Not Democracy, These Are Tax Parasites

As usual, there is never any good news from our The Chacha State. The first thing I read today was that they are “infusing” 5000 crore rupees into Air India. Frankly, if I had 5000 crore rupees spare in the public kitty, and wanted to give a fillip to civil aviation, in the interest of consumers, who are "the people," I would abolish all taxes on aviation turbine fuel, using the cash to compensate state governments for the revenues they would lose. Makes much more sense. But our The Chacha State represents tax parasites, not taxpayers. And there is more evidence on that score in the news today, from Chacha's bhateejas.

First comes the astonishing news that the Tamil Nadu Bhateeja State is going to distribute colour TVs to “all.” The deputy chief minister is quoted in this news report as saying:

He said 1,04,42,500 colour TVs had been purchased and distributed to around 79, 35,975 families.

Is this the “role of State.” Is this why we pay taxes?

The attitude of our socialist-democrat politicians to the contents of the public treasury is brought out best by this story from Karnataka, where 1 crore was spent on one meeting of the Bhateeja State cabinet; of this money, 28 lakhs was spent on decorating the venue with flowers. The meeting, attended by 34 ministers, their secretaries and staff, lasted “a couple of hours.” No earth-shaking decision was taken. I wonder how much was spent on getting everyone to Gulbarga, 623 kms from Bangalore, the state capital. They must have flown in, ‘coz there couldn’t be much of a road between Bangalore and Gulbarga. Why, there isn’t much of a road between Bangalore and Banerghatta, 20 kms away; or between Bangalore and Sarjapura, 20 kms away on the other side.

It is not hard to believe that “socialism” combined with “democracy” – both powerful words – should bring the nation to such a sorry pass, ruled by parasites. In truth, this had been foretold long ago – by Frederic Bastiat, for instance, in the 1840s. In his brief and humorous essay, “The State,” Bastiat defined the beast thus:

The State is that grand fiction by which everyone tries to live at the expense of everyone else.

He added:

Everyone wants to live off The State. They forget that The State wants to live off everyone else.

In another essay, one that is justifiably more famous, “The Law,” Bastiat exposed the deep errors in Rousseau’s conception of democracy; adding that the only results would be “legal plunder” guided by an ideology of “false philanthropy.” It is precisely these that plague our society today. But there is more:

Political economists have for long been saying that a fiat paper currency is incompatible with democracy. The idea of democracy is representation of the taxpayer, and nothing else. “No taxation without representation” has always been the rallying call of democrats. In England, for over 500 years, the monarch would call a parliament only to obtain a vote on taxes.

However, with central banking and a fiat currency, The Democratic State comes in possession of a money-making machine, something monarchs never had. With such a State established, parliamentarians only work towards channeling State expenditures towards their clients – what is called “pork-barrel politics” or “log rolling.” MPs no longer represent taxpayers because their The State is not dependent on tax revenue. It can print the money on its own. And it can buy up all the support it needs with this “funny money” – witness the MPLADS. All those who believe in the true ideals of democracy must join in the call for “sound money.”

What is the Role of The State in a free society? Writing in 1776, before mass democracy, Adam Smith listed out the “three duties of the Sovereign.” They are:

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.

Defence, the “exact administration of justice,” and ROADS. Not money. Not "making law."

Not television sets. Not airlines. Not steel plants and hotels.

How does the “system of natural liberty” operate? Adam Smith described it thus:

All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society.

We must move from here to there – and fast.

For A Big Bang Diwali

Diwali, the festival of lights (and sound) is just around the corner, but kids in Delhi are not being allowed to celebrate the occasion with crackers, on the spurious reasoning that this will “damage the environment.”

Oh, how many excuses these killjoys use to kill any fun that life may have in store for us miserable Indians. Our motto must be to suffer real private deprivation for some imaginary “collective good” or the other.

Frankly, I do not think the total amount of smoke released on Diwali night if firecrackers are allowed free rein will exceed that released by a single active volcano in one day. The earth is a huge planet and the atmosphere is even bigger. If Obama can bomb the moon, surely we can blow crackers once a year?

During my years in southern Goa, one thing that never ceased to amaze me was the fact that not a single night would pass without a whole lot of crackers going off. I made some polite inquiries as to what my neighbours were celebrating every night and was told that the occasions vary. In one house, crackers would go off to herald the birth of a child. In another house, to celebrate the start of a new business. In a third, the purchase of a new car. In a fourth… It could be anything. But crackers are a must. Every night. Without fail. I loved it. Chitty chitty bang bang night after night.

Of course, this fascination for crackers was reflected in the nearest market. In Chaudi, my nearest town, there was a shop selling crackers throughout the year. In Delhi you never get crackers except during Diwali. But in Goa, they sell every day. What does Delhi gain by banning crackers even for the one great celebration all Indians enjoy? We must look not only at the loss of fun, but also at the loss of business, and its implications.

Say’s Law tells us that “the sale of X gives rise to the demand for all non-X.” So, if I get to sell my bhel-puri, I am possessed of the means to buy whatever else the market has to offer, except bhel-puri, which I will not demand. I might buy clothes, music, books, tandoori chicken, cold beer – whatever. All these businesses that do not compete with bhel-puri have an interest in seeing that I am allowed to sell bhel-puri. If I am debarred, the energy in the entire catallaxy is reduced.

Applying Say’s Law to the ban on crackers in Delhi, we see that this policy does not hurt just the firecracker business alone; it hurts all other businesses as well. For, who knows, maybe a few SUVs would have been purchased in Sivakasi if Liberty reigned. With liberty, just as the sweetmeat-wallahs get rich on Diwali, so too would the cracker sellers. Then, just as the sweetmeat-wallahs would splurge on other offerings on the market, so too would the cracker-wallahs.

The Lesson: Restrictions and bans hurt not the directly affected industry alone; they hurt the entire market order.

I am therefore of the opinion that we the suffering masses of Delhi should celebrate any and every occasion that comes our way to the hilt, without any holding back. And it is our duty and obligation to our children to ensure that they enjoy whatever small joys life may afford. Diwali is an annual event. And a big one. Let us enjoy it. The killjoys who profess to care for clean air should be put in their place. They are causing all-round losses to the civic community.

No Bells For Another Nobel

I liked David Kramer’s comment that this year’s Nobel prize in Economics has gone to a “commonist.” Note that Cato Institute gave their big prize for advancing liberty to Hernando de Soto, from Peru, a nation full of indigenous tribal communities – and de Soto’s message is one of Private Property. Usually, such communities are seen as examples of “primitive communism,” of common pool resources, and “collective action.” It is remarkable that a Peruvian should champion Private Property in a land of primitive tribesmen.

In the case of the white tribes of Europe, the Angles, Saxons, Picts, Scots, Jutes, Danes… the key law that enabled them to rise to such spectacular levels is Private Property. And, as de Soto points out, the “representation” of this property in transferable titles. Of course, this does not require The State, and can be accomplished within “private law.”

Looking at this prize from an Indian perspective, therefore, I find little to commend it. Our people need to wake up to Private Property. Urban slums will be transformed overnight if de Soto had been the man in the news today.

Ostrom is citied as an important authority on the management of common pool fisheries. But, along our shores, fish die of old age, the fishing being so technologically backward. And my travels along both our coastlines have revealed to me that our fishermen need titles to their beachside properties.

Indeed, much attention in India needs to be devoted to the issue of “homesteading” unowned land. We must not get diverted by “commonism.” Our focus must remain on Private Property, on homesteading. On Private Law. Ostrom’s “commonism” is not an area of research of great relevance to India’s immediate future.

What I find interesting is that, after the “political” prize in Economics to the inflationist Paul Krugman last year, this year’s prize should go to a “political economist.” Obviously, mainstream Economics has little of worth. However, if it is this science that the prize is really meant for, then it should go to Israel Kirzner of the Austrian School, whose work explodes every fallacy in the mainstream approach to “microeconomics.” Austrian thinkers must be honoured today, and I really enjoyed this column by an Indian physicist on how he discovered the teachings of this school of thought. If anything, it illustrates the power of correct thinking in the science of Economics.

Not that “political economists” have not done great work. But, even in this sub-field, the man who richly deserves the prize is Gordon Tullock. He is over 90 now. His work sheds vital light on “government failure” – in a liberal, democratic setting. Had he received the prize, attention would have been focused on his pioneering work, and public opinion would have been much better informed. Another political economist who richly deserved the prize was Mancur Olson – but he passed away some years back.

There is a long list of people who are gone and deserved this honour: Ludwig von Mises, for one; Peter, Lord Bauer, for two. And there is an even longer list of peculiar intellectual insects who have received it – from Wassily Leontief to Gunnar Myrdal. It just so happens that this prize is awarded by a central bank, and the awards committee comprise sarkaari baboos. It is perhaps time that other prizes be put up to be awarded to deserving economists.

Chacha Is Lying

Our prime minister, Chacha Manmohan S Gandhi, is lying to the people. He is reported as having stated:

“The worst is indeed over for the economy,” he said. “The price rise has been due to the drought. Steps are being taken. I am confident the harvest will be normal.”

If you really want to know the horrific truth, which is that things are going to get much worse, then I suggest you carefully read the views of a wise fund manager published in Mint today. This good man begins by making it clear that inflation is caused by printing money in excess – not drought, as Chacha avers. He expects inflation to double the RBI target by March 2010. And there is worse. The mammoth government borrowing programme is going to screw up things a lot more. Interest rates will rise; private borrowers will face problems. The Market will do badly. This prescient fund manager says, of Chacha’s stewardship: “Over the last four years, we have not had fiscal prudence.” He laments the fact that our The Chacha State spends mostly on consumption, and not on capital; on salaries rather than roads.

Now, our Chacha is supposed to be an eminent economist. How come an ordinary fund manager talks more sense than him? I do believe that, if we scratch the surface, we are forced to conclude that Chacha is a liar too, adding to all his other accomplishments. In any decent society, lying on the part of the government elite is considered to be a grave offence, usually resulting in impeachment.

My question is this: If Chacha is bullshitting about The Economy, the most important aspect of life, then how can we believe what he says about Baloochistan, Afghanistan, Kashmir et. al.? We can’t. We mustn’t.

On the other hand, we all know that “you cannot fool all the people all the time.” In politics, as in business, veracity works. Chacha is playing a loser’s game – for himself, for his Congress party bosses, and for the nation.

Wake up!

The Thievery Of The Congress, Exposed

I had planned to write a happy Sunday post on my hero, Adam Smith, but the widely reported statement made by our finance minister pranab baboo that his government will work to “strengthen PSUs” forced my hand.

[PSUs are Public Sector Units, the State-owned industrial sector, India’s “common loss.”]

Indeed, the language is telling: he dismissed reports on privatization, calling them “malicious propaganda.” He was speaking to a trade union audience. He has chosen his friends. We must know our enemies.

Recall that the Swatantra Party never had a trade union wing.

What kind of political party is the Congress, of which the minister is an old hand? Can this party ever “represent” the true interests of the “commonwealth”? At a time when serious law and order problems plague much of the vast territory, what is the “role of State” that this party upholds as its guiding philosophy? The USSR is history, but this party hangs on to failed Soviet-era thinking. I daresay India is doomed unless this party is unceremoniously ousted from power. They are the pits.

If their rank-and-file want to run industrial empires, they should approach the stock exchange, not the public treasury. It becomes obvious that, under the Congress, looters take charge of the public treasury. Their ideology is not “socialism,” for they never think of “society”; rather, their ideology is one of private gain at public cost. They cause the “common loss.”

The core belief of the Congress is that PSUs are “collective property.” Actually, this is the greatest fiction of socialist propaganda, for every PSU is very much the “private property” of client groups who run them, and exploit them, for their own benefit – like the trade unions, and the managers. Just as the minister’s bungalow in Lutyens’ Delhi is a piece of “collective property” that the minister is enjoying as his own – wee the sheeple cannot picnic on his lawns – so too with the PSUs. They are all “private property.” But acquired at public cost.

In other words, these properties have been illegally acquired. The public must re-acquire them, sell them off, and re-invest the money in roads – for roads are real collective property, which every citizen, and the visiting foreigner, can use for free. I am also a great fan of public parks in cities and towns – both the Mughals and the Brits loved them too – which also add to the common wealth of all citizens. We must have a clear idea on Property. The Congress and their professors have confused everything.

There is another story on the Congress today that shows what a bunch of hypocritical old farts these jackasses are: the party organ is carrying an editorial that advises the rank-and-file to avoid showing off their (ill-gotten) wealth. Of course, it must be hugely embarrassing for a gang of thieves when some members indiscreetly flaunt their takings.

In China, Deng said “to be rich is glorious.” He was referring to The Market, not the State-owned industrial sector.

What do we do? Since we are legally barred from setting up a free market party, I suggest we pick up guns and join the Maoists. They are sure to be lesser villains than the Congress. Manas Chakravarty has a nice column today on how he almost joined the Naxals while in college. Yes, they have all the pretty, idealistic girls on their side. They love smoking joints, and there is great mahua in the jungles. So I am cleaning my father’s old gun today and thinking of Orwell volunteering to fight in Catalonia.

Revolt!

No Bells Ring For Obama

On Obama’s Nobel peace prize, the ToI headline was quite apt:

“Lifetime award for debutante Obama.”

True. The man has only been a few months in office.

But the truth is even stranger: It seems the last date for filing nominations for the peace prize was February 1. This means Obama got the prize for the work he did in his first 12 days of office! (Thanks to Karen De Coster on LRC.)

Who nominated him?

Whom did he beat to win the award?

Again, thanks to an LRC provided link, we have the answers to the latter question. Obama beat:

Sima Samar, women’s rights activist in Afghanistan: “With dogged persistence and at great personal risk, she kept her schools and clinics open in Afghanistan even during the most repressive days of the Taliban regime, whose laws prohibited the education of girls past the age of eight. When the Taliban fell, Samar returned to Kabul and accepted the post of Minister for Women’s Affairs.”

Ingrid Betancourt: French-Colombian ex-hostage held for six years.

Dr. Denis Mukwege: Doctor, founder and head of Panzi Hospital in Bukavu, Democratic Republic of Congo. He has dedicated his life to helping Congolese women and girls who are victims of gang rape and brutal sexual violence.

Handicap International and Cluster Munition Coalition: “These organizations are recognized for their consistently serious efforts to clean up cluster bombs, also known as land mines. Innocent civilians are regularly killed worldwide because the unseen bombs explode when stepped upon.”

Hu Jia, a human rights activist and an outspoken critic of the Chinese government, who was sentenced last year to a three-and-a-half-year prison term for ‘inciting subversion of state power.’

Wei Jingsheng, who spent 17 years in Chinese prisons for urging reforms of China’s communist system. He now lives in the United States.

Of course, the peace prize has gone to many American warmongers before, from Theodore Roosevelt (1906) and Woodrow Wilson (1919) to Henry Kissinger (1973). One wag calls this prize “The Arms Dealers’ Cup.”

Pretty ugly, huh?

And Alfred Nobel invented dynamite. His biggest customers were armies.

Personally, I don’t follow the peace prize much, though the prize for Economics has become a disgrace. Last year it went to Paul Krugman in a blatant political move to shore up the Fed and its “stimulus.” Of course, this didn’t work.

But Obama is a very keen stimulus providing president. So perhaps the best idea is that expressed by Stephen Kinsella – give Obama the Nobel prize in Economics too. This way, we kill the credibility of both prizes.

... But There Is Hope

The situation is getting worse on the law and order front, with our Kabul embassy suicide bombed and 17 cops shot dead by Naxalites in Maharashtra. The ToI has an alarmist headline: “India attacked.” It would have been more accurate to say “Indian State attacked.”

These are, however, dangerous times. Such crises allow The State to assume extraordinary powers, and ordinary rule of law disappears. Aristotle the Geek has a good post on this today. Also recommended is this interview with Dr. Binayak Sen on Naxalism in Chattisgarh, where he talks of “State terror.” These are all warning signals. Things are going haywire in India. We must be even more vigilant.

As if on cue, the UNDP reports that India is one of the worst places in the world to live, ranked 134 out of 182. I am sure this UNDP team never visited Jharkhand or Chattisgarh, or Manipur, which must surely be worse to live in than any place in Africa. We are fast becoming “The Darker Sub-Continent.”

It should therefore come as no surprise that not a single Indian university figures in the list of the world’s top 100 universities released today – this, while the entire focus of The Chacha State has been on “education.” What education can they deliver with the worst universities in the world?

John Rae’s Life of Adam Smith contains this remarkable passage on Oxford in those days, a rich and well-endowed university where learning had long been under a “total eclipse.” Read on, carefully:

Smith’s residence at Oxford fell in a time when learning lay there under a long and almost total eclipse. This dark time seems to have lasted most of that [18th] century. Crousaz visited Oxford about the beginning of the century and found the dons as ignorant of the new philosophy as the savages of the South Sea. Bishop Butler came there as a student twenty years afterwards, and could get nothing to satisfy his young thirst for knowledge except “frivolous lectures” and “unintelligible disputations.” A generation later he could not even have got that; for Smith tells us in the Wealth of Nations that the lecturers had then “given up all pretence of lecturing,” and a foreign traveller, who describes a public disputation he attended at Oxford in 1788 says the Praeses Respondent and three Opponents all sat consuming the statutory time in profound silence, absorbed in the novel of the hour. Gibbon, who resided there not long after Smith, tells that his tutor neither gave nor sought to give him more than one lesson, and that the conversation of the common-room, to which as a gentleman commoner he was privileged to listen, never touched any point of literature or scholarship, but “stagnated in a round of college business, Tory politics, personal anecdotes, and private scandal.” Bentham, a few years after Gibbon, has the same tale to tell; it was absolutely impossible to learn anything at Oxford, and the years he spent there were the most barren and unprofitable of his life. Smith’s own account of the English universities in the Wealth of Nations, though only published in 1776, was substantially true of Oxford during his residence there thirty years before. Every word of it is endorsed by Gibbon as the word of “a moral and political sage who had himself resided at Oxford.” Now, according to that account, nobody was then taught, or could so much as find “the proper means of being taught, the sciences which it is the business of those incorporated bodies to teach.” The lecturers had ceased lecturing; “the tutors contented themselves with teaching a few unconnected shreds and parcels ” of the old unimproved traditionary course, “and even these they commonly taught very negligently and superficially”; being paid independently of their personal industry, and being responsible only to one another, “every man consented that his neighbour might neglect his duty provided he himself were allowed to neglect his own”; and the general consequence was a culpable dislike to improvement and indifference to all new ideas, which made a rich and well-endowed university the “sanctuary in which exploded systems and obsolete prejudices find shelter and protection after they have been hunted out of every corner of the world.” Coming up from a small university in the North, which was cultivating letters with such remarkable spirit on its little oatmeal wisely dispensed, Smith concluded that the stagnation of learning which prevailed in the wealthy universities of England was due at bottom to nothing but their wealth, because it was distributed on a bad system.

The “small university in the North” was Glasgow. Scotland was then far, far behind England in everything. Whereas the Thames outside London was a “forest of ship-masts” way back in the days of the Magna Carta, barely any ships came up the Clyde when Smith was a young lad in Glasgow. It is for the development of a backward place that Smith advocated free trade and the end of all monopolies. This is seen in his subsequent strong support for free trade for Ireland in the 1770s, which was then probably the most backward and poverty-stricken province in the whole of Europe.

The story of the great “Scottish Enlightenment” centres around the University of Glasgow, in the back of beyond, a fourteen day journey from London. It is a story of people, not buildings, not equipment, not great libraries, nor huge funds. Extremely remarkable people, among whom Adam Smith was a much loved colleague. There was Black, the chemist, who discovered latent heat; there was Hutton the geologist, who discovered the first theories of the earth’s crust. But the university went further, inviting James Watt to set up his workshop there after the Hammermen’s Guild had refused him. It is here that the condenser for the steam engine was invented. The university encouraged Foulis, the printer, who went on to achieve great distinction in the quality of his books. They even set up a design school. They took an interest in agriculture, textiles – even to the extent of presenting a prize for the “best hogshead of strong ale.”

Universities require people; that is, people who “produce knowledge.” If the most backward province of Britain could enlighten the whole of Europe and America on free trade and the “system of natural liberty” – and on many more subjects besides – then we have hope. But it lies outside The Chacha State.

I leave you with that thought.