My recent post on how "only the Natural Order can solve the current money and banking crisis" argued in favour of private savings retaining their value, and thereby allowing all these private savers to "invest in themselves." At the conclusion of that post, as a study in contrast, I offered my reader the Communist MP Sitaram Yechury's column asking for the Inflationist State to "invest in people."
Well, Yechuri's latest column is pure "Idiot Wind" - if you know your Dylan. But before going into it, allow me to place before you the "academic record" of this Communist Party of India (Marxist) MP - Rajya Sabha, of course, which means "indirect election." The following is from his page on the CPI(M) website:
In 1973, he completed B.A.(Hons) in Economics, first class, from St. Stephen's College, Delhi University.
In 1975, he completed M.A., first class, in Economics, from Jawaharlal Nehru University (JNU), Delhi.
Yechuri starts off stating the bare facts:
Dark clouds are enveloping our economy threatening the livelihood of millions. The growth rate has dipped to the lowest in a decade. Inflation and price rise continues relentlessly.
He then indulges in some prattle about how our garment exporters are going bust because the US and the EU are both going bust.
The next paragraph is about the EU: How Spain is the fourth nation to be "bailed out." He notes that there is not much left with the EU to bail out other member-states about to go belly-up - and how this will severely impact the Indian economy.
Before going further into Yechuri's analyses and prescriptions, let me first place some questions before the reader; questions that arise from Yechuri's words above, but which he has not asked, and hence, not answered. These are:
1. Why do "inflation and price rise continue relentlessly" in India?
2. Why are so many European nations being "bailed out"?
3. Why are so many European nations facing "sovereign debt default"?
Now, the source of all demand is "production": Say's Law. Have the European PEOPLE stopped working, stopped producing? What exactly has "collapsed"? After all, if the people have not collapsed, how has the "economy" collapsed?
The answer: It is the paper money and central banking system, run by a club of member-states, and used to finance State expenditure, that has collapsed. The root cause of all this: Socialism and Welfarism - funded by Keynesianism.
So, why is there this "relentless inflation" in India? We arrive at the same answer - because the paper money, issued monopolistically by the State, is losing value with each passing day. The root cause: Too much State expenditure - to fund Welfarism. Like "rural employment," "free and compulsory education," "right to food," and what not.
(No "right to property," of course, for socialists-communists hate that.)
And, let us not forget, for Yechury does not mention it, that S&P has said our The State's bonds will soon be JUNK!
And, let us not forget, for Yechury does not mention it, that S&P has said our The State's bonds will soon be JUNK!
Thus, the only solution is to drastically cut down State expenditure. Put an end to all this PHONEY WELFARE. To cut down on taxes - so that private investments can grow. And to switch to the Gold Standard as quickly as possible. These are the words with which I ended my column in Mint advocating a "Return to the Gold Standard":
Any nation can unilaterally revert to the gold standard whenever it chooses. If we do so, our rupee, now pegged to gold, will always appreciate against the rest of the world’s fiat papers. This will help us become big importers. And cheap imports, including of capital goods and components, will make our manufactured exports competitive in terms of technology, quality and price. Our banks will attract the world’s savings, and we will possess capital, the vital ingredient of “capitalism”. All prices will steadily fall and the consumption of the poor will rise in leaps and bounds. This is the power of “sound money”.
This is a call for HARD MONEY, and an END TO INFLATIONISM.
Thus, the savings of the people will not lose value - and the private investments of the poor will rise.
Not only that, the private CONSUMPTION of the poor will rise as well - because IMPORTS will be cheaper.
Increased Indian imports will help save the rest of the world from recession.
Better than a downward spiral, what?
Increased Indian imports will help save the rest of the world from recession.
Better than a downward spiral, what?
Of course, the Manmohan Singh government is NOT doing these things - and, predictably, they are doing what they are best at: and that is, throwing our money at their cronies, the exporters. This is the RACKET of "export promotion."
The exchange rate of the rupee vis-a-vis major world PAPER currencies has been steadily falling for decades now. And all we have been hearing is that we will prosper from "export promotion." And if you drive down the West Coast, you will find that each and every port, from Goa to Mangalore, is exporting iron ore - and importing nothing!
Now, imagine giving "sops" to the iron ore exporters!
And reducing the consumption of the poor by making all imports expensive!
And thereby reducing global demand - a downward spiral for the whole world, as well!
We export only in order to import.
Just as we produce in order to consume.
Manmohanomics is Craponomics - as I had written earlier.
Peter Bauer said a very important thing about Third World poverty: that it has nothing to do with the "limited capacity to export"; rather, it has everything to do with the "limited capacity to produce."
Poverty is caused by the fact that LABOUR PRODUCTIVITY is too low - and it requires CAPITAL to raise productivity. Productivity is measured in TIME. And all us Indians waste TIME on a colossal scale. Especially the poor. Slow traffic. Slow everything. And one person can work only so many hours in a day: TIME.
Thus, for a labour-abundant country that is capital-short, the best thing to do is IMPORT CAPITAL. And do note that the hammer-and-sickle on the Communist flag above are CAPITAL; they are PRIVATE PROPERTY of the poor; they are their MEANS OF PRODUCTION; and if they were to be nationalised, the Commies would see mass REVOLT!
The exchange rate of the rupee vis-a-vis major world PAPER currencies has been steadily falling for decades now. And all we have been hearing is that we will prosper from "export promotion." And if you drive down the West Coast, you will find that each and every port, from Goa to Mangalore, is exporting iron ore - and importing nothing!
Now, imagine giving "sops" to the iron ore exporters!
And reducing the consumption of the poor by making all imports expensive!
And thereby reducing global demand - a downward spiral for the whole world, as well!
We export only in order to import.
Just as we produce in order to consume.
Manmohanomics is Craponomics - as I had written earlier.
Peter Bauer said a very important thing about Third World poverty: that it has nothing to do with the "limited capacity to export"; rather, it has everything to do with the "limited capacity to produce."
Poverty is caused by the fact that LABOUR PRODUCTIVITY is too low - and it requires CAPITAL to raise productivity. Productivity is measured in TIME. And all us Indians waste TIME on a colossal scale. Especially the poor. Slow traffic. Slow everything. And one person can work only so many hours in a day: TIME.
Thus, for a labour-abundant country that is capital-short, the best thing to do is IMPORT CAPITAL. And do note that the hammer-and-sickle on the Communist flag above are CAPITAL; they are PRIVATE PROPERTY of the poor; they are their MEANS OF PRODUCTION; and if they were to be nationalised, the Commies would see mass REVOLT!
Instead, he calls for HIGHER TAXATION OF THE RICH!
Now, this is the stuff "demagoguery" is made of. The poor love it. They never realise that these taxes will make the State rich - not them. That politicians and bureaucrats will "consume" these. And, further, since the rich save more than the poor, high taxes on the rich will lower the investments of the rich - which, in turn, will lower jobs for the poor.
Thus, Yechury concludes with his predictable "solution": which is more and more State Expenditure to "boost employment," particularly on "infrastructure."
Infrastructure covers electricity, telephones, roads and highways, railways, tramways, underground railways, airlines, internet, water, sewage, etc. Which if these works today? Only telephones, and the internet - because of the Private Sector. So, how will the others work?
Obviously, we need to tax the rich less, and allow rich, private investors, including their foreign partners, to invest in electricity, telephones, roads and highways, railways, tramways, underground railways, airlines, internet, and in water and sewage as well - particularly for new cities and towns.
PRIVATISE EVERYTHING!
Yechury calls for the PERPETUATION OF EVIL:
The revival of the Indian economy can only take place by enlarging the levels of domestic demand. This is currently being squeezed due to the relentless price rise and sharply widening economic inequalities. This can be reversed only by banning all speculative trading in essential commodities and, importantly, generating large-scale employment through significant public investments in building our much-needed infrastructure. There is no dearth of resources for this, if only the massive tax concessions granted in 2011-12 (nearly Rs. 5.28 lakh crore), which exceed our fiscal deficit (nearly Rs. 5.22 lakh crore) are withdrawn this year.
Note how only Keynesian inflationists say "there is no dearth of resources." They know they can always print more and more paper notes - the poor be damned!
Thus, in his concluding para, Yechury says, "Internationally, it is accepted that a 3% deficit level is, in fact, healthy for economic growth."
Internationally?
Then why are the EU and the US collapsing?
And what about his PHONEY concern for the poor - and simultaneous desire to empower corrupt bureaucrats: "banning all speculative trading in essential commodities."
Will not FREE IMPORTS by free traders be best - so, if international and domestic prices are out of synch, then their SPECULATION will be GOOD for the poor? Have any of these interventions in cotton or sugar, for example, helped anyone but the authorities?
All private trade in each and every ESSENTIAL COMMODITY banned?
And what about his PHONEY concern for the poor - and simultaneous desire to empower corrupt bureaucrats: "banning all speculative trading in essential commodities."
Will not FREE IMPORTS by free traders be best - so, if international and domestic prices are out of synch, then their SPECULATION will be GOOD for the poor? Have any of these interventions in cotton or sugar, for example, helped anyone but the authorities?
All private trade in each and every ESSENTIAL COMMODITY banned?
Note: This Communist MP says NOTHING about FREEDOM, PROPERTY, FREE TRADE, SOUND MONEY - all the basic pillars of the Science of Economics.
Where did he "study"?
BA (Hons) Economics from St. Stephen's College, Delhi University.
And MA Economics from JNU.
First class in both.
BA (Hons) Economics from St. Stephen's College, Delhi University.
And MA Economics from JNU.
First class in both.
No wonder this "idiot wind keeps blowin' ev'ry time he moves his teeth."
