False Currency

False Currency by Sauvik Chakraverti

3 Mar 2006, 0000 hrs IST,

When a bad king of yore 'debased' his currency by mixing some 'base' metal with the gold in his coins, he and the officials of his royal mint acted as counterfeiters. 

The 'false' coins were then used to take over 'real' properties of his subjects, and finance his banquets, palaces and wars. The same is done with currency notes by modern-day governments, but the process is far more insidious. 

A currency note is, in truth, a 'property title': The note is supposed to entitle the note-holder to obtain, from the issuer of the note, on demand, 'real' money in exchange for the note. 

However, each and every central bank in the modern world issues notes that are irredeemable. Even the 'mighty' US dollar is not convertible into anything. 

Thus, all the governments of the world today use 'false' money to take over 'real' resources. In effect, then, all the governments in the world are guilty of acting in the manner of counterfeiters. 

All the currency notes issued in the world today are 'property titles without property'. As this false money pervades the global market, the rich get richer while the poor get poorer. 

The immediate effect of currency debasement is that those who first get to use the 'new money' buy up resources at current prices. 

First users of the 'new money' are politicians, bureaucrats, government contractors and those 'crony' businessmen who get generous loans from banks. Those who lose most are those who get to use the notes last: The poor, and those who save. 

There is thus a 'transfer of wealth' from the poor to the rich, and from creditors to debtors, due to the step-by-step process of creeping monetary inflation.  

The world economy is headed towards a monetary crisis as the lead counterfeiter, the US Fed, becomes unable to cope with its 'twin deficits': A huge fiscal deficit combined with a huge trade deficit. 

This time, the blame should not fall on markets and speculators, the blame should fall squarely on central bankers. As we inch towards global capitalism, we need to ditch the false ideas that created central banking (and the IMF). Then only can a true capitalism arise and leftists be put permanently in their place. 

http://timesofindia.indiatimes.com/articleshow/msid-1435777,flstry-1.cms

Second Republic

Second Republic by Sauvik Chakraverti 

TOI 21 Apr 2007, 0000 hrs IST 

Nandigram, Naxal and Maoist insurgencies, Kashmir, Manipur, and the sealing drive in Delhi all point to the fact that we in India are living in a state of 'unlaw'. 

We are ruled by decrees, whims, diktats, military might — anything except by the rule of law. 

The reason why this great nation has come to such a sorry pass is because the founding fathers of the Republic were almost entirely socialist, and collectivist ideas on laware the root cause of disorder and injustice. 

The socialist principle fetishises collectively held properties and despises private ownership. A government by collectivists plunges headlong into the perpetration of injustices guided by these false principles. 

Sixty years down the line, the nation must see collective property as a sham, an ugly spoils system, and a fraud. 

The nation must also see its future in a legislation that makes right to private property inviolable by anyone, including the government. This calls for a new constitution, a Second Republic. 

Instead of recalling the writings of Marx, the nation must remember John Locke: "Where there is no property there is no justice" and Lord Acton: "A people averse to the institution of private property is without the first elements of freedom". 

If we want to live with liberty and justice, a new constitution is the need of the hour. There is no need for electoral politics to make this happen. 

We must take inspiration from the English who gave themselves the Magna Carta. We must pen our own charter, one that guarantees liberty, property, freedom to trade by land and sea, and civic self-government for all cities and towns. 

This statute should be above the government, something that the Parliament of the day cannot amend, whatever be the majority disposition. 

This is a necessary precondition for the rule of law. In other words, the government itself must be placed under the law if the rule of law is to prevail over the rule of arbitrary rulers. 

The 'unlaw' we suffer from today is entirely because of the fact that the sovereign's ministers, bureaucrats, judges, policemen and soldiers are above the law, and are breaking it with impunity. 

It is time now for the birth of a new league of Indian Liberals.

http://timesofindia.indiatimes.com/articleshow/1931433.cms

Second Republic: Securing Indians from the vagaries of the state by

Second Republic: Securing Indians from the vagaries of the state by  Sauvik Chakraverti

 A version of this article appeared in the Times of India, on 21 April 2007. 

We in India are living in a state of 'unlaw'. We are ruled by decrees, whims, diktats, military might – anything except by law. The government itself must be placed under the law if the rule of law is to prevail over the rule of arbitrary rulers, writes Sauvik Chakraverti. 

Nandigram, Naxalism, Maoist insurgencies, Kashmir, Manipur, the sealings of Delhi – all point to the fact that we in India are living in a state of 'unlaw'. We are ruled by decrees, whims, diktats, military might – anything except by law. The reason why this great nation has come to such a sorry pass is because the founding fathers of this First Republic were almost entirely socialist, and collectivist ideas on law are themselves the root cause of disorder and injustice. The collectivist idealises collectively-held properties and despises private property. A government by collectivists plunges headlong into the perpetration of injustices guided by these false principles. Sixty years down the line, the nation must see collective property as a sham, an ugly spoils system, a fraud. The nation must also see its future in a law that makes private property inviolable by all, including the government. This calls for a new constitution, a Second Republic. Instead of recalling the writings of Marx and Proudhon, the nation must remember John Locke: "Where there is no property there is no justice". And Lord Acton: "A people averse to the institution of private property is without the first elements of freedom." If we want to live with liberty and justice, a new constitution is a must. 

There is no need for electoral politics to make this happen. As with the English people in 1215, so too must our own capricious King John be made to affix his signature on a "First Statute of the Realm" that guarantees liberty, property, freedom to trade by land and sea, and civic self-government for all cities and towns. This Statute will thus be above the government, as something that the government cannot amend, by any majority whatsoever. By this, we will make our sovereign "bound by a law that he did not legislate", and this is a necessary condition for the rule of law. In other words, the government itself must be placed under the law if the rule of law is to prevail over the rule of arbitrary rulers. The 'unlaw' we suffer from today is entirely because the sovereign's ministers, bureaucrats, judges, policemen and soldiers are above the law, and are breaking it with impunity. A League of Indian Liberals is required.

Author : Mr Chakraverti is an economist.

 See also Liberty Institute, India

 

Curse of false philanthropy

 Curse of false philanthropy by Sauvik Chakraverti 

Government philanthropy based on notions of social justice is just show-business--false and theatrical. 

The idea of philanthropy has undergone enormous change in the last 500 years. Then, a man who had made his fortune would donate some of it to a public cause. Today, there are professional charities that collect funds on a huge scale. Their fund-raising activities are carefully choreographed and they pay celebrities huge amounts for endorsements. This is philanthropy as show-business. And then, of course, there is government philanthropy based on notions of “social justice”. This is also “show-business”—in the precise sense that all is false and theatrical. 

During classical times, philanthropy was rightly considered noble. It is on record that the Mayors of London, who were among the wealthiest men in the kingdom—each, without exception, richer than their King—routinely donated one-third of their estates to public causes. The legendary Dick Whittington, who served thrice as Lord Mayor, built almshouses for the poor, a college for secular priests and Guildhall till today has a paved floor and glazed windows with his name on them that are his bequest. He gave libraries to Guildhall and Greyfairs. He also built a public toilet known as Whittington’s longhouse in Vintry Ward, which had two long rows, each with 64 seats, one for men and the other for women, built over a gully which flushed into the Thames with every tide. Whittington’s longhouse was in use till the 17th century. 

Even Adam Smith, who entered the scene much later, and who famously said that “we get our lunch not from the benevolence of the butcher, the baker and the brewer, but from their self-love”, understood well why human beings are philanthropic. In a sadly neglected work, A Theory of Moral Sentiments, Smith said that sympathy was a “moral sentiment” present in each one of us. We sympathize with the poor, so we are naturally inclined to help. But do we know how to help? 

The moral sentiment of sympathy is being exploited: by beggars, by charities and by governments. 

A true classical liberal among “development economists”, a man who studied poverty in Asia and Africa deeply, was the late Peter Bauer. In his 1961 classic on Indian planning and development, Bauer made the penetrating observation that widespread beggary on the streets of India and Pakistan is not a sign of poverty; rather, beggary persists because the dominant communities in both these countries, Hindus and Muslims, respectively, believe they earn spiritual merit by offering alms. In these very countries, there are no Sikh, Parsee or Jain beggars. It would seem that we are all steeped in the moral sentiment of sympathy. And our philanthropy has negative consequences. How then can we truly “help” the poor?

While my reader ponders over this vital question, allow me to shift the discussion to government “welfare”. Government netas and babus never donate their own money. Nor do they collect voluntary donations. Theirs is, by their own admission, “redistribution”: They forcibly tax the rich to give to the poor. But it doesn’t end there. They then print money and spend on “social justice”. India’s huge budgetary deficit has much to do with “helping the poor”. In reality, the poor are paying the “inflation tax”. This is “false philanthropy”. 

Classical liberals understood well the evil of inflation. Unfortunately, the Keynesians of our times have obscured this understanding. Keynesians are still talking of government deficits as a “stimulus”. They love their “welfare state”. Yet, their paper money is just a “property title without property” that is “legal tender” in all exchanges by which “real” goods and services can be obtained for the paper notes. Thus, an increase in paper property titles without any increase in the real goods and services produced can only lead to a redistribution of real wealth. Those who get to spend the paper notes first, gain. Those who get to spend them last, lose. Inflation is a tax on the poor, on savers and on all those with fixed incomes. This is no way to “help the poor”. This is a falsity; this is certainly not “philanthropy”. Nor is it “welfare”. It is, of course, “redistributive”, but in the opposite direction of that which theneta claims it to be. It takes from the poor to give to the rich. 

Hard-working people must wake up to the fact that their moral sentiment of sympathy is being exploited from all sides: by beggars, by charities and by governments. But most importantly by governments. And among the world’s governments, none more than by our own government of India. In every international forum, this socialist state lays claim to being a monopolist on poverty. But the fact is that it is entrenching this poverty. It loves poverty for perverted reasons of its own. 

So what do we do? First, let us wake up to the reality. Let us call for an end to all this false philanthropy. Let us not give too generously to beggars either. Let us also make the call for liberty so that the state cannot stand in the way of voluntary exchanges. In that liberated market order, let us appeal to all the people—especially the poor—to work, to produce, to exchange; in other words, to engage in “self-help”. And let us put an end to inflationism. The liberal mantra is: free trade, sound money and property titles. With these and self-help, all can survive. For those who fail, let there be genuine philanthropy. State welfare based on paper money is a curse. 

Bauer once wrote these telling words: “Poverty indicates just one thing—the absence of economic achievement.” He then went on to add: “Economic achievements are made in markets.” So let the market really be free. Remove all obstacles. Poverty will vanish on its own. 

Sauvik Chakraverti is an author and award-winning columnist. He blogs at www.sauvik-antidote. blogspot.com. Comment at theirview@livemint.com 

http://www.livemint.com/2008/12/02222217/Curse-of-false-philanthropy.html

Reassessing Nehru: Free India From His Evil Legacy

Reassessing Nehru: Free India From His Evil Legacy by Sauvik Chakraverti

12 Jun 2003, 0001 hrs IST, Times of India

It is very easy to prove that the great Jawaharlal Nehru, our first prime minister, who founded a democratic dynasty that still lives on, was an evil man. My logic is based on the writings of Frederic Bastiat. 

Let us begin by looking at the difference between good and evil. Man is born into a difficult existence. To survive in this life he has to get a lot of things from the world around him: roti, kapda, makaan. There are but two ways of getting these (if we omit beggary): by working hard in the market economy, earning one’s honest living, and buying what one needs from the market. The second is by theft, by plunder, by stealing from others. The question Bastiat posed is: Which is good and which is evil? Which should we encourage and which should we seek to stifle? My reader will readily answer that the first is good, and people should be encouraged to work towards fulfilling their own needs; further, that the desire to live off others is evil and plunder should be stifled. 

In which case, let us now take a close look at the Nehruvian legacy: What did this socialist dynasty encourage? It will be instantaneously obvious to anyone who remembers those hard socialist times that this dynasty stifled enterprise and promoted plunder. Nehru put in place what Rajaji called the ‘licence-permit-quota raj’: he fettered enterprise in every possible way so babus could plunder entrepreneurs. He encouraged bright young people to join his public enterprises, which were funded by looting the taxpayer. His daughter even went on a nationalising spree, the effects of which are still with us. In her heydays, the only jobs available were under the state. Young people were not encouraged towards enterprise; they were encouraged to join the state and plunder the people. 

Gradually, as the socialist drama unfolded, it mingled with democracy to create a scenario of universal plunder. Every section of society, be it economic, social, religious or linguistic, was issued its own share of the spoils — something free or cheap at someone else’s cost. Or a job under a quota. Or some land plundered off someone else. Even the law was made to side with this plunder, and the property rights of the citizen were no longer guaranteed by the Constitution. What else is this but universal plunder? 

The history books tell us that Nehru fought for freedom. But are Indians free today? We are ranked 122 in the World Economic Freedom Index, 2002. We are still, after 10 years of this voodoo liberalisation, an economically repressed nation. Our natural ability to trade, to ‘truck, barter and exchange’ — a gift which every Indian child is blessed with in abundance — is still not allowed to flourish, and free trade is still a distant dream. Currency controls, trade res-trictions, high tariffs and continued licensing hinder our ability to generate wealth for ourselves. And they encourage a ‘rent-seeking society’ which the personnel of the state, under the Nehruvian system, have become. 

Indians are phenomenal traders: in London, the capital of a country once known as ‘a nation of shopkeepers’, Indians own all the corner shops. There is an Asian pop band in England called Cornershop. One joke about Indians goes: Why can’t Indians play soccer? Because every time they get a corner, they put a shop on it! Legend has it that a Bania can buy from a Jew and sell to a Scot and still emerge with a profit! We are the world’s best traders, but we are not free to trade because of a worthless bunch of ‘industrialists’ whom Nehru encouraged to plunder their consumers. And so it was that great evils engulfed the land. 

To rid the country of these evils, there is no alternative but the formation of a liberal political party. Only liberalism can offer us an escape from this socialist plunder, now under a fascist dispensation. Only liberals believe in the free market — that all the people should be left free to earn wealth and the state should have a minimal role. Only governance under such principles can lead India back to her age-old prosperity. 

Getting there is impossible today because the Representation of Peoples Act proscribes the formation of parties that are not socialist. So the Shiv Sena is OK, but we liberals are not! Indians must realise that this democracy is not a true one if communists, socialists and Hindutva types are free to compete and liberals are not. And the Mumbai high court must immediately respond to a public interest litigation on this issue by the Indian Liberal Group which it has been sitting on for over five years: What are libe-rals expected to do if they cannot participate in elections? Take to armed insurrection? 

Having proved that this socialism is evil, and this democracy is false, let me conclude by informing my fellow citizens that it is far more important to have a free market than it is to have the vote. The market is where economic achievements are made. I cannot open a beer bar in my basement, but I can vote. What good is that vote to me? Tribals in central India can vote, but cannot sell their lovely drink, mahua. What good is democracy without the market? Democracy without free markets is meaningless. Illiberal democracy, we Indians must now realise, is a very bad system of government.

The country is in a horrible state. Corruption rules the roost everywhere. Every city is dying. Every town is decrepit. Evil ideologies hold sway. Will India’s liberals stand up and be counted?

http://timesofindia.indiatimes.com/articleshow/17770.cms

Do we need socialism?

Do we need socialism? By Sauvik Chakraverti

Socialism was inserted into the preamble of the Constitution in 1976. It infiltrated into the Representation of the People Act, by which all political parties are made to swear by socialism in order to be eligible to participate in the electoral fray. At stake is the idea of a truly liberal party based on individualism and private property -- the very antithesis of socialism. A liberal party opposed to socialism must be allowed to attract the mind of the smart Indian voter, writes Sauvik Chakraverti in the New Indian Express

A constantly moving target is difficult to shoot. But shoot it we must. I refer to the word ‘socialism’, which was inserted into the preamble of the Constitution; and the subsequent infiltration of this term into the Representation of the People Act, by which all political parties are made to swear by socialism in order to be eligible to participate in the electoral fray. At stake is the idea of a truly liberal party based on individualism and private property -- the very antithesis of socialism.

 

But what is socialism? Is it the ‘commanding heights of the economy’ that Nehru ascended? Is it the empire of PSUs that no party wants to privatise? Is it the contempt for private enterprise and private property? Apparently, it is none of these things anymore. The Supreme Court has found yet another definition of socialism — a definition that has serious implications for our future. If this new definition goes unchallenged, socialism will be perpetuated; simultaneously, liberalism will be barred.

On January 9, 2008, while dismissing a petition challenging the legislation that makes it mandatory for every ‘recognised’ political party to swear by socialism, the Chief Justice of K G Balakrishnan, asked counsel Fali S Nariman: “Why do you define socialism in the narrower sense as the Communists do? Why don’t you go by the broader definition… which mandates the state to ensure social welfare measures for all the citizens… as a facet of democracy?”

There is an ever-present danger with Supreme Court: that it will act in ways that preserve the government, of which they are a part. Indira Gandhi called her judges ‘a committed judiciary’, and it seems they are indeed still committed to her political ideals. An entirely new judicial definition of the dreaded word has been established: one that ‘mandates the state to ensure social welfare measures for all the citizens, as a facet of democracy.’ Justice Balakrishnan wants ‘welfare for all the citizens’ — but that must be over-enthusiasm for his cause. What he probably means is welfare for the really deserving poor.

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 wasLiberty 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.

Writing in the 1950s, the great dissenting development economist, Peter, Lord Bauer, said that widespread beggary on the streets of India and Pakistan is not a sign of poverty; rather, it exists because the dominant communities in both these countries, Hindus and Muslims respectively, believe they earn spiritual merit when they offer alms to beggars. In the very same countries there are large communities like the Parsees, Sikhs and Jains who practice charity differently among themselves — and produce no beggars. A ‘welfare state’ of the kind contemplated by the learned CJI would cause beggary in India to multiply thousand-fold.

What is the best way to help the deserving poor? When I ask this question during seminars, I offer students three choices: First, take direct action and give alms to every beggar you come across. Second, pay taxes to the government and ask the government to help the poor. And third, donate to a good charity organisation like Mother Teresa’s and ask them to use that money to help the poor. Even kids of Class 5 decide that the third option is the only doable one. To liberals, charity must be private.

In India, what keeps people poor are stupid policies — and all these policies are the product of ‘socialism’, however defined. The new definition will lead to the perpetuation of our ‘spending bureaucracy’, without any benefit to the poor. For real progress, Indianeeds the classical emphasis on Liberty and Self-Help —and well-directed private charity.

If an example of an Asian country is required that prospered immediately upon embracing these principles, it is Japan after 1868: the Meiji era. Samuel Smiles’ Self-Help was translated into Japanese then, and widely read. It convinced the ordinary Jap that with Liberty all he needed to add was sincere, individual effort. And every Jap worked hard; their work-ethic is the stuff of legend. The populous little nation flourished and became an inspiration for all of Asia. The Japs have never embraced socialism. It is still Liberty and Self-Help in the Land of the Rising Sun.

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.

This article was published in the New Indian Express, on 16 February 2008. Please read the original article here.

Author : Mr Chakraverti is the author of Antidote and Antidote 2, and a columnist.

http://www.indefenceofliberty.org/story.aspx?id=967&pubid=681

Holmes rolls in Goa

Holmes rolls in Goa by Sauvik Chakraverti

Sherlock Holmes and his assistant Dr Watson holidayed in Goa recently, enjoying a few days of r&r. After a leisurely walk along Palolem beach, Holmes remarked: "Watson, it seems perfectly apparent to me that tonnes of ganja gets smoked in Goa every day. This calls for a deeper, private investigation" writes Sauvik Chakraverti in his Antidote column in The New Indian Express on Sundays.

Sherlock Holmes and his assistant Dr Watson holidayed in Goa recently, enjoying a few days of r&r. After a leisurely walk along Palolem beach, Holmes remarked: “Watson, it seems perfectly apparent to me that tonnes of ganja gets smoked in Goa every day. This calls for a deeper, private investigation.” 

Dr Watson, as is his wont, was slow to get the point. “How can you arrive at such an outrageous conclusion after just one short walk, Holmes?” he demanded to know. “Why, you have not even unsheathed your famous magnifying glass!” 

“Elementary, my dear Watson,” said Holmes. “Perceive the loads of rolling papers that are sold in all the little shops here, in five kilo jars. You don’t need a magnifying glass to spot this singular, vital clue. So much paper means so many spliffs, which means so much ganja — simple arithmetic. Tell you what, Watson, let us score some ourselves and smoke it. You know, when in Rome etc. And anyway I haven’t brought my cocaine along, anticipating trouble with this foreign police.” 

Deprecating Holmes’ sense of adventure, Watson nevertheless agreed. The duo headed for the closest cigarette shop. Holmes bought a pack of king size Rizlas. The little shop had over 500 packs in stock. Holmes, in a conspiratorial tone, asked the shopkeeper where he could get some ‘stuff’ to smoke in his Rizlas. The shopkeeper pointed to a young Goan lad in a Bob Marley T-shirt, leaning casually against a coconut tree. Very soon the deal was done, and Holmes obtained a goodly quantity of fine ganja. The two hastened to smoke it. 

“Time me, Watson,” commanded Holmes as he began the tedious preparations that go into rolling a spliff: cleaning the grass of twigs and seeds, preparing a nice ‘mixture’, making a roach, and then finally doing the spliff. 

“Twelve minutes precisely, Holmes,” said Watson, as Holmes lit the spliff and inhaled deeply of the sweet smoke. “Let me now count how long it takes to smoke it.” This turned out to be three minutes. The duo, now suitably stoned, strolled into a beach shack and ordered some beer to tackle the inevitable ‘cottonmouth.’ The shack had some chairs on the sand facing the setting sun. The colours were breathtaking, the soft reggae music emanating from the shack was elevating, and the cold beer was heaven itself. Of course, Holmes’ mind was still ticking away on the ganja question. 

“Watson, the plight of ganja smokers distresses me. Twelve minutes to roll what takes three minutes to smoke. What a criminal waste of Time! All roll, roll, roll and no rock at all! We must therefore arrive at an assessment of not only the total sales of rolling papers and the total quantity of ganja smoked, but also the total amount of time spent hand-rolling. Let us down our beers and proceed to the first step: evaluating the only visible clue we have — rolling papers. How many packs of rolling papers are sold here every day? That is the question.” 

Very soon, the two were back in the shack, Watson bearing his notepad. More beers were ordered and Watson pulled out a calculator. The statistics on rolling began to roll. 

Twenty little shops selling 100 packs of rolling papers every day added up to 2000 packs sold per beach, per day. Assuming Goa has 20 beaches like Palolem, that means 40,000 packs of rolling papers sold every day in Goa. Now, a pack contains 50 leaves, which means 2 million spliffs are rolled in Goa every day. Hand-rolling them takes 24 million minutes or 4,00,000 man-hours. At two grams of ganja per spliff that adds up to four tonnes of the stuff consumed daily in Goa. Holmes and Watson were both flabbergasted at the implications of what their very ‘private investigation’ had uncovered. They paid for their beers and continued on their stroll. Holmes was lost in thought, almost oblivious of his enchanting surroundings. 

“Watson,” said Holmes, “let us visit the website of Rizla and try and find how many rolling papers they sell annually worldwide. This could give us an exact understanding of this ‘crime’ that the whole wide world revels in.”

The two trooped in to a cyber café on the beach, but the data could not be obtained. Rizla maintains all such information as trade secrets. But they did find a long history of the company, which has French origins but is now owned by Imperial Tobacco and headquartered in the UK. It must indeed be a very big business to attract Imperial Tobacco to it. And Rizla was just a market leader. As Holmes and Watson discovered, there were many other brands available, with keen competition between papers made of hemp and Rizla, whose papers are made of rice. However, they could not obtain any hard data on the international rolling paper industry. Disappointed, but not beaten, our heroes re-emerged on Palolem beach. 

The sun had set, the moon was out, and all the shacks had their pretty coloured lights on. They walked into one of them and ordered more beer. Holmes began to roll another spliff. The evening proceeded slowly, more beers were drunk, more spliffs were smoked, and a fine seafood dinner followed. Holmes then summed up his thoughts: 

"Watson, my good man, if Goa represents even 5 percent of the world market for rolling papers, this means 40 million spliffs are smoked worldwide every day. The total time spent hand-rolling them is 8 million man-hours – every day. Total ganja smoked worldwide every day is 80 tonnes. This is an astonishing discovery. If ganja was legal, big spliffs would be made by machines, as cigarettes are today, and 8 million man-hours of hard labour saved." 

"Why don't you write a column for The Times on this when you return to Baker Street, Holmes," suggested Watson kindly, knowing that his friend was exceptionally perturbed at his findings. "You would shake up the authorities." 

"I most certainly shall," Holmes replied, adding, "and could you please roll a joint for us now. I am too stoned to roll, but very keen on a last smoke." 

Watson did the needful, as a dutiful 'joint secretary' would. 

Holmes patiently waited the full 12 minutes; he then lit the joint, inhaled, exhaled, and raised the toast: "Here's to machine-made spliffs someday soon, so the whole world can chain smoke them." 

"Amen," said Dr. Watson.

This article was published in New Indian Express on 01 March 2008. Please read the original article here.

Author : Sauvik Chakraverti is a columnist, and is the author of Antidote

http://www.indefenceofliberty.org/story.aspx?id=1014&pubid=725

Road to the future

Road to the future by Sauvik Chakraverti

Street Smart by Gabriel Roth sets the tone for a learning experience on ‘the future of roads’ that can benefit many Indians dealing directly with this vitally important subject or indirectly interested in it, from infrastructure fund managers down to journalists covering roads - that roads can be private businesses. For one with a passion for roads, I can only assert that I have myself benefited greatly from a study of Gabriel Roth’s Street Smart. I am happy this will be reflected in my writings on roads for many years to come, writes Sauvik Chakraverti in the New Indian Express.

Book Review:

Street Smart: Competition, Entrepreneurship and the Future of Roads 

By Gabriel Roth 
Transaction Publishers and 
The Independent Institute, (2007), US$30 

Gabriel Roth is a libertarian with a passion for roads, that is, roads as private businesses. His earlier book Roads in a Market Economy (1996) revealed that Western nations had deeply erred by making roads into government monopolies funded through taxation and provided by politicians. 

It offered capitalist nations the way out of this ‘Soviet-style roads system’. 

His new book is a collection of brilliant essays by a wide variety of specialists on various aspects of roads. Bruce Benson, for example, a formidable authority on Law and Economics, has contributed two fascinating essays: The first on ‘eminent domain’, its misuse, and why it is really not required for road-building; and the second on the history of the 'turnpike trusts' of 18th and 19th century England, which were private efforts at building, maintaining and tolling roads. Indeed, the history of private roads in both Englandand America are recounted in this book, and there are many lessons to learn. 

The essay on eminent domain is particularly instructive, since it dispels the false idea that roads cannot be built without invoking these authoritarian powers. This paves the way for a deeper understanding as to how businessmen can easily assemble the land required for such projects. The examples of the misuse of these powers in western countries tells us a great deal about the politics behind a similar misuse in India such as in Singur and Nandigram. 

There are 20 essays in all and they present a wide array of issues and perspectives. John Semmens talks of privatising vehicle, driver testing and licensing and it becomes clear why better safety standards will be promoted if insurance companies, with a direct financial interest in safety, took over this vital function from a corrupt and useless government bureau. 

Gopinath Menon, who teaches traffic management at Singapore’s technical university, has contributed an excellent piece on the city-state’s Automatic Road Pricing system and the history of its development. 

This history confirms the old adage that ‘Rome was not built in a day’ and that traffic and transportation was always an area of critical focus for their government, right from independence in 1965. It is also time for our government to give up the ‘looking after poor’ bullshit and deliver knowledge-based solutions to traffic congestion and mayhem in all our cities and towns. 

While each and every essay is noteworthy, those that deserve mention in this review are the two on city streets as ‘private sector public goods’ and the account of the Private Roads Associations of socialist Sweden, which provide and maintain a major share of that country’s rural roads. Rural roads are a critical area for India, as are city streets, and these essays are hugely illuminating. 

Another essay that is extremely relevant to the Indian situation is on ‘the role of the private sector in managing and maintaining roads’. It is seen that ‘performance-based contracts’ with private firms are the best and cheapest way to maintain roads. There is an interesting story of how a US town paid $120 per pothole repair by traditional manual methods. When the performance-based contract was executed, the contractor found it prudent to employ a pothole-repairing machine that could be driven over the pothole, and which conducted an immediate repair for just $22. There is a photo of this machine. It is also mentioned that not repairing highways in time escalates costs hundredfold. One of the contracts cited contains the clause that, over every 10 kilometre, not more than three potholes of 15mm diameter should be seen: and where seen, they should be repaired in 48 hours. These are ideas India needs. 

Gabriel Roth’s own essay, which opens the volume, ‘Why Involve the Private Sector in the Provision of Public Roads’ sets the tone for a learning experience on ‘the future of roads’ that can benefit many Indians dealing directly with this vitally important subject or indirectly interested in it, from infrastructure fund managers down to journalists covering roads. 

Engineers can also benefit, and there is an exposition of radio-enabled ‘open road tolling’, by which tolls can be electronically collected on all roads, without requiring vehicles to stop. 

As a libertarian myself, that too one with a passion for roads, I can only assert that I have myself benefited greatly from a study of Gabriel Roth’s Street Smart. I am happy this will be reflected in my writings on roads for many years to come.

This article was published in the New Indian Express, on 23 March 2008. Please read the original article here.

Author : Mr Chakraverti writes the Antidote column in the New Indian Express.

http://www.indefenceofliberty.org/story.aspx?id=1054&pubid=764

Liberalism versus the Rest

Liberalism versus the Rest by Sauvik Chakraverti

There is hope for liberalism as compared with all other political ideologies only because we do not require coercion for the fulfillment of our political ideals. Since all other political creeds require coercion, they are foredoomed to failure because there is an limit beyond which none will submit to authority. For this crucial reason, based on an appreciation of the limits to coercion as well as a principled understanding of the legitimate use of coercive powers, liberalism is destined to prevail over all competing political visions. It is only a matter of Time, writes Sauvik Chakraverti.

Antidote

Surely the first question any aspiring 'representative of the people' must ask himself is: What is the role of the State in a free (or democratic) society? To Raj and the Thackeray parivar, to Narendra Modi and the sangh parivar, to Buddhadev Bhattacharya and the communist parivar, just as it always was for the Nehru parivar, it seems perfectly apparent to me that their idea of State is 'an institution that protects us from injustices, except those it commits itself' (Ibn Khaldun, Muqaddima, circa 1350).

The reason behind this eclipse of reason is not difficult to find. Coercion is their motto not because they are anti-democratic, but precisely because they are democratic. The process we call democracy in India is riddled with coercion. Anyone who runs a political party holds vast powers over all members; a political party is a power hierarchy based on 'hegemonic relationships'. (Business hierarchies are 'contractual'.) When politicians vote within democratic assemblies, each member must respect the orders of his 'party whip'. The very term reeks of coercion. Then there is the Party High Command (or Politburo). Theirs is the 'vote motive'. Or is it 'rent motive'? Compared to these motives, the 'profit motive' is innocent: shubh laabh.

Raj Thackeray is 'political' in the sense that he seeks to represent a majority. He is the leader of a 'recognized' political party and has powers over 'party cadres': they follow his orders. Now, this is true of all political parties. It is because of this very reason that Roberto Michels propounded his Iron Law of Oligarchy way back in 1915: "Hierarchical political parties can never yield a classless, socialist society," he wrote. "Where the instrument is hierarchical, how can classlessness result?"; adding, most accurately, "socialism will fail at the moment of its adherents' triumph."

The politics of Thackerayism, Moditva, Buddhadevism, Lalooism, and Nehruvianism are all 'legitimate': all these recognized, hierarchical political parties swear by 'socialism', as defined not only in the Constitution of India, but in their party constitutions as well. But the reality of hegemonic power relations within each party hierarchy should wake us up to the fact that the way we are headed is not the classlessness of socialism, but something diabolical. It is politics without principle, based on coercion. It is aimed at taking control of the dysfunctional State – which provides access to further coercion, through legislation, through taxation, and through manipulation of the police and the administration. Never will we attain the ideal of Socialist Equality if we continue with this socialist democracy. It will always be arbitrary coercion. Oligarchies will rule. Chaos will follow.

In vivid contrast, Liberalism begins not with coercion, but with voluntary co-operation in markets: the natural order of natural liberty. Voluntary exchanges in the market order must be free, we believe. We therefore oppose legislation on 'victimless crimes' like gambling, prostitution, and ganja peddling. To us, coercion is an actionable tort, and a very grave matter indeed. We dream of a coercion-free natural order. That is why our ideal State is but a provider of Justice, whose only role in a free society is to act against those who disrupt the market order with their unjust actions. Nothing else.

This is Liberty under Law. It yields Freedom and Property, not Equality. To liberals, socialist ideas of Equality are a dangerous deception. The highest political values of liberalism are Freedom and Justice. Yet, we are barred from political participation while Raj Thackeray is legit. "Fair is foul and foul is fair," as Macbeth's witch put it.

To grasp the enormous amount of coercion that Raj Thackeray has unleashed on a very poor minority, recall that at least 50,000 north Indians have fled the state of Maharashtrasince he began flexing his Maratha muscles. Why did so many run for their lives?

Unveiled threats are also coercive. Because these threats were not countered by immediate and stern State action, they were deemed imminent by all concerned, who fled. Specific provisions of the Indian Penal Code outlaw political hate speech of the kind Thackeray delivered; but then, the Indian police is itself rooted in arbitrary coercion, and is the very anti-thesis of the 'rule of law', thanks to 60 years of socialist misgovernment.

So, what would happen if liberals took over? Whom would we throw out? This is relevant given that all these politicians place before the voter their own idea of a 'class enemy'. To Raj Thackeray, north Indians are the enemy. To Modi, it is non-Hindoos. Who then are the enemies of Liberalism?

The enemies of liberalism are all those who coerce the rule-following citizenry. Today, apart from some recognized political parties, who must be defeated by State action, the biggest profiteers from arbitrary coercion are the police and the taxation bureaus. A liberal government's first task will be to bring these coercive bureaus to heel. The police must protect petty traders, not loot their surpluses. Taxation must be linked to services provided. Today, taxation is arbitrary and excessive – like those on civil aviation, which transfer business to the unsafe railways. Tolls on stretches of our 'notional highways' are double-taxation, as we already pay dedicated road taxes on automotive fuels. Since we pay the taxes, proper highways must be built as 'freeways'. Similarly, the excise department must be stripped of all licensing powers, so the business of alcohol retailing can be free. Further, the customs department must either be abolished (like octroi), or a small 'revenue tariff' should be levied on select, bulk imports. A minimalist State requiring minimal taxation: that is the liberal ideal.

Where masses are poor, taxation must be lighter still. If liberals come into positions of authority and responsibility, it is not the Muslim or the Bihari who should fear for his life – but the police, the excise, the customs, the income tax: these coercive bureaus will feel the heat. And that's a promise.

To conclude: There is hope for liberalism as compared with all other political ideologies only because we do not require coercion for the fulfillment of our political ideals. Since all other political creeds require coercion, they are foredoomed to failure because there is an limit beyond which none will submit to authority. For this crucial reason, based on an appreciation of the limits to coercion as well as a principled understanding of the legitimate use of coercive powers, liberalism is destined to prevail over all competing political visions. It is only a matter of Time.

A version of this article appeared in the New Indian Express, on 23 March 2008. Please read it here.

Author : Mr Chakraverti is the author of two volumes of Antidote (Macmillan Publishers)

http://www.indefenceofliberty.org/story.aspx?id=1053&pubid=763

The Intelligent Woman's Guide to Capitalism

The Intelligent Woman's Guide to Capitalism by Sauvik Chakraverti

The suffragettes fought for the vote and got it. Yet, despite years of voting, millions of women remain poor. The vote is obviously not enough. Women must therefore think hard as to where their true interests lie. Free trade, sound money, private property, liberty under law, production for exchange in urban markets and the consequent rapid urbanization of India – it is with these that all women can prosper. When they do so, men will gain too, because there is a law in Economics that says: When any good is sold it creates the demand for all non-competing goods and services, writes Sauvik Chakraverti in his blog, Antidote.

(With apologies to George Bernard Shaw, who was a Fabian socialist and wrote a very popular "Intelligent Woman's Guide to Socialism.)

Till fairly recently, both economic as well as political activity were the reserve of men. Thus, women had to depend on men for everything, and this led to subjugation.

Fortunately, better days are here. The suffragettes fought for the vote and got it. Yet, despite 60 years of voting, millions of women in India remain backward and poor. The vote is obviously not enough. Some, like the socialist economist Amartya Sen and his protégé Manmohan Singh, say they need “education” – from the government. But prosperity is delivered by markets, and the government of India is scarcely a lamp of learning. Women must therefore think hard as to where their true interests lie. Only then can they campaign for the right policies.

It is not true that women did not “produce” or that they were “ignorant” in the centuries gone by. All over the world, women cooked delicious food, kept homes clean, and managed household budgets. In India, women produced pickles, papad, chutneys, butter, ghee and so many other wonderful things. Tribal women still produce alcoholic drinks like mahua, handia and apong. But all this was for “self-consumption”. These were not produced for “exchange”. If all these are produced for exchange in the market economy, it would become evident that women indeed possess a great deal of useful “knowledge” – even without formal education. They are not ignorant.

Thus, the first step towards the liberation of all women lies not in the vote, nor in “education”; rather, it lies in the freedom for all women to participate in the exchange economy of the market with whatever knowledge they may possess or choose to acquire. Indeed, pickles, papads and chutneys are very big businesses today. Street food is another. Entertainment is a multibillion dollar industry now and traditionally women have always been proficient in music and dance. Rather than the vote, which is “political freedom”, or government education, which can seriously damage the mind, women today should strive for the Liberty to engage in economic activity, which is Economic Freedom. This is a term not found in the lexicon of the socialists.

At the outset, let it be clearly understood that Gandhi got it all wrong. His ideal of “village self-sufficiency” means economic suicide for both rural men and women; but more so for women, because if their men are poor, women are poorer still. Self-sufficiency is production for use; capitalism is production for exchange. If rural women produce surpluses for exchange, they will discover that the markets in which they can find sufficient customers are invariably located in cities and towns. Stuck in a sparsely-populated village, a woman might sell two jars of pickles. But if she took her output to a crowded city, she might sell a hundred kilos of the stuff. Thus, villages, self-sufficiency and “rural development” must be ditched in favour of urbanization: hundreds of free trading cities and thousands of such towns, instead of millions of self-sufficient village economies. Women must produce for exchange in urban market centres. This is my Lesson # 1.

On to Lesson # 2: As far as politics and government are concerned, what these must be able to provide women is Liberty Under Law. Nothing else – no “sops”, no “reservations”. There must not be any politically imposed restrictions placed upon women (or men) when they go to the urban markets. It is here that we find the critical problem that many, many women face in our cities: that the Law does not give them Liberty; rather, the Law is an instrument of coercion. This applies not only to women street vendors and petty traders, but also to women performing artistes, right through to women working in professions like tending bars and serving food and drink. Indeed, although we in India have a huge film industry, we do not possess a “nightlife” industry – where lakhs of women could find gainful employment. There isn’t a Moulin Rouge in any Indian city. Nor are there any casinos. Even bars are strictly licensed, and entertainers are discouraged by the “entertainment tax”. These are areas where women are usually employed en masse, at least in the western world. In our own land, the nautch-girl was a fixture of the Mughal court; she was there in every city; even the British were entertained by her; but our modern-day democracy has thrown her out – and this is repression via legislation. So my Lesson # 2 reads: Fight for Economic Freedom – the liberty to engage in consensual capitalistic exchanges that hurt neither buyer nor seller.

Now, the difference between primitive “production for self-consumption” and capitalistic “production for exchange” is that the latter requires Capital as “investment”. With capitalism, we have “roundabout methods of satisfying wants”. For example, till fairly recently, all yoghurt produced in India was in the home, consumed inside the home itself. Today, we have big companies producing yoghurt. Instead of a woman milking her cow and preparing the yoghurt – which is “direct satisfaction” – we now have the “roundabout” method of companies buying humungous amounts of milk from lakhs of cattle-owners, transporting them to distant factories in big trucks, making tonnes of yoghurt and packaging it, transporting these to shops, advertising these offerings, etc. This “roundabout” method is Capitalism – and this requires capital to invest. My third lesson is on how women can save the capital necessary to invest in capitalistic enterprise.

At the basic level, we save if we spend less than we earn – and this is something every intelligent woman understands full well. (Though Lord Keynes didn’t: but that’s another story.) But there are two factors that erode our savings: taxes and inflation. It is in the interest of all women to campaign for lower taxes (so oppose Manmohan Singh’s “education tax”) and for an inflation-free currency. Inflation is a hidden tax. As the value of the currency falls, so does the value of one’s savings. The gainer is the borrower who takes a loan today and pays back many years later when the money has lost much of its value. The government also gains. Thus, women should understand inflationism and oppose it: Low taxes, balanced government budgets, sound money – these are policies that will allow millions of women to save and invest, and engage in Capitalism. Whenever a finance minister announces a “budget deficit” or another populist giveaway, all Indian women should cry “Foul!” This is my Lesson # 3.

Fourth: Capitalism is based entirely on private property (socialism exalts “collective property” – like the steel plants Nehru built). The unwritten law of any market is that the goods arrayed before a vendor belong to the vendor. If we want some of them, we must strike a bargain and make the exchange, whereupon the ownership rights are reversed. Now, imagine what would happen in the market if the Law said that bread belonged to all, and all were free to consume it: communism. The result would be there would be no bread offered for sale in any market. There would be wheat, flour, chappatis – but no bread. The “natural law” of private property cannot be dispensed with without causing immense economic dislocation.

What properties do women need? Women are homemakers: they need homes. Homes are the most essential private properties. Since all cannot afford to buy them, they rent. But what happens if the Law says that the actual owner of the house cannot raise his rents to market levels and cannot evict tenants who refuse to pay what he demands? As in the case of “collective bread” above, the result would be that rental housing would not be offered on the market. Prospective tenants would not find rental housing. They would have to stay in slums. This is what is happening in every Indian city today. Yet, every bai in Mumbai would have decent rooms on rent if all legislation on “rent control” was repealed. Slums would disappear. I hope my readers will now instruct their bais to take to the streets in opposition to rent control. This is my Lesson # 4.

Finally, what good is the money earned if there is nothing much to buy with it? – as in our socialist heydays. Women are great shoppers. They love shopping. And they have the nose for the best deals. What good can these excellent noses do if foreign products are left out? Free trade is in the interest of all shoppers – so that they can purchase, with their hard-earned wealth, the best goods the world has to offer. So campaign for free trade as an essential component of Economic Freedom – the freedom to engage in consensual capitalistic exchanges with foreigners. This is my Lesson # 5.

 

Free trade, sound money, private property, liberty under law, production for exchange in urban markets and the consequent rapid urbanization of India – it is with these that all women can prosper. When they do so, men will gain too, because there is a law in Economics that says: When any good is sold it creates the demand for all non-competing goods and services. Thus, when a woman sells a tonne of papad, she will possess the means to buy a good car – manufactured by male engineers.

And even we men will prosper.

This article was published in the Antidote blog on Wednesday, June 18, 2008. Please read the original article here.

Author : Mr Chakraverti is an economist based in India. He writes on his blog http://sauvik-antidote.blogspot.com

http://www.indefenceofliberty.org/story.aspx?id=1329&pubid=1087