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