Interesting reading

"The right to food law has been sold as a grand gesture in humanitarianism, in a country that generally prefers emotional tugs to factual thinking."

"The prospects of Parliament legislating a comprehensive law to regulate parties are dim. In the absence of any regulation, the CIC verdict subjecting parties to RTI must be welcomed. More citizen scrutiny of parties and their inner working is surely a good thing"

That is why we need to think about where we walk.

"But I never minded it because I have always believed that a genius has to be different from average persons like me and an ignited mind like B Raman has a right to wear an attitude."

Its time to get out!

Minister for Civil aviation says, very rightly so:

• "Not just the civil aviation sector, the entire service sector is a burden on the government. There are too many constraints and the attitude of government employees is depleting the sector. The catchword is customers should be king, but in this sector, government servants are king. You cannot sack anybody and it's difficult to discipline the staff."
• "We have planned to appoint an ombudsman to address grievances. But I can't say when it will happen. In the government, never ask when,"

Caste and Capitalism

"Ambedkar clearly saw the potential of capitalism in breaking traditional caste and occupational shackles. This did not happen in his time. It has finally happened after the economic reforms of 1991."

Read 1994 book on "Caste and Capitalism in Colonial India"

"Capitalism versus caste: A new order based on the market can sweep away centuries of caste discrimination"

Factious Polity over Prosperity

Here is a brief piece which I wrote in 2012 when the debate on FDI in retail was headline.  The Prime Minister Manmohan Singh said the below para in his lecture at Raman Research Institute, Bangalore. At that time he was not holding any official post in the government.

• “...those who wish to persist with the old policy framework of India must realise the tremendous social and economic cost they are asking the people of India to pay for their preferences…To argue for greater openness is not to argue that globalisation processes, involving liberalization of trade and capital flows, do not pose risks. Competition can certainly hurt those who are not prepared for it. But a country like India, with its vast human and material resources, and with the ambition of becoming a major global economic player, cannot take such a defeatist view. We ought not to underestimate the capabilities of an India that can produce computer programmers for the Silicon Valley. We must have a coherent strategy to come to term with globalisation, a process we cannot stop even if we do not like it”.

Of that Twelfth June

Shruti has great piece in the today's Livemint newspaper on Indira Gandhi and her polity of drama in Indian democracy. Shruti concludes with the following para:

• "Remembering this verdict, Sushma Swaraj and Arun Jaitley should pause to reconsider their role as the incumbent leaders of opposition in Parliament. In the spate of corruption scandals that have been exposed in the last three years, they have not been successful in making the Prime Minister testify before a joint parliamentary committee, let alone in a court of law. It is particularly disappointing as both started their political careers opposing the emergency with Jayaprakash Narayan as their inspiration."

Capitalism, Caste and Society (CCS)

Here is a very interesting interview with two powerful, yet persuasive minds working on mission to do something concretely with the idea of Capitalism, Caste and Society. And thus they say "'Capitalism is changing caste much faster than any human being. Dalits should look at capitalism as a crusader against caste". A bit from the interview:

"What has happened during the past 50 or 60 years is that the state's welfare measures or methods or reservations got slightly misunderstood and also slightly misused by the "victims".

...10 per cent of MSMEs registered with the Government of India are Dalit-owned, which is about 1,64,000 across the country. 

...the silencer in the Tata Nano is produced by a Dalit entrepreneur.

Affirmative action has given Dalits a launch pad. A launch pad is a launch pad. You need that to take off. Ambedkar gave you the launch pad. Now don't run on the launch pad, take off.

Because of economic reforms, globalisation, you can't produce everything under one roof. You will have to outsource work. Most of the Dalit entrepreneurs of today are beneficiaries of outsourcing.

Along with globalisation came Adam Smith to challenge Manu. So that's why for the first time, money has become bigger than caste.

there is an economic process, that capitalism is changing caste much faster than any human being. Therefore, in capitalism versus caste, there is a battle going on and Dalits should look at capitalism as a crusader against caste.

what man failed to do, capitalism is doing. Let us go with capitalism that is changing caste faster than your reforms

People who are working on poverty have a better life than people like us, because if you work on poverty, then you fly. You work on poverty, you live in five-star hotels. If you work on poverty, you are in touch with big foreign funding agencies. So, talking poverty makes you strong, makes you rich.

The inspiration behind DICCI is the economic thought of Dr Babasaheb Ambedkar. The second is the black capitalism in America."

Aspirations of emerging giants

That is the title of my latest column in the Pragati magazine out today. The special thing about the article are the below paras:

• The difference in fundamental comparisons between India and China are best encapsulated in the prophetic words of Wuttke, who said “Chinese educate for practical life, the Indians for the ideal; those for earth, these for heaven; those educate their sons for entering the world, these for going out of it; those educate for citizenship, these for priesthood; those for industrial activity, these for knowledge; those teach their sons the laws of the state, these teach them the essence of the Godhead; those lead their sons into the world, these lead them out of the world into themselves; those teach their children to earn and enjoy, these to beg and to renunciate.” Whether one agrees or not, it is difficult to better these words, which capture the difference between India and China in its ethos and antiquity. The economic, social and political developments in these two countries have to be seen through the words of Wuttke.
• On the similarities between the two nations, Chie Nakane, a Japanese anthropologist wrote in 1998 that “…their respective great civilizations were formed along the two great rivers: the Indus and Ganges in India, the Huang-he and the Yangtze River in China, all of which originated in the Tibetan Plateau. The modern capitals of both countries, Delhi and Beijing, are situated in the north. In the south-east are situated two large cities, Calcutta and Shanghai, each at the mouth of the great rivers of the Ganges and Yangtze, backed by the fertile and productive areas of Bengal and Jiangsu. Both cities received the first impact from the West, its citizens were earliest exposed to Western culture and the two cities become the centres of modern rich cultures. Similarly, the southern regions of both countries have a high population density: Tamil Nadu and Kerala in India, and Kwangtung and Fukien in China. Further, both countries possess rich granary regions in the inland area of the Punjab and Sichwan. It is interesting that the names of these two regions connote rivers- the Five revers and Four rivers. Both societies possess a certain similarity, being composed of wheat-producing areas in the north and wet paddy cultivation in the south…”

Nehruvian condescension

Good friend Harsh has great article in today's Livemint newspaper. A bit from the piece:

• "It is a construct that manufactures distrust in society and encourages Indians to be suspicious of each other because the state emphasizes our differences, rather than our common heritage, while making us compete for goods and services for which an artificial shortage is created by faulty economic policies. "

 

Interesting reading

Bibek on "Borrowing from George Orwell's evocative descriptions in 1984, there are the Proles (Indian poor) and NAC represents the "Inner Party" - this is crony socialism at its worst"

Rajan asks "Can countries without a reliable and effective legislature or legal system do better to protect against downturns?"

Food Security in America

Truth must be told- "Then prime minister P.V. Narasimha Rao, who already had a blueprint for reforms (inherited from the outgoing regime led by Chandra Shekhar), first turned to I.G. Patel, who declined the job on account of failing health. Patel recommended Singh. The rest is history. The dramatic turnaround of the economy, together with Singh’s understated demeanour, made him the darling of the middle class and the Congress party."

Modi, anti-incumbency benefit BJP, but will it last until 2014 polls?

Economic history of India

Gurumurthy has great article in today's BL.  Its a must read. A bit from the article:

• India could never have been an agrarian economy then as it is now, given India’s share in world manufacturing at 24.5 per cent in 1750 and with industrial employment then estimated at between 21 and 28 per cent. It was the collapse of Indian industry during the colonial period that drove people back to the farms. This kind of widespread and widely shared economic activity would not have been confined to the minuscule Bania community.
• There is need to recall, re-author, and review Indian economic history, which is even now a prisoner of the Marx-Weber perspectives.

Rural Gandhi vs Urban Ambedkar

From Niranjan Rajadhyaksha's article in today's Livemint:

• Indian public policy suffers from a well-known Gandhian bias, with a pious belief in rural development even though development patterns the world over show that countries have emerged out of poverty through urbanization. B.R. Ambedkar, who had a very direct experience of social oppression, had little patience with the glorification of village life: “The love of the intellectual Indian for the village community is of course infinite, if not pathetic… What is a village but a sink of localism, a den of ignorance, narrow mindedness and communalism?”
• But what is less well known is that Ambedkar was a trained economist who argued in one of his earliest papers, written in 1918, that India needed to help people migrate from agriculture to industry: “A large agricultural population with the lowest proportion of land in actual cultivation means that a large part of the agricultural population is superfluous and idle…this labour when productively employed will cease to live by predation as it does today, and will not only earn its keep but will give us surplus; and more surplus means more capital. In short, strange as it may seem, industrialization of India is the soundest remedy for the agricultural problems of India”.
• There has been a robust debate in India on the relative merits of the Gandhian versus Ambedkarite visions on the direction the country should take in the future. The varying demographic trends in modern India—especially the rapid decline in rural population growth in some states—could create disagreements in the political system that in some ways echo the old debates on a rural versus urban future.

Ambedkar's free market ideas in Tamil

Here is my Tamil article on B R Ambedkar's free market economics. This article may be the first one to talk about Ambedkar's free market ideas in Tamil magazine. The English version appeared in various publications. See here 1, 2 and 3.

Nerhu vs Rajaji & Masani

Seetha has a great article in today's ToI. She asks "What if India had followed Masani's and Rajaji's vision rather than Nehru's?" A bit from it:

• "There will be no public functions to mark the 15th death anniversary of Minoo Masani, co-founder of the erstwhile Swatantra Party, even though since 1991 the country has been travelling the road he tirelessly championed for 40 years along with another political stalwart, C Rajagopalachari or Rajaji - that of a liberal, market-oriented economy. But Masani, too, would shudder to have his name linked with all that is happening today, in the name of the model he advocated."

Some interesting links

"After a day’s work on the farm or in the factory, ambitious young villagers might spend a night in the virtual stacks—becoming 21st century Abe Lincolns or Bhimrao Ambedkars."

 Arvind Panagariya, who let fly in a subsequent interview. "I often say in jest that serious economists are handicapped in policy debates in India because their opponents feel entitled not only to their arguments but their own facts as well! And here I was facing the same from Sen!

"I think it's a stupid argument of not selling the stock wheat at a discounted price. You have already bought the stuff, if you don't sell it, you will have to pay for stocking it and that stocking cost itself is Rs 3-5 per kg so if you don't pay the Rs 3-5 kg discount you are a stupid chap."

Amartya Sen on Hayek's The Road To Serfdom

For record, I reproduce the full review article by Professor Amartya Sen on Professor F A Hayek's one of the greatest book The Road To Serfdom. This article was first published in The Financial Times on September 20, 2004.

"An insight into the purpose of prosperity" By Amartya Sen

Friedrich Hayek's combative monograph The Road to Serfdom had a profound impact on political, economic and social thinking in the decades that followed its publication 60 years ago, serving as an intellectual manifesto against socialist planning and state intervention. But are Hayek's ideas and arguments of any interest today, after the downfall of communism and the emergence of neo-liberalism as the dominant ideology of contemporary capitalism? I would argue that they remain extremely important.

Consider Hayek's insistence that any institution, including the market, be judged by the extent to which it promotes human liberty and freedom. This is different from the more common praise of the market as a promoter of economic prosperity. A huge part of economic theory is concerned with the prosperity argument, going back to Adam Smith and David Ricardo. That connection is indeed important, and it is not surprising that so much attention has been devoted to seeing the market mechanism from this perspective - defending its achievements as well as disputing particular claims and proposing qualified endorsements. Yet Hayek was surely right to insist on clarity regarding the purpose of seeking prosperity. Markets have to be judged, he argued, by their role in advancing freedoms, not just in generating more income (as Hayek once said: making money can be of interest only to the miser). This integrative perspective demands that we be concerned both with the outcome of market processes (including the economic prosperity it may generate and the extent to which that would advance human freedom) and with the processes through which these results are brought about (including the liberty of action that people have in an institutional system).

It is the perspective of seeing markets and other institutions in terms of their role in advancing freedoms and liberties of individuals that Hayek brought into singular prominence. It may be pointed out, in contrast, that despite the title of Milton Friedman's famous book (with Rose Friedman), Free to Choose, the criteria by which Friedman tends to defend the market mechanism are not liberty and freedom, but prosperity and utility ("being free to choose" is seen as a good means - a fine instrument - rather than being valuable in itself). Even though a few other economists, James Buchanan in particular (and, to some extent, John Hicks), have presented insightful ideas on a freedom-centred line of reasoning, it is to Hayek we have to turn for the classic articulation of this way of seeing the merits of the market mechanism and what it gives to society.

I am not persuaded that Hayek got the substantive connections entirely right. He was too captivated by the enabling effects of the market system on human freedoms and tended to downplay - though he never fully ignored - the lack of freedom for some that may result from a complete reliance on the market system, with its exclusions and imperfections, and the social effects of big disparities in the ownership of assets. But it would be hard to deny Hayek's immense contribution to our understanding of the importance of judging institutions by the criterion of freedom.

A second contribution of Hayek is of particular relevance to thinkers on the right of the political spectrum. In The Road to Serfdom, he gave powerful reason to indicate why explicit provision has to be made by the state and the society for the deprived and the dispossessed. While Hayek is often taken to be uncompromisingly hostile to any economic role of the state (other than what is needed to support the market mechanism), and certainly late in his life he gave grounds for thinking that this could indeed be his view, nevertheless in The Road to Serfdom Hayek's position is much broader and inclusive than that. Now that the welfare state is often under such attack, it is worth recollecting that the pioneering manifesto that championed the market mechanism on grounds of freedom did not reject the need for a welfare state and provided a reasoned defence of it as an institutional necessity.

A third contribution of Hayek is of particular interest to those on the left of the political spectrum. Hayek's critique of state planning is mainly based on a subtle psychological argument. He was particularly concerned with the way centralised state planning and the huge asymmetry of power that tends to accompany it may generate a psychology of indifference to individual liberty. As Hayek put it: "I have never accused the socialist parties of deliberately aiming at a totalitarian regime or even suspected that the leaders of the old socialist movements might ever show such inclination." One of Hayek's central points was that "socialism can be put into practice only by methods of which most socialists disapprove".

We can hardly ignore the massive accumulation of evidence - before and after publication of The Road to Serfdom - of tyrannical use of bureaucratic power and privilege, and the political and economic corruption that tends to go with it. Hayek's central point here was to note that even though socialism has a strongly ethical quality, that is not in itself adequate to guarantee that the results of trying to implement it will be in line with its ethics, rather than being deflected and debased by the psychology of power and the influence of administrative arbitrariness.

Hayek was insightful in drawing attention to a basic vulnerability that goes with unrestrained administrative authority, and in explaining why social psychology and institutional incentives are extraordinarily important. To take the massive evidence in socialist practice of departures from expected behaviour to be no more than easily avoided individual aberrations would be comparable to blaming the "few bad apples" to whom the leaders of the coalition forces point in Iraq when they refuse to consider the systematic corruptibility underlying the torture and brutality of an unrestrained system of imprisonment. Incidentally, Hayek's psychological insights into administration also tell us something about the genesis of those terrible contemporary events.

Our debt to Hayek is very substantial. He helped to establish a freedom-based approach of evaluation through which economic systems can be judged (no matter what substantive judgments we arrive at). He pointed to the importance of identifying those services that the state can perform well and has a social duty to undertake. Finally, he showed why administrative psychology and propensities to corruptibility have to be considered in determining how states can, or cannot, work and how the world can, or cannot, be run.

As someone whose economics (as well as politics) is very different from Hayek's, I would like to use the 60th anniversary of The Road to Serfdom to say how greatly indebted we are to his writings in general and to this book in particular. Dialectics is critically important for the pursuit of understanding, and Hayek made outstanding contributions to the dialectics of contemporary economics.

The writer, Lamont university professor at Harvard University, was awarded the Nobel prize for economics in 1998.