Laws are to seek rents

Professor Deepak Lal writes:

• ..........one continuing major source of “monopoly rents”. This is the colonial labour laws creating “monopoly rents” for the small aristocracy of organised labour. By limiting entry and exit, and artificially raising the price of India’s most abundant resource, they have damaged labour-intensive industrialisation in India. This situation will be made worse by the minimum wage and other purported labour rights being implemented in the unorganised sector. Much worse, the proposal to introduce minimum wages in the rural employment guarantee scheme will remove the main reason for the efficiency of this poverty-redressing policy: self-targeting. Though the immorality of rent-seeking associated with pure “economic” and “composite quasi” rents may be reprehensible, it is less damaging to growth than the continuing “monopoly rents” generated in the labour market.