Wednesday, November 19, 2008

India lost over four decades experimenting with a system that has lost all credibility

Sharad Joshi has important article in the Business Line and it may be noted the following paragraphs which is dead crucial to understand the notion of freed enterprises or the market.  

“Markets are live organisms and not mechanical contraptions. They work like birds. The birds have to move their wings up and down in order to gain height. Even the strongest of the birds has to come down and take rest on a branch from time to time. That does not make the birds inferior to insects and reptiles.

 ….expressing their doubts whether Nehruvian socialism was not a better option than Dr Manmohan Singh’s liberalisation and globalisation. It’s funny how so many economists who spent a lifetime building socialist theories and institutions switched over to economic reforms soon after 1991. 

Politicians, as a species, view retrenchment as a certain vote-snatcher. At the very first signs of economic recession and retrenchment, politicians and economists appear flabbergasted enough to beat a hasty retreat towards the illusion of a safer and more comfortable welfare/socialist regime. These neo-socialists appear to lose sight of the fact that India faced large-scale secular unemployment during the epoch of socialism. 

The governments of the era concealed the massive unemployment by giving figures of employment created in the public sector rather than publishing the figures of those who remained unemployed. 

Let no one forget that the socialist welfare state spelt secular stagnation for all the years since Independence. A market-oriented system might have its ups and downs. That is inevitable in any free moving body — economic, social or aerodynamic.

It would be most unfortunate if the economists tried to frighten the people back to the days of the license-permit-quota-inspector raj, where no one was allowed to do anything; but nothing was disallowed to those with the necessary political pull. 

All living organisms have their ups and downs. A mother would not exchange her baby for a doll simply because the doll does not fall ill”.

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