Employment Guarantee a Hoax

Employment Guarantee a Hoax by SAUVIK CHAKRAVERTI

 Posted: Aug 06, 2005 at 0000 hrs IST The Indian Express

The UPA government, with an eminent economist at its head, is attempting to perpetrate an economic hoax on the nation under the pretext of guaranteeing employment for one and all. This hoax can be unraveled at four levels.

First, is the government there to see that everyone is gainfully employed? In the bad old days of socialism, the state did emerge as the nation’s biggest employer. It still is. Even today, one in every fifty Indians is employed by the state. They perform not a single task well, and society would be much better off if the state did not employ such a huge army of ne’er-do-wells. It would make far more sense for the government to cut down its flab, cut down its expenses, and perform the tasks expected of it efficiently, employing far less people. In a free market economy, people are expected to generate wealth for themselves either through kaam or dhandha. They are not expected to survive on alms from the state.

Second, anything the government does must be paid for by taxes. If the government pays money to A in order to employ him, then it takes the money from B, who is already employed. This is the ‘‘zero-sum game’’ of the politician (and his economic advisers): B loses while A gains. If the government did not tax B, and let him spend his own money, then B’s private spending would generate as much employment as government spending, if not more, considering that a lot of money is lost from the government’s ‘‘leaky bucket’’. Thus, government spending generates fewer jobs as compared to private spending. The government is an agency that taxes and spends; it does not create wealth. It cannot create wealth. If the government employs hordes of daily wage earners in public works, what is of relevance to the tax-paying citizenry is the public works, not the employment. Public works like roads and bridges are required by the people, yes, and the aim should be to build good roads and bridges; not shabby roads and bridges with the aim of employing as many people as possible.

Thirdly, as industrious individuals, we do not seek to maximize work; rather, we seek to maximize production. So should the nation. India and all Indians would be better off not by working more, but by producing more. Increases in productivity are what we should be pursuing, not increases in work: the sweat theory of value! Indeed, increasing productivity is the only means of raising the wages of the poor. Our productivity today is extremely low. For example: a truck covers 250 miles a day on Indian highways; they do more than 800 miles in the rest of the world. Productivity increases occur when more is produced given the same time and effort. These productivity increases would occur if we revamped our transportation system and employed the latest technologies in whatever we seek to do. Then, every Indian would earn more, by producing more with the same time and effort.

Fourthly, the government is actually a destroyer of jobs because of the innumerable restrictions and bans it imposes on the people. 75,000 dancing girls have just lost their jobs in Bombay. Will they spin and weave in rural India, or work carrying stones for road-building works? Restrictions imposed on economic activity in India are an enormous hindrance. We are ranked 122 in the World Economic Freedom Index, bare notches above the ‘‘economically repressed’’. We would be far better off if the state were to get off our backs.

The socialists and communists who make up the UPA government should give up the idea of guaranteeing employment, and public opinion should be garnered in this direction. All that India needs are complete economic freedom, free trade, property rights under the rule of law, and sound money (freely tradeable money without inflation). Apart from that, we could do with good roads and clean cities and towns. In such a scenario, the state will be minimalist, with only one task to attend to: going after the bad guys while leaving the rest of us alone. In such a ‘‘haven of freedom’’, poor Indians will survive far better than they do today, even by selling peanuts, for they will not have their surpluses stolen by the petty kleptocracy. The government will not guarantee employment; rather, it will guarantee a free and fair business environment. That is what the country needs of the state in a free market system.

The writer, a journalist, coloumnist and an author of books, can be reached at: sauvikc@yahoo.com 

http://www.indianexpress.com/oldstory.php?storyid=75729