Tuesday, September 6, 2011

'India's decentralized principalities have been merged into one bureaucratic morass'

Thanks to Sauvik! Excerpts from The Daily Bell article:

  • This is the conclusion to the article, and while it sounds reasonable, it seems to us that the assumptions on which the article is built are not necessarily accurate. For one thing, the article glosses over the fairly Draconian authoritarianism of the anti-corruption movement.
  • For another, the article assumes that the current Indian vitality is the result of inexorable cultural and entrepreneurial shift. We would argue this is entirely incorrect. India's resurgence is driven by central banking money printing and may not be seen as a natural expression of industry and society.
  • It is extremely important that the progress of the BRICS be placed in perspective. Brazil, China, India, even Russia, all have aggressive central banking policies. China and India, especially, have economies that are obviously being stimulated by excessive money printing. Both countries have a problem with price inflation as a result.
  • Progress built on printing money from nothing is ephemeral. In America and Europe, thanks to the debasement of money and the vast resources it grants (temporarily) to government, economies can seem quite healthy  one moment and then ill the next.
  • Money printing hollows out economies. It distorts business and job growth. It makes people feel wealthier than they are in reality. In both China and India, economic implosions will eventually take place. It cannot be otherwise, because central bank money stimulation inevitably leads to an exaggerated business cycle and subsequent busts.
  • For this fundamental reason in particular, the Wall Street Journal article is flawed. India has not necessarily experienced a resurgence of business and market creativity. It is simply going through the same cycle of monetary stimulation that the European PIGS and America went through recently.
  • Such monetary stimulation inevitably leaves behind ruined and fractured societies. In the case of India, the anti-corruption movement will likely make things worse, as it is in no way an expression of ancient Indian culture, which was decentralized and extraordinarily tolerant.
  • The India of today, based on reports having to do with the anti-corruption movement, would seem to be inheriting the worst parts of Western socioeconomic systems. India's decentralized principalities have been merged into one bureaucratic morass.
  • Money printing, in fact, is fooling the Indians into believing their economy is far stronger than it is – and also increasing the corruption of the bureaucracy. The anti-corruption movement is providing the Indian middle class with a simplistic approach to dealing with such problems.
  • The real issue of the way the West has organized Indian society from the top down, starting with central banking stimulation, are not being addressed. The solution is seen as one of authoritarianism rather than a reconfiguration of India's basic institutions.

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