Wednesday, November 9, 2011

Blinking links

Interesting reading:

From What G-20 Achieved at Cannes by T.C.A. Srinivasaraghavan
  • Or, if you like, Keynes, by being instrumental in providing the intellectual basis for removing a metallic anchor for paper currency, got it horribly wrong.
  • That is, as long as the amount of currency that a country could issue was tied to its gold reserves by some multiple, there was an automatic limit on how much could be issued.
  • The moment this tethering was eliminated by the US in 1971, and it began to finance its war in Vietnam by printing even more notes than it had done in the 1960s, the balloon floated off and, like all balloons, became subject to random gusts of wind blown by speculators.
  • That produced volatility in the commodity markets, which was a private problem. But the freedom to print notes without restraint soon became a public problem.
From Time to Rock the Vote by Prem Shankar Jha 
  • She did this because her purpose was not, as her party claimed, to reduce the influence of big business on policy-making. The second Industrial Policy Resolution of 1956 had already done this. It was to cripple a rising threat from the right by depriving it of funds. In 1967, the pro-market Swatantra Party, formed by C Rajagopalachari in 1961, and the Bharatiya Jana Sangh (BJS) had fought the elections jointly and become a serious threat to the Congress in three states. These were Madhya Pradesh, where the BJS won 78 out of the 296 seats, Gujarat, where the Swatantra Party won 66 out of 168 seats, and Rajasthan, where, by winning 72 seats, they succeeded in reducing the Congress to a minority.
  • The Swatantra, being the most dependent on funds from the corporate sector, simply threw in the towel: most of its members merged with the Jana Sangh. The two socialist parties, the Praja Socialist Party (PSP) and the Samyukta Socialist Party (SSP), weakened rapidly, merged, then joined the Janata Party in 1977 and finally, disappeared altogether. Their place was taken by a host of caste and ethnicity-based political parties that we are familiar with today.
  • Milton Friedman, regarded as the most influential economist of the second half of the 20{+t}{+h} Century and a Nobel Laureate, denounced social security as creating entitlement for all based on merely age, not an economic or poverty index. It is therefore not an anti-poverty measure. And what started off as support to families slowly expanded to supplant the families themselves.
  • The result: by such welfare schemes, the US government gradually took over the responsibilities and burdens of US families, and rendered them duty-free and functionless. By taking over normal functions of almost half the US households, the state has virtually replaced the household — that is, nationalised the families. While the next part of this article will be on the causes and consequences of this fundamental shift in the state-society relation, here is a brief on how this shift seems set to dynamite the US economy itself.
From Economics of Bahuka and Greenspan by S. Gurumurthy
  • Milton Friedman declared that ‘as children stopped contributing voluntarily to the support of their parents and began contributing through a system of government fiat, a serious erosion of family values became inevitable' and saw ‘social security system as a detrimental influence on social patterns'. The NBER work also pointed out how ‘family functions such as production of food, clothing and fuel and some other staple items were taken over by business firms, and responsibilities such as education, childcare, and social insurance have been assumed by the state.' What the NBER meant here is that business firms and the state had, together, robbed the families of their functions, leaving them functionless, therefore, dysfunctional.
  • Conceding that ‘the market system is the most efficient, and most conducive to individual freedom yet devised', NBER pointed out that the market itself ‘doesn't provide for the organisation of the society' but its ‘success during the last 200 years is attributable in good part to the existence of strong non-market institutions such as the family; also adding that the ‘decline of the family and the growth of the government will jeopardise the market system and associated social, political and cultural freedoms.'

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