Yesterday, I wrote about the government’s massive borrowing programme and, quoting Mises extensively, showed how this is capital consumption. Let me now continue further today. In the meantime, Mint has a little piece that says one-third of all government expenditure is financed by borrowing, and one-fifth of all expenditure goes towards paying interest. They add that out of every 100 rupees spent, 14 rupees goes towards creating assets, while the rest goes towards salaries – that is, towards consumption. Note that “welfare” and poor relief also have nothing to do with production; they are all matters relating to consumption. Also note that, in India, most of the “consumption” is done by the personnel of The State itself – the politicians and the baboons.
Now, capital consumption is the highway to de-civilization. Progress and civilization has always meant increased saving and investment – that is, the accumulation of capital. This capital, when invested in production, raises the wages of labour and results in an abundance of goods and services for all. This is how, throughout history, civilizations have arisen.
What about those who “invest” in government bonds? Their savings do not go into capital creation or production. They merely finance the consumption activities of The State and they are rewarded with interest that comes from us taxpayers. How can this be called “investment”? It is not. It therefore becomes clear that all government borrowing is nothing but capital consumption – the highway to de-civilization.
I am therefore of the opinion that widespread awareness must be created about the pernicious consequences of putting private savings into government bonds. Investors should be made aware of the fact that they are destroying precious capital in a capital-poor country, and that they would be doing their bit for the nation if they made genuine investments either in the stock market, with the banking system or elsewhere within The Market. Further, public opinion must demand that all these perpetual irredeemable loans be repudiated at once. Those who will lose money have only themselves to blame, for they “invested” their money in an insolvent institution. They did not invest in The Market. So theirs were not “capitalist investments” at all. Throughout history, many foolish people (including the Medicis) have lost fortunes by lending to monarchs. Let this important lesson be learnt once again.
The most desirable and socially beneficial effect of such a campaign will be that panic will be created in the bond market, and our The Total Chacha State will find no takers for its bonds. Then, and only then, will the government be forced to downsize and cut their long-tailed frock coat according to the size of their loin-cloth. Privatization will have to be pursued. NREGA will have to be dumped. Armies of tax-parasite baboons will have to be sacked.
A severely down-sized bare-bones government, as prescribed by classical liberalism, is the only way we can progress as a civilization. Then, taxes will be moderate, capital will remain in private hands, investments will be in The Market – and the whole engine of progress and civilization will chug along merrily.
Our The Total Chacha State is not only borrowing, but also inflating. Barely 10 per cent of its expenditure comes from taxation, so Mint informs us. Inflation is also a way of consuming capital. This is disastrous for the poor, the working classes, the labourers – who need capital. Further, our The Total Chacha State is also disallowing foreign capital entry – as in retailing – and thereby making things worse.
Commenting on the economists attached to the BJP during the Vajpayee regime, Jagdish Bhagwati made the acidic comment that “if they are economists, then I am a Bharatnatyam dancer.” Methinks the same comment can be applied to Chacha Manmohan S Gandhi, montek, amartya sen, jean dreze, kaushik basu, rangarajan, suresh tendulkar and all the rest of the CONgress’ economists. What they call Economics is nothing but the justification of State parasitism accompanied by widespread pauperization of the people.
But one solution is in sight: Do not buy their bonds, and ask others not to do so.
To conclude: Let's not forget that great civilizations have also perished in the past. The Roman one collapsed because of debasement of the coinage and State interventionism in markets, both of which destroyed the division of labour.
Our civilization has more or less collapsed. We may have cars and cellphones, but every city and every town (and every village as well) is a disaster. When the Roman civilization collapsed I am sure people owned horses and the postal system worked. That is our condition today.
Time to wake up to the fact that Chacha & Co. are hell-bent on destruction, parasitism, capital consumption and their inevitable consequence – de-civilization.