Sauvik has a column in Mint – “In defence of individualism”. If you follow his blog, nothing he writes about is “new”. But its the responses to the column that interest me. One “SC” writes-

Shri Sauvik Chakraverti in his article “In defence of individualism” (Mint March 5) has observed “Villagers throughout India are crying out for sadak (road). If I had my way I would sell every PSU-and invest the public treasure in the best network of roads that money can buy: true collective property……”. I could not follow why does he want to sell every PSU? It appears that he will invest the sale proceeds of every PSU say in the construction of roads all over India. But to achieve this goal why does he want to sell every PSU when unlimited funds are available to construct roads? Already every village has been connected with roads by Gujarat (100%), Maharashtra (except 600 appx villages), Madhya Praadesh, Kerala, Chhatisgarh, Himachal Pradesh, Uttrakhand. There are some states which are lagging behind but funds are being provided by the central government in abundance. If there is any specific problem about non-construction of roads Mr. Sauvik can write to the Government and the road will be constructed without fail. But why is he angry with PSUs which are doing wonderful work of constructing roads in their areas where they operate? Mr. Sauvik will be well advised to persuade every State Government to allow every PSU to provide roads, drinking water, electricity, toilets in every household of every village within the radius of 50 kilometer of factory/work site. PSUs can do wonders Mr.Sauvik. Have faith in PSUs. Don’t be angry with them.

I think the PSU-loving-SC is an inhabitant of Disneyland.

Power shortage has begun in Maharashtra again – PSUs headed by political appointees supply power in the state. Since there is nothing happening in the power sector as far as investment is concerned though demand keeps rising – thanks to the virtual monopoly of the State on power production and distribution, and the strangling of private producers and distributors by the so-called “regulatory commission” – in five years time, we will regress to the Bihar of the ’80s and ’90s – 20 hour daily power cuts. Some company advertises “inverters” on television – one elephant-sized model will even run a/cs. But “inverters” don’t “produce” power – only “generators” do. Time to invest in candle factories.

There is water shortage everywhere – from the smallest villages to the biggest cities. While municipalities have problems meeting demand, the “PSUs” tell people to “rationalize” their demand (so do the electricity companies)-

[T]he Brihanmumbai Municipal Corporation (BMC) has decided to cut down the water supply to new buildings from the present 90 litres a person per day to 45 litres a person per day. The BMC will also stop giving water connections to proposed construction projects in the city.

The civic administration has taken these harsh measures to cope with water shortage and growing demand.

PSUs are building roads across the country. The “Golden Quadrilateral” was planned ten years ago; it is still “nearing completion”. The municipalities build roads; they disappear after the monsoon. Two months before the rains begin, the road will be laid again. Then permission will be granted to PSUs to dig and lay water mains, and to telephone companies to lay cables. And the rains will wash away the roads, again. Towns that have taken up concrete roads will fare better – the roads last longer. But only arterial roads will benefit. Since roads are “public property” everyone parks their vehicles on the road sides for free; builders, malls and multiplexes don’t have to provide “sufficient” parking spaces. Lest people assume that this is an attack on builders, its totally the State’s fault. The State ignores some immutable laws of property – like “people only take care of things that belongs to them,” and “people will always choose ‘free’ over ‘pay’, other things being equal.” That is the source of the phenomenon of the “tragedy of the commons”.

PSUs are a disaster when it comes to providing services, and PSUs that have a monopoly on services are unmitigated disasters. The babu (who cannot be fired) in a government office who is assured of a higher salary than most Indian private sector workers will ever get, and assured inflation-linked pensions, and first class medical care – costs that are paid from taxes collected from the salaries and profits of the private sector – has zero personal investment (or interest) in providing service to citizens – his job doesn’t depend on it (no wonder the would-be-bride’s father always prefers a groom who is a “government servant”; he is “settled” for life) . That’s why PSUs always blame the customers for all their faults. Murray Rothbard, in three chapters of his “For a New Liberty”, demolishes the argument that the PSU is necessary, or that “any” public property is necessary. In the libertarian world, everything from roads to police forces will be privatized. In chapter 10, he writes-

People tend to fall into habits and into unquestioned ruts, especially in the field of government. On the market, in society in general, we expect and accommodate rapidly to change, to the unending marvels and improvements of our civilization. New products, new life styles, new ideas are often embraced eagerly. But in the area of government we follow blindly in the path of centuries, content to believe that whatever has been must be right. In particular, government, in the United States and elsewhere, for centuries and seemingly from time immemorial has been supplying us with certain essential and necessary services, services which nearly everyone concedes are important: defense (including army, police, judicial, and legal), firefighting, streets and roads, water, sewage and garbage disposal, postal service, etc. So identified has the State become in the public mind with the provision of these services that an attack on State financing appears to many people as an attack on the service itself. Thus if one maintains that the State should not supply court services, and that private enterprise on the market could supply such service more efficiently as well as more morally, people tend to think of this as denying the importance of courts themselves.

The libertarian who wants to replace government by private enterprises in the above areas is thus treated in the same way as he would be if the government had, for various reasons, been supplying shoes as a tax-financed monopoly from time immemorial. If the government [p. 195] and only the government had had a monopoly of the shoe manufacturing and retailing business, how would most of the public treat the libertarian who now came along to advocate that the government get out of the shoe business and throw it open to private enterprise? He would undoubtedly be treated as follows: people would cry, “How could you? You are opposed to the public, and to poor people, wearing shoes! And who would supply shoes to the public if the government got out of the business? Tell us that! Be constructive! It’s easy to be negative and smart-alecky about government; but tell us who would supply shoes? Which people? How many shoe stores would be available in each city and town? How would the shoe firms be capitalized? How many brands would there be? What material would they use? What lasts? What would be the pricing arrangements for shoes? Wouldn’t regulation of the shoe industry be needed to see to it that the product is sound? And who would supply the poor with shoes? Suppose a poor person didn’t have the money to buy a pair?”

And then says-

We have seen above that the universally acknowledged pressing problems of our society are all wrapped up in government operations. We have also seen that the enormous social conflicts entwined in the public school system would all disappear when each group of parents was allowed to finance and support whichever education it preferred for their children. The grave inefficiencies and the intense conflicts are all inherent in government operation. If the government, for example, provides monopoly services (e.g., in education or in water supply), then whichever decisions the government makes are coercively imposed on the hapless minority — whether it is a question of educational policies for the schools (integration or segregation, progressive or traditional, religious or secular, etc.), or even for the kind of water to be sold (e.g., fluoridated or unfluoridated). It should be clear that no such fierce arguments occur where each group of consumers can purchase the goods or services they demand. There are no battles between consumers, for example, over what kind of newspapers should be printed, churches established, books printed, records marketed, or automobiles manufactured. Whatever is produced on the market reflects the diversity as well as the strength of consumer demand.

On the free market, in short, the consumer is king, and any business firm that wants to make profits and avoid losses tries its best to serve the consumer as efficiently and at as low a cost as possible. In a government operation, in contrast, everything changes. Inherent in all government operation is a grave and fatal split between service and payment, between the providing of a service and the payment for receiving it. The government bureau does not get its income as does the private firm, from serving the consumer well or from consumer purchases of its products exceeding its costs of operation. No, the government bureau acquires its income from mulcting the long-suffering taxpayer. Its operations therefore become inefficient, and costs zoom, since government bureaus need not worry about losses or bankruptcy; they can make up their losses by additional extractions from the public till. Furthermore, the consumer, instead of being courted and wooed for his favor, becomes a mere annoyance to the government, someone who is “wasting” the government’s scarce resources. In government operations, the consumer is treated like an unwelcome intruder, an interference in the quiet enjoyment by the bureaucrat of his steady income. [p. 197]

Thus, if consumer demand should increase for the goods or services of any private business, the private firm is delighted; it woos and welcomes the new business and expands its operations eagerly to fill the new orders. Government, in contrast, generally meets this situation by sourly urging or even ordering consumers to “buy” less, and allows shortages to develop, along with deterioration in the quality of its service. Thus, the increased consumer use of government streets in the cities is met by aggravated traffic congestion and by continuing denunciations and threats against people who drive their own cars. The New York City administration, for example, is continually threatening to outlaw the use of private cars in Manhattan, where congestion has been most troublesome. It is only government, of course, that would ever think of bludgeoning consumers in this way; it is only government that has the audacity to “solve” traffic congestion by forcing private cars (or trucks or taxis or whatever) off the road. According to this principle, of course, the “ideal” solution to traffic congestion is simply to outlaw all vehicles!

But this sort of attitude toward the consumer is not confined to traffic on the streets. New York City, for example, has suffered periodically from a water “shortage.” Here is a situation where, for many years, the city government has had a compulsory monopoly of the supply of water to its citizens. Failing to supply enough water, and failing to price that water in such a way as to clear the market, to equate supply and demand (which private enterprise does automatically), New York’s response to water shortages has always been to blame not itself, but the consumer, whose sin has been to use “too much” water. The city administration could only react by outlawing the sprinkling of lawns, restricting use of water, and demanding that people drink less water. In this way, government transfers its own failings to the scapegoat user, who is threatened and bludgeoned instead of being served well and efficiently.

There has been similar response by government to the ever-accelerating crime problem in New York City. Instead of providing efficient police protection, the city’s reaction has been to force the innocent citizen to stay out of crime-prone areas. Thus, after Central Park in Manhattan became a notorious center for muggings and other crime in the night hours, New York City’s “solution” to the problem was to impose a curfew, banning use of the park in those hours. In short, if an innocent citizen wants to stay in Central Park at night, it is he who is arrested for disobeying the curfew; it is, of course, easier to arrest him than to rid the park of crime. [p. 198]

In short, while the long-held motto of private enterprise is that “the customer is always right,” the implicit maxim of government operation is that the customer is always to be blamed.

The State is designed to fuck the consumer, whatever he does. Read this report, for example. After heeding grave warnings about shortage of water, when people reduced their water consumption, the State increased water rates because consumption was low.

The “PSU” is bad. “Public property” is bad. The sheeple should clear the cobwebs from their attic and tell Mr. Goon to “Clear Orf”.

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  • Kalidas  On March 7, 2009 at 3:48 pm

    As they say in Gujarati..

    “Je desh na raja vepaari.. ae desh ni praja bhikhari”

    The country in which the ruler is the businessman, the local populace is the beggar..

    • Aristotle The Geek  On March 7, 2009 at 11:44 pm

      The people are beggars in a country in which the rulers are good-for-nothing politicians who are in the pay of corporatists. Strip the State of its power to “make laws”, and then see what happens.

  • yet_another_hindu_infidel  On March 22, 2009 at 1:28 pm

    since india is 3/4th villages, it actually makes sense to have control over sensitive sectors. i’d bet privatized units would yield more drawbacks than we have with public units. if people are willing to pay for private services then they will do so as with reliance power in mumbai. same is happening with water and sanitation. i don’t believe in the competition theory. take the case of computers… that market is a free-for-all in all places except the villages. and india is again 3/4th villages.

    • Aristotle The Geek  On March 22, 2009 at 5:50 pm

      # “it actually makes sense to have control over sensitive sectors.”
      Why? And by what right?

      Competition works. It has always worked. Ever tried getting a telephone connection in the ’80s/ early ’90s, or a gas connection for that matter, or a car or scooter the production of which was “controlled” by the government? Take ANY problem and you will find GOVERNMENT KA HAATH behind it.

  • yet_another_hindu_infidel  On March 22, 2009 at 7:23 pm

    hehe, my father paid three fucking thousand bucks for a telephone connection back in 94. though i was talking about sensitive sectors. people in 94 had no problem living without a telephone and most don’t need one today either to survive. same with gas connections – we had stoves dude. and the kerosene too was had to be purchased some govt. sponsored ration shops. energy however, is a sensitive area and even today the govt. has a monopoly play in the energy sector. same with bsnl and mtnl which are still considered reliable. orange, hutch and vodafone come and go. the reason why there affordable is because of the presence of a regulatory body. the govt. makes them affordable while plays a monopoly part in it to make a few bucks for it’s public unit. wonder what would the effect of recession be like if they hadn’t nationalized our banks… the burning baton at work!!

  • Aristotle The Geek  On March 22, 2009 at 8:13 pm

    You can’t look at a single effect – that’s what Bastiat’s Broken Window fallacy is all about. About regulators and the government – both have restricted competition in the phone market – that’s why, before Ambani came, people were paying 16 bucks a minute. Its competition that drives rates down. In a free market, the moment companies gang up and raise rates, a new company can come in with a new technology and offer a service at cheaper rates – like internet telephony – which is banned/ regulated by the government – at least pc to phone.

    Same goes for the banks. Are you aware of a recent RBI circular demanding that auditors not classify as NPAs (non-performing assets) those loans that people have defaulted on if such people agree to a rescheduling before March 31st. Look it up. The banks are not as strong as they appear to be – even nationalized ones, and the RBI is fiddling around.

    Then there is the fractional reserve banking that I have talked about which is implemented because of government control – even in the United States.

    And have you forgotten the US64 scam? Was UTI not a government entity?

  • yet_another_hindu_infidel  On March 22, 2009 at 9:48 pm

    i’ll agree with your competition point and yes there are past incidents to consider but sh!t happens and it the sh!t is huge and the risks are far too great then it’s best to avoid taking that risk. a boeing passenger plane has crashed several times but thats less than 0.1% of total take off’s. doesn’t mean you avoid traveling in planes. the sh1t may amount to blasphemy to your literalistic beliefs but quit being a liberal fundamental. cool off and watch some incest p0rn. that’s what people in the US and india are jacking off to these days after india’s 9/11, india’s osama bin laden, india’s hindu taliban, india’s incest daddy… isko bolte hai amrika ka “culture invasion”.

    • Aristotle The Geek  On March 22, 2009 at 10:09 pm

      # “the sh1t may amount to blasphemy to your literalistic beliefs but quit being a liberal fundamental.”
      I hope you will buy this argument when someone who drives away with your car, or bike – risks it – tells you the same story. Who are you (the government) to tell me what to do with my land, my house, my car, my body, my cigarette, my telephone and my money? That’s my “liberal fundamentalism.” If you want to “risk” something, do it with your money and your life – not mine.

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