Tuesday, July 27, 2010

The tragedy of socialism drama

Sitaram Yechury writes in HT:

  • This trajectory resulted in the assets of the top 22 monopoly houses shooting up from Rs 312.63 crore in 1957 to Rs 1,58,004.72 crore in 1997, a 500-fold increase. Private capital, thus enabled, mounted pressure for the privatisation of the public sector in order to further enlarge their profits. The subsequent years of neo-liberal reforms have today produced 52 USD billionaires whose combined assets equal a fourth of our country’s GDP. On the other hand, 77 per cent of our people are living on less than Rs 20 a day.

  • This is accompanied by an unbridled loot of public resources and the country’s mineral wealth under what can be described as ‘crony capitalism’ at its worst. The telecom scam, the Indian Premier League scam and the illegal mining scam appear to rule the roost. Further, this is also distorting our parliamentary democracy where money power is influencing the voting pattern of the people.

Your own friend, your own foe

K Vijayaraghavan writes:

  • This verse notes that one should uplift one’s self by the power that he has within, not ever becoming depressed or cynical or ever giving excuses, because ultimately one is his own enemy or his own friend.
  • This verse points out that one who has won over his self through his own efforts would become his own ally in progress, while one who has not done so will become his own foe, himself inviting obstacles and problems.
  • This verse points out that one who has won over his self through his own efforts would become his own ally in progress, while one who has not done so will become his own foe, himself inviting obstacles and problems.
  • Learning thus from and being the better for past mistakes, he would find in his own refined and empowered self within, that true friend, philosopher and guide. Indeed, it was, therefore, not vainly said that you can be your own friend or also choose to be your own foe!
  • This choice purely is yours because options and opportunities are aplenty for the one who acts well and in good time!

Day after day

Samuel Taylor wrote in his The Rime of the Ancient Mariner:

Day after day, day after day

We struck, not breath, not motion,

As idle as a painted ship

Upon a painted ocean.

Sunday, July 25, 2010

Swatantra Party and Jaswant Singh

Mr Jaswant Singh said in a interview with IE.

COOMI Kapoor: You are one of two senior leaders of the BJP who is not from a Sangh background. How did you get into the party?

The first party I joined was Janata Party. Bhairon Singh Shekhawat was then the leader of the Jan Sangh. He asked me to join the Jan Sangh but I had difficulties doing that. Then, Rajmata Gayatri Devi of Jaipur asked me to join the Swatantra Party. I knew Minoo Masani and Rajaji were in the party. I had to tell Rajmata Gayatri Devi that I couldn’t join the Swatantra Party. She was quite irate and asked me why not. I told her there were too many princesses in it! Post 1975, I joined the Janata Party and when the Janata disintegrated, I went to the BJP. That was the long and short of it.

Manoj C G: What will be the topic of your next book?

It’s a book on Rajagopalachari. I think Rajaji is a rather neglected figure of Indian politics. He is an extremely wise man, quite a remarkable figure, he had great foresight and his political life is really a commentary on those times.

Saturday, July 24, 2010

Failed outsource

Home Minister P.Chidambaram said in an interview:

  • They are well-trained, reasonably well-trained even in jungle warfare, but they are fighting in a terrain unfamiliar to them, whose culture, habits they have no knowledge of and they speak a language that is completely unfamiliar to the local people and their language is unfamiliar to them.

Friday, July 23, 2010

Distance dream of free trade with our lost neighbour

There is no doubt that it is much easier for a communist-party controlled government like China’s to sign FTAs than it is for a democratic government like India’s. The Indian government, almost by definition, has to be more sensitive to public opinion and negotiate its way carefully taking into account special domestic interests, that may be opposed to FTAs. The reason why India took a longer time to conclude its FTA with ASEAN was because of the Indian farm sector’s protest over products such as fish, rubber and palm oil. India may never be able to catch up with China but it can at least start moving in the direction of significantly improving its ties with its neighbours.

Skills and income inequality

Michael Walton has nice piece on how inequality is reduced in Brazil:

  • A recent book from the UNDP helps us see why. The inequality decline matters: it looks like a turning point, even though there is a long way to go. And it has already made a large difference to poverty reduction. The Brazil study estimates that two-thirds of a substantial poverty decline between 2001 and 2007 was due to falling inequality. Growth would have had to be four percentage points higher if inequality had not changed. That kind of contribution to reducing poverty would be of great significance in India.
  • What was going on? The two largest influences in Brazil, and elsewhere, were direct transfers and reductions in labour earnings differentials. Government transfers to households accounted for about half the Brazilian inequality decline, mostly due to old-age pensions and a cash transfer to the poor (Bolsa Família, which is conditional on children going to school, health check ups and an assets-based means test—like India’s Below Poverty Line measure). The Bolsa Família was substantially expanded under the Left-leaning (but largely pro-market) administration of President Lula da Silva.
  • The other half of the decline mainly came from reduced wage differentials, especially linked to skills, and also to inter-regional and inter-industry wage differences. The fall in skill differentials represents a reversal of earlier increases. When Latin America opened up in the 1980s and 1990s, most countries experienced rises in relative wages, especially of college-educated individuals, as the economic restructuring increased the demand for skills. Only in the 2000s are the benefits of early expansions in education being reaped, a product in many countries of the return to democracy in the 1980s.

The Hayek Interviews

Collection of F A Hayek's Interviews

Tuesday, July 20, 2010

Nation-State or Stateless Nations

Peter F. Drucker wrote in 1997:

  • Since talk of the globalization of the world's economy began some 35 years ago, the demise of the nation-state has been widely predicted. Actually, the best and the brightest have been predicting the nation-state's demise for 200 years, beginning with Immanuel Kant in his 1795 essay "Perpetual Peace," through Karl Marx in "Withering Away of the State," to Bertrand Russell's speeches in the 1950s and 1960s.

Monday, July 19, 2010

Dig that court, not that Supreme

If the Supreme Courte of India lies, what you do?

Certainly you should not hang yourself in the nearest lamp post like it continuously doing with the word “socialism” in the name of “nothingness”.

Bibek Debroy has a nice piece exploring the “nothingness of socialism”:

  • But for the Preamble, we wouldn’t have had Section 29-A of Representation of the People Act, 1951, inserted in 1989, specifically Clause (5), requiring the political party to abide by “principles of socialism”. This would have been understandable in 1976. In 1989, the year in which the Berlin Wall collapsed (effectively, so did the Soviet system), this socialism bit in Clause (5) probably got inserted without a great deal of thought, because of the other elements of Section 29-A. Hence, a political party has to be “socialist” for it to be registered.

  • The NGO Good Governance Foundation rightly challenged this — that is, challenged both amended Preamble and Section 29-A(5). In 2008, the Supreme Court ducked. It allowed the challenge to Section 29-A(5), but not the Preamble. Now, on the challenge to Section 29-A(5), the Supreme Court has ducked again, calling the issue “academic and hypothetical”. Why is it academic and hypothetical? Because no registered political party has refused to swear allegiance to socialism? And because the Election Commission (EC) hasn’t so far refused registration to a proposed political party on grounds of non-adherence to socialism. Let that situation crop up, and then we (the Supreme Court) shall see.

Sunday, July 18, 2010

Mr.Annadurai, former CM of Tamil Nadu on Human action

"That Capitalizm is the apotheosis of civilisation is the do*** of some. They argue that since Capitalist gives employment to the labourer, he helps society substantially. So a capitalist is not a human parasite but a benefactor and capitalism should not be concerned but ought to be welcomed. Any elementary book on economic will tell us that Land, labour, Capital and Organization are the four agents of production. It is true to say that Capital is as necessaryn for production, as labour is. But the problem is, which of these deserves more consideration. A labourer works hard but the direction comes from the Capitalist. Whether the concern gets profit or not, a labourer gets his annas and never cares for either the prosperity of the Capitalist or the comfort of the consumer. whereas, the Capitalist spends sleepless aights in devising plans, and determining the nature and quantity of the demand that is likely to arise. Failure means to him not only a risk of parting with his capital, but also a good-bye to honour. A failure means an ‘I.P.’ and it is by no means a decent degree. So when through his efforts, the Capitalist gets profit he demands a greater share in it. Or, when the Capitalist is not capable of ‘brainwork’, he hires the services of a ‘D.Com’ and shares the profit with that organiser."

MOSCOW Mob Parade: (This is the first article written by Perarignar Anna, When he was a student of the Panchaiyappa’s College, in 1933, which was published in the College Magazine)

India’s open political system and closed economic system

Indian democracy’s weakness is that it hasn’t been effective in enforcing accountability from the state. A once-in-five-years election, he says, for example, is too blunt an instrument to enforce accountability in the delivery of public services. How exactly the political economies of the two states evolve is as likely to determine the future of India and China as are their respective integrations with the global economy.

M K Gandhi for centuries to come

Sunil Khilnani writes:

  • Above all, there is a psychological sharpness to his argument that modern civilization implants in all of us a restless dependency. It corrodes individual self-restraint and self-rule, and inundates the individual with distractions. Did he sense the Facebook and Internet addictions of the future when he wrote:

  • “(M)ind is a restless bird: the more it gets the more it wants, and still remains unsatisfied. The more we indulge our passions, the more unbridled they become. Our ancestors, therefore, set a limit to our indulgences....(They) dissuaded us from luxuries and pleasures.”

  • Gandhi was himself fascinated by modern inventions—pens, watches, the wireless radio, gardening tools—and perhaps felt his own susceptibility to gadget addiction. He saw how difficult it was, once new technologies and tools were invented, to turn away from what they seem to offer. “It is no easy task to do away with a thing that is established,” Gandhi wrote inHind Swaraj, “We, therefore, say that the non-beginning of a thing is supreme wisdom.”

Simply make volunteerism as major force

Chetan writes:

  • One suggestion is to use the massive youth student population. A radical move - such as exchange programmes between city and rural colleges - where every city student spends time in the villages, and vice versa, will help a lot. This needs to be done on a massive scale. The city students will spend time in the villages and infuse modern values there, and come back home with a better understanding of rural issues. There can be other similar ideas - incentivising MNCs to base themselves in smaller towns is another one. Sure, there will be lots of challenges but, frankly, there is no other way out. Unless we truly reform the core of our country, things will never really change.

‘Invisible hand of government’

A new theory of the ‘invisible hand of government’, somewhat akin to the invisible hand of the market, which would define how far and in what manner governments can and should go in order to build confidence of markets, so as to enable them to function on their own without disturbing their ‘integrity’, is the need of the hour. The invisible hand of the market combined with the invisible hand of the government can then go on to provide the Midas touch to economies and lives across the globe.

Liberty vs choices

T N Ninan on liberty vs choices

  • Societies usually emphasise one of two values: freedom or liberty (as in the United States, where they talk constantly of “libedy”) and equality (typically in the socialist states). The two are often posed as a choice; the more you have of one, the less you have of the other. The US was a surprisingly equal society in the late 1970s, in the wake of President Johnson’s Great Society legislation of the 1960s, but has become progressively unequal under mostly Republican presidents since. And though the Soviet Union is defunct, the independent countries which were once Soviet constituents, as well as the “transition economies” of Eastern Europe, remain among the most equal societies on Earth.

  • Those who drew up India’s Constitution in 1950 tried to ride both horses. The Constitution underlined the inviolability of basic freedoms, by enshrining fundamental rights, but also stressed equality (social and economic justice) through the Directive Principles. This has typified the choices made in public policy for 60 years. Through the socialist phase, the fundamental rights were chipped away (for example, the right to property, while the first amendment circumscribed freedom of speech). Through the reform years, it is freedom (in favour of individual volition, and a rollback of state control) that has gained the upper hand.

  • For some reason, those on the equality platform think that stressing modalities (i.e. minimising waste, corruption, etc.) is somehow anti-poor. Ditto with providing the intended beneficiaries the freedom to choose. They are also opposed to taking away subsidies enjoyed by the non-poor (as on cooking gas) to provide the fiscal elbow room to hand out more subsidies to the poor. Perhaps they think that the efficient and honest delivery of goods and services to a properly selected target population is a pipedream and, therefore, a diversionary tactic by those who speak in the name of efficiency but only want to deny the poor their due. Or, the expansion of the state is an ideological end in itself — as must be the case with the Communists. Also, talk of markets being efficient, or at least working better than bureaucrats do, is to the bleeding hearts the equivalent of waving a red rag. Despite all this, is it too much to hope that the revived National Advisory Council, dominated by well-meaning, civil-society activists, will look to see how efficiency also enhances equity?

Barack Obama and Saul Alinsky

When Barack Obama came to prominence as a presidential candidate, his Chicago background—in particular, his efforts as a "community organizer"—reignited an interest in Saul Alinsky (1909-72), the hard-charging activist whose 1971 book, "Rules for Radicals," was said to have had a formative influence on Mr. Obama's thinking. Some critics worry that Alinsky's ideas guide Mr. Obama even today, in the White House. About such matters Nicholas von Hoffman cares little. But about Alinsky himself Mr. von Hoffman cares a great deal. He knew Alinsky, worked with him for 10 years in Chicago community groups and now offers a portrait of him in "Radical."

Wednesday, July 14, 2010

The eternal treaty of Land

In a piece in WSJ Barun concludes:

India's policy makers have clearly identified a critical area for reform. Poverty in India isn't due to a lack of access to capital, but to people's inability to realize the value of their most prized asset—land—and to put that money to its optimal use. Constitutionally, land is a state subject, and therefore political leadership is needed to have the states adopt such a progressive law in the provincial legislatures. There are quite a few examples of model laws at the national level which have been orphaned by the states, as in case of agricultural reforms.

The deliberations over the coming months could determine whether this legislation will transform India or merely remain a piece of paper that scores high on intention, but fails in practice.

Also read here

Sup-prime is the ‘socialism’

There is news saying:

“SC refuses to dump 'socialism', still a must for all parties

  • “But solicitor general Gopal Subramaniam said all parties knew their duties and none had ever objected or moved the Election Commission challenging the requirement to give declaration owing allegiance to the word "socialist".

One thing is terribly clear to me. In one of the discussion where Mr Gopal Subramaniam was in chair and the way he was spoke… no I cannot say ….but still he is the true grandfather of socialism of the world ever existed in this earth!

Mr J. Venkatesan has a piece in The Hindu “Petition against term “socialist” in Constitution rejected”

  • 42nd Amendment violated the basic structure of Constitution, says Nariman

  • So far no political party has challenged this and every one has subscribed to it: Justice Kapadia

Hayek: The Back Story

That is the essay appeared in the NYT Book Review by Jennifer Schuessler.

Some excerpts:

  • “The Road to Serfdom” — a classic attack on government planning as an inevitable step toward totalitarianism, published in 1944 and kept in print since then by the University of Chicago Press — had already begun a comeback of sorts. It sold 27,000 copies in 2009, up from about 7,000 a year before the inauguration of Barack Obama. But Beck’s endorsement catapulted the book to No. 1 at Amazon.com, bringing a temporary end to at least one tyranny, that of Stieg Larsson. Since the program was broadcast on June 8, 100,000 copies have been sold.

The essay is fantastic one!

Monday, July 12, 2010

Well said

The government is about creative tensions. We criticise many things the ministries do. I don’t think there is anything wrong with ministries criticising us. The Prime Minister also chairs the Cabinet: on that basis, everything we do when we criticise other ministries could be shot down.

The notion that the government just sits there and agrees on everything is a dream. We better get used to the idea: Government is full of intense disagreements. And, it is good. These disagreements get sorted out at different levels, there is nothing wrong in that.

Media apathy

There is a news saying Commerce Minister Kamal Nath. In this same newspaper few days back it was mentioned “Road Transport and Highways Minister Kamal Nath” this simple wrong information happens in almost every policy action under The State!

Wood's Despatch of 1954

I was reading the famous Wood's Despatch of 1954 on Education and comparing with many views expressed by our great founders including M K Gandhi. My views have changed in respect of British use of English language and the native languages in India. I have read only five pages till now but there is great insights!

Export mania does not work every time

Nayan Chanda has interesting piece on jobs creation and export mania. Some excerpts:

  • I was recently in Paris for the French release of my book on globalisation and was asked repeatedly by liberal and well-meaning interviewers how Europe could stop Chinese and Indians from taking their jobs. "Isn't it unfair?" they asked, conveniently forgetting that export-driven economic growth was what the western doctor had prescribed for Asia. Structural change means they are exporting their labour in the form of assembled western goods.

  • Events surrounding the recent launch of Apple's iPad tablet computer provides a nice example of this new kind of labour export. While Apple enthusiasts in Paris mobbed stores to grab the latest gizmo, news reports from China talked of workers' unrest and a string of suicides in the military-style Foxconn factory that assembled the iPad. Long hours, sleeping in barracks within the factory with little pay, the workers who produced the technological wonder were driven to desperate action.

  • A recent New York Times analysis of what goes into producing an Apple bestseller is the economics of outsourcing. For assembling a $600 iPhone 4, the Chinese factory gets 7 per cent of the profit margin, and some 30 per cent goes to pay the suppliers of components in South Korea, Germany, France, Japan and others. Apple's profit margin is over 60 per cent. Consumers worldwide enjoy Apple products, profits go to the parent company in California and crumbs fall on the plates of the Chinese workers who toiled to assemble them. American workers are out of this supply chain. This is a structural change that may not have many fans among the growing ranks of the unemployed.

Export mania does not work every time

Nayan Chanda has interesting piece on jobs creation and export mania. Some excerpts:

  • I was recently in Paris for the French release of my book on globalisation and was asked repeatedly by liberal and well-meaning interviewers how Europe could stop Chinese and Indians from taking their jobs. "Isn't it unfair?" they asked, conveniently forgetting that export-driven economic growth was what the western doctor had prescribed for Asia. Structural change means they are exporting their labour in the form of assembled western goods.

  • Events surrounding the recent launch of Apple's iPad tablet computer provides a nice example of this new kind of labour export. While Apple enthusiasts in Paris mobbed stores to grab the latest gizmo, news reports from China talked of workers' unrest and a string of suicides in the military-style Foxconn factory that assembled the iPad. Long hours, sleeping in barracks within the factory with little pay, the workers who produced the technological wonder were driven to desperate action.

  • A recent New York Times analysis of what goes into producing an Apple bestseller is the economics of outsourcing. For assembling a $600 iPhone 4, the Chinese factory gets 7 per cent of the profit margin, and some 30 per cent goes to pay the suppliers of components in South Korea, Germany, France, Japan and others. Apple's profit margin is over 60 per cent. Consumers worldwide enjoy Apple products, profits go to the parent company in California and crumbs fall on the plates of the Chinese workers who toiled to assemble them. American workers are out of this supply chain. This is a structural change that may not have many fans among the growing ranks of the unemployed.

Is the idea of independent RBI is anathema?

Well, in my view ‘yes’ and ‘no’ given the situation of an economy is undergoing and the kind of pundit’s arguments.

Consider. One of our great monetary economists in India Dr. C. Rangarajan who upheld (in the first para below) his views expressed for so many decades. And the second para below is fair enough but who listen in the government even for this high profile words?

Coomi Kapoor: Who should call the shots on monetary policy, the Finance Minister or the RBI?

Ultimately, it is the RBI which should do it. There is always considerable amount of discussion between the RBI and the government because the government is also responsible for the decisions taken by the central bank. I do not think the RBI would announce some decision to which the government is totally opposed. It is the responsibility of every wing of the government to ensure that the inflation rate is kept low, growth is enhanced and financial stability is maintained.

Subhomoy Bhattacharjee: What is the next big challenge in reforms?

There are reforms required in almost all sectors. But one important issue that becomes urgent is improvement in governance. This is not necessarily a reform issue in the particular sense of the term, but more efficient administration, timely policy decisions, things will become more critical as we go along. The role of the government in the social sectors is expanding. We really need to get the maximum out of the money that we are spending. I think the issue of governance would become more important as we go along. Land is one resource which is limited. Therefore, there would be competing demand for land as we grow. The land policy will assume importance in balancing the interests the economy—agriculture on the one hand and infrastructure and urban development, etc, on the other.

Enough of Keynes

Friday, July 9, 2010

Letters of Spirit between Keynes vs. Hayek

Gerald P. O'driscoll Jr. has a article (Keynes vs. Hayek: The Great Debate Continues) published in the WSJ:

  • The debates raging over what policies will pull the U.S. economy out of its Great Recession replicate one that occurred during the Great Depression. Thanks to the efforts of Richard Ebeling, a professor of economics at Northwood University, we have compelling and concise documentary evidence. He has unearthed letters to the Times of London from the two sides that mirror today's debates.

  • On Oct. 17, 1932, the Times published a lengthy letter from John Maynard Keynes and five other academic economists. Keynes, et al. (Keynes for short), made the case for spending—of any kind, private or public, whether on consumption ..

For Full article you need subscription

Also red a piece by Mario Rizzo in the CM

What’s wrong with “My Own Private India”

Atanu Dey writes:

  • I don’t know why we Indians don’t get outraged by reports of massive endemic corruption by politicians. Why isn’t there huge popular protests about that? Why do people tolerate that? Why don’t Indians refuse to vote corrupt and criminal people into political office? Why does the country as a whole tolerate a despicably dishonest man as the prime minister who takes his orders from an Italian woman?

  • The reason India is poor is because the collective wisdom of the Indians elects “leaders” who are incompetent and cannot make choices that would create wealth. Immigration to developed economies is a way out for a tiny minority. They do that despite facing many hardships — including vicious attacks against them in print and in person.

I agree with him mostly. However, there is a limit to put words about one country when we generalize because everything you want to generalize is stupidity!

The logic of liberalization in school education

Ashok Malik writes:

  • In its judgement in TMA Pai Foundation vs State of Karnataka (2002), an 11-member bench of the Supreme Court made a perceptive comment: "There is no compulsion on students to attend private schools. The rush for admission is occasioned by the standards maintained in such schools and recognition of the fact that state-run schools do not provide the same standards of education. The state says it has no funds to establish institutions at the same level of excellence as private schools. But by curtailing the income of such private schools, it disables those schools from affording the best facilities because of lack of funds."
  • In 2009, after the Pay Commission award and its cascading impact, private schools sought to raise fees. In Delhi, the state government allowed private schools to charge Rs 4,500 as a one-time fee and raise regular fees by up to Rs 500 a month. When it came to permission for the annual fee hike in April 2010, however, another controversy was triggered. The only school allowed to cross the Rs 500 barrier and take its fees further was Sanskriti School, run by the Central Civil Services Society!

Thursday, July 8, 2010

Child and parents

Buffett said:

Pay for nothing but pity politics

The Economist has an analysis on politician’s salaries and its tries to find out “How much a country's leader is paid compared to GDP per person”

Further, this is what it says on one who have toped and the bottom:

"Lee Hsien Loong, the prime minister of Singapore, tops our list of selected leaders' salaries. He is paid more than 40 times the city-state’s GDP per person. At the other end of the scale, Manmohan Singh, the prime minister of India, reaffirms his reputation for saintliness by taking a modest sum from Indian taxpayers."

Tuesday, July 6, 2010

Progressive legislation is fraud

In this article Mr Sainath writes few more bits which he did cover during his talk delivered on 1st of July at IIC.

Some bit’s from his article:

  • Most dishonest of all is the “there-is-no-money” line. The country spends Rs. 10,000 crore on a new airport. There's Rs. 40,000 crore or more for the Commonwealth Games. There's Rs. 60,000 crore happily lost in the spectrum scam. There's Rs. 500,000 crore in write-offs under just three heads for the super-rich and the corporate sector in the current Union budget. But funds for the hungry are hard to come by. What would it cost to universalise the PDS? Pravin Jha and Nilachal Acharya estimate that if rice/wheat were made available to all Indians at Rs. 3 a kilo, it would add Rs.84,399 crore to the food subsidy in coming budgets. That's about one-sixth of the tax write-offs for the wealthy in this year's budget. (Other estimates place the added expenditure each year at no more than Rs. 45,000 crore).

  • A disclosure: I was a member of the BPL Expert Group. In a note annexed to that report, I argued that in four sectors — food, healthcare, education and decent work — access had to be universal. That flows from the Directive Principles of State Policy of the Constitution. The rights of our people are based on their being citizens. Not on their ability to pay. Not on their being BPL or APL (or even IPL). Rights, by definition, are universal and indivisible.

  • Will the features of the government's proposed food security bill take the Directive Principles forward? Or will it weaken them? Diluting constitutional rights and presenting the watered down mix as progressive legislation is fraud. The only PDS that will work is a universal one. It is only in those States that have the closest thing to a universal system — Kerala and Tamil Nadu — where the PDS has functioned best.

Invisible Hayek’s Gangs among Indian economists!!

This is the first time I hear about economist Yoginder K. Alagh writing on Prof F A Hayek:

In today’s IE he writes:

  • As a country we seem to live in a state of nirvana. The discipline of strategic policies and planning was quietly given up almost two decades ago, so quietly that the logic of markets was never explained. Even as he brought in a Hayekian world with a vengeance, PM Narasimha Rao talked Nehru’s socialism right up to his defeat in 1996. His successor, understandably, did not want to be the bearer of bad news either.

  • we needed to explain to our people that we will now, subject to some restrictions and regulations, follow free markets and that means that prices at home and abroad will not only be costs, but will also play a role in allocating resources.

  • When people are hurt they will be angry, but it is the dharma of an economist, who’s not entering a popularity contest, to say that some prices have to rise for all of us to be better. I don’t believe in free markets for a strategic vision is the heart of policy in a poor country, but living in western India I know that some things markets do better than economists and babus and we must use them, where they work.

Property means wealth creation

Once again we have the grand Walk The Talk Show with Peruvian economist Hernando de Soto:

Some excerpts:

Shekhar Gupta: So the classical capitalists have got their discourse wrong.

de Soto: I don’t think most of our Western friends realise how their wealth coincided with the industrial revolution, and the industrial revolution came about because there was a breakdown of the feudal system, and because essentially every guy got the property and the business right and a uniform rule of law was applicable to everybody.

Shekhar Gupta: How would this apply to, say, tribal India, where we see the rise of Maoism now?

De Soto: So, having a property title doesn’t only mean that you own something, it means that it’s that with which you raise capital. So the question you must ask yourself, which I would do if I were Indian, is: How many of the people that are in these areas where you have natural resources actually have a piece of paper that you can take to Wall Street? And if they don’t, they are in a situation of inferiority.

Monday, July 5, 2010

The Indian Hayek: Professor B R Shenoy

There is a great speech by Smt K.J. Udeshi delivered on June 4, 2007 on the occassion of the Birth Centenary Memorial Lecture of Prof. B. R. Shenoy,

some excerpts:

  • Shenoy attained international recognition but in India, he faced hostility of opposition from every corner, be it the Government, the bureaucracy or his fellow economists. It is a tribute to his foresight and courage of conviction that today his views stand vindicated, in the sense that the liberalisation policy now adopted bear the ideas which he ardently espoused. But, as Professor Parth Shah of the Centre for Civil Society, New Delhi says, “even in these heady days of liberalization men like Professor Shenoy are at the very fringe of public memory.”

  • In many ways, Prof. Shenoy was the Indian Hayek. Like Hayek, Shenoy was hounded out of the corridors where economic counsel was sought. Yet, like Hayek, Shenoy came out of his corner fighting for the causes which were dear to him. While Hayek had the good fortune to be belatedly recognized and honoured by his detractors, it is poetic justice that Hayek was awarded the Nobel Prize jointly with Gunnar Myrdal, both of whom had very divergent views. Unfortunately, Shenoy neither lived to see the turnaround in policies after 1991 nor did he get any recognition. If there was any economist of the post independence period who saw India’s Tomorrow it was Shenoy. There is a need to recognise the invaluable contributions made by Professor B.R. Shenoy.

  • The Economics Research Centre has rendered yeoman service in organising this Memorial Lecture and bringing Professor Shenoy’s writings into public discourse. His writings and his courageous profile will not fail to inspire future generations of Indian economists. As for me, it is a personal honour and privilege to have delivered the Professor B.R. Shenoy Birth Centenary Lecture.

Smt K J Udeshi was appointed as a first woman RBI Deputy Governor in 2003

If Saul Alinsky were around now, what seven pieces of advice might he offer today's progressives?

Alinsky called himself a radical to differentiate himself from liberals who were wishy-washy wusses in his book. As far as he was concerned, liberals were the people who left when the fighting got serious.

Master is yet to reach masses

The RSBY story of master card is gaining its stage at anything but virtually there is no progress in Andhra Pradesh, Bihar, J&K, Madhya Pradesh, Rajasthan,

In some states like the Gujarat where the performance is far below the expected.

Profits = Votes

There is no better occasion than this to point out the great book: The Vote Motive by Prof Gordon Tullock.

What India’s Finance Minister Mr Pranab Mukherjee said in his opening remarks at the INDIA-US CEOs Forum meeting on June 22 was very opt to the above book. One has to read on the line of control of two walls: the profit and the votes.

Mr Pranab Mukherjee said:

“I am aware that, as captains of industry, you will have a major focus on profits. I am sure you are equally aware that, as a politician, I have to keep a watch on votes. But, at the same time, all of us must have ambitions that go beyond these.

Saturday, July 3, 2010

Workers, labourers, men

The wolf at the door is not an idle threat.

Direct cash transfers make sense

Realising that existing schemes have not holistically addressed the issues that compel women to work right up to the last stage of pregnancy and resume work soon after childbirth, thus endangering both themselves and their infants, the Ministry of Women and Child Development has proposed a pilot project based on a conditional cash transfer scheme in some 95 districts across the States and Union Territories. The government intends to universalise it.

Indians faith on Government is far less than the American

Shefali Anand writes:

  • A recent study by economists at the Federal Reserve Bank of Chicago found that Indians are more focused on education and savings than Americans. (The study looked at people in the top third of India's economic class.) Among Indians who responded to a basic survey of financial literacy, 80% got the right answers, while in a comparable study in the U.S., only 60% of Americans got the answers right.

some readings

Friday, July 2, 2010

From whom it is missing?

There are also no blueprints for reviving capitalism, or for replacing it. No big debates, no big ideas. There is an intellectual vacuum. All that one is looking forward to is for some small solutions to small problems, and hoping that the big issue will get sorted out on its own. The economists cannot be blamed for turning out to be too timid to offer radical answers. It is the fault of everyone — social scientists, natural scientists, social reformers and culture critics.

This kind of article is always written after every crisis period!

There is a need for bringing back the Private Property Rights in the Constitution of India as a Fundamental Right.

Yesterday I happen to attend a lecture delivered by none other than the most talked person in the area of farmer suicide and a grandson of a former president of India. The talk was on “Agrarian Crisis and Farmer Suicide” by Shri P.Sainath who is also Rural Editor in the The Hindu Newspaper. The session was presided by Solicitor General of India Shri.Gopal Subramanium.

Since I read regularly Sainath’s writings I personally expected nothing from his talk! But was great fun and figures which are not often expected from any of talks in the corporate world or even in the government policy circles!

The major issues he raised, however valid to ponder the real Indian’s prosperity (remember not India’s prosperity).

  • The Union Government gave a subsidy of Rs.1,43,000 crore to corporate for more see here the budget documents especially table five (don’t forget to see table 12!).

  • Income inequality has gone up tremendously in the last decade than any other period in Indian society since independence.

  • Farmers have no control over seeds, fertilizers, pesticides, electricity, water, (note that all theses are controlled by big corporate or government)

  • Prior to 1990s the State has mediated the different interests groups in the country.

  • In the post 1990s this mediation by the State has declined.

  • So his third point was what is good for elite is national interest and this has been excited by the media also.

  • Farmer suicide in the last ten years is higher than any other period in the past.

  • Farmer suicide is highest among cash crops especially the cotton farmers.

The major cause he said to be believed for mass farmer suicide include skyrocketing input prices, huge cost of healthcare expenditure and due to cash crops (like Cotton).

On the income inequality I have no problem (for more see the labels of inequality in this blog).

So Sainath said that most of the today’s or in the last 10 years farmer’s suicide are because of poor land reform done in the 1960s and 1970s. And this has further created huge amount of distress among people particularly the peasants in the social life.

So the result of this distress is millions of migration. The peasant’s debt has gone up about 48 percent (59th NSSO Report) according to Sainath. Moreover, the peasants migrated to cities for job that did not exist.

What he did not talk about are the following:

  • Fragmentation of land holdings and its effects in productivity that further led to ceasing of food grain production.

  • Private property rights to farmers including tribals

These are two important areas where one finds less discourse in the public policy debate. Even can you imagine? The private property right was our Fundamental Rights in the Constitution of India. Alas, it was removed through the 44th Amendment in the late 70s.

Thursday, July 1, 2010

Wasted is the Bengal

A young MP writes:

  • The bandh culture has crippled economic growth and industrial development of the state. Many industrialists still consider West Bengal a politically volatile state where most political parties use bandhs as tools to realise their demands. Surprisingly, even the common man has come to be bandh-friendly these days, largely because a bandh gives you a sudden holiday for nothing. But this is disastrous. Bandhs should be discouraged at all levels. Bandhs have hit our image very badly.