Further Implications Of Say's Law Of Markets: Part 2

So far, I have shown how Say's Law disproves the Keynesians, the protectionists and those who oppose free immigration, like the trade unionists. Today, let us take the arguments a few steps further, and also counter the points raised by Murali yesterday - "legal and cultural objections" to free immigration.


Let us begin with the example I gave yesterday - of the bhel-puri wallah. As Say's Law reveals, once he sells his stock, he is possessed of the means to demand other stuff on the market, except for bhel-puri, of course, which he will not buy. Thus, the sale of bhel-puri creates the demand for all non-competing goods. Our bhel-puri wallah might buy a mobile phone!


There are two important aspects worth noting at this stage: first, who are his customers; and second, the fact that the bhel-puri wallah is really a "poor" man, a very small businessman, often hounded by the cops. I will examine each aspect in turn. 


First: the customers of the bhel-puri wallah are a diverse bunch of people who produce a diverse bunch of goods and services, which they have successfully sold, and which has given them the means to enjoy some bhel-puri. This shows that widespread diversity - a hugely diverse division of labour - is good for all businessmen, because there are then more and more "non-competing" goods and services on sale. In other words, the more non-competing goods on sale, the better it is for all businessmen, the greater the demand for his own produce. 


Thus, Say's Law of Markets allows us the possibility of restating Adam Smith's dictum: "The division of labour is limited by the size of the market." This could be also put in the following form: "The greater the division of labour, the greater the demand for all goods on the market." Thus, free international trade is good - because then we have the "international division of labour."


Second: We noted that the bhel-puri wallah is a very small businessman. Now, especially in a poor country like India, the bulk of the businessmen are of this variety in our cities and towns - very small businessmen. And they are victims of the police. They are hounded, robbed, and their surpluses go in paying bribes. 


Yet, capitalism is all about Big Companies. And these Big Companies are ALL producing for the "mass market." Modern capitalism is nothing but "mass production for mass consumption." Our bhel-puri wallah bought a mobile phone - and he will spend the rest of his life re-charging it. Another example: 70 percent of all shampoo sold in India comes in little 1 rupee sachets - for the poor. This has enormous implications for policy.


This shows that the bulk of demand comes from lesser off people - and, if we want prosperity, every effort must be made to ensure that these people are able to sell whatever goods and services they wish to sell.

There must be economic freedom!

And State Predation on these people must end. This is a very different approach from Keynesian "funny money" welfarism of the kind chacha manmohan s gandhi has instituted, copying the West (where it has failed most spectacularly). 


Thus, either we institute Liberty - by which we will become the world's fastest growing market for mobile phones and other gizmos; or we continue with the charade of a Predatory State pretending to be a Welfare State: free rice for all bullshit.


Murali pointed out that westerners are opposed to "illegal immigration." But what does True Law state on Private Property. Does the US Immigration Department own the United States of America? Or is there, indeed, a "patchwork" of private property? In which case, each private property owner has the full right to decide who should enter his area. If I rent a room in a US hotel, US Immigration should not be able to disallow me entry.


As far as "cultural" objections to free immigration are concerned, these are "tribal mindsets" at work - not the sort of "rugged individualism" capitalism is all about. In any case, they make zero economic sense. Immigrants from different cultures are good for a country precisely because they make the division of labour more and more diverse. In Pondicherry, for example, I met a Frenchman who has been living there for 40 years, running three French restaurants. Such immigration is for bidden in Goa. And in Pondicherry of the old days, there were lots of Vietnamese running their own restaurants - and the city is poorer because they have upped and left. Mexicans in the US have popularised their cuisine. 


There is much people of diverse cultures can successfully sell that is "non-competitive" - like handicrafts and jewellery. Would the USA be a better place with just European food, burger joints and the like? And have you ever tried Vietnamese nouc mam sauce? Isn't Britain better off with all the Indian restaurants? And I did find a Vietnamese restaurant in London! Give me a "cosmopolitan" city any day. And do note that all these diverse restaurants ADD to overall demand - unlike Keynesian funny money.


We in India should therefore consider ourselves fortunate that none of our cities are homogeneous. They are all true "catallaxies." Catallaxies, which are "open trading arenas" - open to strangers, that is - are the "key to an Open Society," something I discussed in a column once. We can either have catallaxies and open societies - based on rugged individualism - or we can have "closed communities." 


Say's Law, as I discussed yesterday, makes a strong case for rugged individualism. Our heterogeneous society is best placed to make such a world, and such an Open Society, happen.


(This series on Say's Law is continued here.)

The Sun No Longer Shines On Konarak

Took a taxi ride to see the Konarak Sun Temple, 40 km from Puri. Within a couple of kilometres we were out of city limits - and the slums.

Then, we passed some "residential localities" of the middle class - but no markets there, and poor inner roads. No space for the automobile. Or servants. 

And then, the JUNGLE started. All jungle between Puri and Konarak. Forest Department warning signs about deer crossing. Casaurina trees, cashews too - but all jungle.

Finally, reached a sort of roadside town - quite a shambles - with a statue of Biju Patnaik pointing in the general direction of The Sea. But there is no promenade for tourists. A municipal functionary operating a roadblock took 10 rupees tax from me.

A few minutes later, we were near the famous temple - and a cop had to be bribed to drive inside. Another 10 bucks for a ticket - and I made the fortunate decision to hire the services of a guide. 

The Sun Temple in Konarak is built on 24 "spoked wheels" - each with a massive "hub." That is, two hub-and-spoked wheels for every month, representing the phases of the moon. They worked as "sundials" too, my guide told me, and you could tell the time by them.

The temple is elaborately carved - but not too well maintained. Scaffolding all over the place, and many "new stones" that are out of place and ill-designed, obviously by our The State. What is interesting is the representation of the "stages of life" - with animals cavorting for the children, sexual enjoyment for the adults, and metaphysical speculation for the aged. Metaphysics has been the bane of Indian philosophy.

One interesting mural showed a day in the life of a noblewoman - she wakes up and stretches, bathes, helped by servants, and then rides out on a horse to hunt! 

No hunting allowed any more  in Orissa - a heavily forested State of the Federation. Why not deer ranching in the private sector? Barun Mitra is going gung-ho about tiger farming; but I think we should begin with deer. And ganja farming, of course.

I enjoyed a venison steak at the Ikea showroom in the outskirts of Frankfurt-am-Main. The photo accompanying this post is of deer hunters in the USSA.

I must mention what the noble-woman did after the hunt - well, she enjoyed her man. The Good Life! In three or four different positions.

My guide smoked ganja - and we shared a couple of chillums in the unkempt temple gardens. Some other chaps joined us - sellers of precious stones, which seems to be a big "street business" here. This is also "knowledge" not taught in school. The gemstone sellers commented how ganja was a "good nasha" - and how alcohol was killing the people. My guide scored some ganja for me - which did the trick this morning, somewhat.

But the Sun is not shining on this Tourist Destination. The crowd at the Sun Temple was immense! That too, on a Monday evening. All along the road, people have opened dhaba-type shacks. I even found a Cafe Coffee Day - and enjoyed a cappucino. I thought of Goa, where, all along the NH 17, you find establishments calling themselves "Bar & Rest" - the Goans are too susegaad to use the full word "Restaurant"! - but here on this jungle highway there are no bar & rest signs. No Freedom. No road. No wheels. Abundant Space.

I thought a Great Idea would be to rig up a private consortium that would build a sea-side train ride between Puri and Konarak - and develop commercial property all along. The crowd of Bengali tourists would love it. Maybe some would buy Property here for their retirement. This would be real "development" - coming from The Market, an Institution of Free Society that socialists like Biju Patnaik could never comprehend. And they never looked towards The Sea; they only looked towards Nude Elly - for "planned development funds": all the "funny money" of the RBI. Funny money that loses value even as I write.

You might as well burn your Macroeconomics textbook too.

It rained on the return journey - and all was cool. Not violent rain like the Goan monsoon, but a gentle drizzle, with blowing gusts of cool wind. It was nice driving through The Jungle, but when we reached The City all was a mess. Can't enjoy the weather in The City. 

Saw a guy with a t-shirt saying "My idea of a Balanced Diet is a Beer in Each Hand" - but I find the beer here prohibitively priced. For the price of one beer I bought a 180ml bottle of Seagram's Royal Stag IMFL whisky. It costs much less in Nude Elly. It costs even less in Goa. So the poor drink chullu. Smoke bidis. And horrible ganja. And their savings are eroded by Inflationism.

What the fuck!

You might as well burn your Microeconomics textbook too.

It is the Science of Economics you need to know - as developed in the Tradition of the Austrian School.

So stay tuned to this blog, where I will elaborate key principles each day.

Why Pay Taxes To A Kleptocracy?

It is indeed an ominous sign when a leading business daily publishes an editorial on "India's treacherous roads." The editors of Mint say:

The major estimates are startling: there were 4,90,000 accidents in 2009, killing around 1,25,000 people, and injuring almost five times as many. Beyond the numbers, it shows that accidents have refused to decrease in number despite better and wider road networks. Indeed, estimates suggest the number of road accident deaths in 2010 was close to 1,60,000.

This means that if we add fatalities to injuries, there are over 10,00,000 victims of our treacherous roads every year. There were far less casualties  in the Kargil War! We are "unsafe" on the streets. We might well be far safer in war.

In Goa, over 300 people are killed every year on the roads, and many, many more injured, including lots of foreign tourists. Not a day passes by when the local papers do not mention a road accident death.

All that the cops here do is hang around to impose fines on those who don't wear seat-belts or helmets! 

And, of course, they have the Anti-Narcotics Corps (ANC) who hassle all those "good people" who peddle substances that make tourists happy. And these cops "collect" their huftha: an "illegal tax."

Indeed, just the other day, the chief of Goa Police declared Goa to be a "safe destination" - in these words:

"You get a feeling of safety while moving on the beaches in Goa. There have been some wrong impressions created about Goa and that needs to be corrected. I can say with certainty that Goa is not an unsafe destination," Bassi told reporters.

I, on the other hand, when advising foreign tourists, always tell them to be EXTREMELY CAREFUL on our roads. 

Only the other day, a middle-aged English couple asked me how they could best get to Anjuna (in North Goa) from where we were - Canacona, in South Goa, some 100 km away. Should they drive there on their hired scooter? they asked. I advised them to hire a taxi - and relax on the back seat with a bottle of wine. "It is too dangerous to drive here," I told them.

Note that road safety ought to be a priority - and a specialisation - for the officers of the Indian Police Service (IPS). Yet, it is most certainly not. This is an area they completely overlook when they talk about how "safe" we are. Mint is right when they say that road safety for  pedestrians, cyclists, scooterists and motorcyclists should be a matter of TOP PRIORITY - since they are the "most vulnerable." But in Socialist India, there is no "equality" - and the poor get fucked: right there on the streets.

What do the cops do? That is, apart from VVIP security. 

Do read Bruce Benson's The Enterprise of Law: Justice Without The State which says how we can happily exist without any "criminal justice system" - by imposing fines on all "crimes against the individual," which are Torts. There are no "crimes against The State" in a stateless "private-law society." That is the direction in which our country must head - in my opinion.

Indeed, why just the cops: What does the whole fucking government do? Apart from MGNREGA. And Air India. 

Why do we pay taxes at all? For what "goods and services"?

I conclude with what the BRASS SIGN on my door says:

TAX COLLECTORS WILL BE SHOT!

(This is not a threat; this is a prophesy)

It makes no sense to pay taxes to kleptocrats.

Think about it. And revolt!

Fukuyama, Hayek, Sen - and a Cop

Francis Fukuyama, who once wrote a book arguing that liberal democracy is the "end of history," has reviewed a new edition of Friedrich Hayek's The Constitution of Liberty for the New York Times, in which he has pitted Amartya Sen against Hayek. Fukuyama writes:

There have always been two major critiques of Hayek’s arguments, neither of which are fully answered by a re­reading of “The Constitution of Liberty.” The first comes from the left. Hayek provides a very minimalist definition of freedom as freedom from coercion, and particularly coercion by a central government. But as the economist Amartya Sen has argued, the ability to actually take advantage of freedom depends on other things like resources, health and education that many people in a typical society do not possess.

Fukuyama does well to categorise Amartya Sen's critique of Hayek as "coming from the left." Sen is a "welfarist" – he won the 1998 Nobel prize for his work on “welfare economics” - and it is he who has championed and supported the "right to free and compulsory education" as well as the "right to food" and the "right to work." These are all disastrous ideas that merely serve the bureaucracy by giving them very big budgets to spend. All this big government spending does nothing for the poor - indeed, it actually hurts them by consuming precious capital and causing inflation.

Today, in India, we are suffering because Chacha Manmohan S Gandhi has followed Sen's ideas - as expressed in his Development as Freedom (1999) and its sequel Rationality and Freedom (2003). Sen's acolyte, the professor of sociology Jean Dreze, is a senior member of the National Advisory Council attached to Sonia Gandhi. In that position, Dreze supported all kinds of rights - except the Right to Property!

Fukuyama notes that:

Hayek always had problems getting the respect he deserved; even when he was awarded the Nobel in economic science in 1974, the awards committee paired him with the left-leaning economist Gunnar Myrdal.

Actually, Myrdal and Sen are more or less identical in their thinking: both believe that the masses are stupid - without "the ability to actually take advantage of freedom" - and that the baboos of our The State are an "intellectual-moral elite" who must plan the economy and take "collective decisions" on behalf of these dumb masses. These baboos must impart "education" to them, too.

It was Peter Bauer who demolished these nonsensical ideas – so contemptuous of the poor, and so much in praise of The State. And Bauer was a “development economist” who had studied the Third World - and the “informal sector” in which the poor operate - very closely.

Fukuyama therefore treads dangerous ground when he pits Sen against Hayek by writing in support of Sen’s claim that “the ability to actually take advantage of freedom depends on other things like resources, health and education that many people in a typical society do not possess.”

Did the bar dancers of Bombay lack “resources, health and education”? Do ganja farmers need freedom or welfare? Is Sen’s welfarism going to “help the poor”? Or do they need Freedom from the Centralised State? What about the Right to Property – the only solution to the “mystery of capital.”

Think things over – but I am on Peter Bauer’s side, opposed to both Myrdal as well as Sen. You can read my (unfavourable) review of Sen’s Rationality and Freedom, published in the New York Sun, here.


As far as the critique of Hayek that "comes from the right" - the charge of "moral relativism" that Fukuyama mentions - the philosopher Tibor Machan rebuts it roundly here. Machan concludes:

The relationship between objective personal morality and the principles of politics which are basic to a constitution such as Hayek's constitution of liberty is a challenging aspect of political philosophy. It does not help to casually dismiss Hayek's approach by caricaturing it as moral relativism.

After writing The Constitution of Liberty (1960), Hayek published three volumes on Law, Legislation & Liberty between 1973-79, and then The Fatal Conceit: The Errors of Socialism in 1988. He died in 1992 – at the age of 92. So it cannot be said that The Constitution of Liberty was his last word on the subject. Indeed, in Law, Legislation & Liberty he outlined the respective spheres of “private law” and “public law” – the latter being legislation. These pioneering ideas have been carried forward by many since then: you can read Hans-Hermann Hoppe arguing very strongly in favour of a private law society here. I have also written a brief column on this subject, available here.

Fukuyama concludes his review by saying that Hayek “proves himself to be far more of a hubristic Cartesian than a true Hayekian.” Actually, it is in the first volume of Law, Legislation & Liberty – titled “Rules and Order” – that Hayek demolished Cartesian rationalism and “legal positivism.” Fukuyama ought to read this too. Also, the Hayekian insight that when we buy and sell in the market we do so “between instinct and reason” – the opening chapter of The Fatal Conceit – proves that Fukuyama’s assessment of Hayek is totally unfounded.

To conclude: Here in Goa, the people suffer from various repressive pieces of legislation passed by the Central State – from the Coastal Zone Regulation Act to the Narcotics & Psychotropic Substances Act. Both are in violation of the Right to Property – a right not guaranteed to us by the socialist Constitution of India.

The other day I had a chance to interact with a Goan cop. I told him to resign from service – pointing out that he was doing “bad work” and not “good work.” There were quite a few Goan people listening in on our discussions – and they all agreed with me. In the end, the cop agreed too!

This itself is proof of the fact that our The State is repressive – and that the people need Freedom and Property. It was a vindication of Hayek’s contention that “liberty, property and law are an inseparable trinity.” So much for Amartya Sen and his “welfarism.” This welfarism funded by Keynesianism is the bane of India, detrimental to the poor. It must give way to Liberty and Sound Money.

Self-Interest, Competition & Property: Are They Good or Evil?

A young English lad - educated entirely in England, that too - came up to me the other day and said he doesn't approve of Capitalism "because Capitalism means self-interest, competition and private property - and these are dividing humanity." He was particularly harsh on Private Property - saying that once upon a time we could pluck berries in the wild and eat them, but now everything has become private property, and we must buy them.

Actually, berries survive because someone looks after them on his private farm. It's far easier to buy berries than to hunt for them in the wild. The human population on this planet would be far smaller if we returned to hunting and gathering. 

Note that the lad has been "educated" for 16 continuous years in England!

And he dreams of a world where we are all generous and altruistic, where competition does not exist, and property does not either.

I was then half-way through my "Adam Smith Lunch" - a steak, some bread, and a beer - and so promptly reminded him of that great Scotsman's infinite wisdom:

It is not from the benevolence of the butcher, the baker, or the brewer, that we expect our lunch, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

Smith added that he had "never seen much good come from those who purport to trade for the public benefit" - like Air India or SAIL.

Self-interest is a powerful drive - and surely it would have led to mutual annihilation without The Market. Without markets, we would snatch, grab, loot, kill and plunder to obtain what we need. With the market, we peacefully trade and exchange. We never camouflage ourselves in the market, as predators do in the jungle; rather, we loudly advertise! The market is not the jungle.

An added fact is that there is much we do that is neither selfish nor altruistic. I liked Kenneth Minogue's words quoted on this blogpost of a friend:

The defect of this whole way of thinking is that it fails to take seriously the fact that a great deal of what humans get up to is neither self-interested nor altruistic. It is disinterested, activities that people enter into just because they happen to want to be thus engaged—with no thought of personal advantage or the world's benefit. Many pursuits, from playing a musical instrument to making academic inquiry (the "disinterested pursuit of truth," as it is sometimes described), fit into this vital category. It is a place where many of Western civilization's great achievements originated. 

Moving on to the English lad's second grouse: Competition. Now, we all hate competition when we go to the market to sell what we produce - but we love competition when we go to the market to buy. It pitches each self-interested businessman against others who are equally self-interested. And this works in our interest as consumers. This "catallactic competition" is also NOT the law of the jungle - and it is certainly not true that only the fittest survive. All survive in market competition. The best whisky sells alongside a bottle of the worst plonk, and so on. Note that if there was no competition - because of the Tyranny of protectionism - no one would work, as in the case of the sales manager of Bajaj Auto in the bad old days.

And as for Private Property - it is the unwritten law in all our bazaars, where goods arrayed before every street vendor are presumed to belong to him: "possession is nine-tenths of the law." If someone declared everything in the bazaar to be "collective property" chaos and looting would immediately ensue - and all in the name of the "Brotherhood of Man." This was John Lennon's dream too, when he sang, "Imagine no possessions... " The American poet, Robert Frost, got it right when he wrote, "Good fences make good neighbours." And it was, of course, Ludwig von Mises who defended the Institution of Private Property most forcefully:

If history could prove and teach us anything, it would be that private ownership of the means of production is a necessary requisite of civilization and material well-being. . . . Only nations committed to the principle of private property have risen above penury and produced science, art and literature." 

Self-interest, competition and private property are NOT dividing humanity. On the contrary, they are providing us with the means of co-operation; the "rules of the game." In the market, there is social co-operation because we take burdens off others' backs by producing for them. This is why we specialise in the "division of labour." What we produce is Property - our property - and these we exchange with others, for theirs.

Finally, it must be noted that The Market is based on Individualism: each entrepreneur taking his own risks, answerable to none but himself for his gains and losses (or to shareholders, in the case of joint stock companies). The motto of such a society is "each man for himself; each man by himself." The motto of such a society is certainly NOT "all for one and one for all."

Indeed, the market economy has nothing to do with the Brotherhood of Man. The chief advantage of the crowded urban bazaar is that it allows us to gainfully trade with COMPLETE STRANGERS.

This last point is most evident in Goa - where each shack-owner is looking out for, and serving, the needs of endless foreign tourists whom he has never met before. Interestingly, while the "educated" English lad was unconvinced, our unlettered waiter, who was listening-in, saw that I was right. He later told me that he liked my emphasis on Individualism and Private Property - he said he wanted to be his own boss one day. He agreed there was no Brotherhood of Man; there was no "society"; and that all the people out there were almost entirely strangers. 

That complete strangers can gainfully interact and make exchanges is the greatest benefit of the market order and its commercial culture - which have come to us from the past, as a part of our heritage, as we have evolved intellectually. 

Celebrate The Market!

With English, We Are The World

There is an almighty fuss going on in Goa these days - with parents demanding English-medium instruction in schools. Some decades ago, these very people had opted for instruction in Konkani - and, indeed, the whole of India was divided into "linguistic states." Then, Hindi was forced into the curriculum, and many states and regions protested - while others fought and died for their language, and states based on that language. Potti Sriramulu is the best example of such a martyr.


In time, India was hopelessly divided - with  people from different areas unable to understand each other. It was forgotten that what brought the Indian National Congress together in the years 1885-1947 was English. This was the language of the INC elite - who had different mother tongues. Yet, independent India did not increase the scope of English - opting for Hindi chauvinism instead. All the states chose the vernacular as the medium of instruction. In West Bengal there was a backlash several years ago - and English was re-introduced by The State. This is exactly what is happening in Goa these days.


One wonders why The State is required to teach English?  Or to teach anything at all? Already, there are many firms offering short English-language learning courses. I even saw one in Margao. I personally know two entrepreneurs of this kind - and one of them has developed a pedagogy that he sells to franchisees all over the land. Our software geeks have all been privately trained by NIIT, etc. Why can't English be taught the same way?


There is a more important point to make here - that India is "globalising" in all seriousness, what with even the poorest preferring that their children study English, which is a World Language. They are all seeing that the biggest opportunities knock on the doors of those who know this language - while they themselves cannot survive outside their home states because they only know their native tongue. A Tamilian who knows only Tamil cannot survive outside Tamil Nadu. For a Tamilian who knows English, "the world is his oyster." The next generation of Indians are going to be like that, it seems.


In his Nation, State, and Economy (1919), Ludwig von Mises began by asserting that the idea of "nation" lies in a "speech community." Western Europe is thus divided. And the vast regions of Eastern Europe that the Hapsburgs ruled comprised many, many linguistic nations. This book was written in Vienna, in German, just after WW1, in the very same year that Keynes wrote The Economic Consequences of the Peace.


In this book (PDF here) , Mises made the acute observation that the USA and Great Britain are "one nation" but "different states." He also wrote of how Germans were similar - with the Swiss-Germans and the German-speaking Austrians preferring different states.


Almost 100 years have passed since this book was first published - and it seems in another 20 years, most Indians will be part of an English-speaking globalised "nation." Mises champions a "liberal nationalism," of which he writes:

The nationality principle above all bears no sword against members of other nations. It is directed in tyrannos [at tyrants].

Therefore, above all, there is also no opposition between national and citizen-of-the-world attitudes. The idea of freedom is both national and cosmopolitan. It is revolutionary, for it wants to abolish all rule incompatible with its principles, but it is also pacifistic. What basis for war could there still be, once all peoples had been set free? Political liberalism concurs on that point with economic liberalism, which proclaims the solidarity of interests among peoples.

He adds that this "liberal nationalism  does not clash with cosmopolitanism, for the unified nation does not want discord with neighboring peoples, but peace and friendship." The example he gives is of the Swiss-Germans: 

... the idea of unity cannot exert its state-destroying and state-creating power where freedom and self-government already prevail and seem assured without it. To this day Switzerland has scarcely been tempted by that idea. The least inclination to secession is shown by the German-Swiss, and very understandably: they could only have exchanged freedom for subjugation in the German authoritarian state. But the French also, and on the whole also the Italians, have felt themselves so free in Switzerland that they felt no desire for political unification with their fellows in nationality.

Mises defines this "liberal-pacifist nationalism" in these words:

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. It persists in the position that it adopts for the problem of state boundaries. The peoples themselves may decide how far they want to harmonize their laws; every violation of their will is rejected on principle. Thus a deep chasm separates liberalism from all those views that want forcibly to create a great state for the sake of the economy.

Liberal nationalism has to be clearly distinguished from nationalism of the "militaristic-imperialist" kind. In the former, the economy is separated from The State - and, in this manner, the State itself is made quite redundant to the entire scheme of things. Theirs is a "limited State." In the other kind of nationalism, the militaristic-imperialist kind, the State is joined with the economy, and therefore seeks more territories and subjects. The liberal nation is different, as Mises says:

Liberalism knows no conquests, no annexations; just as it is indifferent towards the state itself, so the problem of the size of the state is unimportant to it. It forces no one against his will into the structure of the state. Whoever wants to emigrate is not held back. When a part of the people of the state wants to drop out of the union, liberalism does not hinder it from doing so. Colonies that want to become independent need only do so. The nation as an organic entity can be neither increased nor reduced by changes in states; the world as a whole can neither win nor lose from them.

As more and more Indians learn English and become part of the global community, it is hoped that a liberal nationalism will prevail here - as it should. In India, a vast sub-continent comprising many linguistic nations (like the Austro-Hungarian Empire of the Hapsburgs Mises was familiar with) English remains the uniting factor among the elite. Once the language is learnt by the masses, we will all hopefully become "cosmopolitan" in our outlook.


But then, my optimism may stem from the fact that I am writing this in Goa, where, because of tourism, the people are naturally welcoming to foreigners. There is no reason why the entire country cannot be like that. After all, every region has tourism potential - and tapping this potential requires cosmopolitanism, not the narrow, militaristic-imperialistic nationalism we sometimes find in some regions.


Of course, to me, writing 90 years after Mises, the idea of "free cities" sounds much better than "nationalism." Every Indian city is multi-lingual and multi-cultural. And most Indians speak not one, not two, but three languages: English, Hindi and the mother-tongue. They may not be able to read and write in all three, but they can speak them and be understood. For Indians, therefore, a "national language" makes no sense - and Hindi lost this battle long ago. With language gone, the only other basis for nation are religion and race - and we are too mixed a population for these narrow identities to work. Thus, the "idea of community" must be rejected here in favour of the idea of "catallaxy": which is a free trading market arena where strangers of all kinds can make peaceful and gainful exchanges with us. I have written about this in a column published by Mint.


I am extremely happy that the masses are demanding English language education for their children. It means that the masses are "globalising" while our "political society" is not. In time, these new-kids-on-the-block will all be singing "We are the World." I most certainly hope so.

Money, Taxes, Prices - And A Parade

The governor of our central bank, the RBI, has assured the Sheeple that he "will do everything to bring inflation under control." The strategy he will adopt: "restrain demand pressures." As though inflation is demand-driven. Oh! We poor sheeple.




Similar sounds are also emerging from Ben Bernanke, chairman of the US Federal Reserve, the chaps who print US dollars:

In his first press conference as chairman of the Federal Reserve, Ben Bernanke discussed rising gasoline prices, blaming higher demand from emerging economies and Mideast oil-supply disruptions as the cause of the zooming prices. Bernanke did not mention the US government's role in the higher energy prices, and he explicitly absolved the Federal Reserve of any blame.

As Mark Brandly points out in this article (in which the above quote is the opening paragraph) on why the US Fed ought to be shut down:

Bernanke's deceitfulness is appalling, although not unexpected. He knows that Federal Reserve monetary policy plays a significant role in gasoline prices. Expansionary monetary policy leads to more dollars being available in world currency markets and weakens the dollar. The weaker dollar results in higher import prices. More than half of the oil consumed in the United States comes from foreign producers....

The word "deceitfulness" is noteworthy. It must be applied to our RBI governor, too. Inflation is a deliberate policy used to finance State expenditure - a very deceitful policy. More dollars or more rupees - the result is the same: the value of the paper note declines. Gold has crossed 23,000 rupees for 10 grams - only because the value of the rupee has fallen. Similarly, in the US, when Nixon de-linked the US dollar from gold, the yellow metal was priced at $35 an ounce. It is more than $1500 an ounce now.

Inflation is nothing but a purely monetary phenomenon - caused by an excess supply of money resulting in the fall of the purchasing power of the monetary unit. To end inflation we must end central banking. Money must be "private money." The country must be put on the gold standard.

In other words, The State must be denied the power to fund its programmes through the deceitful means of printing paper notes to pay for them.

No more MGNREGA, no "right to food" and no "right to free and compulsory education" - that is, no more welfarism to buy votes - and inflation will be ended for ever.

Remember - inflationism robs the poor of their Capital - thereby rendering them poor for ever. Welfarism never benefits the poor in the long run - see the poor in the welfare states of Europe that are now going belly up. Welfarism paid for by inflationism is NONSENSE! It is precisely the "false philathropy" combined with "legal plunder" that Frederic Bastiat warned us about in The Law. This is not socialism; this is anti-social. So much Capital Consumption will destroy our civilisation.

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But we also pay taxes! Should we continue to do so?

I was discussing taxes with a local entrepreneur here - pointing out that all we get in exchange for them is the State Danda: all manner of "inspectors" land up to collect bribes, which are an "illegal tax." We pay taxes in exchange of these bribe-taking inspectors. This is all that is "real" about our The State.

These are not just from the State Police, but also come from the labour department, the health department, the CRZ administrators, the excise department and so on and so forth.

This danda (Hindi word for "stick") is REAL. This is ALL we get for our taxes. We certainly don't get good roads, footpaths, clean cities and towns, scientific traffic management and suchlike. Over 200,000 of us are killed on our unsafe and horrible roads every year - more than get killed in a small war. Why should we pay taxes - that is, after money has been privatised and The State can no longer print paper notes to fund itself?

Think about it!

If we do not pay any taxes to The State - if business is laissez faire, if we inhabit a "private law society," and if everything is privatised, all we would have to pay for whatever we need are PRICES: for electricity, for water, for expressway tolls... The local entrepreneur here affirmed that he would be happier paying prices than taxes. "Starve The State," he cried out loudly.

Yes, in exchange for prices, businessmen will supply us with "goods." All that we get in exchange for our taxes are "bads." The Danda!

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I HATE the danda of our The State - a State that does nothing right. A State that leeches on the people. A Predatory State.

As you all know, one danda I really hate is the Narcotics Act. It denies me good ganja. That drives me even madder. Especially in the morning. Like right now.

I therefore propose a Great Ganja Pride Parade in Goa. Let all smokers of the Holy Herb assemble, smoke and shout slogans for Liberty. And march. Let us show them our numbers. Let us show them our Anger. Let us show them our Pride - and our determination to be free from Tyranny.  

The Great CONgame

While discussing State spending with a passing stranger last evening, I posed this question:

The budget of the Goa government is Rs.3,320 crores. Would you be richer if this budget was Rs.10,000 crores? Or would you be richer if the budget was just one crore?

The man hemmed and hawed for some time and finally arrived at the truth:

He said, "We would be richer if the budget was just one crore, because we would obviously be paying less in taxes.

"Not just taxes," I said, "We would also not be paying for their inflation and their borrowings."

The fact is that big spending governments are BAD for us. I have written a recent post on this, titled "Against State spending: The more they spend, the more you lose."

It is indeed a GREAT DELUSION that increasing the quantity of money produces prosperity. It is only because of this great delusion that all central bankers can freely practice inflationism. They gain; we lose.

How can we be rich? We need Property - and Liberty. And money must be sound. Hard money is also Property. Gold is Property.

That is all we need. When we have Property and Liberty, we can raise Capital, save and invest, and carefully tend to our businesses. There is no short-cut to prosperity - and printing money is certainly not the way. The only way to be prosperous in a market society is to satisfy one's customers.

Of course, if you want to take this path, you will have to reject State Education. They deliberately spread the Great Delusion - and you succumb to their CONgame.

Bob Marley got it right:

Here comes the CON-man,
Coming with his CONplan...
We build your penitentiaries,
We build your schools,
You brainwash education,
To make us the fool....

Though Bastiat put it most forcefully:

If you want to have theories, systems, methods, principles, textbooks and teachers forced on you by the government, that is up to you; but do not expect me to sign, in your name, such a shameful abdication of your rights.

Reject State Education!   

It's Clientelism, Not Federalism

The news is that the Central Planning Commission has approved Goa's Annual Plan of Rs. 3320 crores (or 3.23 billion rupees) - and the photo on the front page showed Goa's chief minister, Digamber Kamat of the CONgress, with chhota ustad montek, the IMF man who heads the Planning Commission in Nude Elly.

This gives the impression that the Centre is "allocating resources" appropriately, so that Goa can "develop." Yet, the truth is the very opposite. Much of this money is printed or borrowed money - and this retards development, while also fuelling inflation. Goans do not gain with such spending; rather, they lose. As I pointed out the other day, "the more they spend, the more you lose." Indeed, the more there is of "government growth" - in terms of either powers or budgets - the less the people grow, the less private businesses grow.

What is really going on here?

Is this "federalism"? I don't think so. What is obvious is that Goa is a "client" of the Centre, receiving money from Nude Elly in exchange for loyalty. The CONgress chief minister of Goa is part of the Party Apparatus headquartered in 10, Janpath.

Actually, even the Civics textbooks do not claim that India is "federal." They say India is "quasi-federal" - which ought to mean that India is "quasi-unitary." Had ours been a real federation, the transfer of resources would have been the other way around, with Goa collecting its own resources and spending these on what Goa needs (like roads) - while also sending a small portion to finance the Centre, which will have very limited tasks to perform. This "inverted pyramid" is called "subsidiarity" - and is based on the idea that local government comes first. I have an old post on this concept, basic to de-centralisation.

Subsidiarity matters in Goa as well. Although this is a tiny state, there are 3 major cities and over 30 towns with municipal organisation. And it cannot be denied that all these cities and towns are collapsing. The fishing hamlets by the sea where tourists flock in the season are also pictures of neglect.

Goa needs mayors too. It is from Goa's cities and towns that taxes are collected. These should ideally be spent in the city or town itself, while some portion of these should be sent upwards, to Panjim and (maybe) Nude Elly.

I say "maybe" because Goan feni - of which I had three large shots last night - is not allowed entry into the rest of India. Nor does Nude Elly's "trade policy" allow Goa to import freely through its "major port," Marmugao. This port is today another "iron ore exporter." Recall that the Magna Carta gave all Englishmen the "freedom to trade by land and sea."

Interestingly, in the Plan that has just been approved by montek, Rs.500 crores has been allocated for the "mining areas." The news report makes no mention of any funds allocated to the cities and towns of Goa for local Capital investments like roads and footpaths - which they desperately need. Instead, almost all the money has been allocated for various "welfare schemes." In other words, politicians loyal to Nude Elly and IAS baboos will get all this money for loose spending - that is, building clientelistic networks of their own. There is no "economics" to this Plan; it is all about "politics." This is only natural in a socialist country that despises the Free Market and makes politics the means to economic gain. All immorality and corruption stem from this ideology.

Politics and politicians in Goa are much the same as anywhere else in India - and this is a tragedy. Many important ministers are under a cloud. It is a mirror-image of Nude Elly. Dirty politics.

Recommended reading: My article from 2007 titled "Goa must secede."

When NGOs are GOs

I was directed to Tavleen Singh's timely column berating NGOs by a friend's blog. Singh concludes thus:

Incidentally, the greatest patron of NGOs is Sonia Gandhi. She has exalted them to a role in government through her National Advisory Council (NAC). So does the NAC represent civil society or political power? And, can its NGOs account for their funds?

I was discussing this matter of State support for NGOs just the other day when the local newspapers here reported the chief minister of Goa saying that he was willing to give 1 crore (10 million) rupees to anyone who put up a proposal for starting an NGO, provided this was "approved" by his baboos.

It has been well said that "he who pays the piper calls the tune." If NGOs are funded by The State then they are GOs (government organisations) and not NGOs (non-government organisations). This very chief minister, just the other week, donated a huge amount of State money to an "educational institution." Will such an educational institution ever teach what is wrong with socialism, planning and all that? Of course not!

The National Advisory Council surrounding Sonia Gandhi does include some NGOs - and these are run by former bureaucrats. It is they who have an interest in "welfarism."

Tavleen Singh rightly concludes that "a lot of very corrupt people have made lucrative careers out of becoming NGOs."

Beware of them. 

Goa's Image - Good & Bad

The "image of Goa" is a big issue here these days, what with a Bollywood film on the "drug scene" being shot here. The majority opinion seems to be that Goa's image is being dented by this film.

My own opinion is that if Amsterdam can proudly declare itself the "Marijuana Capital of the World," why cannot Goa be proud to be such a place too? After all, it is the hippies who first put Goa on the global tourist map. If there were hash cafes here, would that dent Goa's image or improve it? Would it not attract tourists in bigger numbers - just as Amsterdam does.

To the politicians and busybodies who are bothered about Goa's image, I would like to point out that what really sucks here are the roads. Goa is a big place, stretching 150 km from end to end. The "notional highway" is of an age before the automobile explosion. Tourists can scarcely travel safely from north to south. I read the statistics of foreign tourists killed on the road - over a hundred - and this is truly bad for Goa's image.

The Konkan Railway offers NO means of travel within Goa. There are also no tramways. If internal railways and tramways were built (by entrepreneurs, of course) Goa's image would surely improve. Even the Goans would be better off. Let Switzerland, another tourist haven, be the guide here, for the transport system in this mountainous country is astounding.

Further, the internal roads by the beachside "villages" are terrible, too narrow, too unsafe, no footpaths, no signage at all. I call them "Goa Constrictors."

The beachfront settlements are also not very attractive. Every one of them seems like an overgrown village - and not a pretty town. And the old towns built by the Portuguese are facing imminent collapse. All these deserve the serious attention of the government - and the citizenry.

Indeed, Goa's politicians themselves give Goa a bad image. The State Police also have a very bad image - especially over corruption related to the drug trade.

As for this Bollywood film: It is titled Dum Maro Dum after a line in a famous song of some decades ago, and it refers to the chillum in which ganja and charas are smoked. The original song, and that film, in my opinion, gave a very bad image to all smokers of this Holy Herb. The songline went:

Dum maro dum,
Mit jaye gam...

Which means:

Smoke, Smoke, Smoke,
And your sorrows will be wiped out...

While there are many who "drown their sorrows" in alcohol, ganja-charas have the effect of opening the mind, and they are used for this purpose. Cannabliss is truly the philosopher's drug - which is why sadhus use it. The medical texts say that it delivers a mild euphoria, colours seem brighter, music resounds better, there is an effect of seeming to float, and observations are more acute. Dev Anand gave this Holy Herb and its smokers a bad image. We need to correct it.