Now Feel This DRUMBEAT – As It Beats Within – Playin’ A Riddim’ – Resisting Against The System – Singin’ – I Know Jah’ll Never Let Us Down… : Take #2

The most perceptive piece of economic journalism I read this morning in Mint, appropriately titled, “An unlimited QE world,” makes it quite apparent that the “doctors” who have been applying this “medicine” for long, and who intend to apply the same well into the indefinite future, are not quite right in the head. The column concludes thus:

While the latest rounds of monetary easing will buy some time, the failure of the last two rounds of QE to kick-start the Western economies has led to a lot of questions about the efficacy of monetary easing. The hike in commodity and oil prices as a result of successive rounds of QE is a dampener for the economy. The markets don’t seem to believe that the monetary easing will help the economy much—why else are gold prices going up? And every once in a while, whenever there are signs that the fundamental problems in the global economy haven’t gone away, markets get into a blue funk.

As William White, the Bank for International Settlements economist who predicted the financial crisis, wrote in a recent paper, successive bouts of monetary easing led to the Asian crisis, the dot-com boom and bust, and finally to the current crisis. He argues that the consequence of monetary over-indulgence is that it leads to bubbles, which ultimately burst. Worse, the successive busts keep getting bigger and bigger. The important questions are: (1) Who’s listening? and (2) What is the alternative?

So, the very “Austrian” message seems to be spreading – and this comes from a Bank of International Settlements man.

Some “common sense” would also help.

People must produce, earn – and, most importantly, SAVE, which is the “private accumulation of Capital” – for any “economic growth” to transpire. This applies also to the stock market.

Where savings are being eroded by inflationism, and only “funny money” is proliferating, the blips seen in the stock market index have no connect with “Main Street.” Share values are rising only because much of this funny money is expected to enter stock exchanges.

Of course, there had to be a statement by an RBI honcho to the effect that India’s high inflation is on account of “poor monsoons.” But the monsoons are now seen to have been quite normal – and inflationism is nothing but DELIBERATE POLICY.

Inflationism means expanding the funny money supply endlessly.

This is also the reason why our stock market index is looking better. But wise columnists have called for caution among retail investors – expecting a “correction” soon.

Meanwhile, gold is skyrocketing, and I claim credit for having recommended gold to my readers on Diwali 2008.

So, if we didn’t have this funny money from our The State – and God’s Own Gold (and silver, and copper, too) was our money – think of how much private capital accumulation would occur.

Further, how much of this real capital accumulation would enter the stock markets, to invest in companies that actually produce useful things – and these companies would prefer equity to debt then, so the small shareholder would matter, and not the crony banker.

After all, with free and legitimate private banking, interest rates would be higher – even better for savers.

[NOTE: Artificially low interest rates – even when close to ZERO – have failed to lift many advanced economies out of the doldrums.]

Wall Street (or Dalal Street) and Main Street would only then have a real connect. Only those companies that do well on Main Street would see their stocks rise.

Anyway, one helluva lot of economic activity goes on in each and every Main Street that has very little to do with share capital.

As far as our own Indian Main Streets are concerned, the headlines are all cheering the fact that our The State has GOT OUT OF THE WAY – so supermarkets are going to happen.

Well, that is precisely what people-like-me have been calling for all along – GET THEM OUT OF THE WAY OF ALL PRIVATE ENTERPRISE, especially the poor.

So, why not get the Customs Department OUT OF THE WAY as well, so that the “consumption” of the poor can improve?

RUKAWAT HATAO – AUR GARIBI APNEY AAP HUTT JAYEGI!

Sounds infinitely better than “India is Indira’s” Garibi Hatao, what?

But the news also had this bit about some minister at the Central “Laputa-on-High” State blabbering about how these foreigners who will invest in supermarkets should be forced (by him and his goons) to procure “locally made goods” because – and this is this dud’s precise grouse – without his State Intervention, “cheap foreign imports” would be stocked in these superstores.

Wouldn’t the “consumption of the poor” be much better if they could buy these cheap imported goods?

So, I say: RUKAWAT HATAO!

Liberate The Market!

Laissez Faire.

This prescription of mine means TOTAL PRIVATISATION as well – and today I will argue for the immediate application of my medicine to ELECTRICITY generation, transmission and distribution.

But GENERATION comes first.

The Daily Noose is full of stories and photos of protestors in Tamil Nadu opposed to a State-owned NUCLEAR POWER PLANT coming up there – as also occurred in the Konkan – while, at the same time, the chairman of State-owned Coal India, who claims “all the coal belongs to the people,” says coal is the best fuel for the purpose; and that too, for decades to come.

Whatever: In Mangalore, for a decade or more now, electricity is being generated by a private gas-based power plant that is BARGE-MOUNTED – and sits in the ocean!

The Central State’s decisions to invest from its Empty Treasury in nuclear power on both coasts, while making a scandal out of coal – all this while the entire sub-continent reels from electricity failures on a daily basis – well, what SENSE does this make?

I also read reports that the State-owned banks have lent heavily to all their State Electricity Boards – and it looks unlikely they will ever get their money back.

The State-owned nuclear power plant on the Konkan has received “environmental clearance” from the Central State – even though it is located in an “ecologically sensitive area.”

Further, for both these State-owned nuclear power plants, Parliament has passed legislation drastically limiting the (foreign) equipment suppliers from damages in case of accidents.

LAWLESSNESS WRIT LARGE!

So, let there be Liberty, Property, Contracts and TORTS – a “private law society.”

Private entrepreneurs investing in the generation of electricity choose their technology, fuels, locations, et. al.

LIBERTY!

While thinking of the State-owned nuclear power plant on the Konkan, I also thought about the iron ore scandal in Goa – about which I wrote yesterday – and the thought suddenly struck:

With our “collective property” socialist-communist anti-social lawless State what is actually happening all over this vast sub-continent is that they are “misruling the land” – no private properties and no titles either – while they are also unable to “rule the waves,” which requires private ports, private merchant ships, container traffic, and all that.

IMPORTS.

“When my ship comes in… “

Our fellas have Indian Navy gunships in Bombay, Goa and Vizag – and enormous establishments, at that.

A Coast Guard as well.

[Read what a good American has to say about the US Coast Guard.]

Did the Royal Navy enable Pax Britannica to rule the waves – or did the “tall ships” of the Honourable East India Company (and many, many other such companies) accomplish this feat?

In each and every port along our 2500-mile coastline, minerals are exported – and nothing is imported.

Zero foreign trade – which is swadeshi.

So, as I wrote above:

Why not get the Customs Department OUT OF THE WAY as well, so that the “consumption” of the poor can improve?

RUKAWAT HATAO!

Meanwhile, poor fishermen all along this 2500-mile coastline still use 2000 BC catamarans – without even outboard motors. Not that they possess titles to their ancestral beachside properties either – no thanks to the Coastal Zone Regulation Act.

RUKAWAT HATAO!

This includes especially the “environmentalists” – who support the Central State’s Ministry of Environment & Forests, their Forest Guards, and who oppose modern fishing vessels because, according to them, “fish stock is depleting” in the seas. Ask anyone who knows, and they will tell you the real truth, that is, “Fish die of old age in the Indian Ocean.”

Thus, Property Arises From A Liberty – and the fisherman who returns from the seas in his modern fishing vessel with his huge catch is another such Property Owner.

Yesterday, I gave the example of the domestication of wildfowl. But the older and more pertinent example, really, is cattle. That these were “capital on the move” for all the nomadic herdsmen of yore, and that their hides spontaneously emerged as money in “indirect exchange” (which is not primitive barter) is evidenced by the very word “pecuniary,” whose root pecus means “ox.”

[You will surely enjoy Carl Menger’s brilliant essay “Theory of the Origin of Money” available here, and I strongly recommend it. He does write about nomadic herdsmen.]

So, given the “unlimited QE world” that is emerging, heading directly towards such “prehistoric” times – which is DE-CIVILISATION – I for one, knowing better, in terms of both Theory as well as History, shall continue to sing the same ol’ song of mine:

PRIVATE PROPERTY – which arises from a Liberty.

PRIVATE CAPITAL.

PRIVATE MONEY – which is “hard, commodity money.”

FREE EXCHANGE.

PRIVATE SAVINGS AND PRIVATE CAPITAL ACCUMULATION.

PRIVATE ECONOMIES.

FREE, COMPETITIVE, AND LEGITIMATE PRIVATE BANKING UNDER “PRIVATE LAW”: that is, Property and Contract.

CIVILISATION!

Civilisation is PEACE – for none come to market when guns, bombs, rocket-fire and cannons are going off in the Central Business District of the City.

And there are endless reports these days of such happenings in North Africa and the Middle East – with a great deal of anger against the US State and its personnel.

My advice to these people is to first reject paper money – and read this brief Islamic Judgment on the subject carefully.

I would also advice them to reject US-imposed “democracy” accompanied by US-UN inspired “constitutionalism.” This is all about State Formation and Organisation – and not Liberty, nor Order.

Modern constitutionalism has not worked anywhere – not even in the USSA (see the Hayek quote here). France has already had Five Republics – and is yet to make the “Discovery of Freedom.” As far as India’s constitution in concerned – it is “socialist,” and has nothing whatsoever to do with traditional ideas of “liberal constitutionalism” of the Jeffersonian kind.

The Principles for Just Individual Conduct and a successful Private Property-based Market Order come first – and I will outline them in brief below.

Islam is all about FREE MARKETS – for the Prophet was a trader himself. It is he who said, “Those who make money please Allah” – but I am sure he did not mean this applies to those who “make funny money,” these QE-wallahs, for the Islamic Judgment is very clear on that.

As far as “US Foreign Policy” is concerned, Ron Paul had pointed out long, long ago that they were only aggregating enemies worldwide with their unprincipled interventionism in the internal affairs of foreign nations and peoples. Another US Ambassador, for example, perished in the same air-crash that killed Pakistan’s General Zia.

“Who even likes America anymore?” – as I asked in a recent post.

“Mind your own business” is the MOTTO of The Market.

(Which also implies no central bankers!)

Further, Allah ho Akbar means “God is Great” – it does not mean some State Functionary is Great. Islam means “submission” – to the “will of God,” and not to that of any Unjust Tyrant. Do read how I sang the Azaan while in Pondicherry recently.

Allah ho Akbar, as I see it, is not very different from the motto of the Olde City of London – Domini Dirige Nos, which means “Let God Be Our Guide.”

I agree.

You go into business and – Inshallah! – you make a profit. If you do, you say Mashallah and Subhanallah. If not, you “submit to the will of God.” And try your hand at some other business.

Laissez Faire means just that.

No Protectionism.

Free and Open Internationally Competitive Trade.

No subsidies.

Let God be your Guide – and not some central banker, central planner, or even Central State.

Bob Marley, the Rastafarian, sang this same song as well  - “Lord guide and protect us; when we’re wrong, please correct us.”

I quoted this prayer at the conclusion of my column on “The Morality of Markets.”

Amen.

Now, let me enunciate the Principles for Just Individual Conduct, and a successful Private Property-based Market Order:

First: CONSENT is the Principle that should guide all interactions with others – in markets, or otherwise. This means NO USE OF FORCE.

Thus, the LIBERTY TO DEFEND ONESELF AGAINST AGGRESSION belongs to each Individual.

A LIBERTY is an action anyone is free to undertake; while a RIGHT exists only when someone else has the corresponding legal obligation. So, if one has signed a tenancy agreement, one possesses a RIGHT to occupy that space - while the landlord who has signed the agreement has the corresponding legal obligation to allow you to do so, undisturbed.  

Further, since Property arises from a Liberty, it follows that each proprietor is entitled to defend what is his.

It is from this Liberty to Private Defence that everything else arises, from written constitutions to collective police forces.

The question than arises - what are the "rights" all taxpayers who maintain such institutions possess as LEGAL OBLIGATIONS from the collective institutions they have established.

Whatever, each little REPUBLIC is perfectly free to arrange their collective affairs as they deem fit - if they want to establish one at all. Of course, in many parts of the world today, including India, the essential civic order, civic peace, and civic cooperation does not exist - and this precludes the possibility of civic institutions being established. 

But that is not a problem for the rest of the world to worry about - for there have always been "frontier territories" throughout history. Before the Wild West, it was Eastern Europe - where the Jews of Spain fled. In India, the troubled North-East is such. And then, there is the Af-Pak region - where any businessman seeking trade will make sure he is well armed and protected, using his own, private means.

The question I shall answer below is the PRINCIPLE that ought to guide all those who wish to establish such local, collective, civic institutions, which will be collectively financed, accountable to the same collective, and who will be able to use COLLECTIVE FORCE in legally specified circumstances: and that is, when any individual or group has acted unjustly towards anyone else, and this wrong has to be righted - using Torts.   

The Principle is:

Collective Force cannot do anything that Private Force Cannot.

So, if private force cannot murder, or steal, or violate private property – neither can the collective. And so on and so forth.

But, then again, all collective security is LOCAL.

It is NOT the United Nations Security Council – nor any Central Police Ministry in Dilli Door Ast.

It is not a "Head of State" - that is, a vast territory with a Centralised Political Head.

Once again I recommend Gustave de Molinari’s essay of the 1850s, the first of its kind, on “The Private Production of Security.”

Once private security of Life and Property are taken care of, the rest follows: Property Titles, which can be insured; free transfers by Contracts; and, equally importantly, TORTS, by which we achieve a social order in which everyone is “careful” not to injure anyone else, or his properties.

This is a “private law society.”

Judges, courts, lawyers – all these follow, but the above are the fundamental principles.

Note: In any city where all consensual trades are free, ex ante justice prevails by definition as an attribute of every individual’s own principled conduct. It logically follows that there will be ZERO LEGAL DISPUTES.

Lawyers are rich today – and courts are overloaded with unsettled disputes – only because of legislative interventionism.

I therefore found this column in today’s Times of India by Kapil Sibal, the socialist lawyer who heads the Central Education Ministry ABSURD TO THE EXTREME. For he actually writes:

Governments are not in the business of maximising revenues. Instead of filling its own pocket, it is obliged, in a welfare state, to create an environment to fill the pockets of the 'aam admi' (common man). 

Fill pockets with your funny money? You got any “reserves” in your Reserve Bank?

Does the Constitution of India say anywhere in its 350+ articles that “India is a Welfare State”? Does the Constitution of India “authorize” our The State to “fill the pockets" of ordinary citizens?

And is democracy about “representation of taxpayers”? Or is it about “representation of tax-parasites”?

Does this man even know Law?

Is he fit to “teach all the children” – and that too, by THE FORCE OF LEGISLATION?

So, according to OUR PRINCIPLE, if no private teacher can force anyone to attend his classes, no collective force can, either.

Kids only have to be good at ONE THING in order to find a niche in the urban market economy by which to flourish – as, for example, playing the guitar, or dance. Even knowing how to run a little shop, say a tea-stall, works - and this is "knowledge," too. 

Just ONE SKILL is required to “become yourself” – what you choose to become.  

This “division of labour” into so many specializations, which is what the market economy is all about, is “the principle of cosmic change and becoming.”

"And so, become yourself" - a post in which I establish the fact that Gandhi was INSANE. No one becomes "self-sufficient." No one does so in some remote village, either. Everyone specialises. Even little children, when asked, "What do you want to BECOME when you grow up?" will answer: Actor, pilot - whatever, but not "self-sufficient." And they will do so in CITIES and TOWNS. They all need just ONE SKILL in order to succeed.

However, over a lifetime, with so much knowledge obsolescence, one may have to change one’s line of work many times, requiring the learning of new knowledge and skills on each occasion.

So I recommend my old column of what “knowledge” means in the market economy, which is the pathway to economic success.

I conclude with the words of the Prophet himself:

The search for knowledge is the sacred duty of every Muslim. Go in search of knowledge – even to China.

Thus, each has to “search” for knowledge – in areas that interest his or her own mind.

Knowledge is also “developed” – in the sense that it does not “stagnate.”

The activity of genuine scholars lies in the “continuous production of NEW KNOWLEDGE.” This is PROGRESS.

The Science of Economics did not sit idle after Adam Smith. Ludwig von Mises developed upon the ideas of Carl Menger. And many continue to “advance the scholarship of Liberty in the tradition of the Austrian School.” Thus, as Mises put it, “to read Adam Smith today is like reading Euclid to learn Geometry.”

Knowledge is not something “centralized” in some stagnant State-owned Reservoir to be doled out to everyone.

My only advice, limited to my own area of specialistion, is that anyone seeking knowledge in the Science of Economics should go to the Ludwig von Mises Institute.

Don’t go to China!

However, not just all good Muslims – but all who seek liberty, prosperity and civilization – ought to study the Science of Economics. I conclude with an extract from what Mises wrote concerning “The Place of Economics in Learning”:

Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.

The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.

Below are the two sides of my very old visiting card. I've run out of them - and plan to redesign it a bit, so the subtitle will read, "Philosopher of Freedom" instead. But don't miss the Ganja Leaf Flag in Rasta colours. 

I know Jah'll never let us down...