Blinking links

Swapan Dasgupta: "Everyone loves a good poverty business" India except the poverty stricken on poor human being.

• "It certainly didn’t need a familiarity with complex econometric models and either Keynes or Hayek to realize that the Planning Commission’s extrapolation from the Suresh Tendulkar method of poverty measurement was just another example of economists living in a make-believe wonderland. The wise men of Yojana Bhavan had once again demonstrated to the public’s satisfaction that after lies and damned lies comes statistics."

Gurcharan Das on, "Duty or revenge":

• On a sweltering afternoon on September 29, 2011, principal district judge S. Kumarguru began to hand out sentences. There was a hushed silence in the packed courtroom in Dharmapuri, Tamil Nadu. He began at 3.30 pm but could not finish until 4.40 pm because he had to read aloud the names of 215 government officials. Among those convicted were 126 forest officials, 84 policemen and five revenue officials. Seventeen were convicted of rape and they were sentenced from seven to 17 years; others received from one to three years on counts of torture, unlawful restraint, looting and misuse of office. Had 54 of the accused not died in meantime, the sentencing would have taken longer.
• Early on June 20, 1992, four teams of government officials descended on the adivasi hamlet of Vachathi, near Sathyamangalam forest, also home to the dreaded brigand Veerappan. They assembled the villagers beneath a neem tree and let loose a reign of terror as they searched for smuggled sandalwood. They picked up 18 teenage girls and dragged them into the forest, where they raped them repeatedly. They only brought them back at 9 pm.
• Claiming a haul of sandalwood from the riverbed, the officials then put 133 villagers in jail. How does the human mind begin to cope with this soul-numbing news? My first reaction was horror at the rape of teenage girls by men in uniform. Second, was a feeling of relief and catharsis when punishment was meted out to powerful men. The third emotion was outrage at those who allowed the case to drag for 19 years. Then questions arose in my mind. How could this happen in the first place? And was this not as serious an act of corruption as the 2G scam? And why was the nation quiet?

Thank heavens their phone monopoly has gone!

Sauvik has great piece in the Outlook Business. Some excerpts: 

• Now, if corporations act in this way—serving the self-interest of their shareholders and customers—then, as Adam Smith says, “society benefits as though by an invisible hand.” The mobile phone with a built-in torch is a great example in India, where the socialist State, with all its social responsibility, cannot provide reliable, uninterrupted electricity, which it has monopolised. Thank heavens their phone monopoly has gone!

• Indeed, all the goodies we enjoy consuming today are produced by private corporations—cars, phones, computers, software, beer, wine, fashionable clothes, and so much more. Because of these “selfish capitalists” the invisible hand ensures that the whole of society benefits. 

• Indeed, all the goodies we enjoy consuming today are produced by private corporations—cars, phones, computers, software, beer, wine, fashionable clothes, and so much more. Because of these “selfish capitalists” the invisible hand ensures that the whole of society benefits.

• “I have never seen much good come out of those who purport to trade for the public benefit,” added Smith, and this point is worth pondering in socialist India, where the State owns and operates hundreds of companies that “purport to trade for the public benefit”—from Air India and SAIL to ONGC and ITDC to banks, phone and electricity companies. Our experience with a State-owned industrial sector ought to have convinced us that private corporations serve us—the members of society—far better than public sector firms. The former produce for us our “common wealth,” while the latter are our “common loss”.

• In other words, it ought to be apparent to all of us that “social responsibility” is a hoax, just as “socialism” is a hoax. If a socially responsible government were to take power, its first duty would be to liquidate all the PSUs. Social responsibility, indeed! Friedrich Hayek, the only Austrian School economist to win the Nobel prize so far, called “social” a “weasel word” —and we must watch out for it. The weasel is an animal that feeds by making a tiny hole and sucking everything out of an egg, leaving behind the empty shell. In precisely the same way, if any other word is attached to “social” then it loses its meaning entirely. For example, “social justice”. Justice, we all know, is fair exchange: “the principle of Justice is the principle of Trade.” But what “justice” is there in “social justice”—which means the State robs Peter to pay Paul? Social justice is just a “mirage,” said Hayek. Look at the MGNREGA.

The Money of Fools

That is the title on which the great economist Dr.Sowell has written a serious of articles in the Townhall column. It is worth to read all the pieces.

1, 2, 3, 4.

Some Hayek Quotes

From David Henderson post

From Hayek's Law, Legislation, and Liberty:

• For the same reason that the prices which guide the direction of different efforts reflect events which the producer does not know, the return from his efforts will be frequently be different from what he expected, and must be so if they are to guide production appropriately. The remunerations which the market determines are, as it were, not functionally related with what peoplehave done, but only with what they ought to do. They are incentives which as a rule guide people to success, but will produce a viable order only because they often disappoint the expectations they have caused when relevant circumstances unexpectedly changed. It is one of the chief tasks of competition to show which plans are false. [italics his]

• Men can be allowed to act on their own knowledge and for their own purposes only if the reward they obtain is dependent in part on circumstances which they can neither control nor foresee. And if they are to be allowed to be guided in their actions by their own moral beliefs, it cannot also be morally required that the aggregate effects of their respective actions on the different people should correspond to some ideal of distributive justice. In this sense freedom is inseparable from rewards which often have no connection with merit and are therefore felt to be unjust.[italics his]

• Of course, those who as a result will be deprived of their former customers will incur a loss which it would be in their interest to prevent. But like all others, they will have been profiting all the time from the repercussions of thousands of similar changes elsewhere which release resources for a better supply of the market.

• The known and concentrated harm to those who lose part or all of the customary source of income must, in other words, not be allowed to count against the diffused (and, from the point of view of policy, usually unknown and therefore indiscriminate) benefits to many. We shall see that the universal tendency of politics is to give preferential consideration to few strong and therefore conspicuous effects over the numerous small and therefore neglected ones . . .

Via comment posted by Brian T. Schwartz:

In his speech on The Quest for Cosmic Justice, Thomas Sowell selects a good Hayek Quote:

• The late Nobel Prize–winning economist and free-market champion Friedrich Hayek, for example, declared, "the manner in which the benefits and burdens are apportioned by the market mechanism would in many instances have to be regarded as very unjust if it were the result of a deliberate allocation to particular people." The only reason he did not regard it as unjust was because "the particulars of a spontaneous order cannot be just or unjust." The absence of personal intention in a spontaneous order—a cosmos, as Hayek defined it—means an absence of either justice or injustice. "Nature can be neither just nor unjust," he said. "Only if we mean to blame a personal creator does it make sense to describe it as unjust that somebody has been born with a physical defect, or been stricken with a disease, or has suffered the loss of a loved one."

Politicians are anti-social justice!

Sowell on:

But that is wholly different from having politicians make such decisions for other people. Politicians who take on that role stifle economic progress and drain away other people's money, in order to hand out goodies that will help get themselves re-elected. Some people call that "social justice," even when it is anti-social politics.

Get rid of your ability off the air!

Sowell on “Stepping beyond your competence can be like stepping off a cliff. Too many people with brilliance and talent within some field do not realize how ignorant — or, worse yet, misinformed — they are when talking like philosopher-kings about other things.”

Random thoughts on the passing scene

Sowell on “Think things, not words.”

• The older I get, the more I learn to tolerate human shortcomings — and the less I tolerate bad attitudes.
• When I contemplate the direction in which this government and this society are moving, my biggest consolation is that economists’ predictions are often wrong. I can only hope that my expectations are wrong by miles.
• What is most frightening about the political Left is that they seem to have no sense of the tragedy of the human condition. All problems seem to them to be due to other people not being as wise or as noble as they are.
• Oliver Wendell Holmes said, “Think things, not words.” In words, many see a need for “social justice” to override “the dictates of the market.” In reality, what is called “the market” consists of human beings making their own choices at their own cost. What is called “social justice” is government imposition of the notions of third parties, who pay no price for being wrong.

Two winds- Ideas and Justice

Political science professor Pratap Bhanu Mehta reviews Sen's new book The Idea of Justice in the current Outlook issue. Some excerpts:

• “A theory of justice should draw on social choice techniques and aim at partial rankings of states of affairs.
• Indeed, the book is not so much about an idea of justice as it is about the vast range of legitimate considerations that have to be taken into account in a theory of justice. And finally what institutional arrangements might best embody a move towards greater justice will crucially depend on circumstances; perfect institutional structures are no guide to how we might proceed.
• …ideas like liberty and equality. Even each of these concepts has several dimensions. Liberty is both a process and an opportunity. Equality invites the question: Equality of what? There are several plausible and conflicting answers to this question. It is here that the strength of the book is also, in an odd way, its weakness. The capabilities approach—an approach that focuses on enhancing people’s capabilities—is so supple that you are left wondering exactly where Sen stands.”

R Jagannathan writes in DNA:

• “The book does not say anything Amartya Sen has not already said before. He has criticised our excessive preoccupation with building "just" institutions instead of a "just" society. The latter would include good institutions, but one would monitor outcomes of actual societal behaviour and keep making course corrections. Debates over what constitutes a just order are also less important than adopting a common-sense approach to reducing gross injustices through public reasoning.
• The best part of Sen's jargon-filled book is where he explains his ideas through examples. This is where Ashoka, Akbar and Arjuna figure in large doses. Through Sen's lens, all three emerge as one-dimensional heroes, reasoning automatons, not real people.
• Amartya's Ashoka, Arjuna and Akbar are great historical characters who contributed to India's cultural nationhood, but he has reduced them to cardboard characters of dubious authenticity. He hasn't done them or Indians much justice.”

Change of guards and in search of ideas!

Two things I wanted to put down in this post- what Amartya Sen’s take of F A Hayek idea in his new book "The Idea of Justice" and the Sen’s one of PhD student Professor Kaushik Basu who is now preparing to become Chief Economic Adviser in the Ministry of Finance.

First the latter one Mr Basu seems to be changed his mind somehow but I’m certainly not sure because his past writings are not that different from our mainstream economists.

His views has been changed I mean his dissent note the Yashpal Committee on Higher Education is really worth to muse.

He said:

"If a private company wants to start a university to make profit why shouldn’t "t it be allowed to do so?"

Moreover:

• “Third, we should allow private sector money to come into higher education. Surreptitious privatization is already a fact of life. It will be better to let this happen openly; there can then also be open monitoring. The purely-private colleges should of course not be subsidized by the state. They should be allowed to set college fees as high as they choose (as long as this is made transparent). It is true that such private colleges will end up teaching mainly commercially-viable subjects and cater to relatively rich students. There is no harm in this and some advantages, since the state will now be able to allocate more money to the colleges and universities under its charge and provide good education to the remainder at a lower cost.
• There is an additional question: Should we allow these private colleges to be profit-making organizations, that is, allow the owners or the shareholders to openly keep the profit to themselves? A common presumption is that,if someone is interested in profit, that person will not be interested in providing good education. This is a fallacy. It is like assuming that, if Tata Motors is interested in making profit, it will not be interested in producing a good small car. However, in reality, its interest in producing a good small car could be because it is interested in making profits. Likewise, in education. If a profit-making company wants to start a university, there is no reason why we should not allow this. This is an idea that should at least be on the table. There are not too many examples of such universities in the world. This can be a pioneering effort on the part of India and, if successful, can cause a huge infusion of funds into our higher education system.”

On the first Professor Sen has mentioned F A Hayek in pages 77 and 442 in his book but it seems to me that he is well known to Hayek’s ideas but its not clear because one has go through the book. So after reading the book i will post what is his sense on Hayek!

There is no such thing as SOCIAL JUSTICE!

Sauvik has a piece titled “Saying no to ‘social justice’” indeed we must say no to those who “Advocates of social welfare........ But they invariably champion state redistribution”

Please remember as I have been saying in this blog that F A Hayek has valid points to ponder on “the idea of justice”.

As Sauvik writes:

• “As Nobel laureate Friedrich Hayek says, “Rules of just individual conduct are as indispensable to the preservation of a peaceful society of free men as endeavours to realize ‘social justice’ are incompatible with it.”
• Hayek goes further: He says, “No one has yet found even a single general rule from which we could derive what is ‘socially just’ in all particular instances that would fall under it.” Welfare is such a loose concept that “some will put it here and some will put it there”. Amartya Sen will champion nutrition, Jean Dreze employment generation, and Manmohan Singh education. A fourth person might find something else, say, healthcare. The decline of the modern West is indeed such a story, thanks to ideas of social justice, which produced the “Illfare State”.
• Hayek also offers an explanation for the popularity of social justice: The idea appeals to our primitive instincts. Whereas liberalism is modern and individualistic, social justice yearns for a return to the happy days of hunter-gatherer tribes where there is the “leader” who shares the prey with all members. Yet, we emerged from primitive society only by disregarding the principles that held the old tribes together. The pioneers abandoned the old closed groups and sought unknown people they could trade with. This is how we created cities and towns, settled agriculture, and the Great and Open Society. Social justice is “atavistic”. As a theoretical concept, Hayek calls it “intellectually disreputable”.
• This conclusion is strengthened by the fact that, while eminent étatists champion social justice, there is little real justice in India. The National Human Rights Commission registers 75,000 cases a year—against the State’s police! There are at least 30 million cases pending in courts. Murders and rapes go unpunished. Injustice rules the land—and these étatists wave the flag of a phoney justice, a mirage, an illusion, a trick. They must be defeated.”

Can you sue the injustice?

Shiv Visvanathan writes in a different angle in today’s ET that the “Justice is often a strange experience. It is like a form of pregnancy. Its rituals of gestation, its modes of realisation consume time. Often by the time it arrives, the victim is too tired to celebrate. Yet, the search for justice has a powerful sense of drama. The procedures invented to articulate it can be radical.”

The Idea of Blender and Confession=Fiction of Social Justice

In an interview to Utv Prof Sen says something which is terribly wrong and fundamentally unsound. We have seen in India in the last fifteen or twenty year’s that the 80s and 90s economic reforms have greatly helped Indian economy. One needs to have open mind to recognize these facts before jumping to criticize.

Prof Sen says:

• “……..capitalism is a very confusing term, to some it means complete reliance on the market and for others it means the society which we have today in America, Europe, Japan, South Korea, etc. but they are quite the same because while Europe has the national health service, America does not have that but has public pensions, medical and other kind of insurance. I think the success of the capitalist economies has been based upon these mixed services and people forget that.”

What is that mammal of “mixed services” or “mixed system” did he ever pen it, what is that all about?

• “So asking the question that we need new capitalism, does not seem to properly identify what was happening earlier. Secondly, we do not know whether we should call it new capitalism as the state has a bigger role to play in many bigger areas, that it would like to extend and not just in the United States but also in India. We also need to have educational arrangement provided by the government without stifling the private initiative. So do we call it a new capitalism or new something , I think it is silly to worry about that and one of my heroes Adam Smith, who is considered to be a great guru of unrestricted capitalism, never used the term capitalism and I think theory of the invisible hand that is attributed to him, I think he hardly ever used it…, There were three uses in his entire life of that and two of them are negative and one case is I think a reference to Lady Macbeth and the bloody hands so he didn’t think that the market did all that good…
• ..find what kind of institution or the mix we would want..”

Very soon we are going to celebrate our 62 Independence Day Prof Sen still argues “find what kind of institution or the mix we would want” in way all that is not that bad but I ponder what was our leaders contribution to this country, what kind of institutions we wanted actually, and what they did?

“Social Justice” and “Social Choice” are nonsenses: Friedrich Hayek and James Buchanan

John Gray on “A just society will accord its members a range of basic liberties but also the capabilities needed to make use of them”

From The Economist:

• AT THE disputed crossroads where economics and ethics meet stands Amartya Sen, a Nobel-prize-winning economist who thinks like a philosopher. In a dauntingly impressive flow of books and papers over 40 years he has done much to change both disciplines for the better, humanising the one, bringing content from the real world to the other. His work is technical, however, and the fine detail has sometimes hidden the shape of the whole. Mr Sen’s latest book answers both difficulties in magisterial style.
• In the courtliest of tones, Mr Sen charges John Rawls, an American philosopher who died in 2002, with sending political thinkers up a tortuous blind alley. The Rawlsian project of trying to describe ideally just institutions is a distracting and ultimately fruitless way to think about social injustice, Mr Sen complains. Such a spirited attack against possibly the most influential English-speaking political philosopher of the past 100 years will alone excite attention.
• Virtually every claim Mr Sen makes will be objected to by someone. Right-wingers who follow Friedrich Hayek or James Buchanan will treat “social justice” and “social choice” as nonsenses. Mr Sen wants to humanise canons of “maximising” rationality; behavioural economists, much in fashion, aim to ditch them altogether. Rawlsian liberals will rally to the defence of their hero.

The Idea of Fiction of Social Justice!

So, Prof Amartya Sen’s latest book “The Idea of Social Justice” is out and many of you may be thinking heavy bites probably the notion of justice in India! As I have posted here my first take on his book.

When we see people talks on the idea of justice on the same line of Sen’s argument it seems to be that these people never dare to think beyond their writers or teachers.

Let’s go back to some of Sen’s interview and excerpts from this book:

From the ET NOW Interview:

• “….all our policies relate to injustice because none of our policies, even ones like the employment guarantee scheme, will make the world perfectly just, it will only make the world a little less unjust.
• ……..the democratic institutions might exist but their utilisation might be quite limited, partly through our own fault because we don’t engage enough, partly it’s about the way the media is organised and its limits or the way the parties are organised.
• ……….there is a school of thought which is very powerful, that took that view. But there is a little bit of a contradiction there. Those that take the view that human beings act only on self interest, they should have been in favour of regulation. Because human beings won’t spontaneously act that way. But you have a peculiar combination of people believing in self-interest but holding the view that regulation is bad. It’s a mystery.
• The solution to the mystery is a belief in the effectiveness of the neeti of the market. The market is so magical, even though everyone is acting in their self interest, it’s working out in the interest of everybody. That requires a very special theory. People often attribute it to Adam Smith, but Adam Smith explicitly denied that. I think it’s the theory of the so-called efficient market. Self adjusting, self correcting, self directing market system. And that kind of faith in the neeti is completely unjustified.
• ………stupidity arises from the institutional faith in the magical power of the market as a neeti. If you study air crashes, you will find that if there is one thing that goes wrong, the plane still flies. You need several things to go wrong on top of one another for the plane to nose dive. What went wrong with the market economy story was a similar combination of mistakes that were made.”

First of all if your dare to think ONE STEP Ahead of Sen’s understanding say from F A Hayek point of view, even beyond I’m sure you will say that there is no such thing as “Social Justice”.

Instead of saying “all our policies relate to injustice because none of our policies” we should ask are they aimed at people’s individual freedom, liberty and property? The answer is a big NO!

It is completely illusion to say that “we don’t engage enough” infact, if The State is minimal there is greater participation among people for their needs.

While attacking this book Acorn argues “Dr Sen’s line is dangerous because it threatens to reduce the importance of individual rights and freedom, and supplant them with the discourse of social justice”.

Other readings:

From Mint book review The rational synthesis

From Outlook interview “I am a friend of the Left and my politics has been on the Left, but sometimes it’s difficult to recognise what is Left, what is Right. I am in favour of fighting today’s battles rather than yesterday’s battles.”

From his book excerpts published in The Hindu “Justice and the world”

The Nobel Prize-winning economist is inspiring Labour politicians with his theory that inequalities of power matter as much as inequalities of income.

How “relevance of Amartya Sen” ideas?

Book review from OutlookIndia ‘Doing’ Justice