Saturday, April 5, 2014

Narendra Modi's Development Model

Narendra Modi, the lead prime ministerial candidate of BJP party, is having an eight point development model, which he is proposing to implement if he comes to power in 2014. In this succinct write-up I want to analyze this Modi model. Although for those who have a thinking head on their shoulders this model presents nothing new, we, in any case, need to analyze it because Modi is likely to be the next PM of India. Let's take a look at the eight points of this development model one by one. My analysis follows the description of this eight point development model. Here is the model:
  1. Education & Job Opportunities for Youth: IITs, IIMs and AIIMS in all states
  2. Children & Women’s Empowerment: Beti Bachao Programme
  3. Urban Develeopment / Infrastructure: 100 smart Cities, Twin City Concept,
  4. Satellite Cities, Interlinking rivers, Golden Quadilateral of bullet trains
  5. Inflation/Price Control: Price Stabilisation Fund, Special courts for black marketeers
  6. Agriculture Reform: Data bank for Agri Produce, National Agriculture Market 
  7. Health Care for All: Preventive health care
  8. Federal Structure: Addressing regional aspirations
  9. Anti Corruption Measures: Bring Back Black Money Stashed Abroad 
First thing that catches any thinking head's attention in this model is, how Modi wants to achieve these goals? What are the various means that he wants to use to fulfill the goals of his model? There is no mention of these means in this description of his model. Without the knowledge of what kinds of means he wants to use, it is difficult to analyze anything concretely. The absence of the discussion of these means itself shows how serious and sincere this model is! Notwithstanding the absence of the discussion of means, we can make few educated guesses, by using thymology, about what means Modi is likely to use. Modi is a hardcore politician, so he will definitely use political means for achieving his political goals. He basically will use the State powers of robbing Peter to pay Paul. He is very unlikely - almost impossible - to use the system of free market capitalism to achieve his model goals. The idea of Freedom won't even cross the mind of totalitarian dictator politician like Modi.

Can government provide education? Or Can government create jobs?

Government's compulsory schooling - we should strictly differentiate between schooling and education because for real education going to school is not necessary and going to school doesn't mean you are educated in a real sense - system is specifically designed for brainwashing children and create obedient zombie citizens out of them who will never question the legitimacy of the state authorities. I will let H L. Mencken, the great American journalist, speak in this regard:
“The most erroneous assumption is to the effect that the aim of public education is to fill the young of the species with knowledge and awaken their intelligence, and so make them fit to discharge the duties of citizenship in an enlightened and independent manner. Nothing could be further from the truth. The aim of public education is not to spread enlightenment at all; it is simply to reduce as many individuals as possible to the same safe level, to breed and train a standardized citizenry, to put down dissent and originality. That is its aim in the United States, whatever the pretensions of politicians, pedagogues and other such mountebanks, and that is its aim everywhere else.”
Government can not also create any jobs. To understand this I will strongly advise my readers to understand the broken window fallacy. Modi or any other politician can never ever create anything new let apart jobs by using the political means of taxes, subsidies etc. Government is a meat grinding machine and it can only destroy societal resources.

Gujarat itself, where Modi is CM, is doing miserably when it comes to infant mortality rate and maternal mortality rate or broader human development indicators (see here, here, and here).  

In the name of infrastructure and urban development Modi government has looted farmers in Gujarat, and the same is likely to happen all over India if he wins this election. Moreover, the broken window fallacy shows that building such cities or interlinking rivers or running bullet trains [sic] represent no real development; it only shows transfer of real wealth from the productive tax paying class of the society to the unproductive tax consuming class. And above all, all these economic goods, if really demanded by the consumers, can very well be produced by the system of free market capitalism. For their production we don't need any Modi or Gandhi or Kejriwal! 

Price control means disaster. 4000 years old human history shows that whenever governments have used price control measures to stop inflation, they have failed miserably. Can Modi falsify economic laws and do something which no other ruler was ever able to do in last 4000 years? No. He doesn't even understand what inflation is! His talk of price control itself shows that he is totally clueless about the true meaning of inflation. And, scapegoating black marketeers won't stop inflation because they are not responsible for it. RBI, the central bank of the Indian government, is wholly responsible for creating inflation via its loose money policy. Is Modi going to dismantle RBI? Absolutely not. Without dismantling the RBI and the adoption of pure gold standard with 100% reserve banking, inflation monster can never be slain. In fact, what actually will happen is Modi will increase government spending to fulfill his model goals, which, in turn, will create more inflation!!!

Government health care for all will be a total disaster also in the health care market like India were private providers are doing good work. Obamacare in USA is a prime example of how government health care programs create havoc amongst the populace.

Bringing back black money won't stop corruption. As I have discussed in past, the root cause of corruption is the presence of the bloated Indian government bureaucracy. Without demolishing these bureaucratic departments, corruption can't be ended. As long as bureaucrats are standing in between the peaceful buyers and sellers, they will continue to demand their share of state loot from both buyers and sellers. As long as government bureaucrats have the power of making various decisions, they will continue to gobble up tax payers' money. Bringing back black money is a pure nonsense talk.

Regarding federal structure I am thinking, and I definitely can be wrong in my thinking, that Modi will break-up this country, and for good. As I have said in past also that instead of having one central state power ruling over billions of lives, it is better to have smaller private cities in this geographic region called India. India never was united historically. It was always a decentralized place full of smaller independent principalities. If Modi's coming to power can again divide this country into such decentralized local powers, then, that will be much better compared to today's centralized federal structure.

Overall, this so-called Modi development model is a pure baloney. There is nothing new in this model. It is a same old boring politician's promises of doing this and that. Modi and his BJP party has no clear cut vision. They cannot have one because they, like all other state officials, are only interested in getting elected and re-elected. They want power and nothing else. Pretty soon peoples' delusions are going to end regarding Modi. Pretty soon people will start complaining about his government too!   

Saturday, March 8, 2014

The State is a Mother of All Forces

Anyone who understands the true criminal gang nature of the state (aka government) knows that it is a mother of all forces. The fundamental basis of every government, whether that be fascist, socialist or a liberal democratic, is force. Without coercion no state can ever survive. Taxation is the quintessential of this force. Without coercive taxation no government can come into existence. I have made this point time and again in front of people, but still many refuse to believe this eternal truth. Many people bring out age old boring and long refuted argument of government - especially a democratically elected one - as a voluntary institution just like any club. They say that people voluntarily go and elect their representatives in elections! Nothing can be farther from the truth. I have explained in my past write-ups that these democratic elections actually present no true choice in front of people. They are an illusion of choice e.g., hapless voting public can never elect a no government for themselves for five years or more. When you have to choose a lesser evil, it is still choosing an evil!

But I digress. In today's article I want to focus on the coercive nature of the whole election process itself from the side of those who are involved in conducting these elections. Indian election commission has announced the dates of the general 16th Lok Sabha elections 2014. In this election more than 81 crore citizen slave voters are going to forcefully elect who is going to loot them for next five years. This time around they are given a false choice of NOTA (None of The Above). NOTA is a tool of fooling public yet again. If someone is thinking that by giving a NOTA vote they are fundamentally going to change the outcome of the election process, then, they sure are day-dreaming. Here is what Wikipedia entry of NOTA says about the possible outcomes if  majority votes for NOTA:
When None of the Above is listed on a ballot, there is the possibility of NOTA receiving a majority or plurality of the vote, and so "winning" the election. In such a case, a variety of formal procedures may be invoked, including having the office remain vacant, having the office filled by appointment, re-opening nominations or holding another election (in a body operating under parliamentary procedure), or it may have no effect whatsoever, as in the state of Nevada, where the next highest total wins regardless. (See here).
Not only that, in India NOTA has no importance whatsoever as the same Wiki entry again discusses:
Although frequently termed a "right to reject" in India, a former head of the Election Commission has noted that it is not in fact such a thing. The Election Commission also clarified that the NOTA votes are considered as invalid votes and will not be considered for determining the forfeiture of security deposit. (Footnotes removed).
So, NOTA votes are basically considered invalid votes! Good luck people if you decide to waste your time on election day for voting for NOTA.

Now, I said I want to focus on the coercive nature of this election itself from the side of those who are conducting it. I will give you my own example because in this general election my home town authorities have picked my name also for the election duty work. Few weeks back I received an order from the local body election authorities notifying me about this misfortune of mine! What I want to do here is let my readers see the scanned copy of a selected paragraph of this order where the State election officials are clearly threatening and forcing me to do this work compulsorily. You will see in this order that I don't have any other choice but to carry out this work under all kinds of duress. There is no choice open in front of me over here. If I refuse to do this work, they will take punitive actions against me. They will take me to the court and police will come and harass me. And I won't take names of my friends here, but they have faced these headaches in past for refusing to do this work. Below I present the scanned copy of relevant part of my election duty order:
My Election Duty Order
It is in Gujarati and it basically says, that I have to remain present for the election duty training program otherwise they will take legal actions against me as per the Representation of the People Act 1950! This is a typical Statist language of aggressive force and intimidation!  

I know Statist people will always say, that there is nothing wrong in this use of force for the sake of keepping democracy alive in India! They will always think it is alright to push people around to further their own end of ruling over them. But, any sane person with a thinking head will realize that there is no choice involved over here. When people who are conducting election are being forced to do this work, how can one think that this election represents any choice for the voters also? There is NO CHOICE. In the name of dreaded democracy these thug state officials are exploiting people, period.  

As I said in the beginning, the state is a gang of criminals and it represents no choice in front of us. It is a mother of all forces. Everything it does is always compulsory for the hapless slave citizens. You can't say No to the State. It is better that people realize this fact quickly. As long as we don't realize this fact, the State will continue to plunder us.

Saturday, February 15, 2014

Indian Economy is Very Vulnerable

Since December 2013 the US central bank Federal Reserve has decided to scale back its dollar printing program called QE (Quantitative Easing). The Indian economy is very fragile looking at these new developments. Raghuram Rajan, the Indian central bank RBI's governor, has criticized the uncoordinated policy of the selfish US Fed saying the withdrawal of stimulus by the Fed is rocking the emerging market economies. Despite this, he is assuring the Indian public that the Indian economy is quite resilient and immune from any shock coming from the US central bank. In my following economic report I call Raghuram Rajan's bluff and analyze the impact of US Fed's tapering policy on the Indian economy.


Saturday, January 25, 2014

Raghuram Rajan Calls Inflation a Disease and Creates Some More of It!!!

RBI governor Dr. Raghuram Rajan a day before yesterday described Inflation as a destructive disease. This is his exact statement as reported by the newspapers:
“Inflation is a destructive disease. Industrialists complain about high interest rate and when inflation is high at 8 per cent, citizens want to have their savings earning 10 per cent interest to marginally beat inflation. Industrialists want an interest rate of about 5 per cent. Both cannot be satisfied. The mismatch is because of inflation.’’
Delivering the 8th R. N. Kao Memorial Lecture, organised by the Research and Analysis Wing (RAW), here, he said that a long time could be spent in debating the sources of inflation but ultimately inflation came from demand exceeding supply. “It can be curtailed only by bringing both in balance. We need to reduce demand somewhat without having serious adverse effects on investment and supply’’ (here).
Let’s analyze his statements.  First, as usual, his mainstream definition of inflation as a rise in the general price level itself is faulty, resulting in faulty analysis and policy stances. As the old and true definition of inflation shows, inflation is an increase in the supply of money and credit, period. Rajan is saying, that the high price is a result of demand exceeding supply, but the relevant question is, why is the demand exceeding supply in the first place? Is it possible that somehow demand will exceed supply? Any sound understanding of the functioning of the market economy will make one thing clear that such demand supply mismatch is simply not possible. In fact, absent RBI’s own loose monetary policy, demand can never exceed supply. Say’s Law of Markets states this very clearly:
Say’s Law or Say’s Law of Markets is a principle attributed to French businessman and economist Jean-Baptiste Say, stating that there can be no demand without supply. He theorized that the activity of production opens a demand for the products produced. Thus the mere creation of one product immediately opens an avenue for other products. To put it another way, Say was making the claim that production is the source of demand. One’s ability to demand goods and services from others derives from the income produced by one’s own acts of production. Wealth is created by production not by consumption. My ability to demand food, clothing, and shelter derives from the productivity of my labor or my nonlabor assets. The higher or lower that productivity is, the higher or lower is my power to demand other goods and services. (here).
As Say said, without supply, there can be no demand. Demand can rise only by that much amount by which supply has risen. The problem here is not economic goods’ demand exceeding its supply, but too much money chasing too few economic goods. And for this phenomena RBI’s own money printing monetary policy is wholly responsible. So, in fact, Rajan first creates the destructive disease of inflation and then cries fowl about it! Who is he trying to fool hmm?

He is also saying, that we have to reduce demand somewhat without having serious adverse effects on investment and supply. This can easily be done if RBI stops printing any new money immediately, and allow the market to cleanse itself of prior malinvestments. Rajan instead of fighting deflation should be embracing it as a cure of inflation and its boom bust consequences' remedy. As long as he is printing money things will never change for better.

Those statements by Rajan only exhibit his complete lack of understanding of sound economics. He is totally clueless about the economy’s capital and production structure. He has no idea of how various prices like the market rate of interest are formed by the market forces of demand and supply. He has no idea of what inflation actually is and what are its destructive consequences. Basically, he is creating the same inflation monster which he is allegedly trying to fight and conquer.  

Wednesday, January 22, 2014

RBI's Urjit Patel Panel Wants to Steal 4% of your Annual Wealth

This is what the Hindu news item reported today: “An expert committee appointed to examine the current monetary policy framework of the Reserve Bank of India (RBI) has suggested that the apex bank should adopt the new CPI (consumer price index) as the measure of the nominal anchor for policy communication.

The committee felt that inflation should be the nominal anchor for the monetary policy framework. The nominal anchor or the target for inflation should be set at 4 per cent with a band of +/- 2 per cent around it. (here).

What is the meaning of all these? If we remove all the technical jargon and linguistic trickery of the central bankers and mainstream economists, then, this simply means that the Urjit Patel committee is proposing to steal 4% of our annual wealth! It is as simple as that. Anyone with a sound understanding of monetary economics can easily uncover this hidden agenda of RBI.

Inflation is nothing but theft of savers’ hard earned wealth. By proposing to keep the annual inflation target at 4%, RBI is proposing to steal 4% of our annual wealth. Inflation is an increase in the supply of money and credit out of thin air. Currency note rupee is a commodity like any other commodity in the market whose value i.e., its purchasing power is determined by its demand and supply. Any increase in the supple of rupees, assuming its demand to be constant, will reduce its purchasing power. This means, an annual increase of 4% in the supply of rupees will decrease its purchasing power by 4%. That in turn means, every year your rupee note will buy 4% less goods and services compared to the previous year. Compounded over a long period of time, this means a secular decline in the purchasing power of rupee and a steady decline in the standard of living of common man who saves his hard earned income. Not only this, this 4% inflation target will also trigger many boom and bust cycles. 

RBI's money printing is what is making our economy sick. That is what is keeping millions of Indians poor. That is what is creating the inequality of income and wealth. Having a 4% inflation target will only make us more poorer. Instead of having any of these targets, we must dismantle the RBI and send all its officials packing as soon as possible.