Yesterday’s post on inflation and its only cure – which is nothing but the complete elimination of all human interference, be that of the State or of private bankers, in the setting of interest rates or altering the supply of money and credit – was a pellucidly clear demonstration of the fact that MONETARY INTERVENTIONISM is extremely harmful to society at large, by which I mean “the masses.”
Today, I shall extend that argument to cover each and every kind of State intervention in economic or business affairs. I shall cover, in brief, diverse “regulated” areas, from the RTO to civil aviation, from labour and immigration to foreign trade and investment, from drugs and alcohol to subsidies for diesel and fertilizers, and “policies” in areas such as agriculture and automobiles, and extend these to education and welfare as well.
To begin, however, let me place before my reader the broad outlines of the general argument – and only thereafter examine specific instances. This is the best place to start, because whenever anyone champions “free enterprise,” the cry goes out that “the market has to be regulated because businessmen only pursue profit, thereby ignoring the poor masses, hence The State must step in to ensure that the wider ‘public interest’ is served, especially so on behalf of ‘the poor.’”
The FACT that this line of argument is patently false has already been clearly demonstrated yesterday in the most important area of all – which is surely money and banking. That monetary interventionism is actually harmful for the toiling and poor masses is simple to prove: Since inflationism penalizes savers while rewarding borrowers, the poor suffer relentless and deliberate erosion of their savings – their precious CAPITAL – while The State and all its cronies, all of whom borrow, gain.
In that post, I also pointed out that Ruchir Sharma’s “folk wisdom” in contending that curing inflation implies nothing more than curbing the State’s “fiscal deficit” is naïve – because the really big issue is the perpetuation of “business cycles,” the endless booms-and-busts that occur and will keep occurring on account of the falsification of entrepreneurial monetary calculation by monetary interventionism. Hence, the only solution lies in eliminating all human influence in monetary matters. For a full explanation of what this means in terms of Law, I recommend this recent post.
[There is also a long essay on this vital subject of money and banking with much more detail in my online publication of 2007.]
In any case, fixing the fiscal deficit is not a matter of Economics; rather, it is related to Politics, and to "public law," which is constitutionalism, and the principal concerns of public law are "limiting" the State, its Budget, its ability to borrow, to tax, and all its coercive powers - so that the people can be possessed of their Liberties and Properties, can freely "pursue happiness," and there will be no abuse of power.
I have discussed these issues in a recent post on constitutionalism.
Ludwig von Mises has penned two tracts against interventionism – the first was during his Vienna years, in German; and the second was written when he had just arrived in New York and obtained an appointment at the National Bureau of Economic Research (NBER) – a position for which he received a very small stipend from the Rockefeller Foundation.
This second book against interventionism was written in German, then translated into English by two of NBER’s own staff – but never published!
Instead, Mises’ services were suddenly terminated – and Margit’s Memoirs contains the text of the rude letter he received from NBER informing him of this. This important book was finally published POSTHUMOUSLY!
Among all the strictly “economic” arguments against interventionism, this second book on the subject also posits a “political argument” – one that ought to have been of great interest to Americans, who are forever to be found, all over the planet, equating “freedom” with “democracy”; the latter referring, of course, to “American Democracy”: which is nothing but “waving their banner all over the place.”
Mises, in this second book, shows very clearly how interventionism, powered by “democratic legislation” that empowers bureaucrats, ultimately destroys democracy – because all those who are supposed to “represent the people” or “represent their constituencies” invariably end up as nothing more than “representatives of special interest groups.” Since the very survival of these special interest groups becomes dependent on their ability to influence legislation – this perversion of democracy is inevitable.
There are now 85 posts under the label “Interventionism,” and if my reader goes through the earliest ones, which include a series covering many areas, and contains quotes from both these tracts of Mises, he will discover all that I have already imbibed from The Master.
Today, therefore, I shall prefer to quote certain advances made in the theories against interventionism by Mises’ successors and followers, and these quotes are from the same paper by Joseph Salerno I have been citing for many days now, the one that seeks to “dehomogenise Mises and Hayek.”
[To be more precise, this is not really a “paper”; rather, it is a “review article” of a volume of Essays in Honour of Hans F. Sennholz (and I do have an old post quoting Sennholz at length.)]
Before I begin, I would also like to draw my reader’s attention to the 203 posts under the label “Predatory State.”
Referring to Sanford Ikeda’s contribution to the above-mentioned collection of essays honouring Hans Sennholz, A Man of Principle, which is titled “The Dynamics of Government Intervention: Theory and Implications,” Salerno dismisses outright Ikeda’s (Hayekian) contention that the outcome of interventionist acts are “unintended consequences.” Salerno writes:
From the Misesian perspective, however, the motivation for the various acts of intervention is precisely those immediate benefits that are intended by its proponents. And while Mises admits that there may be long-run consequences of any intervention, he attributes them not to an inevitable and irremediable condition associated with the Hayekian “knowledge problem,” but to antisocial and deliberately obscurantist ideologies that blind the masses to the conclusions of economic theory.
Moreover, Mises’ analysis of the interventionist process does not preclude the possibility that the proponents of an intervention recognize and intend its generally unforeseen consequences. Thus, unions support minimum wage laws precisely because these laws price low-skilled workers out of the labour market and increase the demand for skilled union workers, while bureaucrats manning municipal rent-control boards may welcome the growing apartment shortage resulting from rent control because it increases their power, prestige, and the value of the favours they can bestow.
Indeed, it is precisely the goal of many radical environmentalists to cripple capital formation and productivity and to bring about a decline in real income and population via environmental regulations.
The very crises which regularly recur as the interventionist process proceeds also may be desired by those who are ideologically committed to the extension of political control over the economy….
From the Misesian perspective, the consequences of an intervention are not necessarily “unexpected” to its active promoters and beneficiaries and need not continue to be so to the masses it victimizes.
[I think labour legislation, unionism – or “organized labour” – and environmental legislation are sufficiently discredited already.]
So far, in examining monetary interventionism from the point of view of losers and gainers, and then extending the same analysis to how Mises viewed interventionism as clearly INTENDED by its beneficiaries, and as caused by antisocial and deliberately obscurantist ideologies that blind the masses to the conclusions of economic theory, let us now proceed to understand what exactly Mises considered to be “social welfare.” I shall attempt to be both brief as well as simple – so that non-economists may also understand. Economists and students of this science, of course, ought to study Salerno’s essay most carefully.
The completely free market is in the best interest of the poor and toiling masses for the following reasons:
First, the poor and toiling masses engage themselves in peaceful, voluntary, and “productive” acts known as “work” only in order to morally earn an income that they can spend on acts of consumption. The “disutility” for them is “work”; while “utility” for them lies in whatever they purchase with their earnings. Thus, it follows that the sole and ultimate standard of socially efficient resource use lies in whatever best satisfies the preferences and demands of the masses as consumers.
Second, the ideal of the Consumer as King implies not only free international trade – which means full competition and choice – but also an “unhampered market” (unhampered by rules, regulations and legislation), simply because only under such conditions can there emerge the absolute necessity for all promoter-entrepreneurs to direct all their capital as well as energies towards attempting to best satisfy whatever they consider to be the most urgent needs of consumers – and nothing else. In Salerno’s words, “the unhampered market is socially efficient because it provides the incentive for social action by establishing a tight producer-consumer nexus that gives full sway to consumer choice in determining the allocation of resources.”
Third, it is an added fact that the consumption of “luxuries” by the wealthy goes on to improve the well being of the poor in the not-too-distant future. When anything new is produced, the scales of production are small, and that “luxury” is affordable only by the wealthy: like the first automobile or the first mobile phone. It is only the initial patronage of the wealthy that enables the early manufacturers of these luxuries to improve their offerings, invest in expanding scales of production – and then attempt to satisfy mass consumption: and modern capitalism is “mass production for mass consumption.” Henry Ford’s “assembly line” for mass manufacturing the Model-T is one example. Another is Janis Joplin, in the late 1960s, wailing to the Lord to buy her a colour TV – and I don’t think black & white TVs are even manufactured any more!
Thus, it makes no sense to tax luxuries heavily. Nor does it make sense to tax the wealthy on socialist, “redistributionist” grounds either, for the wealthy do not hurt the poor by splurging on luxuries; further, if the prudent among them prefer to save and invest, this is what ends up not only employing poor workers alongside capital they themselves could never have saved, it is also the means by which the consumption needs of the poor are satisfied, by mass producing goods for mass consumption. Henry Ford’s workers, for example, could buy a Model-T with just three months wages. (I will discuss taxation in a future post – with particular focus on what taxation should NOT be all about.)
Fourth, this social efficiency is ex ante – that is, the efficiency occurs before all the acts of investment, production, exchange and consumption that are aimed at by all participants, including the promoter-investors. This further implies that what matters most to the attainment of this ex ante efficiency is that there be no regulatory- or policy-induced distortion or falsification of actual market prices, upon which accurate economic calculation depends. Thus, ex post efficiency (or the Paretian kind, for example) is entirely meaningless. It is always to be expected that all promoter-entrepreneurs, as also all consumers, will not succeed – because such is the necessary fate of all their essentially speculative acts, as the future is always uncertain – but the free or unhampered market contains within it a “selective process” that serves to “weed out” all who are, relatively speaking, unastute or inefficient, thus ensuring the most farsighted as well as technically proficient entrepreneurs, as also the most discerning consumers, succeed.
Fifth, welfarism reduces the incentives of the "productive" who earn money and pay taxes to continue to do so, while the processes by which the resources of the productive are siphoned off to the unproductive - who are essentially "parasitical" - further falsifies economic calculation, while also reducing the incentives of welfare recipients to engage in productive activities by participating in the social division of labour. Therefore, the resultant reallocation of resources is socially inefficient to the extreme. Of course, if this welfarism is financed through inflationary means, the poorest are being "cheated," not “helped.”
Thus, no matter how we look at it, every act of intervention unambiguously LOWERS social welfare.
For the sake of clarity, let me restate the implications of the Science of Economics as developed by Ludwig von Mises, which is defined as “the study of market phenomena.”
This science is rooted in the “trading mind” of Homo Oeconomicus, all blessed with “a natural propensity to truck, barter and exchange,” and it is because of this trading mind that humans specialize in the “division of labour” and not only provide for the needs of others, but also, and more importantly, for this is the “end” they have in mind when they “work” for their customers, obtain all their own need-satisfactions from yet others, who are specialized in areas other than themselves.
It is because of this Market that we are “productive”; it is also because of this Market that we “cooperate”; and it is only from this Market that we can practically as well as morally satisfy all our needs.
A State, or a Government – or, to be more precise, a “civil government” – is never constituted for the purpose of satisfying our needs. In all the old literature, including Thomas Paine’s Common Sense, its only purpose is to act against all enemies of this Market Order – and nothing else.
It ought to be emphasized that this Market is always surprising us with new products and processes – things that we ourselves had not even dreamt of – and we then find ourselves satisfying needs we not only thought could never be satisfied, but needs we could not even articulate. The telephone, the gramophone, the electric bulb, the steam engine, the aeroplane – well, these were complete surprises for our ancestors. And look where we are today, in 2012. For example, for a guy like me, who began writing 25 years ago, blogging was simply unimaginable. As was the Internet. Email. The Search Engine. And Image Search even moreso. I often think that if Mises or Rothbard or even Bauer could have blogged like I can…
It therefore follows quite logically that Consumer Sovereignty is of Paramount importance in the Market – because the Consumer is everyone, and Consumption is the goal and end of all productive work.
If each and every producer were sovereign, no one would succeed as a consumer. Protectionism, cronyism, and each and every kind of interventionism – these are but means by which certain producers use the “indirect force” of the State (as with the guns of the Customs Department) in order to keep out their competitors. The masses come off poorer – as consumers. They are, in truth, simply being “cheated” – by the “misuse of force” on the part of the State, acting on behalf of its cronies, and completely against the wider “public interest.”
This is not Shubh Laabh. This is “corruption” – in politics as well as business. Shubh Laabh, if it is to mean anything perfectly “moral” at all, then it is this:
That the businessman satisfies his customers in completely free and open competition – everything voluntary, without any use of force at all. The profit motive only becomes moral when the consumer is not being deliberately cheated.
And as for The Vote Motive…. Read the book in the picture alongside (free download here). It is this that is the really “ugly motive.”
Now, there are many scientific conclusions and deductions that follow: first, because we specialize, urbanization is “natural.” The biggest markets only happen where the largest number of potential customers can be found. A tea-shop in a vacant village or a tea-shop in a busy city market – which of these would appeal to your “locational economics”? Thus, Gandhian “rural development” as well as “village self-sufficiency” are not just nonsensical; they are anti-civilisation itself. And it shows!
More importantly, Gandhian “self-sufficiency” is actually BLIND to both the reality of the human condition as well as to the Potential of Man – for this phenomenon of specialization is not a “theory”; rather, it is the “datum” – what we can see all around us. And it was none other than Ludwig von Mises who proclaimed the division of labour and the specialization which ensues to be “the great Principle of cosmic change and becoming.” Anyone who desires to “become” someone does not seek to be “self-sufficient.” A writer, and actor, a singer, a dancer, a painter, a poet, a philosopher – whatever, but NOT self-sufficient isolation in a remote village, growing your own foodgrain and surviving on them, spinning your own cotton yarn for weaving your own cloth and nonsense like that.
Next: The very word “oeconomicus” implies that we humans possess trading minds that engage in “calculative action,” which is what “economisation” means – so we count the size of our herds, or the number of gold coins in our vaults, and differentiate between Capital and Income, to ensure that we “save” and do not “dissave” by “consuming capital,” as in the case of “the fence eating the flock.” This is precisely what is happening today – only because of monetary interventionism, which destroys all calculations, not only of the present, but also the future, is an extremely damaging practice, one that must go.
Over a century before John Maynard Keynes came up with his evil and immoral General Theory that “monetary policy” by The State is “theoretically valid” - to be used by The State in order to achieve trade-offs between inflation and unemployment: so, if unemployment rises, increase the money supply, thereby raising inflation, which stimulates the economy, and thereby reduces unemployment.
Inflation causes unemployment, actually. And causing inflation by increasing the supply of money never raises demand - for History shows clearly that Spain and Portugal did not "profit" much by importing gold and silver looted from the Americas; while the Brits profited by exporting their gold and importing spices; by exporting gold and investing in cotton, tobacco, sugar and tea plantations overseas - and it is the "production" of all these new commodities that raised demand, and not the mere increase in money, which is but a "medium of exchange," even when that money is hard gold and silver, and not mere paper, as today.
Over a century before Keynes’ General Theory appeared – an entirely “phony economics” that deals not with “market phenomena” but prescribes “State intervention” for supposedly desirable ends – there was Jean-Baptiste Say’s “Law of Markets” that DOMINATED all classrooms where Economics was taught. This was long before the Misesian “science” of today; but it was, nevertheless, a “law of markets,” and had nothing whatsoever to do with any State, any government, or any coercive authority.
(I now have 20 posts on this law, under that "label" on the right-hand bar, including a long series explaining many of its implications.)
In a nutshell, Say’s Law holds that the source of all demand lies in the production and subsequent sale of all “non-competing goods and services.” Thus, if I am successful in selling the rights to even one of my unpublished books, I will be immediately possessed of the means to demand all the goodies I may desire from the Market, except for my book, which I will never buy, though I will most certainly buy lots of other books, by other people – and, then again, I do declare that I will never buy a copy of Keynes’ General Theory, because I know better.
Among the innumerable implications of this Olde Law of Markets, allow me to point out two of immediate relevance: first, that combinations of protectionists who do not compete makes no economic sense whatsoever, and reflect the harsh fact that those who combine for such protectionism do not even know what classical liberals called “rightly understood interests.”
Thus, it is true that when imported televisions, consumer electronics, mobile phones, air conditioners, washing machines, microwave ovens and other consumers durables are freely sold by foreign firms through their dealers (who are Indians) a few domestic manufacturers who cannot compete may be adversely affected.
Yet, the very fact that millions of Indians are profiting from the sales of these, as are consumers, implies that the demand for all non-competing goods are rising: for garments, for restaurant meals, for liquors, for automobiles, for cigarettes, for movie tickets, for music CDs, for newspapers and books…. The list is endless.
Second: Say’s Law of Markets emphatically proves that a completely free market, possessed of free international competition, unhampered by regulations (particularly on the employment of labour) is in the best interests of all industries and all producers, of all goods and services, simply because it is only when such competition prevails, and the Consumer is King, that all goods and services (including labour) will be sold at their lowest competitive price, which further implies that the demand for all non-competitive goods will be at their highest.
For example: If cigarettes or beer are overpriced because of protectionism or extortionist taxation, then those who smoke cigarettes and drink beer will have less left over to spend on other, non-competing goods on the Market, and the demand for all these will fall.
Artificially raising wages through legislation “protecting” unions and also by immigration control hurts everyone – and this I leave for my reader to “think through.”
Thus, it follows that each and every kind of intervention in markets is not only harmful to society at large, especially the poorest; it is also NOT what Economics is all about, which is the “study of market phenomena.”
Only socialists, welfarists, Keynesians, protectionists, environmentalists, unionists, interventionists and State-worshippers who derive powers, privileges and pelf from legislation look at Economics as a subject that must insist markets are unfair, that the profit motive is corrupt, and that democracy is fabulous, as are central bankers, regulatory authorities et. al.
There is not an iota of truth in their claims.
All socialists, welfarists, Keynesians, protectionists, environmentalists, unionists, interventionists and their associated State-worshippers hate Freedom; they worship Power – and its misuse, of course, for obvious reasons. They are precisely the sort who are “ideologically committed to the extension of political control over the economy.” They want everything politicized.
Yet, I wonder what my reader will answer if I were to ask:
Would you prefer the Liberty to open a beer shop at will, or would you prefer to vote in this economically repressed and completely unfree country?
What is REAL FREEDOM?
Economic freedom or the vote?
And if you prefer the Liberty to open a beer bar, what do you think of the Liberty to set up your own micro-brewery?
Or a nightclub?
What is democracy without liberty?
Go ask some American, dude – who are all “born to be jailed” today, as I pointed out a few months ago.
Lastly, Say's Law of Markets emphatically proves that ECONOMIC FREEDOM FOR ALL perfectly coincides with the "rightly understood interests" of all businessmen - because if anyone cannot sell what he produces, he also cannot be possessed of the means to demand what anyone else is trying to sell.
LIBERTY - FOR ALL!
SHOUT IT OUT REAL LOUD FROM EVERY ROOFTOP!
Examples of Interventions that Harm the Masses:
The RTO, Environmental Standards for Automobiles, "Import-Substitution Industrialisation" imposed on foreign carmakers, and forced domestic sourcing of components:
The auto-rickshaw is licensed by the RTO (Regional Transport Officer). There is a “ceiling” on the number of licenses that can be issued. For this reason, an auto-rickshaw with a valid license costs Rs.6,50,000 in Delhi – while a brand new videshi modern car costs half of that.
We can see that prices have been affected, that economic calculation has been distorted and falsified, and also that the poor consumer, who finally pays for the uncomfortable ride, is screwed.
Why is the auto-rickshaw licensed? Why is there this ceiling on the number of auto-rickshaws that can be allowed on to the roads? The only rationale offered is that the roads are too crowded.
Yet, if you travel on the roads of Delhi, you will find that enormous buses owned by The State are plying freely – hogging up all road space.
Indeed, this The State has also implemented a (failed) Bus Rapid Transit Corridor on major thoroughfares that effectively reserve over half the road space for its own, unlimited buses!
Roads are too crowded for the poorest transporters - but not for The State!
And as for “road safety” – the statistics I read just the other day reported that over 3,500 citizens have died on the unsafe roads of Delhi between January and June 2012. There are no functioning zebra crossings anywhere in this Capital City. Very few footpaths for pedestrians, either.
Under these circumstances, pray tell you me, what sense does it make to impose environmental standards on internationally reputed car manufacturers? This is even more absurd than the "pollution control" certificates all motorists and even two-wheeler owners (and, perhaps, auto-rickshaw wallahs, too) must compulsorily obtain from the RTO and its "agents."
When there are no roads, when traffic crawls in low gear, when all kinds of weird – actually “unroadworthy” motorised vehicles – ply and add to congestion, when human beings are killed daily on a massive scale, when slums proliferate, with open drains, which means filth and disease, when garbage is not collected - what sense, then, does it make to IMPOSE such "environmental standards" (which means "increased costs" for manufacturers and, hence, consumers as well) on the wacko notion that this will give us "clean air"; or, weirder still, prevent "climate change"!
In reality, the biggest cause of respiratory disease in India is the poor quality of domestic fuel: like dried animal dung, burnt indoors.
[Thus, the kerosene subsidy, and the cooking gas subsidy as well, do not help the poor. The artificially cheap kerosene is used to adulterate automotive fuels; and as for the gas subsidy, the fact remains that almost the entire cost of cooking gas is transportation – in cylinders, for this is not piped anywhere in India. Thus, private supplies of electric power (to cook on) would solve the problem fastest. The choice of fuel for electric power plants should be left to the free market. The State is, instead, going the other way – with UNSAFE nuclear power plants under its own ownership! Socialism!]
I also keep reading that our The State is about to impose all kinds of interventions on automobile manufacturers in order to improve things like “fuel efficiency” and so on. Let it be understood that the only way such technological feats can ever be accomplished is through open and free competition. The fuel efficiency of a Model-T, the fuel efficiency of a motorcycle or car of the 60s or 70s, these have improved so dramatically to what they are today NOT because of any State action, but only because of competition – with consumers being conscious of these parameters. This is why the Japanese succeeded with their small, fuel-efficient cars – while all the big, American gas-guzzlers died.
On the other hand, in the West today, there are huge “environmental taxes” imposed on cars with big engines – like sports cars – and their only effect is to kill this industry. Obviously, firms that specialize in manufacturing such supercars cannot expand production scales – because the environmental tax kills demand. The less wealthy among sports car enthusiasts suffer as consumers. And as for the “clean air” nonsense – supercars barely account for one or two percent of all cars on the roads. Again, this represents a great misconception about what taxes are supposedly collected for, as well as the Principles of Public Finance. Subsidies and taxes that alter “relative prices” are the worst kind of interventionism ever. This, indeed, must be the sole reason why Porsche has just been taken over by Volkswagen – when in the good old days before environmentalism Professor Ferdinand Porsche was FORCED to design the Volkswagen Beetle for Hitler, and Volkswagen was a very “National Socialist” State-owned company till fairly recently.
[In German “Na” means the letter “N” while “Zi” is the letter “S.” Hitler and his “National Socialists” were therefore called “Nazis” by Germans.]
The Greens of Europe drive “toy cars” – and they want everyone to be like them. They are actually killing the automobile industry on some phony environmental grounds with unjust taxation because “it is precisely the goal of many radical environmentalists to cripple capital formation and productivity and to bring about a decline in real income and population via environmental regulations.”
In India, where very few own cars, and the vast masses still rely on animal power, it was therefore not surprising for me to find that when my Four Wheels For All: The Case for the Rapid Automobilisation of India was released in Delhi, the “expert” from The Energy Research Institute (TERI – which is headed by the Nobel laurate RK Pachauri) did not turn up at the scheduled panel discussion.
Pachauri himself has opposed SUV ownership in India. I guess Pachauri believes we will prevent “climate change” or some such imagined disaster by driving toy cars like the Maruti 800 on our broken, rutted and pitted “notional highways.” Bump, bump, bump all the way to dusty death!
So let us forget about the air, for India is filthy in every other way, whether cities and towns or anything else: Have you ever seen the dirty rivers, like the Yamuna or the Ganga? They are State Property. And there is a permanent water shortage, pan-India.
The only solutions lie in Private Property - and Torts.
Do carefully read Murray Rothbard's "Libertarian Manifesto on Pollution."
And understand that all this environmental legislation and the rules and regulations associated with it are but:
Environmental taxation is even worse.
If we extend the analysis above, on the harmful consequences of this sort of licensing and regulation of motor vehicles that can be freely chosen and invested in to satisfy the anticipated transportation needs of the masses, to the entire gamut of rules and regulations covering “automobile policy” – from manufacture to import, and from taxation to environmental standards – the conclusion we will arrive at will be the same: the consumer gets screwed.
Free international trade alone can ensure that each and every poor Indian will be able to buy an automobile for himself (of course, his savings must not be eroded by inflationism) – as used cars, and even crashed ones, are imported, repaired, and sold to the “masses.” As for the wealthier members of the citizenry, free imports will also mean a very wide choice of models and makes – unlike today.
I ought to add that the enormous two-wheeler industry in India today is akin in many ways to the enormous bicycle industry in China during Maoist times. (Or the Mao suit industry, for that matter.) Two-wheelers are not safe at all these days. Wherever I have stayed in India during the last ten years or so, be it Mangalore, Goa, or Poona, and now Delhi, I have noticed that every single day the newspapers inevitably report road deaths of motorcyclists and scooterists. I was particularly horrified while in Poona for many months in 2003-4, to read of at least two (if not more) deaths on two-wheelers. This is the city where Rahul Bajaj lives – and where his two-wheeler factories are located. One particularly horrifying experience during those months was a bus ride to Bombay during which my co-passenger was a young Sikh studying computer science in Poona, who confessed to using a motorcycle to college. When we started discussing road safety, he blurted out: “Yes, the roads are very unsafe. Before, we used to have a holiday if any student died. But nowadays so many die that there are no holidays any more.”
Indians must therefore think of “four wheels” – which means cars – and not two or three wheels, as today. This is in the interest of all consumers – including especially the poorest of them, if used and even crashed vehicles come in from across the seas.
Thus, it becomes evident, the forced location of automobile factories in India, based on the illogic of “import-substitution industrialization,” goes against consumer interests.
Even if many want to buy cheap, new cars, the fact remains that if each and every manufacturer of each and every product is left perfectly free to decide upon where to locate his factory or factories, he would choose locations based on his own “economic calculations” – which, to be successful, would have to be in the consumer interest. Towards this end, he would enter into his calculations many factors – from the reliability and cost of energy, the availability of quick transportation both for the bringing in of raw materials as well as components to the dispatch of finished goods to markets.
We can add to that other important factors that will feature prominently in these calculations, such as not only the cost of hiring workers, but also their skills, including not only technical skills but also language proficiency. Even more important than these would be “industrial relations” – referring to trade unionism and labour unrest.
By forcibly locating multinational car companies within our territory, considering the shoddy infrastructure – electricity, roads, and everything else, including labour unrest – I am sure costs to consumers are far higher than they would have been if these manufacturers had been free, and foreign trade free as well.
In any case, “protecting” these multinationals who manufacture within our territory with the same tariff barriers invites what is known as “tariff jumping.” This "protects" them from other MNCs who manufacture abroad; and further serves to falsify and distort their economic calculations, to the detriment of Indian consumers.
Even more damaging is the forcible “indigenisation” of components – because of “scales of production,” and quality as well. Whereas foreign manufacturers of small cars may possess necessary volumes to support domestic manufacturers of some components, those who “assemble” luxury vehicles do not. In a completely free, liberated, laissez faire situation - the “unhampered market” - manufacturers would choose and appoint their own vendors of components, spares, and the like, and that alone would serve the consumer best.
This conclusion is validated by the insane intervention now being proposed for IKEA – that they procure, for their Indian stores, in which they will be investing billions, from “small and medium” domestic manufacturers. The suggestion that this intervention will benefit “small and medium” sized factories is something Gandhian – and entirely nonsensical, because Modern Capitalism is “mass manufacturing for mass consumption,” which means huge scales of production, huge investments in huge factories, and hence low costs per unit of output, which then translates into low prices for poor consumers.
The free market is always in the interest of the masses as consumers. It is never ever in the interests of producers, whether big, medium, or small, or domestic, or multinational.
IKEA is famous mainly as a furniture designer and manufacturer – and I do believe that COMMERCIAL TIMBER FARMING would serve them, and all poor Indian consumers, best. Today, because of anti-human and anti-progress environmentalists, who support the Forest Department with their hypocritical pro-tiger propaganda, furniture made from good timber is unaffordable to almost every Indian: rich, poor, and middle class as well. Plastic chairs and tables are now commonplace, everywhere in India. Even in restaurants!
Freedom to engage in COMMERCIAL TIMBER FARMING means LIBERTY, and PROPERTY – not intervention.
I conclude this section with some additional examples of tariff jumping that go against consumer interests – and why free international trade is best:
Let us take the case of widely consumed stuff, even by the poor, particularly kids, like instant noodles, dehydrated soups, and even chocolates: In India, Nestle (India) (a Swiss company) dominates the instant noodle market – while the Far East produces hundreds of such noodles, with thousands of flavours. As for dehydrated soups, Nestle competes with Unilever (India) – and since the latter’s parent company has bought Knorr, they produce and market a handful of soups under this brand, quite a few of which are “Indian soups.” Soups are Western cuisine – and Knorr makes hundreds of soups in Europe, which we do not get in India. Further, both Knorr as well as Nestle, in Europe, compete extremely fiercely with dozens of other brands – and this is what serves consumers best – and not domestic manufacturing of anything. As for chocolates – my reader can figure it out for himself. In any case, what I really like are “liquor chocolates,” sometimes. And we in Gandhian India never ever get these. Bitter chocolates, which the healthiest, are very rarely available as well.
Free trade – not import-substitution.
The International Division of Labour.
You can take beers with foreign brand names manufactured locally as well – and it can never taste like the original, because the water is what makes the taste. So the original Budweiser from the Bohemian town of Budweis is something else – and as for the American, and now Indian, productions, both of which use a “brand name” for a fee, they are quite simply “not the real thing.”
We also now have many foreign brands of cigarettes “Made in India” – including Marlboro, which the Indian firm that has obtained the use of this brand advertises as possessing a “New Taste,” which, if nothing else, proves that this too is “not the real thing.”
This is an area of great promise that regulation – and regulation alone – has completely KILLED. The papers today reported that there has been a full 10 percent decline in the number of passengers carried by India’s domestic airlines between the last year and the current one.
Entry of private, competing players has been blocked – as has been foreign investment. Worse still, State-owned loss-making firms have been allowed to “compete” – which is precisely what “unfair competition” is all about. Even worser, expropriative taxation on aviation fuel and many other unjustifiable surcharges have meant that almost all “marginal consumers” have not been able to improve their consumption by moving from the unsafe, uncomfortable, dirty and painfully slow Indian Railways to the “low cost” airlines that had emerged, of which I think only one remains: good ol' INDIGO, my favourite domestic airline for very long. They make profits - despite all the fuck-ups, and these, I just found out, include huge charges imposed upon them by the so-called "privatised" airports! Which just goes to show how much hard work is required of private firms that make profits by satisfying cusotomers.
Civil aviation in India illustrates the same effect of regulations and State policies as well as State-owned firms: the distortion and falsification of economic calculation, not only among entrepreneurs, but also among consumers, and all this to the detriment of the poorest among them.
Drugs & Alcohol:
I recommend my Intelligent Pleasure-Seeker’s Guide to Getting High, which tells the full story of the horrors unleashed upon the masses by legislation passed by ignorant, malevolent, and even predatory “interests.” Today, in schools, kids can freely drink colas laced with caffeine, and loaded with lots of sugar! Cannabis, a very ancient as well as socially acceptable high, one that is consumed by Hindu holy men and also by Muslim fakirs, a herb that is non-carcinogenic and completely non-addictive, is BANNED, and even CRIMINALISED. Tobacco is free. And alcoholism is rife, of course.
Surely the original coca in the original Coca-Cola is a far, far healthier stimulant than caffeine – and if you have doubts do read my recent post on why the coca leaf should be free.
Indeed, poor Americans are getting destroyed by “crack” – an adulterated and very dangerous synthetic derivative of coca; just as many poor Indians are being destroyed by “smack,” an adulterated synthetic derived from opium.
The UN-US “War on Drugs” is nothing but a “War on Innocent People” – from South America, from Afghanistan, and from other parts of the world as well, including India. If anything can be said about this illegitimate war, then it is this:
It is not based on “medical science.”
Its effect is directly opposite to its stated aims – and what is really happening is that “public health” is actually being seriously harmed.
Thus, in the USSA, the true interest of public health does not require “Obamacare”; instead, shutting down their Drug Enforcement Authority is what I would prescribe.
Of course, as in all instances of interventionism, there are those who benefit – from purveyors of alcohol, tobacco and coffee to cops and the mafia, of course. But the vast masses, as usual, lose – and lose heavily.
Freedom is the only solution: which means we have to abandon the ridiculous superstition that The State “protects” us.
Instead, we must believe we have to take responsibility for our own protection, for our own choices – and it is in hard “knowledge,” and not The State, that our only hope lies.
Liberty, individual responsibility, hard medical knowledge – these alone can work.
History also provides evidence towards the validity of my prescription: for example, the Prohibition of Alcohol in the US in 1920 created the Mafia – who preferred, for obvious reasons, to peddle hard liquors (all illegally distilled) in their “speakeasies,” and beer as well as wine disappeared. This led to mass alcoholism – which is why Alcoholics Anonymous was founded in the US, in 1935, after the horrendous “public health” effects of alcohol prohibition were noticed (by the Church, which was the biggest supporter of Prohibition in the first place!).
Similarly, today, because of all the legislation criminalizing cannabis, coca, and almost everything else, “private prisons” as well as “private rehabs” are mushrooming – and profiting. They are also big supporters of such legislation. And I must add that I was deeply moved by the late Amy Winehouse’s song “Rehab.”
In India, the hugely repressive licensing regime imposed upon bars – and nightlife in general – have done nothing other than distort and falsify economic calculation, imposed huge costs upon entrepreneurs, and ended up pushing the poorest right out of the market. Where do poor people sit, drink, and eat - particularly in Delhi? Why, even the middle classes cannot afford to eat and drink out in this Capital City!
What do we “work” for? – if not the “liberty to pursue happiness” as we subjectively view it. If this “repression” is “moral” then I would much rather prefer to call myself “decadent.”
Further, because of this DESPOTISM, a great deal of hard “knowledge” that people already possess, and which can never be acquired from the formal “education system” – music, dance, DJing, bartending and so on – have virtually perished.
As Jimmy Page famously said:
"The great thing about the guitar is that they do not teach it in school."
The poorest and the least “educated” people on Plant Earth – the black slaves of New Orleans, who also suffered “racial discrimination” and abuse – succeeded most spectacularly in music, show business, and the movies (which came much later). They “invented” jazz – and provided all the “superstars” of this unique genre. It all began in Congo Square – renamed today after Louis “Satchmo” Armstrong.
Shutting down the entire nightlife industry throughout India, which means shutting down all the “performing arts,” is most definitely not “moral.” If anything, it is “economic repression.”
It is actually both corrupt as well as immoral - and what is more, the rhetoric of those who engage in this sort of "moral posturing," shows them clearly to be nothing but utterly "hypocritical."
In fact, the very notion that the Indian cops are "looking after us" is the most absurd fiction, or "myth," anyone can think of, considering the fact that over 1000 Indians die on our unsafe roads every day.
Thus, all the hot air on "national security" - ditto for "national defence" - are myths, pure and simple. Which is why I champion the Right to Keep and Bear Arms.
For example: With all the trouble people from the North-East are facing these days in many cities, what I read here is a statement by the Police Commissioner of Delhi to the effect that any North-Eastern people who fear for their safety in this city should contact Delhi Police and these cops will do all that is necessary to "protect" them.
What I believe is this:
"A gun in the hand is far, far better than a cop on the phone."
What about the recent History of Delhi - the Massacres of Sikhs in 1984, and the utterly disgraceful conduct of Delhi Police then?
I also found this excellent post by a Sikh handgun-instructor in the US on LewRockwell.com today, written after the recent killings of Sikhs in a Gurdwara there, about how many US Sikhs are now coming to him for instruction, because they want to arm themselves. I quote from his closing remarks:
During the class, they asked me about carrying a gun and I expressed to them that I and most other people who keep weapons have no desire to ever take a life. However, we must prepare for that possibility in order to protect our lives and the lives of our loved ones. I told them that a weapon, when used correctly, is used to preserve life and protect people. They understood this message and brought it up several times throughout the class.
Talking to other people after the tragedy at their church and before I met the Sikh members, we generally came to the unfortunate conclusion that every person has the right to NOT defend themselves. To live their lives daily under the illusion of security and safety as they go about their daily routines. However, if a person chooses to live that way, no one can order them to change, yet, they MUST be prepared to except the consequences of that lifestyle, if they REFUSE to prepare to defend their lives. And if you are met with violence and are unprepared, do not attack the rights of us who choose to prepare to defend our lives from those that would harm us.
Recommended reading: Gustave de Molinari’s brief article of the late 1800s – and Molinari was associated closely with Bastiat – advocating, as Editor-in-Chief of their Journal des Economistes, for the first time in history, “The Private Provision of Security.”
So, pay no heed whatsoever to any of the RAW vs. ISI propaganda emerging from Bollywood nowadays - for it is nonsense.
During the Cold War era MAD magazine portrayed "intelligence agencies" in their Spy vs. Spy cartoons as clowns. But at least that Cold War was based on “political ideology.” It is another matter that the West did not really fight for Capitalism and Civilisation – and that even while the “Evil Empire” of the Soviets has gone, what remains is “National Socialism” in these very countries.
Today, if a retired James Bond, after an entire working life On Her Majesty’s Secret Service, which means working for paper (Keynesian) British pounds, were to try and buy a dry Martini at a local bar with his savings or pension, I sincerely doubt whether he could afford it. He ought to have defected to Mr. Goldfinger's side, I think.
Anyway, my favourite real-life MI6 man is Howard Marks, better known as Mr. Nice, who is very keen, like me, on the legalisation of ganja-charas.
As compared to Mr. Nice, Ian Fleming, the author of all the James Bond fiction, was a complete IDIOT: he lived in luxury and riches in Jamaica, where he died young of ALCOHOLISM!
Thus, he never ever heard the "songs of freedom" of Mr. Marley and Mr. Tosh - and never smoked a big spliff, ever.
Let us now continue with India and Pakistan - and our RAW vs ISI phoney "intelligence war."
Unlike the "political ideology" based Cold War between the Western powers and the former USSR and its communist allies, the divide of 1947 between India and Pakistan was NOT based on any “political ideology”. Rather, this divide and the subsequent Partition of the sub-continent, was based entirely on:
1. Religion, and
2. The “ethic” of majoritarianism, which is supposedly “democratic,” but is surely not what “liberal constitutionalism” or an Open Society are all about. The very fact that minorities were massacred by the million illustrates why “Individual Rights” matter.
3. And in any case, the State of Pakistan then established – with one part some 3000 miles away from the other – was unviable.
Under these circumstances, this “phoney war” between the ruling elites of India and Pakistan is just an evil sort of “rabble rousing” reminiscent of the Partition years.
Allow me to conclude this section with some words about Switzerland, a nation that stayed out of both World Wars. These are from the Memoirs of Margit von Mises. The year is 1939, they have just been married in Geneva, and Britain and France have declared war on Germany. She then proceeds to write the following:
The Swiss immediately prepared for the worst. The Swiss are a peace loving people. For three centuries they have lived in harmony with three neighbours, three languages, and three religions. They have an excellently equipped, small modern army, a sort of standing militia. Every Swiss citizen has to report for military duty once yearly, and the general feeling is enthusiasm for peace and a hatred for aggression.
She continues to then record how refugees from all the occupied countries soon streamed into Geneva, how all hotels and apartments were full, and then she writes:
But along with the newcomers came Hitler’s spies. The atmosphere, once so tranquil and peaceful, was now filled with rumours. Fear touched everyone. The Sunday excursions to France had to stop. We also avoided going to restaurants for dinner and taking afternoon tea in the beautiful gardens by the lake. One did not know who might be sitting at the next table to overhear the conversation. Friends met at private houses, where as early as September, 1939, dark shades had to be installed and not a gleam of light was allowed to show through the windows.
This shows something – that those rulers who know they are wrong, who cannot persuade, only they employ such tactics. Their greatest fear is intellectual dissent – and they want to control the freedom of expression, free speech, and even physically eliminate all their ideological enemies. This is why the Mises’ had to “escape from Geneva” – and what a harrowing tale that is! – despite the fact that Ludwig “loved Geneva,” the added fact that he “loved teaching at the Institute there,” and the further fact that he was “more comfortable in French than in English then.” He even preferred the classical architecture of the old cities of Europe – and could never get to like the skyline of New York City.
Why did Hitler need spies? Because he ruled with “information” – and not “knowledge based on principles.”
That is NATIONAL SOCIALISM – a worldwide phenomenon today, as I have discussed in this recent, and brief, online publication.
What we in socialist-democratic India therefore need to ponder long and deep is this:
So, what is the way we the people of India and Pakistan are going to live in peace and harmony, with safety and security? It is going to come with these “mercenary armies,” these “intelligence agencies,” or any of these State agents, like “diplomats” and all their endless dialogues and parleys on “national security” and “nuclear security” – or whatever.
Again, the real problem is how we look at our own History. And then, after that, how we understand what the right “Theory” is all about. Today, there is no hope whatsoever – because the State is in-charge of “mass education.” I discuss this INSANITY right at the end of this post.
There is much talk, almost every day, for so many years now, on the dithering going on at the highest echelons of Indian politics on allowing foreign investment in supermarkets and the like – the dithering is reportedly caused by the fear that small shopkeepers will suffer. The same "we are protecting the small guy" BULLSHIT!
This is nonsensical on many fronts:
First, the case for freely importing capital in a nation that is short on capital and abundantly placed in labour is simply because the more capital that is employed with labour, the higher will be the resultant labour productivity, and therefore the higher will be the wages of labour. Thus, for the sake of the labouring and toiling masses, capital ought to be freely imported. The poorest worker is the small shopkeeper’s assistant or salesman, the one who fetches-and-carries for him, who does all his odd jobs - and not the shopkeeper himself.
Obviously, this errand boy will earn much more if employed in a supermarket, equipped with all the high-tech gizmos they will invest in, from bar-code readers to computers to big vans to fetch-and-carry and so on.
Second, since the masses are still quite poor, they make their purchases in very small quantities – for example, industry figures say that over 70 percent of all shampoo sold in India comes in tiny sachets costing just about two rupees each. The same applies to many other consumer goods as well. Daily wage earners, who are surely the biggest group among our toiling masses, will always make their small purchases daily – and this implies that small shops will remain profitable for decades and more, simply because it is they who to cater to the needs of the masses, who are all small consumers in this wretchedly poor country.
Once again, we are forced to admit to the validity of Mises’ assertion that all this mindless obstructionism being inflicted coercively by this State upon businessmen is based on nothing but antisocial and deliberately obscurantist ideologies that blind the masses to the conclusions of economic theory.
And the fact that the biggest obstructionists of them all now are Mamata Banerjee and her Trinamool CONgress only serves to prove that each and ever Indian “political party” stands for neither any “political ideals,” nor any “political principles” – as I pointed out in this very popular post quite a long time ago, in which the evidence is almost entirely on this so-called political party that has “ousted the communists” but is not “capitalist”! The Trinamool CONgress is just another wishy-washy, sham pro-poor welfarist, interventionist party. Their State government is completely broke as well –always going to the Centre for doles and grants, which is not “federalism” either. They are a “client” of the Central State – and equally bogus in whatever they call “politics.”
Diesel Subsidy, Fertiliser Subsidy, Agricultural Policy, and Immigration Controls:
Subsidies, of course, directly affect prices and hence distort economic calculation. The fertilizer subsidy, for example, goes to producers, who deliberately inflate their cost-of-production in their books. Farmers get “support prices” for growing food grain like wheat – another subsidy that distorts economic calculation, while preventing them from switching to, say, “cash crops.” Then, there is this “food subsidy” as well, all of it going to various State agencies that store all the procured grain – which rots. The “social welfare” never happens because all this is nothing but WASTE on a colossal scale, which is CAPITAL CONSUMPTION.
Even worse is the recent pronouncement of the prime minister that he will continue with the diesel subsidy because of the errant monsoon, as, according to him, poor farmers need cheap diesel to operate pumps that will enable them to access and use groundwater. Actually, the combined losses of all the State-owned Electricity Boards exceeds Rs. 2,00,000 Crores (1 crore is 10 million) – and these losses are growing exponentially every day. If electricity is privatized, farmers, rich and poor, would prefer electrical energy for their pumps – and may I add that the real beneficiaries of subsidized diesel will be the domestic manufacturers of cheap diesel automobiles. They simply cannot compete with petrol engines if the two fuels are free from this sort of “price intervention” using subsidies.
I have already discussed the harmful intent of labour unions and suchlike who use minimum wages and also immigration controls to keep out competition of cheap, unorganized labour. Yet, the resulting high costs of labour harms all consumers, including the poorest of them all; it harms the international competitiveness of domestic manufacturers; and is ultimately nothing but coercion in the private interest, one that is vigorously supported by the very same antisocial and deliberately obscurantist ideologies that blind the masses to the conclusions of economic theory.
Addenda on Agricultural policy:
A poor farmer, with a small plot of land, with very little capital, must be free to decide what he crop he will plant in his own field – just as any shopkeeper must be free to decide what goods he will stock in his shop. Property is Liberty – and this is the First Principle. This is the First Principle because it is in the interest of the poorest – as consumers. We have already seen that the current practice of “procurement of foodgrain” based on “support prices,” followed by “storage” as well as “distribution” by State agencies is WASTEFUL. And, pray, what is so sensible about forcibly and wastefully insisting poor domestic consumers of wheat or rice or whatever must depend on Indian farmers and this wasteful State for their basic needs? Why wouldn’t LIBERTY and PROPERTY do the same much, much better?
The cheapest wheat is produced in huge farms on the prairies of the American continent, and in other parts of the world, just as the cheapest rice comes from the Far East. Why cannot we import these freely? – in the interest of the poor, as consumers..
What will our own farmers grow, then?
Well, as Peter Bauer has shown, with studies and observations made among poor farmers in Malaya (rubber) and Ghana (cocoa) as well, liberty for them will always translate into the cultivation of CASH CROPS. And there are now so many of these.
For example, why would anyone grow apples in Kulu-Manali when the charas grown there fetches over 1,00,000 rupees a kilo in the international market (as compared to the 50 rupees a kilo for the apples, which is what trader-transporters pay orchard owners when they buy from them in Kulu-Manali itself)?
Remember: It has always been about CASH CROPS - like the SPICES that made Europeans chart the oceans, build “tall ships,” and navigate their way to our shores, with thousands dying of scurvy on the way, so many centuries ago.
Similarly, the first white settlers in America grew and exported tobacco and, later, cotton.
And as for the Brits - their first WORKING CLASS MASS MOVEMENT was the one led by Cobden and Bright demanding FREE TRADE for the sole purpose of IMPORTING CHEAP WHEAT for the poor. This was around the year 1830 - a time when classical liberalism ruled, and socialist, Marxist, and communist ideas were unknown among the English working classes.
[As to how everything went so totally wrong, there is this book with the arresting title The Strange Death of Liberal England.]
There are countless cash crops available for poor farmers all over India, from fruits and vegetables, to flowers, including exotic flowers, to timbers (which include sandalwood, ebony, mahogany, rosewood, sal, teak, and many more), and spices, of course, as well as ganja-charas, which could be grown using the best seeds, fertilisers and drip irrigation, and free sunshine as well, so that exporters of this cash crop could out-compete westerners who grow it hydroponically, under high-wattage electric lights; this, while their "elites" moan and groan about "global warming" caused by excessive energy use!
In the forests and jungles, there could be mahua plantations - and this excellent drink could easily take on Mexican tequila in the world market. In which case, why would anyone, pray, collect tendu leaves in order to survive?
Think things through – the WASTAGE today, and:
Who BENEFITS from LOSSES?
As in Air India.
Or the Food Corporation of India.
And all the rest.
Including the State-owned Oil Companies.
What will enable the smallest farmer to succeed?
And the poorest consumer to survive?
I am sure you will decide upon the First Principles of Liberty and Property.
And against interventionism.
Bauer has also documented the harm caused to small farmers by bureaucrats who run “Export Promotion Boards” and then compulsorily purchase cash crops like coffee from farmers: how these end up cheating farmers, while enriching these State Agents and their cronies.
We must also examine the benefits to consumers by all the “export bans” that inevitably occur whenever some crop or the other fails and domestic prices rise: as in the case of onions, quite often; and the case of cotton, quite recently.
In both cases, the farmer loses – because he cannot sell to those who would willingly pay him more.
The farmer also loses his long-term reliability, which is his reputation, because he has often signed long-tern contracts with exporters, or importers in foreign lands, and must now renege on these contracts. These people will never come to him again. He will lose these customers forever.
As for the poorest consumer: The real beneficiaries of export bans on non-essential agricultural commodities like onions or cotton are big domestic buyers – like cotton textile mills in the case of cotton, and as for onions, the same, wasteful State agencies who will now procure and then sell all these onions and pretend they are, for once, acting in the “public interest.” Of course, they will then show losses on their books. They will benefit from these losses – while PRETENDING to have served the public interest.
In any situation of sudden shortage of any agricultural commodity, as in the case of crop failure, the only policy that works in the interest of all poor consumers is LIBERTY – which means free international trade, which means private importers and exporters will “buy where that commodity is cheap and sell where it is in shortage, and hence dear,” and thereby bring down prices in the latter country. This is “intuitive”: for what all protectionists rail against are “cheap imports,” which they call “dumping.” They hate “cheap Chinese toys,” for example – but these would be great for poor kids in our urban slums, and also in all our remote, poverty-stricken villages.
We could also LOOK at these central ministers of agriculture - like Sharad Pawar, a "sugar baron." Or even the "humble farmer" from the Western Ghats of Karnataka who become prime minister once - HD Deve Gowda. These Gowdas of Karnataka are all wealthy - from cash crops: arecanut, vanilla, coffee... None grow "foodgrain." Sugar is also a "cash crop" - and this is what the islands of the Caribbean specialised in - for exports.
Interestingly, Sharad Pawar's "nationalist" (not "internationalist") political party, which is part of the current ruling coalition at the Centre, has (mis)ruled civil aviation for long - as already recounted above - and their appointee as central minister for civil aviation, Praful Patel, is a bidi king from Maharashtra, from an area close to the jungles and forests where tendu leaves (used to wrap bidis) are collected by desperately poor forest-dwellers for a pittance, and where armed rebellion now prevails.
The only solutions that can bring about lasting peace, the basis of civilisation and trade, are Liberty and Property - which means mahua plantations, cheap cigarettes for the poor, tourism in the jungles, wildlife ranching, commercial timber farming, and all that.
Addenda on Socialist State-owned Factories and Businesses, Including State-owned Monopolies, And How These Hurt Poor Consumers:
Socialists uphold a role for their The State in all kinds of "economic activity" - yet, it is clearly visible that, in each and every such instance when they do so, they only benefit their cronies: the ministers and the bureaucrats, the managers, and the trade union leaders as well as the "elite of organised labour" they represent. In each and every instance, the poor consumer loses.
This is especially true in the case of monopolies - railways, electricity, buses, roads, and so on. Delhi's State monopoly of the retail trade of alcoholic beverages is another such glaring example, right under the noses of each and every senior economic journalist and editor. While the retail monopoly harms consumers - and all consumers know this - what is the real evil, the greatest political and administrative corruption being perpetrated in the open right here in the Capital, is the MONOPSONY: which means "monopoly buyer." Think!
The Konkan Railway has been the latest big railway project in India, much lauded by the media for the technological feats accomplished by the engineers responsible for its construction: so many tunnels, so many bridges, etc. But it is still a “single track railway” – which means not more than one train each way per hour. And almost all the traffic is “trough traffic” – trains from Bombay or even Delhi heading to Cochin – without stopping within the Konkan area. The two passenger trains each way each day that actually stop at all the small coastal towns of the Konkan are rarely used by the people – despite the fact that the fares are extremely low. The people prefer buses. Thus, the bus stations are always crowded – unlike the railway stations, which are all very far from the town. Bus fares are high – and the buses are mostly State-owned. And as for the coastal “Notional Highway” #17 – a German sharing a seat with me from Karwar to Udipi confessed to having seen “worse roads only in some African countries.” Obviously, private buses, private cars, and private highways would have served the people of the Konkan far better than this “gravy train” of our The State.
And now for the most peculiar fact: According to their own website – and this I have confirmed very often visually – their biggest money-spinner is the freighting of LOADED TRUCKS from Bombay to Cochin. If private highway providers had been free to compete, along with private bus operators, and the market for cars had been completely free – then this Konkan Railway would have been shut down long ago.
ECONOMICS, RELIGIONS, PROFITS, AND THE “RIGHTLY UNDERSTOOD INTERESTS” OF ALL, ESPECIALLY THE WEALTHY OF TODAY:
There is a section in the Holy Bible (New Testament) in which Jesus talks to a “rich young man” who asks him about how he can enter Paradise – after which Jesus makes the controversial remark, “It is easier for a camel to go through the eye of a needle than for a wealthy man to enter Paradise.” My take on this passage is: What Jesus meant to say is that “the rich have too much to lose.” In the world of today, with all the interventionism and Keynes-inspired central banking, fiat paper money and all that – there must be many, many very wealthy men who will simply refuse to endorse what is “right” and “good” in terms of “long-run rightly understood interests” simply because they think they have too much to lose by doing so. I believe this is shortsighted to the extreme.
After all, it was Keynes himself, who famously dismissed the future with, “In the long-run we are all dead.” So he was perfectly content to leave behind a ghastly mess as his legacy to all humanity.
On the other hand, while Economics is about “means” and “ends” – it has nothing to do with “ultimate ends,” which are, as Mises put it, “a matter of the soul and the will.”
In any case, Economics has nothing to do with “metaphysical speculations” regarding the existence of the soul, or of heaven and hell. But the question remains: What are YOUR “ultimate ends” as a wealthy businessman?
And, more importantly, is the complete collapse of human civilization – which means the complete destruction of all your wealth (and this is inevitable if paper money inflationism continues) in tune with whatever may be your ultimate end?
Economics is the science that lies at the “pith of civilization.” And that is an “earthly paradise.”
Long before Jesus, it was we Hindus who first said Shubh Laabh, that “profits are auspicious” and augur well for society at large. Europe had to wait for the Scottish Enlightenment for this understanding of profit-making as socially beneficial – perhaps because of Jesus’ warning above.
While the life and words of Jesus in the New Testament were actually written down some 70 to 80 years after his crucifixion – and they are full of miracles – the Prophet Muhammad is a “historical figure.” His sayings are all recorded – among them this one, which extols profit-making unequivocally:
"He who makes money pleases Allah."
The Prophet of Islam was a trader since the age of thirteen, or less - despite not knowing how to read or write!
Interestingly, in his Satanic Verses, Salman Rushdie keeps referring to him as "the businessman" – always in a "mocking" or even "sneeringly scornful" tone – as though businessmen are somehow "immoral." Methinks Rushdie is a leftie.
Businessmen are moral – if free competition prevails, and no interventionism, which is the only condition under which “honesty is the best policy.”
Business is productive, satisfies needs, accumulates capital, promotes civilisation - while politics is its very opposite. In any voluntary trade, both buyer and seller gain – win-win – which is why both thank each other. In politics, interventionism, taxation, welfare – some gain, while the vast majority lose.
From the Misesian perspective, the consequences of an intervention are not necessarily “unexpected” to its active promoters and beneficiaries and need not continue to be so to the masses it victimizes.
Thus, always apply that very ancient question to all interventions being carried out, or ever proposed: Cuo Boni? Translated: "Who benefits?"
And, if you carefully look into each and every single one of these, as I have done above, you will surely discover that the vast majority, who labour and toil for meagre wages only in order to consume, their true interests lie in a free market, free international trade, open competition, completely "unhampered" by any rules or regulations imposed upon them by empowered bureaus armed with legislation, or "subordinate legislation": that is, a truly Free Market Society can flourish only as a "private law society."
I oppose rules and regulations, as well as legislation and subordinate legislation - but I do not oppose LAW: which is, and has always been, the "private law" of Property, Contract and Torts.
Within such a "private law society" we can:
Free all markets!
AND PRIVATISE EVERYTHING!
Businessmen run businesses, in open competition; and if politicians and bureaucrats are required at all, for anything, because of any knowledge or skill they might claim to possess, it is most certainly NOT for running businesses, and most certainly not from the funds in the public treasury.
As far as Islam is concerned, I once read a saying (in Urdu as well as English) from the Holy Koran on the wall of a carpet dealer's house in Srinagar, Kashmir, that went:
"The honest trader will surely find his way to Paradise, there to be seated alongside the Prophet Muhammad, peace be upon him, who was an honest trader himself."
The "honesty" as well as "justness" of the Prophet was established over a long, long period, with good deeds and good work; and all this long before he became known as a Prophet.
While still in his teens, he founded the Hilf-ul-Fidul, a "vigilante" group dedicated to the protection of all traders, especially foreigners, from any merchants in Mecca who might try and cheat them.
In his later years, he earned the title Al-Amin, "The Just One." Such was his REPUTATION before he fled to Medina with his first followers, the first Muslims of the world.
While in Medina, he was always surrounded by 23 scribes, who carefully noted down all he said and did - which means "openness and transparency," and not an "Official Secrets Act," nor any snooping and spying on the citizenry by any "intelligence agencies." Thus, we have a bogus Right to Information – while we do not possess the Right to Privacy, which is part and parcel of the Right to Private Property.
Of course, the Prophet could neither read nor write - but he did possess "divine knowledge" - yet he never ever suggested that knowledge could be centralised and spoon-fed to his flock. One of his most famous sayings is:
"The search for knowledge is the sacred duty of all Muslims. Go in search of knowledge - even to China!"
History then tells of the "knowledge explosion" that immediately followed in the Muslim world, from Samarkand and Bukhara right across Persia and the deserts of Arabia, and then spreading over the whole of North Africa, from Egypt to Morocco, after which they crossed the waters to Moorish Spain.
I will now conclude with what a GREAT EVIL Centralised and Forced State Education is.
Good read for serious students:
Anthony de Jasay's Before Resorting to Politics.
Addenda on education policy:
As we have seen – and this quote from Mises has been oft-repeated, italicized and underlined as well – interventionism continues for only one reason: “antisocial and deliberately obscurantist ideologies that blind the masses to the conclusions of economic theory.”
Then, pray, why should The State monopolise education, regulate it, prescribe curricula and textbooks, and even coerce kids, through legislation, into “free and compulsory education”?
At least I opposed this – some 7 or 8 years ago, in a Leader Article published by The Times of India, and Mr. Jug Suraiya will bear witness to how difficult it was for me to get this particular article accepted for publication. You can find this article here. It is dated September, 2004.
We have already found out, all over India, that State coercion – which is interventionism in hard language – in education has destroyed lives and careers, and fragmented the country further, with political choice, instead of free choice, over language, or the “medium of instruction.” English-language skills have deteriorated nation-wide – and people in one state can no longer communicate with people in another.
The “education system” also forces upon all kids a huge overload of mathematics as well as statistics – which are not “knowledge” at all, nor “education” as properly understood, but only “techniques,” or what ought to be called “training.”
And as for the most important aspects of what constitute “real education” – History, Economics, And Civics – they are force-fed nonsense and propaganda, which is precisely what Mises says, so let me repeat that quote once again: “antisocial and deliberately obscurantist ideologies that blind the masses to the conclusions of economic theory.”
From the Misesian perspective, the consequences of an intervention are not necessarily “unexpected” to its active promoters and beneficiaries and need not continue to be so to the masses it victimizes.
So, look at the picture below - for that is what State Education is really all about. I am extremely proud of the fact that I opposed this HORROR in 2004.
So, I can happily plead NOT GUILTY if ever I am charged, as in the great Leonard Cohen song, "A singer must die – for the lie in his voice."
And all the ladies grow moist,
And the judge has no choice,
A singer must die,
For the lie in his voice.
And I thank you,
I thank you,
For doing your duty,
You keepers of Truth,
You guardians of Beauty,
Your vision is right,
My vision is wrong,
I’m sorry for smudging,
The air with my song.
No, no me! Not guilty! Not I.
But all the other guys - except for Jug Suraiya, of course, who realised that dissent is always a "minority view," which is why it must be aired. After all, how can "truth prevail" – the motto of the Times of India – if only those who "toe the official line" are published, day after day, day in and day out.
Which is why I keep recommending WH Hutt's Politically Impossible to all my readers. This booklet becomes all the more relevant today when we consider some of the other things Hayek said in his grudging "tribute" to Mises in 1962:
1. That Mises championed "unpopular causes."2. That many of Mises' students had earned greater honours and recognition than their teacher.
Hutt was a "Misesian." And his booklet shows why "truth" and "science" are neither popular nor unpopular causes. They just "are." And the "economist" must say what is truth, and what is science – without any care or concern as to how politicians or opinion pollsters view these.
In any case, the “popular politician” who carefully studies opinion polls and the like and deftly shifts his stand on all the various issues that the electorate are concerned with in order to cater to the “median voter” – a number, a statistic, and not a person – is nothing but a “demagogue.”
Why on earth should any economist, or even any journalist for that matter, be concerned about such “popularity”?
So, the question that Leonard Cohen raised remains:
Who are those singers that lie with their voice?