Saturday, March 22, 2008

Free Your Mind: A Beginner's Guide to Poltical Economy


Since our enemies, the socialists, emphasize the role of their State in 'education', I have always taken the position that the content of their textbooks must be exposed as dangerous for young minds. I am therefore happy to note that the great philosopher Anthony de Jasay has penned a column for The Library of Economics & Liberty that says Economic textbooks in Europe teach the young to despise liberty. If this is the condition in Europe, how much worse must it be in India.

Do take a look at one of my prize-winning articles of 2002, called "Teacher! Don't Teach Nonsense", on the website of The Centre for Civil Society, New Delhi. Do browse through this website for many more interesting articles. If you go through the books published by CCS, you will find my Free Your Mind: A Beginner's Guide to Poltical Economy, which can be downloaded for free. This book has been translated into Hindi and Gujarati already, and is soon to be published in Chinese! I have a second edition of this ready, so if any publisher is interested, do write to me.

From organic farming to dance and even the study of lights, sound and meditation

India Today Cover Story THE GIFT OF HUMANITY Communal experience: Auroville, Puducherry

Potters, candle makers and perfumers work in their designated zones; there are information centres and handicraft boutiques; a biosphere is coming up; and the township has a solar kitchen that can feed 10,000 at a time.
Everything is open to everyone and there are no barricades or guards. Auroville is a commune that belongs to no one and yet aims to belong to the whole of humanity.
What was started in the early 1930s as Mother’s—Aurobindo’s disciple Mirra Alfassa—idea of an experiment in human unity, has been realised at Auroville. Commended in 1966 by UNESCO as a project of importance to the future of humanity, the township was inaugurated on February 28 1968.
Today it houses more than 1,700, with more than 600 Indians. Though countless visitors come to Auroville, it does not seek to be a tourist attraction. The idea is to encourage people to stay and participate.

Living in harmony

There is an emphasis on research in fields from organic farming to dance and even the study of lights, sound and meditation.
Auroville has proven to the world that an idealistic community—not built around a cult or religion—can not only exist successfully, but also engage with local communities, evolve architecture that has been acclaimed the world over and work towards environmental restoration—the only experiment of its kind in the world! by Nirmala Ravindran

A liberal party opposed to socialism must attract the mind of the smart Indian voter

Columns by Sauvik Chakraverti: Antidote Do we need socialism? Newindpress on Sunday

Classical liberals of 18th and 19th century Europe and America would be horrified by the idea of a ‘welfare state as a facet of democracy.’ To them, the great idea was Liberty for all — especially the poor. It was held that people are diversely gifted and only in a liberal, free market order could each find his ‘just deserts.’ And since that is a competitive struggle for all, along with Liberty came Self-Help. Samuel Smiles’ eponymous volume was a classic of its times, selling 20,000 copies in its first year alone. Self-Help was kept next to the Bible in every Victorian home, an aspect of Victorian morality all too easily forgotten today, thanks to welfare statism in the west, and its culture of dependency. (Incidentally, Liberty Institute has republished the book in India.)

Liberty and Self-Help were the two pillars of classical liberalism, especially among the poor. That is why the first ‘mass movement’ in British history was the one for free trade in the 1830s, led by Richard Cobden and his Manchester Free Trade League, in which the working classes eagerly participated. Socialism was not even on the horizon then. The ‘welfare state’ is a product of the 20th century, that too, after the second World War. It has indeed become a ‘facet of democracy’ in several western nations, but not a good facet. The welfare state is the darling of ‘tax-borrow-print-and-spend politics’ that is funded by Keynesian fiat money, that sustains a vast ‘spending bureaucracy’ and subsidises an underclass that is increasingly work-resistant. Yet, even in these countries, there are parties and political leaders that oppose welfare statism — like the Tories did under Margaret Thatcher.

In a truly liberal order, it is unthinkable that every party must swear by the welfare state. But the situation in India is far worse, and there are good reasons to believe that the Chief Justice’s conception of a good society, if ever allowed to come into fruition, will spell disaster for the nation and its people...

If India is to regain her lost glory, socialism must be dumped and her people encouraged to help themselves. Indians are known to be hard working. The new definition of socialism offered by the CJI is patronising and impractical; and it will not lead to the ‘welfare’ of the poor. A liberal party opposed to socialism must be allowed to attract the mind of the smart Indian voter.

The writer is the author of Antidote: Essays Against the Socialist Indian State and its sequel, Antidote2: For Liberal Governance
Others. Holmes rolls in Goa . My 115th dream . ‘Competition is liberty’ . When freedom comes first . A global agenda? . A huge slum? . Role of the Indian Left . The real outlaws . A natural social order . The purpose of politics . Building a merchant ship . A politics to end politics . Raising the civic sword . A natural order exists . Riches for the poor . The real apes . Bureaucrats and chairocrats . End to central planning . The scourge of math . A teenage wasteland . Real histories, please . Knowledge: why less is more . A case for liberalism . The big catch out there! . The navel and the WTO antidote

A deep and irresoluble tension between politics and religion

Class, nation and covenant posted by Philip Gorski

The Axial Age concept was first coined by Karl Jaspers. It is bounded at by the appearance of The Buddha, continues through the development of Classical Hinduism, Confucianism, Second Temple Judaism and Christianity and closes with the death of Mohammed. Its unity derives from a set of parallel developments that occurred in and around the great empires of classical Eurasia, from China through South Asia and the Arabian Peninsula to the Mediterranean basin. These developments included:

  • 1) the postulation of a transcendent or supra-mundane reality that was superior to, and discontinuous with, the sensible and the mundane;
  • 2) the emergence of a new class of priestly intellectuals who had considerable material and symbolic autonomy from the state and its rulers;
  • 3) the emergence of trans-local religious movements that crosscut existing ethnic and political boundaries.

As Max Weber - and Thomas Mann - recognized over a century ago, the Axial Age breakthrough shattered the ontological unity of the world, above all, the unity of state and cult, thereby introducing a deep and irresoluble tension between politics and religion that is one of the fundamental features of the last two millennia of world history. The depth of the tension derives from the fact that religious and political elites and institutions have much to gain by allying with one another and will therefore be inclined to engage in quid pro quos of one sort or another: legitimation for protection, for instance. The irresolubility of the tension derives from the fact that their means and their ends are fundamentally at odds with one another: ultimate truth and otherworldly salvation, on the one hand, physical violence and worldly power on the other.

To say that the tensions are logically irresoluble does not mean that they are practically irresoluble. Indeed, Weber identified one, relatively stable equilibrium point, which he referred to as an “organic social ethics.” They involved folding a vertical social imaginary (e.g., “feudalism”) into an enchanted cosmic imaginary, such that the distribution of power and the division of labor within society were aligned with religious vocations and duties. The Medieval Christian formula of the three orders - laboratories, oratores et bellatores - represents one example.

The Tension Refigured: Secularism, Civil Religion and Religious Nationalism
In modern societies, however, the equilibrium of the organic social ethic is no longer viable. Vertical social imaginaries have been discredited and supplanted by the horizontal social imaginaries of the democratic polity and the national community. Vertical cosmic imaginaries have been supplanted by unmediated religions of personal faith and inner experience... SSRC Home SSRC Blogs Blog Home

Tuesday, March 18, 2008

India, constituted as she is, cannot play a secondary role in the world

Home > Op-Ed Letting India discover Rahul
Bhupinder Brar Indian Express: Tuesday, March 18, 2008

As Rahul Gandhi set out on his journey to ‘discover India’, I found that somehow he had also set my pulse racing. Admittedly, that lasted only for a while, but I was surprised at my response. It defied decades of my training as a political scientist. Even worse, it defied common sense.
What could possibly explain this extravagant response? Was it that there still lived within my deep recesses a naïve, young man who had been brought up in the heady, early years of Independence? A man who lay buried under the debris of cynical and callous politics of later decades, but was somehow still alive.
Born six years after Nehru’s Discovery of India was published in 1946, I read it some years later in college, as also his famous midnight speech about India’s tryst with destiny. Together, they had set my pulse racing. Here was a leader, who had discovered for himself and for all of us the soul of an eternal India. Here was a leader who gave us a vision of where we, an ancient people, were headed as a modern nation.

I cannot possibly count the number of times I went back to these two most magical pieces of writing. Last week, I picked up the book again. While the magic had faded a little, there was no denying the power of his words. The words were steeped in his immense faith in the land, in its people, and in their collective wisdom to build a better future for themselves. Above all, the words reflected his unyielding resolve:

“I was not interested in making some political arrangements which would enable our people to carry on more or less as before, only a little better. I felt they had vast stores of suppressed energy and ability, and I wanted to release these and make them feel young and vital again. India, constituted as she is, cannot play a secondary role in the world. She will either count for a great deal or not count at all. No middle position attracted me.”

The first few decades of independent India were imbued with Nehru’s deep convictions and resolve. No wonder that the period came to be remembered as the ‘Nehruvian era’. Nehru sought rapid industrial growth of the country. He initiated the Five Year Plans and set up elaborate public-sector structures to help the process. His zeal for economic development was matched by an equal commitment for the spread of science and scientific temperament, liberal democracy, civil rights and welfare.
Of course, not everything worked to perfection as he had envisioned. His vision produced its own set of paradoxes and ironies. But there was no question that the country was on the move. India had discovered itself and, at the same time, it was reinventing itself.

As a professional political scientist, I am only too aware that in recent years the Nehruvian era has come to be judged very differently by scholars. His developmental plans have been critiqued from all sorts of chic, ultra-radical and post-modernist positions. The India that Nehru discovered has itself been dismissed as a mere invention, an imaginary construct, a product of ‘nationalist historiography’.

I find most of these reassessments rather harsh. My view is that the disillusionments experienced in the later years are being read back into history. Nehru is out of fashion in the present day academic discourses. But while there is no denying that some of the Nehruvian ideals have soured, we also need to question what we have in their place.

The language used by modern day academia may be fancy and seductive, but what are the messages it conveys? The increasing assertion of caste politics is often seen as ‘deepening and widening’ of democracy. Equally often, the rising practice of communal politics is justified in the name ‘cultural nationalism’. Fragmentary forces are celebrated as ‘people’s movements’. A lot of this has always puzzled and troubled me, so that as I read the Discovery of India this time, a passage I had previously missed struck me with poignancy:

“The ideals and objectives of yesterday were still the ideals of today, but they had lost some of their lustre and, even as one seemed to go towards them, they lost the shining beauty which had warmed the heart and vitalised the body. Evil triumphed often enough, but what was far worse was the coarsening and distortion of what had seemed so right.” The writer is professor of political science, Panjab University, Chandigarh

Jinnah was misunderstood on both sides of the border

ePaper l Headlines l Archives Times of India Home Advani blames media for Jinnah controversy 18 Mar 2008

L K Advani has blamed the electronic media for reporting the Jinnah remarks out of context (TOI Photo) A calculated attempt at shedding his "hawk" tag or a genuine bid to highlight a little known aspect of a controversial historical figure, whichever way you look at it, L K Advani's remarks on Jinnah appear to have been a big political miscalculation. They provoked an outrage in India, isolated the BJP leader within the Sangh parivar and led to his resignation as party president.

Two years after the Jinnah storm, Advani appears unrepentent over the turn of events as he writes extensively on the affair in his forthcoming autobiography, My Nation, My Life . Putting the record straight on what he had put down in the visitor’s book of the Quaid-e-Azam's mausoleum, Advani writes,

"As a matter of fact, I had not called Jinnah 'secular'. I had only referred to a particular speech of his on an important occasion in the history of Pakistan, and stated that it was 'a classic, a forceful espousal of a Secular State'. Similarly, it was not I who called Jinnah an 'Ambassador of Hindu-Muslim Unity'; it was a tribute paid to him by Sarojini Naidu..."

In the book, Advani blames the electronic media for reporting the remarks out of context. "(TV channels) ignore, wittingly or unwittingly, historical context, nuance, explanatory arguments and the innate complexity of the issues and personalities involved in the news." He explains the "context" of the remarks:

"If I had done anything as a conscious act, it was to highlight these two little-known facts of history about Jinnah, and that too from the vantage point of Jinnah's mausoleum, because I wanted people both in India and Pakistan to know about this aspect of our shared history. I also wanted the people of Pakistan to judge the contrast between Jinnah's vision of a secular state and its subsequent transformation into a theocratic state that marginalized the minorities."

The rest of the chapter goes into great detail on Jinnah's personality as seen by various contemporaries and commentators. Through these, Advani tries to bring out the two faces of the Quaid-e-Azam—one, the secular politician who was a nationalist to the core, and the other, the man who split India. As Advani explains at the end of the chapter:

"I have given this rather lengthy description of the two personas of Jinnah just to submit to the readers that we should have a holistic and unprejudiced view of history and historical personalities...."

Interestingly, Advani quotes celebrated Pakistani lawyer and a current PM-hopeful, Aitzaz Ahsan, who has written in the preface of his book, "The Indus Saga: From Patliputra to Partition". Drawing a parallel between Advani and the subject of the controversy, Ahsan wrote that "Jinnah was misunderstood on both sides of the border. So, for once, was Advani." That seem to sum up the BJP leader's arguments as well.

Ibn al-Haytham deserves recognition not only as the “father of optics” but also as the first scientist

Bradley has left a new comment on your post "Many of Copernicus' diagrams and calculations were...":

Jim al-Khalili makes some important points. I wrote a similar article a few months ago, here. Not only did Ibn al-Haytham solve the mystery of vision and accurately described the propagation of light, he insisted on systematically testing each of his hypotheses with concrete, physical experiments. For example, to test his hypothesis that "lights and colors do not blend in the air," he used pinhole technology to force light rays to intersect at an aperture, then recorded the results in his massive study of light and vision, Kitāb al-Manāzir (Book of Optics). As the first person to systematically test hypotheses with experiments, Ibn al-Haytham deserves recognition not only as the “father of optics” but also as the first scientist.

If your readers would like to know more about him, I would like to recommend my new book, Ibn al-Haytham: First Scientist. Written for young adults, it is the world's first full biography of the eleventh-century Muslim scholar known in the West as Alhazen or Alhacen. Posted by Bradley to Savitri Era Open Forum at 4:58 AM, March 18, 2008

Saturday, March 15, 2008

The New Asian Hemisphere: The Irresistible Shift of Global Power to the East

The New Asian Hemisphere - a review from DesiPundit by Lekhni
Samanth reviews Kishore Mahbubani’s “The New Asian Hemisphere”. He does not agree with the author on many issues, though he speaks highly of the author’s experience and policy acumen. But the book does appear to be a very interesting read, especially if you are interested in geopolitics.

But he is disconcertingly confident of his extrapolations and his models of the future. For China and India to vault to the status of America and Europe, for example, is no sure feat. Both countries will first have to raise an unprecedented number of people out of poverty and then into the bracket of the middle class, but Mr. Mahbubani does not examine how these twin growth stories will overcome that sheer pressure of their populations.

Good books on trade policies from Marginal Revolution by Tyler Cowen
Jason, a loyal MR reader, asks me in an email:

What is a good economic history of commerce and trade? I'm looking for a book, preferably recent, with lots of historical examples of what trade policies can do. It would be a bonus if it integrated theory in with the examples, but that isn't necessary. I'd also prefer a book written by an economist rather than a historian, since historians tend to get their theory wrong. Rosenberg's How the West Grew Rich comes to mind, but I wonder about other examples.

I say "Ask and ye shall receive." You could try William J. Bernstein's new A Splendid Exchange: How Trade Shaped the World. Readers, do you have other suggestions?

Wednesday, March 12, 2008

Two-way bargaining, each addressing the self interests of others

Ill-Informed Attribution to Adam Smith Of Views on Selfishness
from Adam Smith's Lost Legacy by Gavin Kennedy

Selfishness and Adam Smith do not go together. If Richard had read Adam Smith in ‘Moral Sentiments’ and ‘Wealth Of Nations’ instead of a few quotations from unreliable sources (Christmas Crackers?) he would know that selfishness is treated critically by Adam Smith. The notion that selfishness was good came from a earlier commentator, Bernard Mandeville (1670-1733), whose book, ‘The Fable of Bees’, which made him famous, began as poem and was fleshed out to a best seller in various editions, 1714, 1724 and 1731 (it was recently reproduced in an economically priced two-volume edition by Liberty Fund).

Smith’s robust critique of the ‘private vice, public good’ argument is in Moral Sentiments (Book VII). The notion was popularized by a Hollywood script writer in ‘Wall Street’. Smith did not assume that selfishness was ‘self-limiting’ or had ‘decent limits’. He disregarded its utility altogether.

In fact he asserted the opposite. People act in their self interest and the 18th century idea that was not the same as selfishness. Take the famous quotation (Wealth Of Nations I.ii. pp26-7) about seeking our dinner from the ‘butcher, the brewer, and the baker’, which is commonly misinterpreted by people who confuse Bernard Mandeville with Adam Smith (from not having read either or both authors). Smith’s advice was not to expect our dinner from their ‘benevolence’ (we cannot ALL live on the benevolence of others – who would everybody rely on for their dinner?) – nor by having regard to ‘our necessities’ (surely a selfish notion to think only of ourselves), but to address their ‘self love’ and their ‘advantages’, not our own self love and our advantages, which is an unselfish approach on our part.

In bargaining for our dinner, or whatever, from others the nature of our behaviour is to ‘propose to them: ‘Give me that which I want, and you shall have this which you want’. In short, the practice two-way bargaining, each addressing the self interests of others, and by considering the interests of other people, we address our own too!

What our history textbooks today teach is still basically the theory of a few nineteenth-century European scholars

I have studied the question not only from an archaeological point of view, but also taking into account the views of great Indians such as Swami Vivekananda, Sri Aurobindo and several others (my starting point was in fact Sri Aurobindo’s own research into the Veda [1]). For it is a vast subject which touches not only on archaeology and linguistics, not only on astronomy, ancient mathematics, geology, metallurgy, even ecology, but also on Indian Scriptures, culture and tradition. A few years ago, I summarized some important points in a small book.[2] Today, however, I will limit myself to a few main lines of argument which, to my mind, are sufficient to show that the “new school” of archaeologists and scholars is right in calling for a radical review of India’s remote past.

At the centre of the riddle of Indian’s ancient past lies the famous Indus Valley (or Harappan) civilization, one of the world’s oldest. It was certainly the most extensive by far, since it covered today’s Punjab, Haryana, Gujarat, much of Rajasthan, Maharashtra and Kashmir, western Uttar Pradesh, the whole of Pakistan, even parts of Afghanistan ; it was also one of the most sophisticated in terms of urbanization, industry, technology, trade and sailing. Its art and crafts were varied and refined, though much less abundant than in contemporary Egypt or Mesopotamia. However, its hallmarks were a remarkably peaceful civic organization based on cultural integration, and the care it bestowed on its humblest inhabitants. Its sanitation and water management, for instance, were of such a level that one wishes our municipal corporations would follow them today...

CYBERHINWA View profile From: CYBERHINWA Date: Sun, 9 Mar 2008 23:37:43 -0700 (PDT) Local: Mon, Mar 10 2008 11:37 am
Subject: WHITE MANS LIE STANDS EXPOSED : The Riddle of India's Ancient Past - An Overview of the Aryan Problem
A revised version of a paper presented at a seminar on Value Education organized by the Chinmaya Mission at Coimbatore

Tuesday, March 11, 2008

Kalinga Institute of Social Science is exclusively for tribal students

Private engineering colleges are usually run like corporates and general belief is that these are in business. Instead of delving into this debatable issue, I'd like to quote a praiseworthy positive example set by Dr. Achyuta Samant the founder of the Kalinga Institute of Industrial Technology (KIIT), Bhubaneshwar.

Dr. Samant has established an exclusive institute KISS (Kalinga Institute of Social Science) for tribal students. It's a unbelievable experience to see five thousand tribal students engaged in excelling themselves. There could be some more like these due to few more Samaritans. But, certainly the number is not enough for a country of a billion population. In order to sensitize a large number of people, educational institutes should play a vital role. And the most effective method is to integrate social work into curriculum. That integration will lead towards completeness in life as Isha Upanishad tells:

Aandhang tamah prabishanti yehbidyamupasate

Tato bhuya eeba te tamo ya wu bidyaya nha ratahaaa.

“Into a blind darkness they enter who follow after the ignorance, they as if into a greater darkness who devote themselves to the knowledge alone”. {The Upanishad Part-1, Sri Aurobindo, Page 21].

Hrushikesha Mohanty March 2008 Professor, Computer Science University of Hyderabad, Hyderabad 500046, INDIA.
Posted by Hrushikesha Mohanty at
4:34 AM 0 comments MoKatha Tuesday, March 11, 2008

Swami has moved on to the next battle: the need for better administration

He told us so: The best of Swaminomics VIKAS SINGH, TOI 9 Mar 2008

Long before Freakonomics, there was Swaminomics. For close to 18 years now, readers of The Times of India have turned to the weekly column of Swaminathan S Anklesaria Aiyar — Swami to friends and fans — to help them make sense of the most contentious debates on the political economy. They are rarely disappointed, and always entertained. That, in fact, is the USP of Swami. His is a unique combination of formidable erudition and simple — without being simplistic — writing. And he's always willing to float provocative ideas, tongue firmly in cheek. Admirers still talk fondly of a column he wrote years ago, in which he had suggested that Dawood Ibrahim should be entrusted the task of collecting the dues of the Maharashtra State Electricity Board, since he seemed to be the one person who would have no problems collecting outstanding dues!

Like the self-made billionaires and booming entrepreneurship that it celebrates, Swaminomics had a humble beginning. As Swami recounts, "When (TOI Consulting Editor) Dina Vakil took over the Commerce page in 1990, she asked if I would write a column. It was almost like an outcast page, and nobody was too interested in it. But I was quite happy to write. So, there began Swaminomics, in between prices of cotton and aniseed." It's instructive to remember that at that point, socialism was still the prevailing credo, getting into the bureaucracy was the ultimate dream for ambitious youngsters and it was considered singularly vulgar to show any interest in money — even though India had a flourishing black economy. Even after the economic reforms were launched, they encountered formidable opposition. The prevailing wisdom was that Indian businesses would be slaughtered and hapless consumers would be held hostage by rapacious multinationals. Some even spoke darkly of a repeat of the rise of the East India Company.

Swami's was one of the few voices that rang out loudly in favour of the reforms, arguing that they would liberate India from the Hindu rate of growth (3-4%) in which it was trapped; benefit rather than hurt consumers; and free Indian entrepreneurs to take on the world. Today, India routinely clocks 9% growth, consumers have a mind-boggling variety of choices, Indian businessmen are busy taking over foreign marques, and tax collections have been soaring even as tax rates have declined. If anyone has a right to say 'I told you so', it is Swami. As he points out, "After years of being considered a radical maverick, I am now regarded as mainstream. This is not because I changed, but because India changed. The battles I fought have been won."

Many of those battles are recaptured in 'Escape From The Benevolent Zookeepers: The Best of Swaminomics', a compilation of some of the best columns that have appeared in Swaminomics over the years, published by Times Group Books. Young readers who have no recollection of those dramatic years will find it extremely informative to track how India escaped from the cage created by well-meaning idealists. And for those of us who were part of the debate, it's a great opportunity to look back and shake our heads wryly at how many of the powerful shibboleths prevailing then have fallen by the wayside. As for Swami, he's moved on to the next battle: the need for better administration and for governments to deliver the services promised by them. India will be a far better place if his latest agenda also achieves success.

Monday, March 10, 2008

A modern smart card system that delivers cash and/or subsidies to the poor

a kind of Negative Income Tax from Paul Nollen to date 10 Mar 2008 17:32 subject a kind of Negative Income Tax
sorry, I could not respond on your blog [1:26 PM], I don't have a google account.

About a year ago Arvind Virmani wrote: Poverty can be eliminated Quote:
Arvind Virmani / New Delhi June 29, 2007

A modern smart card system that delivers cash and/or subsidies to the poor could do the trick.
What is the cost of eliminating poverty and hunger in India? That of course depends on the extent of poverty, which has been mired in academic debate about the measurement of poverty. There is however universal agreement that in the years from 1993-94 to 1999-2000 the poverty rate (HCR) was between 25 per cent and 35 per cent. We can therefore skirt the esoteric debate about the precise change in poverty between 1993-94 and 1999-2000 and its level in either year by considering three numbers. For each of these years we order the households/person by consumption level and identify the ones which are 25 per cent, 30 per cent and 35 per cent from the bottom. That is, we identify in each year the consumption level of the person(s) who would be just at the poverty line if the poverty rate was 25 per cent, 30 per cent and 35 per cent, respectively. Then we calculate the income transfer needed for everybody below that level to be brought up to the level. The data are summarised in the table .

In 1999-2000, the total subsidies provided by the central government were Rs 25,690 crore, of which Rs 22,680 crore were for food and fertiliser. During the same year the central and state governments together spent another Rs 28,080 crore on “Rural Development (RD),” “Welfare of SC, ST & OBCs” and “Social Security and Welfare”. Either of these was sufficient to bring all the poor to the consumption level of the person/household at the 30 per cent level. Given that poverty was between 26.1 per cent and 28.6 per cent, either of these if transferred directly to the poor and disadvantaged would have eliminated poverty. Together these subsidies and poverty alleviation expenditures (Rs 53,770 crore) would have been sufficient to eliminate poverty in 1999-2000, even if administrative costs and leakages used up half the allocation (and the small fraction of rural development expenditure on water supply were excluded). ...

Kind Regards
Paul personal websites

For 18 years America’s banking system was run like a “new age” hippy commune

2 Responses to “A Full Blown Recession & America In Denial
Bal Says: March 9, 2008 at 3:07 am
The main difficulty for lots of people is that it’s tough to know who to believe anymore. There’s no real transparency in anything that we look at. Indeed, the very standards of evaluation are changing. I remember when the Bush 1 administration changed the definition of unemployment to include military personnel, thereby automatically improving the employment numbers (because military personnel were considered “employed.”) This kind of thing seems to be happening with increasing frequency.
If the standards themselves change without noting it in the vocabulary, what’s a lay person to do?
My criteria is more provincial and personal. We save like the dickens. We don’t skimp, but we “pay ourselves first and second.” Spending comes third. I also still see “help wanted signs” locally, though not quite as much as even a few weeks ago. I don’t know how common what we do is with other people. Having had a big experience with debt years ago cured us of hyper-spending (I hope).
With the dumbing down of Americans and the importation of large numbers of ignorant (not dumb, just ignorant) instead of educated immigrants, this dumbing down is accelerated. And with politicians apparently craving ignorant immigrants instead of educated ones, that won’t change anytime soon.
I guess the s— will really hit the fan when the word “fiduciary” comes to mean “caveat emptor.” Hopefully, that’s still some time away. But it seems likely at some point sooner rather than later.
Recovery? Since it’s not going to be by the people we stupidly hope will represent us, it’s up to each of us. The above may seem very pessimistic. But we’re still far and away better off than we were at the turn of the 20th Century. I believe that there are still enough good, optimistic and truly patriotic people who will - with brains, grit, verve and muscle - pull America out of the nose dive our so-called leaders are moving us. I have to believe it because it’s really all I’ve got. Indeed, it’s really all we ever had.
Pete Murphy Says: March 9, 2008 at 1:49 pm
Great post, Amar! I came across this post on your blog as the result of a Google Blog Alert for the key-word “economic theory.”
How do we define “recession” and “recovery?” The classic definition of a recession is two consecutive quarters of declining GDP. That’s an almost impossible hurdle and a poor definition because any growth in GDP that falls short of the combined effects of inflation and population growth is going to feel like a recession because the per capita slice of inflation-adjusted GDP is falling. A much better definition would be two consecutive quarters of falling per capita chained (inflation-adjusted) GDP. By that definition, GDP growth that falls below about 4% is a recession. By that definition, recessions are much more frequent and deeper.
An even better measure would be the inflation-adjusted median income of families. By that measure, the U.S. has been in recession for more than 3 decades. Per capita chained GDP has grown, but all of that growth is due to productivity improvement. Economists would have you believe that productivity improvement translates into higher income. It’s simply not true. There’s no relationship whatsoever. But there’s a powerful relationship between income and the demand for labor. As we all know, the demand for labor in the U.S. has failed to keep pace with the growth in the labor force for decades. The Labor Department’s assertion that unemployment is at 4.8% (about the same level that it’s been year-in and year-out) is laughable. When you annualize the weekly first-time claims for unemployment, you find that 13% of the labor force is filing for unemployment every year!
This is a direct result of our enormous trade deficit. At this point, I should stop and introduce myself. I am the author of a self-published book titled Five Short Blasts: A New Economic Theory Exposes The Fatal Flaw in Globalization and Its Consequences for America. To make a long story short, the heart of this theory is: as population density rises beyond some optimum level, per capita consumption of products begins to decline out of the need to conserve space. People who live in crowded conditions simply don’t have enough space to use and store many products. This declining per capita consumption, in the face of rising productivity, inevitably yields rising unemployment and poverty.
This theory has huge implications for U.S. policy regarding population and trade. The population implication is obvious, buy why trade? It’s because when we engage in free trade in manufactured goods with nations that are much more densely populated than our own, we actually import this population density-driven effect on unemployment and poverty. We become one nation economically. The manufacturing work is spread evenly across the new, combined work force. The other nation gets free access to our healthy market but, in return, all we get is access to a market emaciated by crowding and low per capita consumption (if we get access to their market at all). The result is an automatic trade deficit. No amount of productivity improvement, dollar devaluation, etc. can have any impact because none of these alter the fundamental problem - the disparity in population density and the disparity in our markets.
As a result, our enormous trade deficit persists. We have established a host-parasite relationship between the U.S. and these over-populated nations. It’s a virtual global trade welfare state. We finance it through a sell-off of American assets. What will happen when those assets are depleted? The prospects are scary. I believe that the current recession is just a precursor for what’s to come.
As a self-published author, I am waging an on-line guerilla marketing campaign to anyone who seems inclined to be receptive to this new theory. If you’re interested in learning more you can visit my web site at There you can read the preface for free. The book is also available at
Thanks for attention and forgive me for the “spammish” nature of this reply to your post. You have an outstanding blog going here. Keep up your efforts to raise concern about our nation’s misguided economic policies!
Pete Murphy Author, Five Short Blasts

Thursday, March 06, 2008

People of various nationalities, regions and races live in harmony

After 40 yrs, Auroville still going strong Times of India 6 Mar 2008, Gautam Siddharth

Forty years after Auroville was inaugurated by Sri Aurobindo's leading disciple, Mirra Alfassa, popularly known as Mother, the new-age metropolis designed for 50,000 people today houses just about 3,000 people from 40 countries, with a floating population of temporary residents and transnational wanderers adding up to not more than 10,000. So is this the dusk of the 'City of Dawn'? Is Auroville a 1960s' idea whose time is past?

Member of the governing board Mallika Sarabhai, associated with Auroville for four years, disagrees. "I think it's a wonderful idea, even if a bit idealistic. True, Aurovillians have long way to go, and the world is changing fast. But it's in this fast changing world that the idealism of Auroville remains very much relevant." Says another resident Claude Arpi, journalist and author, living here for the last 30 years, "I would say the biggest achievement of Auroville is that the project hasn't collapsed. The vision behind it is alive."

But Auroville is not without its problems. Local sectional interests, nearly all of them villagers in its periphery, distrust "foreigners". Says Major General (retd) Ashok Chatterjee, director Sri Aurobindo International Institute of Eductional Research, "Unfortunately, some of the gram panchayats have gone to anti-socials. They think just because foreigners live here, they must be rich, and make all sorts of unreasonable demands." Says member of governing board Ajoy Bagchi, "While there are internal differences of opinion, Aurovillians know they can't survive without the goodwill of the villagers. So they have made them an intrinsic part of Mother's project by giving them direct employment."

Indeed, close to 5,000 men and women from the villages in Auroville work with the different communities under the Auroville Village Action Group, which disburses around Rs 7 crore annually for their services. And the spiritual dimension is sacrosanct: The activities of the communities are not supposed to be an end in themselves; rather, they are a means to take the inner journey towards self-fruition. The residents thank the government, which, they say, has gone beyond their expectations in supporting Sri Aurobindo's ideals. Despite their occasional differences, at the end of the day they are all one, united in the thought that brought them together: That it's possible for people of various nationalities, regions and races, to live in harmony.

Monday, March 03, 2008

The dishonest evasion of Chinese intellectuals who pray for a perfect democracy or none is pathetic

LEADER ARTICLE: A Troubled Neighbourhood TOI 3 Mar 2008, Meghnad Desai

My present worry about China is that it seems very fragile underneath its strong exterior. A standard complaint of visitors and policy-makers to India has been the sad state of India's infrastructure. Look at China, they've all said. But over the harvest moon festival last month, China's infrastructure fell apart in ways India's has never done. Mind you moving 150 million over one weekend cannot be easy.

I have been in China at this time few years ago. The place goes mad. It is like Pongal and Diwali and Id in one fell swoop. The transport chaos was spectacular, and, for days on end, there was no solution in sight. Power shortage added to the snowstorm and the Chinese prime minister had to apologise publicly.

The point is that while China has built up infrastructure at the posh end - eight-lane highways leading to Shanghai airport and the maglev trains - local passenger suffers from shortages. It is a mark of the elitist model China is following in its growth path which treats ordinary people like dirt. The basic reason for that is the undemocratic nature of the government.

In a recent book, Mark Leonard, who runs a think tank on foreign policy in London, reports on the many discussions going on within China about economic and political reform. Two things struck me. The Chinese intellectuals find myriad objections to democracy - western style, corrupt, limited voter choice etc. They evade the issues cleverly and one can see that until the big brother gives a nod from above, there will be no real progress.

But neither the intellectuals quoted there nor the author himself points out the obvious that next to China, India has already experimented with democracy successfully for 60 years. Indian democracy has its problems but the dishonest evasion of Chinese intellectuals who pray for a perfect democracy or none is pathetic.

The chickens are coming home to roost very soon. When China got the 2008 Olympics, it was argued that this would encourage human rights there. Now Steven Spielberg has already resigned from helping the Olympics event due to China's policy in Darfur. Prince Charles has refused to go there because of Tibet and British athletes are up in arms after being told they can't make a political gesture such as the historic black power salute in the 1968 Olympics. The Falun Gong will no doubt exploit the presence of 50,000 media persons to get one of them shot in full daylight and cause one or more countries to boycott the games. This is what happened in 1980 in Moscow. It will happen in Beijing this year. China will face humiliation. It may even trigger a destabilising reaction like the Cultural Revolution. Don't say I didn't warn you. The writer is a member of the British House of Lords

Sunday, March 02, 2008

As a single economic unit a subcontinent peopled by a fifth of the human race meant by itself a great advantage

Budget Rewind: The planning begins ET 26-28 Feb 2008, Vikram Doctor On the 60th anniversary of the first full Budget of independent India (the 1947 Budget was technically an interim Budget), ET went into the archives to look at past Budgets — their presentation, content and context — to see how the nature and style of the Budget has changed over time. It’s a process that can throw up interesting questions.

Let’s go back to November 26, 1947 when the first Interim Budget was presented by Sir RK Shanmukham Chetty, industrialist, erstwhile Diwan of Cochin state and Constitutional Adviser to the Chamber of Princes. Despite not coming from a Congress background, but the more conciliatory Justice Party, Jawaharlal Nehru had picked him as India’s first finance minister, possibly at Sardar Patel’s behest since he felt that an industrialist outside the regular Congress fold might help reassure Indian industrialists nervous at the ascent of the Congress...When Chetty did rise to present his Budget in November, he made full note of its historic nature, but equally noted the tragedy of Partition that shadowed it.

“The partition of the country has cut across its economic and cultural unity and the growth of centuries of common life to which all the communities have contributed,” he said sombrely, and noted the economic cost: “To have had as a single economic unit a subcontinent peopled by a fifth of the human race meant by itself a great advantage for the teeming millions of its population an advantage not fully realised, and perhaps not properly utilised while the unity was a fact.”

Perhaps not realising, or hoping against, the hostility that would dog Indo-Pakistani relations, he hoped that the two ‘dominions’ would find ways to work together...Chetty’s second Budget, and the first full Budget, was greeted with more enthusiasm...Not long after presenting the Budget he resigned in circumstances that have never been made quite clear...

A more realistic view is that Nehru never wanted Chetty, distrusting his non-Congress origins and closeness with all those shawl-wearing industrialists. So when allegations surfaced that Chetty, possibly at Patel’s behest, had told income tax authorities to go easy on investigations of some industrialists, Nehru seized on this to get him to go. He was replaced by the candidate Nehru had wanted all along, John Mathai, ex-director of Tata Sons and the first railway minister. Mathai’s first Budget, for 1949-50, was a workmanlike exercise where the main interest today is to see how closely world events still impinged on India — he starts by speaking of “the impasse in Berlin, the civil war in Greece, the Palestine question, civil strife in China, the disturbances in Burma”... But what’s really of interest is his Budget the following year, the first in the Republic of India, under its new Constitution...

Wars in the region, first in Korea during Deshmukh’s tenure, and then the Suez crisis, during the tenure of his successor TT Krishnamachari (TTK) also were noted for their effect on the Budget. But as the country got increasingly focused with the Plans, they seem to become less important...

Deshmukh had resigned in 1956, for an oddly current sounding reason. In the face of the Samyukta Maharashtra agitation, Nehru had unwillingly agreed to the linguistic division of Bombay state, but it looked like he might listen to the views of Gujaratis and include Bombay city in their state. Deshmukh was unhappy with the idea and resigned — his transformation from bureaucrat to politician had perhaps gone further than Nehru had intended. He was replaced by TTK, the industrialist turned politician, who in a businesslike way got down to squeezing money out of tax payers with none of Deshmukh’s sense of apology...

Until the ‘80s Palkhivala’s audience had not had an easy time of it. Nehru had disregarded them, Mrs Gandhi had despised them and if they had learned anything from the chaos of the Janata years, it was that they should scrimp and save, yet somehow send their children abroad to escape. But in the ‘80s this started to change. As the growing numbers for Palkhivala’s lectures indicated the size of the middle class was increasingly hard for the government to overlook, and both the chastened Mrs Gandhi, and her ideology unencumbered son Rajiv were now willing to indulge them.

R Venkataraman and Pranab Mukherjee made token attempts in the early ‘80s, but it was in 1985 that V P Singh offered what was a dream budget before Chidambaram took a copyright on that phrase. His sops like abolition of estate duty and concessions to industry may seem small now, but were greeted as almost miraculous at that time. Even Palkhivala offered praise.

Problems were lurking though, not least in the innocuous seeming figure of Singh himself. Plucked from obscurity in UP politics thanks to his clean image, Rajiv Gandhi might have thought that he was a political lightweight who wouldn’t rock the Congress boat. But proving again how the power of the FM’s post, and the platform afforded by the Budget can upset calculations, Singh suddenly started emulating Morarji Desai’s increasingly assertive FM’s role (his ostentatiously clean politics was another parallel with Desai). Bofors and Fairfax erupted and Gandhi’s attempt to sideline him as FM by moving him to Defence backfired and Singh staged a high profile exit from the government...This period is currently the forgotten one in recent history. Not far enough away for nostalgia, but not overlaid either with the retrospective rosy sheen of liberalisation cast over the late ‘90s...

The government also finally acknowledged the growing importance of the stock markets, and in 1987 announced the need for an institution to regulate it (though it would still be a few years before Sebi was formed). And through the Budgets, there are many small measures for relief that would have long-term consequences. For example, one wonders the extent to which Singh’s announcement that “the requirement of taking out a licence in the case of radios, television sets and VCRs is being dispensed with” helped encourage ‘80s video parlour boom that caused such a change in our entertainment habits.

Yet, in retrospect, all this is overshadowed by the looming economic crisis that finally hit the country by 1991, with the government, whatever its composition in that period of revolving door coalitions, forced to go to the IMF for a bail-out. The best thing that can be said about this was that it finally made easier introduction of real reforms by Manmohan Singh when he took over the FM’s chair the following year...

Today, as another south Indian finance minister prepares his Budget, we know that the era of grand Budget schemes is over, but in small ways we are more connected to it than ever. We may no longer have a need of a champion like Palkhivala to dissect and challenge the Budget, but we do need all the detailed coverage provided by papers like this to help us understand the Budget. Sixty years on the nature of the Budget has changed in many ways, but its importance to us remains. Focus on Aam aadmi in Budget session Pre Budget