Where Did India Go Wrong?

We first went wrong with our Economics.

Instead of a free economy based on free exchanges, we opted for a “command economy”.

Instead of rulers who are supposed to get the bad guys and command the police, we got rulers who commanded the businessmen and let the police system rot.

They did not know what to command!

This wrong-headed Economics bequeathed to us a wrong-headed Political Science: instead of “liberal democracy” we got “socialist democracy”, which is no democracy at all.

(Socialist East Germany was also “democratic”.)

With both the Economics and the Political Science wrong, our Public Administration naturally went to pieces. The erstwhile “steel frame” of our Weberian-Platonic bureaucracy neglected its basic duties and became a “spending bureaucracy” hand-in-glove with corrupt socialist politicians.

Where the Economics, Political Science and Public Administration are totally wrong, what will happen to Law? Obviously it will become an instrument of coercion, with “legislation” being used as a means of issuing centralized commands.

We confused “legislation” with Law.

This is how we got all the “social sciences” wrong.

And there is no easy cure to this mess.

Public Squalour... And Collective Ignorance

New Delhi: May 31, 2008: 0730hrs
Robin Cook, the bestselling author of medical thrillers like Coma, has come out with a new book, Foreign Bodies, which takes a bleak look at India’s medical outsourcing industry – which is booming. Read the news report here.

When my mother was in hospital last year, I found a tall gent from Afghanistan, an old man from Lebanon, and a young African boy in her ward.

Indian doctors are good – and their services are cheap, as compared to the west.

My own friend, a German, came to India for dental treatment, finding it cheaper than home – with a holiday thrown in.

Some are now calling this “medical tourism”: that is, get your by-pass done in Escorts and we throw in a free visit to the Taj Mahal.

Sounds good.

But there are some worrying signs.

For example, the new hospitals are great – but just look at the mess outside. We might attract other Third World types to our medical facilities, but a wealthy westerner will be loath to get medical treatment in horribly dirty cities such as ours.

And this begs the question: Where did we go wrong?

After all, we have been producing good doctors for over 200 years now. My great-grandfather was a doctor.

We have also been producing engineers for long.

But the sorry fact is that we have failed precisely in the area of “social science”: we got our Economics and Political Science all wrong.

Hence the mess.

And there is no way out of this mess because the government controls education in the social sciences. Their propaganda is force-fed to every child in school.

The crucial point I am trying to drive home is this: we Indians have succeeded in science, medicine, engineering, software and other fields related to the physical sciences.

What has let us down is our ignorance of the basic principles of a free and prosperous society.

And this is why the roads outside our swanking new hospitals are broken and rutted, and garbage is strewn everywhere.

Private affluence; public squalour.

Cities Built On Rock-n-Roll

I often talk about building brand new cities in India, given the fact that all the existing ones have been destroyed.

So, here's a great song and music video to boost morale:

Jefferson Starship's "We Built This City On Rock-n-Roll".

Enjoy!

Gas Must Be Privatised

New Delhi: May 30, 2008: 0700hrs
Cooking gas prices are set to rise by up to 50 rupees a cylinder. The government, which is a monopolist in this area, claims that its subsidy bill is too large. This is the news today.

Yet, I wonder...

Cooking gas in India is never piped – as it is anywhere else in the world. Thus, the biggest "cost" must be transportation – nothing else.

Travel on any “notional highway” in India and you will invariably come across massive gas tankers ferrying LPG.

Travel in any city or town and you will find trucks, tempos and even cycles ferrying gas cylinders about.

If gas was piped, these transport costs could be saved – and the consumer would gain.

But that requires competition – for which there must be privatization.

Only a private entity taking a long-term view would invest in pipes to carry gas.

A government monopoly would never do that because of the “short-sightedness effect” that politicians suffer from. Because they are elected for short terms, politicians invariably invest public money where there are immediate gains – but heavy long-term costs. They never put the money where there are big costs now, but huge gains long-term. This is why they invest in flyovers but not in modern ring roads that are grade-separated.

Ever since the days of “Gaslight” in London, which used coal gas, private entrepreneurs have found it preferable to pipe gas to their customers.

There is no part of the world that I have visited where cooking gas is transported in cylinders to the final customer.

Therefore, when Manmohan pyarey talks about “lowering the subsidy” on cooking gas, shout for privatization. There is no real subsidy here. Instead, there are political clients engaged in transportation deals.

On Jean Dreze... And Me

New Delhi: May 29, 2008: 0730hrs
In an earlier post, we had commented on the “death of an activist’, referring to the “rural employment activist” who got murdered in Jharkhand.

We also spoke of Professor Emeritus of sociology, Jean Dreze, who was a friend, philosopher and guide to this activist, and who is an activist himself.

Now, there is a report of Dreze leading a procession in the area where the activist was conducting a “social audit” of NREGA projects. There is a photo alongside the report. The banner in Hindi reads “Shaheed Lalit”. The word shaheed means “martyr”. Thus, a bright young man has been “martyred” to Dreze’s cause of rural employment generation and the social audit thereof.

Is this “moral” activism?

I too spent some years in “grassroots activism”. I lectured street hawkers and vendors on why they should ask the government for nothing except the Liberty to carry on their businesses.

No cheap credit – for they were already getting credit easily from informal money-lenders.

No doles.

Nothing except Liberty.

Huftha Bandh!

I gave my stamp of approval to ganja dealers and “dance bars” – that they too need Liberty.

Huftha Bandh!

My activism, and that of my handful of volunteers, consisted in explaining to ordinary people why they should ask for nothing from the State – except freedom: the highest political value.

Jean Dreze’s “activism” consists of rounding up poor people to collect the dole.

My activism was in a city; Dreze’s is in remote villages.

Yet, which is really “activism”?

If people want a dole, and if the government gives it to them, there should be no need for activism. What is the need to round up poor people to collect money from the State? How is this “moral” – since the money has come from taxpayers? What is a “social audit”?

My activism consisted in telling small businessmen, some of whose businesses were illegal because of repressive legislation, to liberate themselves and get rich.

This is preaching “self-help”. Nothing immoral about it. Nothing to take from anyone else. No claims on the State. Nothing except khulla dhanda.

Of course, the government is happy with Dreze’s “activism” because it poses no threat to the State.

The government hated my kind of activism – and I was repeatedly attacked by the cops, and their hired goons.

There is a moral lesson in this.

And I hope you got it.

Abolish The Customs Department

New Delhi: May 28, 2008: 1700hrs
The other day I delivered a talk to young people on the liberal theory of society during which I mentioned in passing that I would like to abolish the customs department.

Everyone laughed in disbelief.

The disbelief was founded on some false notions of the societal utility of this department.

Actually, it is nothing more than a great ugly octroi (chungi in Hindi) inflicted on us all.

I have only read of one other economist who would have happily abolished the customs department – and that is Frederic Bastiat.

Here he is, from “A Chinese Tale”.

"There is nothing that does not pretend to serve the well-being and the edification of the people—nothing, not even the customhouse. You think, perhaps, that it is just another instrument of taxation, like the license bureau or the tollhouse at the end of the bridge? Nothing of the kind. It is essentially an institution for the advancement of civilization, fraternity, and equality. What do you expect? To be in fashion today, one must show, or pretend to show, feeling, sentimental sensibility, everywhere, even at the customhouse window where they ask, “What do you have there, friend?”

But for realizing these humanitarian aspirations, the customhouse has, it must be confessed, some rather strange procedures. It musters an army of directors, assistant directors, inspectors, deputy inspectors, superintendents, auditors, collectors, department heads, assistant department heads, clerks, supernumeraries, candidates for the jobs of supernumeraries, and candidates for the candidacy, to say nothing of those on active service—all with the object of exercising over the productive activities of the people the negative action that can be summed up in the word “bar”.

Notice that I do not say tax, but quite genuinely bar.

And to bar, not acts repugnant to morality or dangerous to public order, but transactions that are innocent and, as is admitted, conducive to peace and harmony among nations."

Read the full text here. (You will have to scroll down to chapter 7.)

So let us abolish this huge big ugly barrier to trade.

There is much to gain – especially the end of protectionism.

Na rahega baans, na bajegi baansuri!

Bungalows For All... And More

New Delhi: May 28, 2008: 0730hrs
I am planning to make a documentary for television on the fact – fact! – that the urban overcrowding we in India suffer from is caused neither by excess population nor a shortage of land.

The only real shortage is of roads.

Next time you fly, take a window seat and keep looking down at the fantastic amount of land available for human settlement – and this is true of every overcrowded Indian city or town.

If there were proper roads into the surrounds, if the market for land was free, even the middle class would live in bungalows with garages for their cars, quarters for their servants, and even a large garden.

Poorer people would live in flats and apartments.

Further, there would be an increased supply not only of urban land and residential property, there would also follow an abundance of commercial property like shops – and this would benefit all trades.

Poor villagers would also benefit from good roads: the value of their lands would rise, there would be real estate instead of all this “unreal estate” – and good transport connections to city markets are good for the poor, period.

The liberal vision of a prosperous India rests squarely on private several property, unilateral free trade, complete economic freedom – and roads.

This means every shop is a duty-free shop – no customs.

This means everyone has a car – the poor buying imported second-hand ones.

This means all dhandas are khulla – and it is noteworthy that the word dhanda has its root in ‘dhan’, which means wealth.

It also means bungalows for all – an excellent “habitat” in a vast country of continental proportions.

Complete and total privatization can fund an excellent public roads and highways system – and this will mean that the public treasure is well invested in “collective property” that all Indians can use and profit from. Even visiting foreigners can use them for free – a boost for tourism, the biggest industry in the world. Public investments in roads are investments in true “common profit”.

Note that I have said nothing about “education”.

So how about some sloganeering by our own cheerleaders:

Duty-free shops for all!
Cars for all!
Bungalows for all!

And a roads network better than the German autobahns.

Under these favourable conditions, all Indians will live well, producing more and more wealth for themselves.

We must first contemplate such a future.

And if it seems realizable and doable, we must go for it.