there is a shortage of land, for India is a huge country. Travel around Delhi, Calcutta, Bangalore, Bombay or Madras, and you will see vast open spaces. If these open spaces were connected to the city by good roads, the supply of urban land would increase and its price would fall. This would benefit the poor.
Further, if we look at the socialist policies of our The State, we find the culprit: they have a monopoly on urban land as well as urban roads. This dual monopoly operates as a double whammy. It is destroying all our cities.
Then there is rent control, without which the poor could easily rent cheap rooms. This is very important for poor people, who cannot buy homes. For them, there must be a vibrant market for cheap rentals.
In a liberated, free market scenario, with private sector real estate development, and a vibrant rental market, the poor would be much better off – if roads are built. The central problem with Chacha’s idea is that the State monopoly over urban land would continue. This would be fatal. Chacha is also devoid of a roads' vision - "hubs-and-spokes" etc.
Note how in 40 years, the Delhi Development Authority (DDA) has failed to house even the people of the middle class, and the price of their shoddy housing has only sky-rocketed. DDA clones exist in all our cities and towns today. They are The Problem.
In our socialist heydays, it was the common belief that State monopoly over land and housing would benefit the people. This idea has been proved wrong – even for the middle class. Thus, there is no chance that the continuation of such policies will benefit the poor. The State will only politicise outcomes, building politicised “vote banks.” There will be more and more uglification of our cities and towns – as with the DDA. There will also be political consequences because of open “clientelism.”
The best way to look at it is by comparing housing to other areas where State monopoly has withered – as with phones and airlines. Today, because of markets, everyone has a phone. Today, the cost of an airline ticket is affordable. When only Indian Airlines ruled the skies, it was hell. We must therefore have free markets in housing too. Note that the idea of cheap “nano homes” has already popped up in the minds of housing entrepreneurs.
To conclude: I find it horrifying that our The State has taken upon itself the task of both feeding as well as housing the vast majority. I find it horrifying that it thinks it can accomplish these tasks. I also find the prospects of living in such a country horrifying, for it will be a huge tyranny.
A good society is one in which people are free to make their economic achievements in markets; where The State exists only to act against enemies of The Market. Thus, under Chacha, we are not progressing; we are going back to an even worse kind of Socialism.
Thursday, June 4, 2009
Against RK Pachauri
Today, June 5, is World Environment Day, and so the Times of India leader article is by the scientist RK Pachauri, who recently shared the Nobel peace prize with Al Gore for his work on “global warming.” Pachauri’s article of today deserves careful scrutiny, for it is nothing but a litany of errors. If these errors are translated into official policy, India will remain poor and backward forever. For the central theme of the article is the call for more and more State action. Pachauri, it becomes obvious, hates The Market. He loves our The State.
Pachauri starts off with a bang:
“The first and most important change that the new government at the Centre ought to address is shifting the pattern of development itself.”
Now, this is something that I would agree with, while arguing for free markets. But Pachauri thinks differently. He is for “sustainable development” – which means continued State interference in markets. He says, in the first para itself, that the basic problems are caused by “blind aping of everything that defines lifestyles in the developed countries.” He lists his targets for attack:
“The unregulated growth of shopping malls, each guzzling several megawatts of electricity; the unsustainable exploitation of our groundwater resources, driven essentially by heavy subsidies on the price of electricity for farmers; and incursions into tribal areas and agricultural or forest lands for setting up industrial projects…”
Actually, Pachauri’s office is bigger than any mall: the Habitat Centre in New Delhi. I am confident that the central air-conditioning system in Habitat “guzzles” more electricity than all the malls in Gurgaon combined.
But that apart, it does seem perverse to argue against projects in tribal areas. Surely “sustainable development” does not mean that all agricultural and forest (unowned) land remain frozen in their current use. Indeed, it is well known that one of the biggest corruption rackets in India is the “permission” given by our The State to use agricultural land for non-agricultural purposes.
I would argue – Let The Market Decide. Let landowners be Free. Pachauri is batting for the other side.
Pachauri then throws a wild card into the ring: he calls for “distributive justice,” the great idea of Socialism. He says Naxalism is caused by “the growing disparity between rich and poor, symbolised by the insensitive and vulgar display of wealth by the rich in our society.”
The dude is a “watermelon”: green on the outside and red inside.
And he is not just any kind of red: he is an étatist. His next para is all about State action required to promote green energy, strengthening the pollution control bureaus, and saving the tiger as “an economic and cultural imperative.” Of course, in the meantime, I just suffered a 2-hour power failure this morning, which is why this post is late. Most people in India do not have energy – neither electricity, nor cooking gas. Most people do not own cars. Which is the way to proceed? What is “development”?
Pachauri goes on to call for Gandhian “rural development,” and strengthening the “delivery mechanism” of the – you guessed it – civil services. It seems in the utopia of sustainability, baboos will “deliver.” Not markets, but baboos. Sheer nonsense.
The rest of the article babbles on about the need for an “external assistance programme” by which India can assist poorer nations. What rot! He calls for action by our The State on global warming – or “climate change,” as he prefers to call it. Never mind the fact that they could not predict the arrival of this year’s monsoon correctly. Even with their “supercomputers.” Pachauri concludes by calling for a united political response to his agenda – the BJP and the Congress should combine to bring this about.
Thus it becomes obvious that the votaries of “sustainable development” are enemies of prosperity. Thereby, they are enemies of the poor. They do not want to raise consumption and living standards in India. They do not want free trade and free markets. They want State action. They idolize baboodom.
Actually, prosperity is eminently sustainable.
It is poverty that is unsustainable.
Think about that.
Recommended reading: My article on the Al-Gore - IPCC agenda, titled "Just Hot Air," available here.
Pachauri starts off with a bang:
“The first and most important change that the new government at the Centre ought to address is shifting the pattern of development itself.”
Now, this is something that I would agree with, while arguing for free markets. But Pachauri thinks differently. He is for “sustainable development” – which means continued State interference in markets. He says, in the first para itself, that the basic problems are caused by “blind aping of everything that defines lifestyles in the developed countries.” He lists his targets for attack:
“The unregulated growth of shopping malls, each guzzling several megawatts of electricity; the unsustainable exploitation of our groundwater resources, driven essentially by heavy subsidies on the price of electricity for farmers; and incursions into tribal areas and agricultural or forest lands for setting up industrial projects…”
Actually, Pachauri’s office is bigger than any mall: the Habitat Centre in New Delhi. I am confident that the central air-conditioning system in Habitat “guzzles” more electricity than all the malls in Gurgaon combined.
But that apart, it does seem perverse to argue against projects in tribal areas. Surely “sustainable development” does not mean that all agricultural and forest (unowned) land remain frozen in their current use. Indeed, it is well known that one of the biggest corruption rackets in India is the “permission” given by our The State to use agricultural land for non-agricultural purposes.
I would argue – Let The Market Decide. Let landowners be Free. Pachauri is batting for the other side.
Pachauri then throws a wild card into the ring: he calls for “distributive justice,” the great idea of Socialism. He says Naxalism is caused by “the growing disparity between rich and poor, symbolised by the insensitive and vulgar display of wealth by the rich in our society.”
The dude is a “watermelon”: green on the outside and red inside.
And he is not just any kind of red: he is an étatist. His next para is all about State action required to promote green energy, strengthening the pollution control bureaus, and saving the tiger as “an economic and cultural imperative.” Of course, in the meantime, I just suffered a 2-hour power failure this morning, which is why this post is late. Most people in India do not have energy – neither electricity, nor cooking gas. Most people do not own cars. Which is the way to proceed? What is “development”?
Pachauri goes on to call for Gandhian “rural development,” and strengthening the “delivery mechanism” of the – you guessed it – civil services. It seems in the utopia of sustainability, baboos will “deliver.” Not markets, but baboos. Sheer nonsense.
The rest of the article babbles on about the need for an “external assistance programme” by which India can assist poorer nations. What rot! He calls for action by our The State on global warming – or “climate change,” as he prefers to call it. Never mind the fact that they could not predict the arrival of this year’s monsoon correctly. Even with their “supercomputers.” Pachauri concludes by calling for a united political response to his agenda – the BJP and the Congress should combine to bring this about.
Thus it becomes obvious that the votaries of “sustainable development” are enemies of prosperity. Thereby, they are enemies of the poor. They do not want to raise consumption and living standards in India. They do not want free trade and free markets. They want State action. They idolize baboodom.
Actually, prosperity is eminently sustainable.
It is poverty that is unsustainable.
Think about that.
Recommended reading: My article on the Al-Gore - IPCC agenda, titled "Just Hot Air," available here.
Wednesday, June 3, 2009
On The IAS: Chacha Manmohan's Bozo Brigade
We knew it all along, of course, but now it’s official:
India’s bureaucrats are the WORST in Asia. Read the news here.
The rankings, from most efficient to least efficient bureaucracies, are as follows:
Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines, Indonesia and India.
There they are, the IAS & Co., right at the bottom of the heap.
And to think that the ICS in British times was one of the world’s best. What did the ICS do that was so different?
For one: they did not do too many things. As Philip Mason says in The Men Who Ruled India:
“The ICS focused on roads, railways, bridges and canals – this was the mixture, very good for the child, to be given firmly and taken without fuss.”
Note how roads come first.
The IAS chose a different ideology – to do anything and everything, from feeding the poor to producing steel. And they abandoned their core tasks – roads, law & order, and justice, including, especially, accurate land records.
The ICS was trained in Haileybury – on the principles of classical liberalism.
The IAS academy in Mussoorie still clings to a garbled Marxist-Ricardianism.
So whaddya expect?
Anyway, I am extremely glad that the IAS knows they have hit the bottom. This should prompt them to re-think their political economy.
Why should classical liberalism produce a good bureaucracy? The answer to this question was most eloquently provided by Frederic Bastiat, who wrote that the ideas he espoused would NOT make The State weak. On the contrary, a State that performed limited functions would always be strong, because the people would not clamour to it for anything and everything. Such a government would have just a few tasks to perform, and if it did these satisfactorily, the people would have little to complain about, and the personnel of the State would occupy a high position in the estimation of the public.
This requires an intellectual revolution, which should begin at the IAS academy.
That is their only was out.
India’s bureaucrats are the WORST in Asia. Read the news here.
The rankings, from most efficient to least efficient bureaucracies, are as follows:
Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines, Indonesia and India.
There they are, the IAS & Co., right at the bottom of the heap.
And to think that the ICS in British times was one of the world’s best. What did the ICS do that was so different?
For one: they did not do too many things. As Philip Mason says in The Men Who Ruled India:
“The ICS focused on roads, railways, bridges and canals – this was the mixture, very good for the child, to be given firmly and taken without fuss.”
Note how roads come first.
The IAS chose a different ideology – to do anything and everything, from feeding the poor to producing steel. And they abandoned their core tasks – roads, law & order, and justice, including, especially, accurate land records.
The ICS was trained in Haileybury – on the principles of classical liberalism.
The IAS academy in Mussoorie still clings to a garbled Marxist-Ricardianism.
So whaddya expect?
Anyway, I am extremely glad that the IAS knows they have hit the bottom. This should prompt them to re-think their political economy.
Why should classical liberalism produce a good bureaucracy? The answer to this question was most eloquently provided by Frederic Bastiat, who wrote that the ideas he espoused would NOT make The State weak. On the contrary, a State that performed limited functions would always be strong, because the people would not clamour to it for anything and everything. Such a government would have just a few tasks to perform, and if it did these satisfactorily, the people would have little to complain about, and the personnel of the State would occupy a high position in the estimation of the public.
This requires an intellectual revolution, which should begin at the IAS academy.
That is their only was out.
Tuesday, June 2, 2009
On Learning... And Laughter
Thanks to LRC, I got the link to a Reuters story on US treasury secretary Tim Geithner’s visit to China. This portion is noteworthy:
Chinese students are smart!
Ha ha.
Wonder how long it will take desi students to laugh loudly at our finance ministers and central bankers.
And talking about students makes me wonder why so many are going to Australia. Could there be a direct link between Indian students going overseas and restrictions on private sector higher education in India? Vipin Veetil, writing in, seems to think so. He, of course, laughed at his professors, dropping out of the Delhi School of Economics; that too, after topping the BA. He is now studying in Europe. Perhaps if we had a school of economics here, where the right stuff was taught, students like Vipin would have stayed back. And laughed.
Anyway, if the goal is to see students laugh loudly at officials and their pronouncements, government education must be done away with.
I would love to see students laugh at “rural development.”
In China they are building new cities all the time – and all along the coast. There is nothing called “rural development” in China. All efforts are aimed at urbanisation.
However, the good news is that in India today there are voices of reason and sanity calling for an end to the sham of rural development, saying that cities and towns must take the lead in the economic development of the nation. Read Pramit Pal Chaudhuri in today's HT here. He concludes with a chilling statistic:
The last census shows that over 50,000 villages have been abandoned.
Indeed, my own trips in rural India have revealed that most villages are peopled by the elders – and unmarried girls. The young and able are all in the towns and cities, trying to earn money.
There is no mystery in this tendency. It is indeed predicted by the laws of Praxeology: the division of labour is greater in highly populated cities and towns as compared to sparsely populated villages. As Adam Smith wrote, "The division of labour is limited by the size of the market." Where markets are bigger, there is greater specialization: you cannot be a receptionist, plumber, taxi driver or even chai-wallah in a sleepy, underpopulated village.
Thus, the “economics” that our The State teaches and practises goes against some of the oldest insights into the market economy. The division of labour features in the first chapter of the Wealth of Nations. Some Greek philosophers had also noted it.
There can never be a rural utopia of village republics.
The idea must be laughed at.
Laugh, Indian students. Laugh.
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.
His answer drew loud laughter from his student audience...
Chinese students are smart!
Ha ha.
Wonder how long it will take desi students to laugh loudly at our finance ministers and central bankers.
And talking about students makes me wonder why so many are going to Australia. Could there be a direct link between Indian students going overseas and restrictions on private sector higher education in India? Vipin Veetil, writing in, seems to think so. He, of course, laughed at his professors, dropping out of the Delhi School of Economics; that too, after topping the BA. He is now studying in Europe. Perhaps if we had a school of economics here, where the right stuff was taught, students like Vipin would have stayed back. And laughed.
Anyway, if the goal is to see students laugh loudly at officials and their pronouncements, government education must be done away with.
I would love to see students laugh at “rural development.”
In China they are building new cities all the time – and all along the coast. There is nothing called “rural development” in China. All efforts are aimed at urbanisation.
However, the good news is that in India today there are voices of reason and sanity calling for an end to the sham of rural development, saying that cities and towns must take the lead in the economic development of the nation. Read Pramit Pal Chaudhuri in today's HT here. He concludes with a chilling statistic:
The last census shows that over 50,000 villages have been abandoned.
Indeed, my own trips in rural India have revealed that most villages are peopled by the elders – and unmarried girls. The young and able are all in the towns and cities, trying to earn money.
There is no mystery in this tendency. It is indeed predicted by the laws of Praxeology: the division of labour is greater in highly populated cities and towns as compared to sparsely populated villages. As Adam Smith wrote, "The division of labour is limited by the size of the market." Where markets are bigger, there is greater specialization: you cannot be a receptionist, plumber, taxi driver or even chai-wallah in a sleepy, underpopulated village.
Thus, the “economics” that our The State teaches and practises goes against some of the oldest insights into the market economy. The division of labour features in the first chapter of the Wealth of Nations. Some Greek philosophers had also noted it.
There can never be a rural utopia of village republics.
The idea must be laughed at.
Laugh, Indian students. Laugh.
Monday, June 1, 2009
For Internationalism... And Capitalism
Heard bits and pieces of Obama’s speech on the bankruptcy of General Motors last night on tv – and my overall impression was that it did not sound like Capitalism.
Sounded more like the Volkswirtschaft – the “national economy.”
Corporatism, not Capitalism.
Methinks the US is headed down a wrong path.
Ditto with the racist attacks on Indian students in Australia. This kind of xenophobia is antithetical to Capitalism – which always seeks to include “friendly strangers” into the overall order. Australia is a penal colony. It is an advanced, developed nation today only because of Capitalism. Yet is seems that the basic values of a free market order do not exist there. This is only because of a narrow “nationalistic” mindset, which breeds many politicians with anti-immigrant views – like Pauline Hanson, who made big news some years ago. Their counterparts in India are Raj Thuggeray’s MNS and the AASU – who are “sub-nationalistic.”
Funnily enough, I don’t think the history of the past, of ancient empires and kingdoms, tells of any instance of the politics of narrow identities overriding the broader economic interests of the community, which depended on including “friendly strangers” into the market order. In ancient Greece, for example, there existed the institution of xenos, or “guest-friend,” who escorted a foreigner around the city, and looked after his tradeables. In the Rajput principalities of Rajasthan, a similar function was performed by hereditary charans and bhats. Foreigners were viewed as a great resource – of new knowledge, products and processes. They were buyers; they were sellers. They were always welcome. Ancient market cities were full of many kinds of people: this is true of ancient Rome, Venice, the City of London, and also of Mecca.
The story of the Parsees, who came into Gujarat as refugees some centuries ago, and who are now India’s leading business community, and as “Indian” as anyone else, illustrates the point that people are a vital resource. They should never be turned away. This should be the watchword of modern Capitalism.
If western nations are moving away from true Capitalism, this is all the more reason why a country like India should champion its basic values. No one put its basic tenet across better than Adam Smith, who wrote:
This is the Capitalism to believe in.
Sounded more like the Volkswirtschaft – the “national economy.”
Corporatism, not Capitalism.
Methinks the US is headed down a wrong path.
Ditto with the racist attacks on Indian students in Australia. This kind of xenophobia is antithetical to Capitalism – which always seeks to include “friendly strangers” into the overall order. Australia is a penal colony. It is an advanced, developed nation today only because of Capitalism. Yet is seems that the basic values of a free market order do not exist there. This is only because of a narrow “nationalistic” mindset, which breeds many politicians with anti-immigrant views – like Pauline Hanson, who made big news some years ago. Their counterparts in India are Raj Thuggeray’s MNS and the AASU – who are “sub-nationalistic.”
Funnily enough, I don’t think the history of the past, of ancient empires and kingdoms, tells of any instance of the politics of narrow identities overriding the broader economic interests of the community, which depended on including “friendly strangers” into the market order. In ancient Greece, for example, there existed the institution of xenos, or “guest-friend,” who escorted a foreigner around the city, and looked after his tradeables. In the Rajput principalities of Rajasthan, a similar function was performed by hereditary charans and bhats. Foreigners were viewed as a great resource – of new knowledge, products and processes. They were buyers; they were sellers. They were always welcome. Ancient market cities were full of many kinds of people: this is true of ancient Rome, Venice, the City of London, and also of Mecca.
The story of the Parsees, who came into Gujarat as refugees some centuries ago, and who are now India’s leading business community, and as “Indian” as anyone else, illustrates the point that people are a vital resource. They should never be turned away. This should be the watchword of modern Capitalism.
If western nations are moving away from true Capitalism, this is all the more reason why a country like India should champion its basic values. No one put its basic tenet across better than Adam Smith, who wrote:
Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and his capital into competition with those of any other man, or order of men.
This is the Capitalism to believe in.
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