This Cardinal Is In Serious Error

A few weeks ago, I welcomed Pope Benedict's call, delivered at the German parliament, for a public debate on positivism. 


Well, today, it seems that the first shot has been fired from within the Vatican itself, with Cardinal Turkson, President of the Pontifical Council for Justice and Peace releasing a document titled “Towards reforming the international financial and monetary systems in the context of the global public authority." This document - which is not a "papal document" - opposes a priorism in Economics, espouses empiricism and positivism, and since these are both "intellectual covers for socialism" - as Hans-Hermann Hoppe has written - the document ends up with all the grave errors of socialism, to the extent of calling for a global central bank.


But the Cardinal begins with some half-truths - half-truths that have prompted one commentator to call this document "Right diagnosis, deadly cure." After the diagnosis, the Cardinal asks the question:

What has driven the world in such a problematic direction for its economy and also for peace?

And his first answer is this:

First and foremost, an economic liberalism that spurns rules and controls. Economic liberalism is a theoretical system of thought, a form of “economic apriorism” that purports to derive laws for how markets function from theory, these being laws of capitalistic development, while exaggerating certain aspects of markets. An economic system of thought that sets down a priori the laws of market functioning and economic development, without measuring them against reality, runs the risk of becoming an instrument subordinated to the interests of the countries that effectively enjoy a position of economic and financial advantage. 

This is an issue concerning epistemology. The question is: Does Economics have to follow the method of physics - which is measurement, after which theories are arrived at a posteriori. Or are the Laws of Economics arrived at a priori, by deduction, and are established by logic, just like the propositions of mathematics or geometry, such that they do not need measurement and observation to validate them?


Let us take an example:


The Law of Exchange - which says that when a good is traded voluntarily, both parties gain by the trade; that their individual valuations of that good are unequal. Obviously, if I prefer beer over money, the barowner prefers money over beer. How does such a law require "measurement" or "observation" to validate it? Obviously, this law is NOT going to be established a posteriori. It is true a priori. 


In fact, "value" cannot be measured, for it lies within the valuing mind. "Value is subjective." All that can be measured are prices and quantities - and the price at which exchange transpires will show agreement, not unequal valuation. The "demand-and-supply curves" type of education teaches nonsense - and these curves can only be produced by "measurement." The curves are actually "statistics."  They are thus History - they are not Theory, which in Economics must be true a priori.


Hence, the methods of physics are NOT applicable to the Science of Economics. Positivism and empiricism are the intellectual covers for socialism and interventionism, since they deny the MIND of the acting individual, and they create the false impression of a "national economy" - with its "national income" and its "growth rate" - which must be managed by a super-human mind: that of the central planner; that of the Great Leader. 


Thus, Hans-Hermann Hoppe concludes his brief essay against empiricism with these words:

If we want to attack socialism, we must also attack the absurd intellectual error of empiricism. And if we want to defeat socialism, we must make a principled Misesian case based on the logic of human action and the irrefutable laws of economics.

Since Cardinal Turkson, President of the Pontifical Council for Justice and Peace,  espouses empiricism and disavows a priorism, he is led deep into socialism, statism, and even the "primacy of politics."


Here are some quotes from the rest of the document:

...the world’s peoples ought to adopt an ethic of solidarity as the animating core of their action... [But we are all individuals, and we buy and sell in markets full of strangers. See my article on "catallaxy."]

the risk of an “idolatry of the market..." [The real risk is idolatry of the State and political authority. See also Tom Woods' rejoinder here.]

global social justice seem most urgent... for achieving... a fair distribution of world wealth... [The "mirage of social justice" gone global!]

one can see an emerging requirement for a body that will carry out the functions of a kind of “central world bank” [Horrors!]

strengthening the existing institutions, such as the European Central Bank [Here is a report that Germany will ditch the Euro if the ECB starts printing more of them.]

In this process, the primacy of the spiritual and of ethics needs to be restored and, with them, the primacy of politics – which is responsible for the common good – over the economy and finance. [Read Anthony de Jasay's Before Resorting to Politics.]

forms of recapitalization of banks with public funds making the support conditional on “virtuous” behaviours aimed at developing the “real economy” [Moral hazard.]

At this point, I would like to remind the Cardinal of his views on the Principle of Subsidiarity, which he upholds, and defines as follows:

According to the logic of subsidiarity, the higher Authority offers its subsidium, that is, its aid, only when individual, social or financial actors are intrinsically deficient in capacity, or cannot manage by themselves to do what is required of them.

Now, money has ALWAYS been "private money": GOLD. Accordingly, we human beings, in freedom, without the aid of any political authority, can manage to produce our own money. Free banking can be conducted under traditional commercial law - as Jesus Huerta de Soto has shown. Thus, according to a Principle upheld by the Church, and also by Cardinal Turkson, there is NO NEED for ANY POLITICAL AUTHORITY over money and banking, and certainly not at the global level.


This is NOT new - not "neo-liberalism." This is "classical liberalism." Adam Smith's "Three Duties of the Sovereign" did NOT include anything to do with money. I have recounted these three duties here.


Mises put it best, in Human Action, when he wrote:

The use of money in a market economy is a praxeologically necessary fact. That gold, and not something else, is used as money is merely a historical fact and as such cannot be conceived by catallactics.

Thus, we Hindus are currently celebrating Diwali - when we traditionally buy gold. It is a "custom" - from History. This has NOTHING to do with "theory."

As far as "world order" is concerned, Mises also put it best when he wrote, in Nation, State, and Economy:

Liberalism, which demands full freedom of the economy, seeks to dissolve the difficulties that the diversity of political arrangements pits against the development of trade by separating the economy from the state. It strives for the greatest possible unification of law, in the last analysis for world unity of law. But it does not believe that to reach this goal, great empires or even a world empire must be created.

I also recommend to my reader this Islamic Judgment on Paper Money - which shows very clear reasoning.

But recall where I began unraveling this litany of errors - with Cardinal Turkson's empiricism, his antipathy to a priorism, and his love for "measurement" in Economics. On the subject of epistemology, I earnestly recommend Hans-Hermann Hoppe's Economic Science and the Austrian Method, which you can find here.


Professor Hoppe's article "Why the State demands Control of Money" is also a very useful read in today's times.

Why I Despise Central Banking, Keynes, And Keynesians Like Paul Krugman

Western Europe, and, in particular, England, developed ahead of the rest of the world only because here the people managed to contain their rulers. Kings, and their royal servants, had to "obey the law" no less than the people. Property and contracts were thus secure from State predation. Economic development naturally followed. In England, the beginning was in 1215 AD - the signing of the Magna Carta. With this, there was "due process," habeas corpus, and much more. After this, the people said, of their rulers:

The King is UNDER God and the Law

and

There is no King where Will rules and not the Law

Such events never happened in nations like ours. Our rulers were always arbitrary.


With the coming of written constitutions, a new concept emerged alongside that of the Rule of Law - and that is "limited government": the purpose of constitutions was to limit the powers and scope of the State. There are two effective means of limiting this power: one, by constitutional law; and the second, by the Budget.


Both these limits to government have been overthrown in modern times by the Keynesians, what with central banking and fiat paper money. These have been weapons in the hands of rulers to buy up support and to finance anything and everything to their own glory, from wars to welfare to space exploration. Entire parliaments can be bought. This is particularly true of India.


The whole world has been inflated. Money is no longer something "hard." It is just government paper. 


Yet, this government paper still has a "promise to pay" inscribed upon it, signed by the central banker. This promise - which makes the note a solemn contract - is meaningless today. The note is actually a Property Title. Today, there is no property backing this title. This is the problem the whole world is facing.


These central banksters practice "fractional reserve banking" with private bankers who are members of their paper money cartel. They say they are "lenders of last resort." Money as well as banking become corrupt under such a system. 


We need gold as money - and free private banking under ordinary commercial law. The writings of Jesus Huerta de Soto are vital in this context. And there is an essay on their import in my Natural Order: Essays Exploring Civil Government & the Rule of Law, which you can read online here. This version is dated 2007 - and I am hoping to have a new edition out next year.


The Keynesians have a very different view of money and banking - one based on "immorality." Keynes claimed to be an "amoralist" - but that was just his homosexuality. As an economist of money and banking, he was a pucca immoralist. Read about Keynes and the "ruling class" who adopted his ideas wholesale in this brief article by Garet Garret. Also, do read the article "Why the State demands control of money" by Hans-Hermann Hoppe.


Today, the most prominent Keynesian in the world is the Nobel laureate Paul Krugman. On the crisis in the Eurozone, Krugman writes that the best way out is to resort to "the power of the printing press" - and let the European Central Bank do the needful, even if current rules do not permit it. 


Really! If printing money could produce wealth, Indians would have been rich long, long ago.


Indeed, even producing more gold and silver does NOT create wealth, as the history of Spain and Portugal testify. The silver mines of Potosi and all the gold looted from South America did not make these nations rich. 


Britain got rich when gold was exported by the East India Company in exchange for spices - much to the displeasure of the mercantilists. What constitutes the "wealth of nations"? Adam Smith answered that in 1776 - and the plain answer was that it was NOT the hoard of bullion. If so, what can more irredeemable paper notes accomplish?


But Keynesian errors are not new. Ludwig von Mises, in his Notes & Recollections, writes of Carl Menger that his essay on "Geld" (money) which he contributed to the German-language Encyclopaedia of the Social Sciences was brilliant. A few pages later, Mises writes:

For obvious reasons I frequently discussed G. F. Knapp's Staatliche Theorie des Geldes (State Theory of Money) with Menger. His answer was, "It is the logical development of Prussian police science. What are we to think of a nation whose whose elite, after two hundred years of Economics, admire such nonsense, which is not even new, as highest revelation? What can we still expect of such a nation?"

Menger, Mises writes, foresaw the destruction of Old Europe. He foresaw the wars that engulfed the whole world. All these wars were financed by "funny money." And these wars will forever continue until the State is once again "limited" by the Budget. And money is gold. Money is private.


Mises once wrote that these "intellectual battles" of our time are something everyone must plunge into - if civilisation is to be saved. These are not difficult issues to understand: what is money? what is banking? etc. I see people crack their brains on crossword puzzles, computer games and Sudoku every day. Yet, these are just pleasurable pastimes, meant to banish boredom.


Surely people can crack their brains at the vital issues of our age - money and banking? The future of our kids - and theirs - depend on it. If Krugman-types win the day, all will be lost.


Paul Krugman also wants to "protect" corrupt banking practices. He wants the power of the printing press to wipe out banking sector losses - irrespective of how much inflation will surely follow, and how much capital loss ordinary people will have to suffer. At least we in India ought to know better than to endure continued inflationism to fund welfare.


In the USSA, there is only one presidential candidate who knows money and banking well - and that is Ron Paul. His photograph graces this post. He wants to "end the Fed." He wants to end war too. He stands for Gold, Freedom, and Peace. 


I wish Ron Paul would add PROPERTY to this list. Without property, there can be no freedom; there can be no "limited government"; there can be no "rule of law": rechtstaat.


Ron Paul will succeed - and civilisation will be saved - only if all you people out there STUDY money and banking and arrive at your own decisions as to what is truth and what is falsehood; what is good, and what is evil.


So, don't "agitate" at political rallies before agitating your brains first.


This is my sincere advice to you all. 

True Law Is Never "Made"; It Is "Found": Take #2

Let us take another look at Adam Smith's "Three Duties of the Sovereign," which I had quoted yesterday:

According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings:

first, the duty of protecting the society from violence and invasion of other independent societies; 

secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice;

and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.

Today, I would like to focus on the second duty - which is "establishing an exact administration of justice."


Note that Adam Smith never says that the sovereign must "make law." Not at all. No one makes law in the "system of natural liberty." What happens is that if there is a dispute, both parties hire their own lawyers, who scour through the books for past decisions in similar cases, based on which they put forward their arguments before an impartial judge. This is how the law is "found." It is never "made."


This true Law upon which a Private Law Society is based consists of Property, Contract and Torts - and nothing else. There is NO LEGISLATION. Thus, there is NO COERCION. And we are all FULLY SECURE. And also FULLY FREE.


Actually, Adam Smith, when he wrote The Wealth of Nations (1776) promised his readers that he would write a subsequent treatise on government - but this promise he never fulfilled. In fact, he burnt all his unpublished manuscripts shortly before his untimely death. As far as his Lectures on Jurisprudence are concerned, these were re-created from lecture notes of two students who attended them. But in Adam Smith's time, it was UNTHINKABLE that Parliament would pass legislation after legislation masquerading as True Law. In England, to this day, the Sovereign does NOT make law. Parliamentary sovereignty has meant that Parliament today possesses more powers and takes away more Liberty than any sovereign has ever done in the past.


As Property and Contract have been covered often on this blog, today I thought I would talk about Torts. These occur when any Individual (or his property) is harmed - even unintentionally. In all such cases, this Individual must be financially compensated for the damages he has suffered.


I have an old article on Torts, which you can read here.


Today, I would like to add that with Torts, our society can solve the problem that is the Indian Police. If all crimes are "crimes against individuals" and if in all such cases the convicted criminal must financially compensate his victim, jails and police are no longer required. The victim can prosecute his own case. 


The Indian Police are indeed a problem waiting to be solved. They do nothing right - not even traffic. Open-and-shut cases like the murder of Jessica Lal do not get solved. All the police do is VVIP security - and "law & order" bandobast for the political parties. As far as the "common man" is concerned, the police are also seen as totally corrupt - and even brutal.


Indians need security - but they cannot get this security from the Indian Police, not even on the roads. In fact, there isn't a functioning zebra crossing anywhere in India - not even in Nude Elly.


Thus, Torts are what we need. In a Private Law Society.


Finally, I would like to add my own experience with the Pondicherry Police. These guys have walked off with my books - some 20 of them, which were being safely stored for me by the Good Firemen. The Pondicherry Police approached the firemen saying I had asked for my books back (this was when I had been spirited away to NIMHANS, Bangalore). Unsuspecting, the firemen handed over the books. And, till date, the cops refuse to hand them back.


What kind of cops do we have?


And how will our people be secure?


These are very important questions. 

It's The Ethics Of Liberty versus Inflationist-Welfarism

The Great Big Lie of the Inflationist-Welfarists led by chacha manmohan s gandhi is that State Aid is required to "help the poor." Actually, poor refugees from Europe made America the richest place on Earth - because they had Liberty (and Property). And this was BEFORE the dawn of the HORRIBLE 20th Century.


The poor should themselves find the very idea of State Aid INSULTING.


They themselves should demand LIBERTY.


This means the FREEDOM to engage in consensual trades - without let or hindrance from corrupt State Authorities.


Further, the poor should be instructed by activists to realise that this inflationist-welfarism is all a very "false philanthropy" anyway. The State is a broke institution. In many provinces, they cannot even meet their wage bills. The State is just printing paper money to pay for all the bullshit welfare schemes like the MGNREGA, the cheap rice, and the free schools where the kids' brains get dumbed down. This is causing inflation - which ERODES the SAVINGS of the poor. This ERODES the PRECIOUS CAPITAL of the poor. What bloody NONSENSE is this?


Increasing the quantity of money in circulation NEVER makes a nation rich - not even if the money is gold or silver. The Spaniards and the Portuguese plundered South America for gold and silver - and spread inflation throughout Europe. The price of gold and silver fell!


The British, on the other hand, traded. The British bought pepper, nutmeg and other spices from the East and sold them at a high profit in the West. They brought tea into India from China - and sold it in England. They brought sugar from Jamaica, tobacco from Virginia - and it is the British who got rich, not the Spaniards or the Portuguese.


This is the essence of Adam Smith's An Inquiry into the Nature & Causes of the Wealth of Nations: that the wealth of a nation is NOT its stock of gold; rather, its wealth consists in the properties and possessions of The People. If the people own lots of goodies, the nation is rich. Thus, Adam Smith recommended "The System of Natural Liberty" - which means free trade and the freedom to trade.


Tp put it another way: The People must produce and sell goods and services and only then will they get rich. If they just increase the amount of money in circulation - even if that money is gold - they will fail miserably. 


Now: What are the "Ethics of Liberty"?


Very simple: First and foremost, we must aim at satisfying our Customers, who are our Kings. We must NOT cheat them, but we must try hard at keeping them happy and satisfied, so they keep coming back to us for their particular needs. If we do this - and are allowed to do so - we survive honourably and morally.


Second: When we Spend the Money we have Earned the HARD WAY - then the FUN BEGINS, and we are the Customer, and we are then the King. We must NOT be forced into buying JUNK by Customs Guards paid for by Protectionists. We must demand the BEST goods, the BEST products, the BEST services. 


This is why Free International Trade and the Freedom to Trade go hand in hand.


See you all again tomorrow.

The Philosopher's Stone

After those horrible weeks in Orissa, it was sheer delight to be in tiny Pondicherry - and civilisation. Shops, shops and more shops, bars and restaurants, masses of people everywhere, and even lots of bright neon lights. 

This small city was built by the French, the roads all neatly arranged in a "grid pattern." The central market area is called Grand Bazaar - and in 1985, I served briefly as the head of Grand Bazaar Police Station. I always recall those days, and those years, for I spent close to three years here, because while I headed Grand Bazaar PS, there was NO CRIME reported. During those years, I noticed that the people are all "god-fearing and law-abiding" and that a "natural order" prevailed. I saw that something was seriously wrong with Thomas Hobbes' view that without The State there would ensue "a war of each against all." There was no such war in Pondicherry. There was only one murder - of an MLA, and that is "political crime." Also, I personally saw the local police tear up the "history sheet" of a newly appointed CONgress minister! I found police work so boring, that I even resigned, but that's another story.

Today, I walked down these streets and their bazaars again, where perfect order prevails, wearing a t-shirt saying:

DON'T STEAL.

The Government Hates Competition.

Today, after over 20 years of "private investigations," a long "intellectual journey," I have found out why this natural order exists. It is so simply because we are all "rule following animals." Apart from religious and cultural rules, we follow commercial rules - and this results in a "commercial culture." Pondicherry exemplifies this culture as, indeed, does any place in this vast sub-continent. The existence of this commercial culture is what civilisation is all about, with its cities, their markets, and all the shops. A "nation of shopkeepers" is really what we are.

Yet, even here, as elsewhere, the truth of what my t-shirt says is evident. Much of the place, especially the commercial areas, is a mess; and traffic is worse than hell itself. In my time, most people rode cycles; today, they have progressed to motorcycles. No one has thought of tramways because I presume they have to apply to some "planner" in Nude Elly for permission. All the "political parties" are centralised, as is the IAS-IPS bureaucracy. All report to Nude Elly. And what an almighty mess Nude Elly is!

I strolled along the Beach Road promenade last night, as I used to do with my dog those long years ago, and passed the Governor's house, with its cannons mounted at the gates. There was a diesel generator on! And it is this The State that produces electricity! Sure enough, the electricity failed in my hotel. I passed a dental college set up by this State, which also runs a University and many schools. I saw a guy wearing a t-shirt saying "Studying Sucks!"

This is the fundamental error our nation has made. We have not sought Prosperity, Peace, Order and Knowledge in The Grand Bazaar; rather, we have asked the guys with the guns, with cannons at their gates, to deliver these to us. Error. The fact that these guys are clueless has already been brought out in previous posts.

Today, what I would like to add is that the guys with cannons at their gates, whether here or in Nude Elly, are issuing wrong commands to their own staff, their personnel. In the liberal scheme of things, the State does NOT command The Market. Rather, it commands its own staff to see that enemies of this market order are brought to justice. This is NOT happening. From Nude Elly you just hear nonsense about free rice for the poor and free and forced education for all, and, of course, the MGNREGA-bullshit; you never hear of all the important things that must be done in each of our cities and towns by the local people themselves, who possess the "local knowledge." They give orders to close down shops at 10pm. They give orders to harass smokers. They don't do any "useful work." This is particularly true of the Traffic Police. And this is true all over India.

Note that the masses of people roaming around in the bazaars are NOT "organised" into any "society." They are truly a "cosmos" of individual stars, an "order without design." Socialists wanted to organise and regiment such a cosmos into what Nehru called a "socialistic pattern of society" based on economic equality. It is from that point on that the guys with the guns got it wrong. And from Chacha Nehru to chacha manmohan it has been a long, downhill journey. As BR Shenoy asked of these planners, way back in the 1950s, is India to achieve "planned progress or planned chaos"? Today, it should be obvious, this IS planned chaos - especially on the streets, and we are fortunate if there are any streets at all, because these guys want to make steel and fly planes - and, of course, "educate" all the kids. 

Over my dead body, I say. For I was one of those "miseducated" kids myself. On my very first day at Hindu College, Delhi University, in 1974, there to study for a BA degree with Honours in Economics, I was taught The Theory of the Vicious Circle of Poverty. This says that poor people and poor nations are destined to remain poor forever - unless they receive outside aid, which can come from their own State, or from "foreign aid."

This was taught to me and millions of other Indians almost exactly 200 years after Adam Smith's An Inquiry into the Nature and Causes of the Wealth of Nations (1776), in which he said we are all blessed by our creator with "a natural propensity to truck, barter and exchange." You see little children exchanging toys and other things amongst each other: like "give me some of your chips and I'll give you a sip of my cola." The instinct to trade is "natural." In my boarding school, we boys even developed our own "medium of exchange" - our money - and these were marbles. If you wanted something from someone else, you gave him some marbles, and different kinds of marbles had different values. That is the miracle of the trading, human mind. It needs NO COMMANDS.

The idea of a "command economy" is what has made this into a Predatory State. The commander is evil. He is possessed of two great big evil eyes. And a great big evil mind. If you want to survive, if you want your children to survive - the same children they call the "population problem" - and, most importantly, if you want this wonderful civilisation to survive, all these cities and towns, these shops and markets, these evil people must be overthrown.

Forthwith! 

If I may add, poverty is a HUGE MOTIVATOR. Poor people always struggle hard to succeed, while the children of the rich usually get addicted to luxury and vice, idling their lives away. A great big fortune made by one generation is usually completely dissipated by the next two, rarely built upon. I hope you see what a great big lie they taught me, on my very first day in class, under the head of "Economic Theory."

Song of the Day: Van Morrison's, here.

Socrates Departs From Orissa

Before studying philosophy, it is useful to inquire into the nature of the philosophers themselves: Who the fuck were these guys? Socrates becomes very interesting to know about, because he was executed by Athenian Democracy, for "impiety, and corrupting the minds of the youth." Yet, he was just a simple "street corner philosopher," always dressed in rags, always barefoot. He was given to the practice of "collaring" people on the streets and asking them questions, so that he could point out their errors.

Another kind of philosopher is Amartya Sen. I saw him at the bar in the Habitat Centre in Nude Elly once, drinking red wine with Arjun Sengupta of the Planning Commission. Sometime later, some men began entering a private room behind the bar, and I saw former Prime Minister LK Gujaral among them. Amartya Sen and Arjun Sengupta then rose and joined the secret conclave of big wigs.

Another time, I attended a public lecture by Amartya Sen in the same Habitat Centre. He was accompanied by Ted Turner of CNN and some other heavy-duty goras. Chairing the session was Gopal Gandhi, Governor of West Bengal. After the speech, I asked the people accompanying me what they understood - and both replied, "Nothing." I tried to ask a question, but Gopal Gandhi ignored me. Note the mandatory Gandhi.

Amartya Sen is unreadable as well. His Rationality and Freedom even contains numberless pages of advanced mathematics. If mathematics were the key to reality, Pythagoras would be the greatest Greek philosopher - but he was an asshole, and that's another story.

Adam Smith is eminently readable, and his prose is lucid and elegant. The Wealth of Nations was a "bestseller" of its time, and Smith is reported to have earned a "genteel fortune" from the book. Smith's life makes interesting reading too, for he spent years and years alone in his little Scottish village, taking lonely walks by the sea, thinking. Philosophers think. And thinking is done alone. Scientific knowledge is produced by men tinkering in laboratories, alone. Only Pierre and Marie Curie thought together, perhaps.

Thinking and writing - the "production of knowledge" - is a lonely enterprise. In the Science of Economics, the great men have all been lonely thinkers. The media circus and the television talking-heads ignored them all - focusing on the "politicians." Yet, in Ancient Athens there were politicians too, but Socrates was someone else, a street corner philosopher whose dialogues taught Plato much.

Mises writes that even in the USSA philosophical discussions in high-society "salons" never happen. In Europe, it was always the philosophers who carried the day, not the politicians, he writes. 

I am such a philosopher - of reality, of Freedom. I once saw a film on Hayek titled "Philosopher of Freedom." 

I am also adopting for myself a new name, by which all my future writings will appear, and that is Baba Pagal Nath Charsi.

I am leaving Orissa in a few hours, and by the evening expect to be in Pondicherry, where Aurobindo - who started off as a "terrorist" - took refuge and spent the rest of his life in metaphysical speculations. I have some lectures scheduled in the Roshni Nilaya School of Social Work, Mangalore, a Christian institution where I have taught many times before, and I guess I will make my way across to the West Coast again.

One final word for the people of Orissa: Drink coconut water. It is a healthy morning drink, better than tea or coffee, which are sugary. The coconut guys are struggling to sell their stuff, on cycles. Pepsi and Coke are selling in trucks! I suggest a major company be set up to market green coconuts - worldwide - to take on Pepsi and Coke. The ad-line can go: 

No fish ever fucked in this water!

Ha ha.

Baba Pagal Nath Charsi signing off.

The Haunted, Frightened Tree Of Complete Ignorance

Vaclav Klaus regaled me with the story of how some World Bank - IMF "economists" phoned him when he assumed office as President of the Czech Republic, seeking an appointment so that they could offer him "advice." He told them he knew more Economics than them, and did not need their advice. Fuck off from Prague, dudes, he told them. Return to Washington DC or wherever the fuck you came from.

Sonia Gandhi has a National Advisory Council (NAC). She needs advice. Why does she need advice? Because she is Ignorant. According to Shekhar Gupta of the Indian Express, these "darbari jholawallahs" of the NAC are "IAS dropouts and retirees." These guys have dreamt up a new scheme for promoting "rural livelihood." But markets are in crowded cities and towns - not in the vacant countryside. As Adam Smith said in the very first chapter of the Wealth of Nations, "the extent of the division of labour is limited by the size of the market." The Principle of the Division of Labour, by which we all specialise, is what Ludwig von Mises called the "principle of cosmic change and becoming." Each of us chooses to "become" someone - singer, dancer, actor, writer, whatever. We do not all sit in villages and spin yarn for our own use. We are NOT "self-sufficient." We specialise - and this requires physical marketplaces in physical cities and towns.

While Sonia Gandhi and her darbari baboons dream of a rural utopia, it is worth noting that all our cities and towns are disasters, including Nude Elly. These socialists built three cities in the past 60 years - while the Bris built 80 "hill-stations" in 50 years - and all three are State Capitals: Chandigarh, Gandhinagar, and Bhubaneshwar, where I am now located. 

I travelled around Bhubaneshwar a fair bit by auto-rickshaw yesterday, and the broad roads lined with trees are all for The State, just like Nude Elly. I asked the driver to take me to the Central Commercial District - and there was none. At least the Brits built Connaught Place, grandly designed. 

In Bhubaneshwar, the streets where shops are located are all disasters - and this affects the poorest of the poor, who eke out their "livelihoods" on the streets, since they cannot afford proper shops. They sell bananas, coconuts, pakoras and what not - this is the division of labour. And you cannot sell coconuts where there is no market - which is the vacant village.

Population causes Prosperity - in cities and towns, and their markets.

While Sonia Gandhi and her darbari baboons dream of rural schemes by which huge amounts of fraudulent money will be spent by younger IAS baboons, the fact remains that poor people from villages are continuously coming to these ghastly cities and towns - and getting fucked. See the jhugggis of Nude Elly, the slums of Bombay and Calcutta, and from my train window I saw the poor of Bhubaneshwar too, trying to survive in huts by the railway track. All around is ABUNDANT UNOWNED LAND.

There is the metaphysical - and there is the physical: cities and towns are our Fixed Capital. City and Town Roads are Social Capital: they are "public thoroughfares" and hence "collective property." They are NOT investing in these because they know not what Capital is, the life blood of Capitalism. Rather, they are "consuming capital" - which is the highway to "de-civilisation." The Professor of Economics at the IAS Academy in Mussoorie is a Marxist - as I reported on the Barkha Dutt Show many years ago.

There is "authority" - and sometimes there comes about the total absence of authority, because of Ignorance. The Delhi Development "Authority" is NOT an acknowledged "authority" on anything: just check out the disaster called Vasant Kunj, built and designed by a bunch of assholes. Similarly, the National Highway "Authority" of India is NOT an "authority" on highways - which would be Gabriel Roth. Our National Highways are all "notional highways." The Traffic Police know nothing of the science and technology of traffic management. Everything about The State is marked by complete and total Ignorance. From top to bottom. And they want to teach your children!

The Science of Economics is the most important science for humanity to know and understand. I am proud to be an Independent Authority in this science.

And as for our The Corrupt & Ignorant State Devoid of all Authority - I have only pure contempt. You look at human society with the "evil eye" - the buri nazar. You desire not that each Indian youngster "becomes" what he or she wants to become. You desire only that they become your servants - that is, "government servants." So you want to employ "the masses" in your "work schemes." You are inventing work in villages - and stealing all the money through your "political and bureaucratic organisation" - while, simultaneously, you are hurting all livelihoods in cities and towns. In Bombay, girls can't dance free. In Nude Elly only The State can open booze shops. In Bhubaneshwar I saw many "musical bands" who had set up their counters on a roadside. One said "Brass Band." And one actually said "ROCK BAND." There are no bars in the city where live music is played. What is "knowledge"? And how much of it comes from schools, and books?

If the CONgress is so ignorant, the Opposition is even worse. The BJP's slogan remains the metaphysical - a God, and his Temple. As if any God can be found in temples. I smoked a chillum with a sadhu in Gangotri. He told me the people worshipping at the temple there were fools, and God is found in solitude, in peace, and in the Holy Smoke. Instead of the metaphysical Lord Ram the BJP has given us Narendra Modi at the top and Dara Singh at the bottom. They are as evil and ignorant as the CONgress; maybe worse. And then we have the Commies - the most Ignorant people ever born. Democracy is also metaphysical. The "power of the vote" is no power; and most people don't vote. So there must be someway outta here. And that lies in Liberty.

I conclude this post with two quotes Peter Bauer ended his essay on "The Disregard of Reality" with - an elegant essay penned on the disaster mainstream Economics has become, written towards the end of a long and productive life championing Liberty for the poor of the Third World. The first is from Pascal, and it goes:

"Let us labour at trying to think clearly: herein lies the source of moral conduct."

And the second is from George Orwell, a socialist hero who did see the horrors of statism:

"We have sunk to such a depth that the restatement of the obvious has become the first duty of intelligent men."

Between Instinct And Reason

While in Juggernaut Puri, my thoughts turned to Stuttgart, Germany, a beautiful city I once had the good fortune to visit, a city where both Mercedes-Benz as well as Porsche are headquartered. In Stuttgart, it struck me, God is crucified - and the people ride chariots. Here in Puri, it is God that rides the chariot, while the people can barely make their way around town. Funny old world, ain't it? In Stuttgart, the Mercedes-Benz museum displays the first "Popemobile" ever made - they made the chariot for their Supreme Pontiff. And all taxis in Germany are Mercedes - for the people. There are, of course, trains and trams - the railway station is stunningly beautiful - and the Intercity Express (ICE) train I took into town travelled at over 350 kmph. Wheels. Wheels for the people.

My thoughts then went to Friedrich Hayek's last book Fatal Conceit: The Errors of Socialism which begins with the assertion that economic activity lies "between instinct and reason." We have given up the instinct to snatch and grab, to plunder, and prefer to trade instead - but we have not reasoned why. We are guided by a "sense of gain" and we therefore prefer survival through peaceful exchanges - but we have not reasoned beyond that. We trade because it is something we have learnt from childhood, as a "means of obtaining desired objects." The child wanting a chocolate will see his father buy it for him - and he learns that this is the way to obtain all that you need. He does so all his life - and his children and grand-children do the same, without reasoning why. It is the same with the worship of God - these are practices learnt by imitation, by following tradition, without reasoning why.

Now, chariots require roads. The road outside the Juggernaut Temple is broad and wide - but there is NO ROAD to my hotel, a cute little old building close to the sea. It has rained in the morning, and there are mud-filled puddles everytwhere. Messy. You feel icky walking around this Holy City. But in Germany, where God is crucified and people have wheels, they have the most incredible roads. There are signs on German autobahns saying "No Speed Limit" - and I once rode a Porsche Carrera at 235 kmph, feeling like James Dean, though fortunately surviving to tell the tale. In India, we have neither roads nor wheels. This is a "centrally planned economy." A planned disaster.

There are two critical areas where we humans go astray in our thinking - when we think about God, and when we think about our Kings. The Sun Temple at Konarak was built by a king in his own glory - but the people paid the taxes. What should they pay taxes for? No one has thought of this. Jawaharlal Nehru called his Big Dams the "temples of modern India" - and the people paid, people who had neither wheels, nor roads, nor phones, nor electricity. The idea was that The State creates wealth by making steel. None thought this absurd - because everyone operated "between instinct and reason," and they deferred to their King just as they defer to God.

All our politicians who wear khadi uniforms are similarly operating between instinct and reason. I asked a little boy whether he would like to make himself a t-shirt by sitting at a spinning-wheel (charkha), which would take him about two years to make one t-shirt, or whether he would just go to a shop and buy one. The little boy - with his "sense of gain" - said he would buy a t-shirt from a shop. We all specialise in the "division of labour" because of our sense of gain - but we never reason beyond that. Neither do the politicians. They themselves do not manufacture their own uniforms at home. They buy them from the Khadi Bhandar. Even Rahul Gandhi has not sat at a charkha - ever. All we see around us are people - both kings as well as commoners - operating between instinct and reason.

Economics is a very young science. It was unknown to the ancients. Its principles have become known only fairly recently. To the Austrian School, it all begins in 1871 with Carl Menger, though Menger himself studied Adam Smith carefully, and his own Lectures to Crown Prince Rudolf followed the Wealth of Nations, which is dated 1776. 

But young sciences often go wrong. Much has gone wrong with Psychiatry - another young science which also began in Vienna. And so it is with Economics. To me it appears that there are barely a handful of people who understand Economics in the entire world. All that is taught in the universities - macro, micro, welfare - is complete bunk.

Even the eminent professors are operating "between instinct and reason." They merely repeat what they have learnt by imitation - they never think things through for themselves. They are like the priests who recite ancient texts they have memorised. The true Science of Economics requires "mental reconstruction" of human actions in markets. The Marshallian diagrams and the Walrasian equations do no such thing. Junk them all, in toto.

And do read Fatal Conceit: The Errors of Socialism, Hayek's last book. Hayek wrote it hoping to challenge any eminent socialist to a debate - but none dared to debate him. They let him quietly die, hoping no one would read his last great book.

Errors.

They are all in serious error.

And these errors are destroying our civilisation.

Some of these errors are so deep that I think the world is run by "criminally insane" people. And you want to go to them for "education"?

Celebrate Today As Adam Smith Day

To me, June 5 is not World Environment Day. It is Adam Smith Day – for this is the day the great man was born. To celebrate the occasion I want to recount how Smith changed the West by spreading the idea of Natural Liberty, and also how he was instrumental in the invention of the steam engine. It is these two great “powers” – the power of ideology combined with the power of steam – that made the nineteenth century so extraordinary. In the twentieth century our world went downhill – thanks to communism, socialism, interventionism, welfarism, economic nationalism, inflationism, mass democracy and world wars; and all these are linked.

The nineteenth century, in sharp contrast, was the age of classical liberalism, and of a “globalism” that meant goods, capital and people could move around the world freely, without passports or visas, and without any “foreign exchange” frictions, as the entire planet was on the Gold Standard.

Adam Smith was a professor of moral philosophy in 1754 when a young James Watt was given space to work at the University of Glasgow after the Hammermen’s Guild refused him permission. Smith was ever opposed to the tyranny of the guilds – and so it was that the University welcomed Watt into its fold. Smith, a much older man, became close to Watt, and the latter was his greatest admirer, as the following extract from John Rae’s Life of Adam Smith shows:

There is nothing in the University minutes to connect Smith in any more special way than the other professors with the University's timely hospitality to James Watt; but as that act was a direct protest on behalf of industrial liberty against the tyrannical spirit of the trade guilds so strongly condemned in the Wealth of Nations, it is at least interesting to remember that Smith had a part in it.

 

Watt, it may be recollected, was then a lad of twenty, who had come back from London to Glasgow to set up as mathematical instrument maker, but though there was no other mathematical instrument maker in the city, the corporation of hammermen refused to permit his settlement because he was not the son or son-in-law of a burgess, and had not served his apprenticeship to the craft within the burgh. But in those days of privilege the universities also had their privileges. The professors of Glasgow enjoyed an absolute and independent authority over the area within college bounds, and they defeated the oppression of Watt by making him mathematical instrument maker to the University, and giving him a room in the College buildings for his workshop and another at the College gates for the sale of his instruments. In these proceedings Smith joined, and joined, we may be sure, with the warmest approval. For we know the strong light in which he regarded the oppressions of the corporation laws.

 

''The property which every man has in his labour," he says, “as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of the poor man lies in the strength and dexterity of his hands, and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman and of those who might be disposed to employ him.”

 

Watt’s workshop was a favourite resort of Smith’s during his residence at Glasgow College, for Watt’s conversation, young though he was, was fresh and original, and had great attractions for the stronger spirits about him. Watt on his side retained always the deepest respect for Smith, and when he was amusing the leisure of his old age in 1809 with his new invention of the sculpture machine, and presenting his works to his friends as “the productions of a young artist just entering his eighty-third year,” one of the first works he executed with the machine was a small head of Adam Smith in ivory.

Watt’s workshop was established in Glasgow University in 1756, and the idea of a “condenser” came to him in 1764 – an idea that changed the world. It was steam (and classical liberalism) that powered the next century with steamships, railways and more. Today it is hard to believe that both these ideas emerged from a small and relatively poor university in the back-of-beyond – as Scotland was then; that too, a place where most people could not speak correct English. This should serve as a strong motivator to those seeking to set up good universities in India.

During his university years, James Watt was member of a cosy club formed by the professors, which included Adam Smith. Watt recalled the discussions at the club in these words: “Besides the usual subjects with young men, the talks turned principally on literary topics, religion, morality, belles-lettres, etc., and to this conversation my mind owed its first bias towards such subjects in which they were all my superiors, I never having attended a college, and being then but a mechanic.”

How did Watt raise the Capital to turn his scientific discovery into technology? Matthew Boulton became his financier and together they set up the firm Boulton & Watt to manufacture and sell steam engines.

Environmentalists today would outlaw the steam engine – because of the smoke. And they would probably have called for the closure of Boulton & Watt. They do not see the magic of capital, how it converts science into technology, and how everything gets more and more efficient as time goes by – because of competition and the profit motive. The engines we use today are many times more efficient and more powerful than those of that era.

To conclude, if you want electricity that works, and good cars, if you want India to progress out of the bullock-cart age, please celebrate today as Adam Smith Day. 

Forever Third World Class

Our environment minister, Jairam Ramesh, is in the news for commenting that our Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs) are not "world class." Of course, they are most definitely not. The IITs have been there since the 50s - and never could they produce a good car or even a scooter. 

With socialism, all you have is "science" - never "technology." The latter requires Capital, and Capitalism, to come about. James Watt needed Matthew Boulton. (James Watt also needed Adam Smith, but that's another story.)

The highest number of science PhDs per capita was in the former Soviet Union - and they didn't have too much technology either, as with the Lada. Today, if we enjoy many "world class" goods and services, these are entirely because of MNCs - not IITs.

In those days of hard-core socialism, MNCs were considered evil - and one of the IIMs (IIM-Bangalore) specialised in training managers for State-owned companies. Even today, you never find an IIT or IIM professor writing a brief newspaper column to say something about something. One IIT-Delhi professor, Dinesh Mohan, designed and built the Bus Rapid Transit Corridor in Nude Elly - a huge disaster.

Jairam Ramesh's comment was made in a particular context: he was advocating the setting up of a "world class institute" to study marine biodiversity, and he wanted that to be a partnership between Reliance and our The State. As though the Tata Institute of Social Science and the Birla Institute of Technology are world class!

What I would like to tell Jairam Ramesh is that everything about India is "Third World Class" - because our The State is Third World Class itself. How about world class cities and towns? Or world class highways? Not a chance! How about a world class currency? - GOLD.

Of course, Jairam Ramesh is a CONgressman - beholdened to the widow of their late leader. This is a party of blood worshippers - they worship Nehru's blood - and that is Third World Class "politics." 

The latest news emanating from Madam Sonia is that they are readying the "right to food." Our The State is going to borrow and print money in order to buy the votes of "the poor." Never mind that the prices of everything else will rise, the precious Capital and savings of all will be eroded, and a whole lot of Capital will be needlessly consumed - to the detriment of the poor. The Predatory State feigning to be a Welfare State is what Keynesianism is all about, for it was Keynes who designed it "as a means of cheating the working class."

In the old days, and perhaps even now, the IIMs gave preference to IIT graduates. I finally discovered why after reading Friedrich Hayek's The Counter-Revolution of Science: Studies on the Abuse of Reason. It becomes clear that the powers-that-be wanted to produce business managers with a fatal "social engineering" (or "positivist") mindset. That is, our Third World Class Socialist State did not desire to "educate" us; rather, they used their powers of force and coercion to control education rigidly and thereby "miseducate" us. It is heartening that today some brave souls are calling for total privatisation of education.

A world class India? No chance of us getting there with Socialism and the Welfare State. And all the cronies. Our only chance of getting there is with laissez faire Capitalism, Private Property, Liberty, and Sound Money. And Private Law.

Further, a decentralised administration with mayors running each city and town. 

The panchayati raj vision - which is combined with "right to food" and "right to work" - is itself a Third World Class vision. They see only peasants, not world citizens.

As far as Jairam Ramesh is concerned, I do think we ought to tell him to get the hell out of Jaitapur. We don't need a Third World Class Socialist State attempting to run a nuclear power facility in the Konkan, where one accident could wipe out the Alfonso mango and put an end to Goan tourism. Privatise power. And respect the Property of others. 

To respect others' properties is civilised behaviour - truly world class. To take over others' properties using the coercive force of The State is barbaric: not world class at all. 

You CONgress barbarians remain what you are: Third World Class.