Monday, August 24, 2009

Austrians! The Indian Market Beckons

Austrians! The Indian Market Beckons by Sauvik Chakraverti

The August 24, 2009

India today is a nation where everyone can see and feel the benefits of private enterprise, including multinational companies; and, at the same time, everyone can see state failure writ large in each and every area where this socialist state is active. Housemaids have mobile phones; college students now own cars; but roads, electricity, sanitation, water supply – these areas of state monopoly cry out for a solution. The situation is no different in education.

A new word has been coined in India – "edupreneur." Indeed, in India, it is edupreneurs who have created the vast pool of software engineers this country now boasts of. Today, there are thousands of private institutes teaching management, medicine, engineering, hotel management and so on. We even have an institute teaching retail management although the government is yet to allow foreign retail chains to set up shop. We also have many private universities. Most of these are successful in the sense that they earn profits. But as I told the chancellor of one of these private universities, they are all engaged in "training," not "education."

Yet, the rapid growth of a vibrant private sector in education in India cannot be denied. There are glossy magazines catering to the sector. The Times of India, for over a decade now, has a weekly pullout on private education – and there are lots of advertisements.

I had the occasion to visit Manipal, a sleepy south Indian village where an edupreneur set up a medical college twenty years ago. They have expanded their operations since, covering many disciplines, and Manipal is now a bustling boom town. Students come from all over the country. I also met many foreign students.

There is another word that has gained currency in India – "educrat." So far, all these private institutes have had to seek permission from educrats. Recently, corruption was revealed. Coupled with this was a widespread realization that higher education under the state has been a failure. Delhi’s Jawaharlal Nehru University has produced the chief ideologue of the Maoists running Nepal today. It has become obvious to parents and students that state institutions are sinecures for étatists, Marxists, Keynesians and so on. To paraphrase Ludwig von Mises, these are the "intellectual bodyguards of the House of Nehru." This painful reality was apparent to all, students and parents alike. Many elite schools now offer the International Baccalaureate.

Public opinion demanded complete liberalization of higher education. No more educrats, the English press cried. We want foreign universities to set up shop here, cried the students and their parents. The education minister has just announced that his top-most educratic agency is to be closed down. There will soon be complete liberty.

Of course, our state is a wily customer. Parliament has recently passed The Right of Children to Free and Compulsory Education Act. Yet, I sincerely doubt the administrative capacity of this state to implement this evil agenda. There are already hundreds of thousands of "unrecognized" schools for poor children operating throughout India, as James Tooley’s studies have documented. Poor parents prefer to send their children to these unrecognized private schools because they see government schools as the pathway to failure in the great game of life. In time, I am confident that the state’s grip over schools will also go. Some people are suggesting voucherization – and this call has been taken up by many leading opinion makers. When I asked James Tooley about vouchers he nonchalantly replied: "The poor don’t need it. They are happy paying for the schooling their children are getting." Thus, we can visualize India soon becoming a country "where knowledge is free" – in the free market, that is.

Let me turn to education in economics. Here, the state dominates the field. No private edupreneur has ventured into this critical area, perhaps because they don’t have the knowledge. Yet, the fact that state education in economics is bogus is beginning to dawn on many bright students. As in eastern Europe, so too in India, really bright and hardworking students have turned to other sources for knowledge in economics. The two libertarian think-tanks in India, both active for more than a decade now, have done commendable work in fostering this changed intellectual climate. Mention must also be made of the activism (among the youth) of the Friedrich Naumann foundation.

Thanks to them, the philosophy of liberty has made deep inroads into the élite of the student community. A college topper recently dropped out of the Delhi School of Economics in order to pursue studies in the Austrian paradigm in Europe. And there are many others like him. Where do they go? Another student wants to apply for a PhD program in America – but cannot find any institution run by Austrians. Étatists rule the "official" academic world in the USSA.

India is a nation of over a billion people and the vast majority is young. They are witnessing the success of the market economy and they seek their future in it. Finding mainstream economics irrelevant, they turn to management institutes. But these teaching shops do not teach them any economics at all. They therefore come out "trained" as managers who cannot fathom how an economy really works. I say this from personal experience. Over the years, I have delivered lectures in many prominent management schools throughout India, and the ignorance on economics they cultivate has never ceased to astound me.

There is thus competitive space in India for a for-profit, independent institute of catallactics that offers a diploma based on its own academic standing, without anything to do with the state. I have long been thinking about this, more as a pipe-dream, but it was the anguish of the student who wanted to pursue Austrian studies in the USA but could not find a suitable institution that really energized me. This is "effective demand." And I do not exaggerate when I say that there are hundreds (if not thousands) like him. There is an opportunity here for Austrian scholars. I am told that most of these scholars today work in mainstream economics departments where they have teaching duties that include teaching much that they dislike. They have to find time off for pursuing their own studies. A new institute of catallactics can employ many such scholars and give them teaching assignments they will enjoy performing. We can build a small temple of learning.

To conclude: India is heading towards capitalism – slowly, but surely, despite political obstacles. There can never be a return to state socialism. Knowledge of catallactics, which is knowledge of how human beings act in markets, and how these markets work, has a definite demand, and this demand will only grow. I am therefore confident that Austrian economics can thrive in the Indian education market, while also contributing hugely to the nation’s knowledge pool.

Friday, August 14, 2009

JK suffers from over-centralisation’

‘JK suffers from over-centralisation’
Sauvik Chakraverti's interview with Greater Kashmir

Arjimand Hussain Talib

Srinagar, Jul 1: Sauvik Chakraverti, an IPS officer, resigned as the Deputy Commissioner, Delhi Police, in 1989 to study higher economics at the London School of Economics. Having developed a strong critique for the failure of Socialist model of development in India, Sauvik served as Senior Editor, The Economic Times, and authored highly acclaimed books like Free Your Mind, 2002; Population Causes Prosperity, 2001 and Antidote: Essays Against the Socialist Indian State (Macmillan, 2000).

On his first-ever visit to the Valley on the invitation of a local NGO, HIMAYAT, to deliver lectures on Population: Kashmir’s Path to Prosperity, Sauvik spoke to Greater Kashmir on a wide range of issues. Excerpts.

In the course of your two lectures in Srinagar on the usefulness of human resources in Kashmir, what impressions did you gain?

I found the students, both boys and girls, very disciplined, eager, curious and intelligent. I feel Kashmir’s future is really very bright.

Our State has had a very limted private enterprise in making productive use of our human resources. Which are the areas you feel we could use them productively?

Every Kashmiri I met is a skilled trader, fluent in English, capable of winning in the globalising world. Kashmir needs free trade to use this resource, more business and less politics.

I remember when you arrived at Srinagar airport you were stunned to see your mobile phone dead..

(Smiles)...All I can say is that in the modern world, to be forced to spend five days without my link to the outside world was extremely frustrating. I hope things change soon.

So are you surprised how people manage things here without mobile phones?

I think when progress passes you by because of State restrictions, it is lamentable indeed.

You have left IPS for academic research and activism. What prompted you to do so?

You see by 1988, I was convinced that socialism was a failure. I applied to the London School of Economics for higher studies and got admission in 1989. My department did not grant me study leave and so I resigned and proceeded anyway. It was the time of Tiananmen Square massacre. Within months, Berlin wall collapsed and within a month Soviet Union was no more. I was convinced that I had done the right thing and since then I have never looked back.

In your many books critiquing socialism’s failure in delivering well in India, you lay a lot of emphasis on developing cities and roads.

Cities are the basis of the civilisation, which began around the Mediterranean with the building of the first cities. Cities are the ant hills of human colonists, because here the division of labour is at a maximum and these are engines of wealth creation. The socialists in India neglected the cities, destroyed all the ones British had built and focussed on a rural utopia that was never realised because it was a false idea anyway.

Roads are important because these enable trade to take place between cities. The socialists neglected this vital area despite being planners. This is really amazing because despots like Roman emperors and our own Shershah Suri built roads.

How you feel about Kashmir’s road connectivity?

Kashmir, like the rest of India, suffers from extremely bad roads. It is vital that this be addressed by inviting private sector paticipation. And if this is left to the State it will only politicise things - as with the Mughal Road - and delay matters endlessly.

The golden quadrilateral is no solution to India’s problems. Our country’s future prosperity critically depends on getting the State out of the inter-city express ways.

What do you think Kashmiri youth should do to improve their condition?

I believe that they should thoroughly study the liberal critique of socialism and convince themselves of the need for free trade and free markets. Thereafter they should totally avoid the politics of empire and focus on urban local self government. As with anywhere else in the world where Socialism entered, Kashmir is suffereing from over centralisation.

An elected mayor and a council, fully responsible for Srinagar and empowered as per the principle of subsidiarity is the first thing Kashmiri youth should struggle for. Then they will be free economically and will be able to prosper without interference.

In your interaction with our Finance Minister what impressions did you gather about the government’s economic priorities?

Although I could note that his government has started doing some positive things on the financial front, I was rather saddened to hear him stress that high on his priority list were the so-called social sectors like health and education.

In both these areas, evidence from allover the country indicates that the State has been a failure. It has denied literacy to the poor and targetted subsidies for the rich. There is a cap of 26 percent on FDI in the insurance sector. If this cap was removed, health insurance will flood the market. Education and knowledge should be freed from State control and immediately as much of it is becoming politicised propaganda. I would advise your Finance Minister to focus on roads. All the roads I travelled on here were terrible. And tax money should be spent on what a private businessman cannot supply on his own.