Thursday, December 23, 2010

Rotis, onions and chillies vs Zombie Economics

Have you ever read how both writers and readers have misunderstand the free market regime? It is here, but don’t jump after the first para and conclude by thinking that the writer is right!! Because that is where be begins. Also you must read the last para below and make your own view on the issues at hand. 

  • So inane, loud and meaningless was the TV debate on onions last night, it literally brought tears to my eyes. I didn’t cry because the rising prices are going to pinch my pocket, but it was the pathetic quality of the noisy show, with the Congress and BJP going at each other’s throat to prove that the other was more corrupt, that made me shed a few tears. Think about it. If the dirt and muck being chucked in television debates is any indication, either way – BJP or Congress – the country is not in safe hands.  
  • And the worst part of the problem is there is not a single person in the government who can explain the onion price crisis in clear, concise terms. The ministers have blamed everything from the weather to bugs to hoarders to trucks to exports for the crisis. They are yet to blame the ISI and appeal to people to pay more for onions for the sake of national security, but people, particularly the poor and deprived, are still confused as nobody knows what’s driving the price rise. 
  • Because the government is headed by an economist, it probably believes in what economists all over the world say: if you can’t convince them, confuse them. So, basically, we have to find the answer ourselves. Though the government will never admit it, its neo-liberal economic policies and market speculation and futures trading are responsible for this mess. In a new book, Zombie Economics, John Quiggin explains how certain “dead ideas” --  “deregulation has conquered the financial cycle; that markets are always the best judge of value; that policies designed to benefit the rich make everyone better off -- still walk among us. “The recent financial crisis laid bare many of the assumptions behind market liberalism -- the theory that market-based solutions are always best, regardless of the problem…  The crisis seemed to have killed off these ideas, but they still live on in the minds of many -- members of the public, commentators, politicians, economists, and even those charged with cleaning up the mess,” says Quiggin in the book.  
  • Tearing apart the dictum that “nearly any function now undertaken by government could be done better by private firms” and market is the solution of all problems, Quiggin says, “Even in its heyday, privatization failed to deliver on its promises. Public enterprises were sold at prices that failed to recompense governments for the loss of their earnings. Rather than introducing a new era of competition, privatization commonly replaced public monopolies with private monopolies, which have sought all kinds of regulatory arbitrage to maximize their profits…” 
  • Though the focus of the book is the developed economies and the recent financial crisis that crippled them, as you read Zombie Economics you feel that Quiggin is talking about India and its future. And here in this poor country, the economists – sitting in government and Planning Commission -- are still selling these expired ideas to us as some kind of revolution that will change the face of this country. That’s why when the prices spiral out of control, there is no one in the government who can explain what’s gone wrong. 

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