They have doubled customs duties on gold and platinum imports and, to make things even worse worse, high taxes have been imposed on real estate transactions. Private capital and savings will thus be further eroded – and this at a time of surging price inflation. The people will be frustrated in their efforts to preserve their wealth, and their every attempt to take the “flight into real value” will be hindered by deliberate State action. They will be indirectly forced to store value in the falling Indian paper rupee, printed at will by this State. This is anti-people. Period.
Let us hope gold smugglers come to our rescue.
The papers reported that this action to raise customs duties on gold and platinum has been taken on the written advice of the Economic Survey Report, penned by Kaushik Basu and his “bureaucrat-economist” colleagues: which is “the State advising the State.”
The news report said that Basu & Co. have made this recommendation on the grounds that gold imports are “unproductive.” Basu & Co. also advised the State to discourage “consumer goods imports” on the same grounds – that these too are “unproductive.”
Nonsense! And evil, too, in intent.
Economics is a study of “means” and “ends” – and the final end of all our “productive activity” is nothing other than “consumption.” A man who toils all day serving his customers with, say, cups of tea, does so only in order to procure the means to buy all that he needs – from clothes, to food, to what not. This is why my kind of economist upholds a completely free market – and that includes free foreign trade as well – so that the “consumer is king.” Everyone suffers when the producer is king – with State support – and this is called “cronyism”: something evil as well as corrupt.
In addition, all “producer goods” like machines etc. are meant to roll out consumer goods in the end. There would be no demand for machines if the final product was not demanded by the consumer.
What is really “unproductive” is State spending – especially in India. They never “invest” tax money – as, for example, on roads and highways. Their spending is almost entirely on “welfare”: rural employment schemes, free foodgrain, all kinds of subsidies, (mis)education and so on. All this money is “consumed.” Nothing is “invested.”
But things are far, far worse – for this State borrows on a grand scale, and also prints money to fund itself. Borrowings are rising – and this year they will add up to some 600,000 crore rupees (1 crore is 10 million). Interest payments on past borrowings (forget the principal) add up to 36 percent of this Budget. Much of this borrowing is “forced” – and this comes from the banks; that is, from public savings. Most of these banks are State-owned – and they are not doing too well. This Budget has allocated 16,000 crores for the “re-capitalisation” of these banks. Their flagship bank, State Bank of India, saw its shares nosedive because investors thought that the amount allocated for re-capitalisation was not enough. And at the bond market, people sold their bonds. Smart investors do not want to buy this “permanent irredeemable debt” anymore.
The real fact is that State spending is “unproductive.” The State is engaged in nothing but “capital consumption” on a grand scale – the highway to “de-civilisation.” The 4000 crores gifted to Air India is another example.
Welfarism funded by inflationary means is actually “cheating the poor” – because they receive less than they lose. They might get some free rice or wheat, some wages to dig useless ditches in village India, some free injections, and their children might be forced into free State schools – but their savings will constantly lose value. We might call this phenomenon the “mystery of disappearing capital.”
The figures speak for themselves: GDP growth expected to be 7 percent; inflation to be 7 percent, too; and the fiscal deficit will be 7 percent of GDP as well. Cuo boni? – but our socialist rulers.
It is high time we Indians realized what Capital is – and the fact that the continuous progress of civilization requires “capital accumulation.” People must be free to earn – and this requires Liberty, or “economic freedom,” something in short supply today, especially for the poor.
Then, they require titles to their Property – and this is how the “mystery of capital” is solved, as Hernando de Soto has shown in his thesis pertaining particularly to poor, Third World nations. The property title regime in India is non-existent –even in urban India. In the capital city itself, as in all our “metros,” over 50 percent of the population lives in slums – without titles.
Apart from Liberty and Property, increasing the wages of poor workers requires raising Productivity. This requires Capital – and not “capital consumption.” We are a labour-surplus and capital-poor country. We need to save and invest – and also to “import capital.” It was imported capital that built our railways. Imported capital is required similarly for private highways and expressways, for civil aviation, for supermarkets, etc. They are stopping all these.
Productivity is measured in Time – how much do you produce in an hour, in a day, and so on. We Indians waste time on a colossal scale – only because of poor transportation. Modern buses on modern highways could easily outcompete the decrepit railways, as could competitive private civil aviation. But the State NHAI is a highway monopolist – and they have raised all tolls! And this State, with all its “planners,” has never ever invested in roads and highways, anywhere in the country. Even the tolled Delhi-Gurgaon 40km expressway is in trouble. As is the Bus Rapid Transport (BRT) corridor in the capital city. The Bangalore-Mysore Expressway hasn’t been completed in 20 years!
Which brings me to deaths in traffic accidents – and here we top the world, with over three Jumbo jet-loads dying on our roads, streets and highways every single day. The WHO has got into the act. The State Police, too – with a Bollywood “star” in tow. And the end result has been a steep increase in fines for traffic violations, from talking on a cellphone to not wearing a seatbelt. Thus, the danda – or “force” – is being used on us, the taxpayers; and the cops are laughing.
This is happening while the real problem is poor road engineering, signage, and scientific traffic management. There isn’t a single functioning zebra crossing anywhere in India – including the capital. And most deaths are of pedestrians and cyclists.
Anti-people, once again. Pro-power. Pro-State. Pro-Police.
And it is exactly this attitude that marks the prime minister’s response to public protests against new nuclear power plants – he blames “foreign funded NGOs” for the mass protests. Thus, the danda descends on all NGOs.
And no one questions the fact that we need private electricity, not more State-owned power plants, nuclear or otherwise. The National Thermal Power Corporation and the National Hydro-Electricity Corporation have been with us for 60 years – and have failed dismally. Power supply is irregular throughout India – and this includes the capital city.
Insincere, once again. Just another attempt to increase the role of the State. Corrupt. Anti-people.
And anti-national as well. All the equipment in these new nuclear powers plants will come from foreign suppliers – and Parliament has already passed legislation limiting the liability of these foreign nuclear equipment suppliers in the case of accidents: to a mere 1500 crore rupees. And they are planning to boycott the London Olympics because of Dow Chemicals and the Bhopal tragedy!
Today, to these foreign nuclear equipment suppliers, our lives and properties are being sold cheap. These foreigners are being protected.
The proposed Jaitapur nuclear power plant is on the Konkan Coast – in Ratnagiri, home of the Alfonso mango. It is close to Goa. And the Environment Ministry has just banned all mining here. But they have allowed an unsafe nuclear power plant!
Anti-people. And anti-national, too. QED.
The Oxford English Dictionary defines the word “treason” as follows:
A criminal act committed against one’s country, as for example by helping its enemies.
From customs duties on gold to welfarism funded by inflationism to the response to traffic accidents to nuclear power – all this points to treason.
The prime minister has been quoted in The Economic Times saying:
“If the government is to govern, it must have a sustainable strategy for managing the economy.”
I think it would be far more desirable if this The State – for it is definitely not a “government” – manages its own finances. And not bother about ours. What is really “unsustainable” is State spending. And borrowing. And money printing.
It is only because our socialist State cannot manage its own “budget” that all our “private economies” are in trouble. Serious trouble. And this trouble is going to only grow – because indirect taxes have been hugely raised. Everything from cars to cameras to mobile phones will cost more. All “services” will cost us more. Our growth story will come to a shuddering stop. Demand for everything will drop.
Now, ask yourself: What are we paying all these taxes for?
What is “governance” when even the courts don’t work?
What is “policing” when even the traffic police don’t work?
And, anyway, over half the vast territory is overrun by armed rebels – most of them of a Maoist persuasion, that too, an ideology that has been entirely rejected in China decades ago.
There is not a single livable city or town throughout India – and the root of the word “civilization” is civitas, which means “city.” The drainage system in Moehnjo-Daro is admired by archeologists – but storm water drainage does not work in Mumbai!
Every city and town is filthy. Diseases spread. Do we need “healthcare” from the State? – which means State-owned hospitals and clinics. Or do we need clean cities and towns – which is “preventive healthcare.”
We Indians need to think. We need to WAKE UP! – and our socialist Supreme Court has just granted us the “fundamental right to sleep”!
What about Property? What about Liberty? The “Pursuit of Happiness”? Sound Money? Balanced Local Self-Government Budgets? Free International Trade?
Further, I have absolutely no faith in the “democracy” of our Socialist State. Capitalist political parties are disallowed in our country, anyway.
The Samajwadi Party (the word means “socialist”) has won in UP – by “bribing to voters” with all sorts of freebies, which is precisely what socialism is all about. There are lots of criminals on board, too.
Their first “policy announcement” was an unemployment dole and free computers for schoolkids. They have also promised free power and free water. The vast province has no roads. And there will be no money left to build any. I saw a photograph of Akhilesh Yadav with the commie Prakash Karat. They will, I am sure, never ever talk the language of Liberty, Property and all that. It will be more of the same.
Here is a proverb I just found in the Holy Bible:
Be sure you know the condition of your flocks,
Give careful attention to your herds,
For riches do not endure forever,
And a crown is not secure for all generations.
Now, some commentators are saying that these rulers of ours have “political compulsions” and thus “good economics does not make good politics.” In which case, after two full terms of Manmohan Singh as PM, why did Sonia Gandhi and Rahul Gandhi and their entire CONgress Party get a drubbing in UP as well as Goa? Quite obviously, the politics is all wrong.
And as for coalitions and all these “regional parties” taking over the provinces, leaving all the “national parties” in the doldrums, the Bible has another proverb to offer:
A nation in revolt has many rulers.
The Anna Hazare movement has shown – spectacularly – that this nation is most definitely in revolt; and this assessment is borne out by the elections in UP and Goa as well.
Well, revolt to me begins with a “tax revolt” – as with Gandhi’s Dandi March and also the Boston Tea Party. As Thomas Paine wrote, “when we suffer from bad government we must realize that we furnish the means by which we suffer.” It is our taxes that funds them. Why should we pay?
Think about it.
[This post is continued here.]
[This post is continued here.]