In Capitalism, the "civil government" does NOT occupy "the commanding heights of the economy." Most certainly not. There is no "monetary policy" - and no "economic policy" either. There is Liberty, Property - and, most importantly, the "accumulation of capital," which is the method by which civilisation progresses.
Thus, The State does not aim for any "growth rate." And, since there is no inflationism, even the poorest accumulate capital. Kaushik Basu's suave statement that India should pursue 11 percent growth along with 10 percent inflation is not just nonsensical; it is evil in intent. No poor person can accumulate capital when his savings are being eroded at the rate of 10 percent. And, anyway, when they inflate the paper money supply or increase bank credit, they themselves do not know how much inflation will actually occur, for there is no mathematical relationship between the money supply and the "price level." The law is "qualitative," not "quantitative": and all it predicts is that if money supply increases, all prices will tend to rise, because the value of the money will fall - but not by how much, and most certainly it does not say that all prices will rise evenly.
Some editors and editorials are pitching for increasing credit for mortgage buyers and those who seek car loans - but it is worth emphasizing that if inflationism is ended and genuine Capitalism ushered in, these very people will see their savings grow, and they will buy houses and cars without requiring any bank loans at all. Further, when easy credit is pumped into real estate, there will eventually result a "bubble" - there will be "overbuilding," which is "malinvestment." Finally, the artificial "boom" will have to result in a "bust" even bigger than the present one.
In the previous post I also said Capitalism means unilateral free trade. Customs officials at ports and airports are not very different from those who erect roadblocks across State and district borders and extort money from truckers; or the octroi collectors. Indeed, customs guys are far, far worse. In many instances, like wine imports, or usued car imports, the suties are so prohibitive that they result in zero trade - which means zero revenue as well. Consumers lose - and consumers lose all the time with protectionism, anyway. A nation that practices policies in favour of producers can never benefit consumers. It is only in the completely free market - which is Capitalism - that the consumer is King. Remember: We all undertake the toil and trouble of production only to reap its fruits which we can spend on consumption. Production, work, effort - these are the "means," while consumption is the "end." The socialist paradise of workers never ever happened not because workers did not work - they did! - but because consumption was zero.
Further, unilateral free trade means all the action will be along our 2500 mile long coastline. New towns and cities will erupt - naturally. They will have to be managed well - by local mayors using local knowledge as well as locally raised resources. Capitalism means republicanism - and that also implies that each and every little urban republic uses its own resources, and is not a "client" of The State as now. Today, India is a huge urban disaster. Not a single city or town is liveable. There is no "local self-government." And all the State governments are dependent on the Centre for cash, grants and loans. Many are broke. Clients, all.
An anecdote: I once lectured at a tiny, little town nestled in the Western Ghats of Karnataka, for schoolchildren, on the differences between socialism and capitalism. This tiny town was quite a shambles - and, since it was in the district of Chikmagalur, which once returned Indira Gandhi to Parliament, I posed a question to the kind: Would you rather elect a good mayor for your town, or would you prefer to go on electing people to "represent" you in Dilli Door Ast? All the kinds unanimously chose the former - without any hesitation.
Later, I delivered the same lecture to eminent citizens of the town, who understood English - and over 100 turned up. At the end I was told by my local host that the Panchayat Council members did not show up because they do not understand English.
The area is full of coffee and arecanut farmers, fairly prosperous, and on another occasion, in another town, I was posed the question by one such plantation owner: What do we do about the harassment we receive from the Forest Department about "encroaching forest land." Since the chief of this department was sitting in the front row, I asked him: Would you prefer that the coffee was pulled out and the jungle planted back? He stared agape - while everyone else laughed out loud.
In any case, the Western Ghats are underpopulated; there is a lot of low-grade iron ore mining going on - including by the State within the Kudremukh National Park. The environment ministry has also cleared the setting up of a nuclear power plant in an "eco-sensitive zone." Methinks human settlement, commercial forestry, plantation crops, and even wildlife ranching would be much better for the environment. Just as in Goa they allow mining in the interiors - the beautiful mountains and forests - but they will not allow a wealthy entrepreneur to build Grand Casino on land! Many Goa casinos are actually on the sea!
So: Capitalism is about Property, which is "homesteading" according to the Lockean Principle. (Which should also apply to the radio spectrum.) The "civil government" owns nothing. Unowned property can be "claimed" by "mixing labour and capital with the soil."
Capitalism is also Liberty - which means street hawkers and vendors are PERFECTLY FREE, so long as they do not "disturb the peace." The bazaars of the East have always been crowded with them. There is no need for "registration" - as our The State is planning to do pan-India. In time, these vendors will also accumulate capital and buy small shops - for starters.
Capitalism is meant for POOR PEOPLE most.
So read Peter Bauer.
This post is continued here.
