Tag Archives: United States

The ‘real’ liberalism

Lew Rockwell writes in “An American Classical Liberalism”

Every four years, as the November presidential election draws near, I have the same daydream: that I don’t know or care who the president of the United States is. More importantly, I don’t need to know or care. I don’t have to vote or even pay attention to debates. I can ignore all campaign commercials. There are no high stakes for my family or my country. My liberty and property are so secure that, frankly, it doesn’t matter who wins. I don’t even need to know his name.

In my daydream, the president is mostly a figurehead and a symbol, almost invisible to myself and my community. He has no public wealth at his disposal. He administers no regulatory departments. He cannot tax us, send our children into foreign wars, pass out welfare to the rich or the poor, appoint judges to take away our rights of self government, control a central bank that inflates the money supply and brings on the business cycle, or change the laws willy-nilly according to the special interests he likes or seeks to punish.
In the 18th and 19th centuries, the term liberalism generally meant a philosophy of public life that affirmed the following principle: societies and all their component parts need no central management and control because societies generally manage themselves through the voluntary interaction of its members to their mutual benefit. Today we cannot call this philosophy liberalism because the term has been appropriated by the democratic totalitarians. In an attempt to recover this philosophy for our own time, we give it a new name, classical liberalism.
Of course my comments might be denounced as anti-government. We are told on a daily basis that people who are anti-government are a public menace. But as Jefferson wrote in the Kentucky Resolutions, free government is founded in jealousy, and not in confidence. “In questions of power, then, let no more be heard about confidence in man, but bind him down from mischief with the chains of the Constitution.” Or as Madison said in the Federalist, “All men having power ought to be distrusted to a certain degree.” We can add that any government that employs three million people, most of them armed to the teeth, ought to be distrusted to an enormous degree. This is an attitude cultivated by the classical liberal mind, which puts a premium on the liberty of individuals and communities to control their own lives.

We could multiply the “anti-government” statements by the framers without end. For they spelled out their theory of public affairs, that of classical liberalism, because in the mid and late 18th century, it had come under fire by a new brand of absolutism, and Rousseau was its prophet. In his view, a democratic government embodied the general will of the people, this will was always right, and therefore government should have absolute, centralized power over a militarized and unified egalitarian nation-state.

Read the entire essay. And Rockwell’s book – Speaking of Liberty (pdf).

Capitalism is fine; lets revisit Big Government instead

Let’s revisit Capitalism, Arun Maira says in the Times Of India. Consider what he has to say on it –

“Is it fair?” This is a question asked not just by people in the developing countries, but even in the US, the bastion of free markets and capitalism. In his book Supercapitalism: The Transformation of Business, Democracy, and Everyday Life, Robert Reich, a member of former President Bill Clinton’s cabinet, observes that the wealth of the two richest Americans – Bill Gates and Warren Buffet – is equal to the combined wealth of 100 million poorer Americans.

He argues that this is a result of the capitalist process. He does not grudge the two their wealth. But he says a system that can result in such huge disparities cannot be completely right.

Bill Emmott, former editor-in-chief of The Economist, in his book 20:21 Vision: 20th Century Lessons for the 21st Century says, “Capitalism in its present form is unpopular, unstable, unequal, and unclean”.

And then some more –

These critics of capitalism are not communists. They are capitalists. Yet, they are calling for a better way. Therefore, let us not be stuck in ideologies. Let us face realities. Why is it ‘socialist’ and wrong to forgive the loans of struggling farmers in India, while it is ‘capitalist’ and right to help Bear Stearns’ rich investment bankers on Wall Street pay off their loans?

It is a real tragedy that people (including me, when I have to offer some example of a country that even remotely practices capitalism) consider the US to be the bastion of free markets and capitalism. It is neither. At most, it is a pseudo-capitalist economy practicing a kind of crony capitalism. The reason is – there is too much of government interference in the economy. But as far as the general perception goes, the US is a capitalist country, and if anything goes wrong in the economy, capitalism becomes the whipping boy because most capitalists are ashamed of being found holding a bag of their hard earned money. That the government manages its finances in a manner which, if the same had been done by a private company, it would have seen its board being jailed, doesn’t seem to concern most people.

Coming to Bill Gates and Warren Buffet and comparing their wealth to that of the 100 million poorer Americans (Why don’t you compare the number of shirts each group has? The 100 million poorer Americans would surely win), and the assertion – a system that can result in such huge disparities cannot be completely right, the argument has no legs to stand on. Did Bill Gates and Warren Buffet go and rob people? Bill Gates made money from something that did not exist 25 years ago. He and the software industry together have created millions of high paying jobs and made the lives of hundreds of millions of working folk easier (and people were ready to pay for this increase in the quality of their life). And Warren Buffet made his money by investing and staying invested in companies that ran a good business. He understands the meaning of investment. Is that his fault? Whether Robert Reich grudges these two their wealth or not is irrelevant (though when a person starts comparing bank balances, what other motive exists is beyond me). The very fact that he can make such asinine comparisons and then extrapolate the results and come to a nonsensical conclusion convinces me that he either has no idea of capitalism or has mistaken the money game being played in today’s United States for the real deal.

The biggest danger comes when people believe Bill Emmott when he says – Capitalism in its present form is unpopular, unstable, unequal, and unclean. At the risk of repeating myself, what we have at present is not capitalism, but pseudo-capitalism.

As for Maira’s statement on Bear Stearns, I will say this – NO TRUE CAPITALIST would ever support the Bear Stearns bailout. I am a capitalist and I was strongly against it. The only people who would support it are those people who would lose the most if government allowed the market to function absolutely freely – and they are definitely not capitalists.

The rest of Maira’s article is mostly a rehash of existing ideas floating around on how corporates should play a more inclusive role in society. He wants them to look at the way they are making their profits and care not only about their customers, but also about the citizens. Basically, he wants them to stop doing just business and also start look at how they affect society and the environment.

A business should do one thing and one thing only – do business. A government should do one thing and one thing only – govern. When neither do what they are supposed to do but try to encroach on each other’s territory, is it surprising that we find ourselves in a supreme mess?

Reduce the size and power of government and let the market work freely if you want to see things change for the better. The only people who won’t survive in a capitalist system are those who refuse to work. And they probably shouldn’t survive anyway, definitely not by riding on the backs of those who do work.

Escape From The Benevolent Zookeepers – The Best Of Swaminomics (A Detailed Review)

Long before Stephen Levitt stormed the world with his contrarian and quirky take on economics, Swaminathan Anklesaria Aiyar did (and continues to do so) the same, and even more, in the Times of India on Sunday in his column – Swaminomics. Swaminomics The Times Of India has recently released a collection of some of his best columns published over the last two decades as Escape From The Benevolent Zookeepers – The Best Of Swaminomics. If you don’t get it at your local bookstore, you can buy it online from Indiatimes Shopping (only place I can find it online atm).

[India has long suffered from having its best minds compared with those who have followed later on. So for the purpose of this review, Swami is not the Indian Levitt but Levitt is the American Swami (and to fix another pet grouse of mine, I also decree that Chanakya is no longer the Indian Machiavelli but Machiavelli is the Italian Chanakya).]

The book has a total of seventy-three articles divided into thirteen different sections and every article displays his flair and trademark wit. I have selected a few truly contrarian gems to list and summarize.

Globalisation And Empowerment
In Get Ready For Davos, 2035, Swami peeps into the future and tells us what the inaugural speech at the WEF 2035 will sound like. It is being held in Gulmarg, Kashmir, and China and India are some of the biggest economies in the world. Infosys has taken over Accenture and Tata Motors has done the same to GM. The world is a different place, really.

In The Slowcoach And Sour Grapes, he ridicules the then commonly held view among most Indians that India’s controls on capital account convertibility and slow pace of liberalization saved us from utter ruin. Don’t jump with glee at the ruin of highly developed Asian economies with per capita income ten times the Indian average, he says. That is nothing but a case of sour grapes.

Politics And Governance
In Seven Commandments of Mr. Singh, he corrects journalists who think Manmohan Singh is the head of government. That can never happen in the Congress Party where the only ones who can rule must have the Nehru-Gandhi blood flowing through their veins. Manmohan Singh is playing the part of regent, waiting for Rahul and Priyanka Gandhi to become politically mature so that they can continue ruling as the rightful heirs of the Nehru-Gandhi family. A teaser in the form of two of the commandments –
4. Thou shall focus on surviving a full five-year term.
5. Thou shall accommodate in the cabinet all criminals who can help this aim.

A Criminalised, Sectarian, Misgoverned Decade talks of the increasing criminalization of poitics and the way in which it has degenerated into a politics of divisiveness. The result is that economic development has suffered. A few statements – parties bent on smashing mosques and burning Christians are unlikely to focus on rural roads and electricity. Parties bent on creating patronage networks for particular castes are unlikely to improve the administration or reduce corruption.

A Vote Against Misgovernance is a triumphant ‘I told you so’. For, Swaminathan Aiyer had predicted months before the 2004 general elections (and provided concrete reasons why) that the BJP-led-NDA was going to lose it.

Communalism: The Biggest Threat
Every article in this section is important and is deservedly serious.

General Dyer’s ‘Gaurav Yatra’ compares Narendra Modi to General Dyer, and Swami demonstrates that their actions were very similar. The British sacked Dyer. Did the Indians do the same to Modi?

In Terrorism is Not A Muslim Monopoly, Swami rips apart the inane statement – “All Muslims may not be terrorists, but all terrorists are Muslims.” The question of who is a terrorist is a matter of political expediency, he says. At various times in history, Hindus, Jews, Christians (including Protestant Christians), Sikhs and Buddhist organizations have been involved in some or the other kind of terrorism. The Indian fear of a Muslim terrorist is a result of following the Western media (which has conveniently forgotten the damage caused by Jewish and Irish terrorists) too much. And what about the secular terrorists – the Maoists, who terrorize about 150 Indian districts?

In The Sad Silence Over Abdul Rahman, Swami flays all those people in India who cry hoarse over secularism whenever the BJP and its sister organizations go and do something communal. “If the Rashtriya Swayamsevak Sangh (RSS) proposed that any Hindu who converted to Islam or Christianity should be hanged, there would be a hue and cry……So, I am aghast at the virtual silence in India over the proposed execution of Abdul Rahman Of Afghanistan for what his country’s legal system regards as a capital offense of converting to Christianity.” Why did the secular parties in India not speak out?

Terrorists as Vote Banks presents a scary possibility where political parties do not mind courting support from terrorist organizations like they have already done with criminal ones. In the end, he offers a unique way of cleaning up the political system – fast track all cases against Members of Parliament.

Economics For You
This is a kind of a dummy’s guide to economics. But he surely does not treat the reader like one. Here, he turns most economic concepts on their head and even takes potshots at Michael Moore. Some good articles in this section include –
Rise Of Left-Wing Capitalism,
The Ultimate Theory Of Lemons, and
Trickle-Up, Not Trickle-Down

Economic Reforms
In The New Delhi Consensus, he questions the then Finance Minister’s complaint that consensus on economic reform was being broken. There has never been any consensus on this issue according to Aiyar. The only consensus among political parties (he dubs it the New Delhi Consensus) is on continuation of subsidies and the practice of graft.

Socialism is Casteism is an attack on Nehruvian socialism. It is nothing but a form of casteism, Swami says. He even proves it by quoting a paragraph from Nehru’s autobiography.

Knowledge Economy : India’s Star Achievement
This section contains articles that toast the emergence of India as a brain-power based economy.

History And Its Ironies
This section is an attempt at correcting the various misconceptions about India and its freedom, and the entire concept of colonization.

Poverty And Its Discontents
You Cannot Legislate Away Poverty explains why raising the minimum wage or doing something similar will not impact poverty in a positive manner. It might just have the reverse effect, he says. That is the result of the relentless law of unintended consequences, and he’s got a few striking examples and one historical tale to prove it.

In Poverty Reduction By Helicopter, he throws up a maverick idea that will send cash to the poor with the guarantee that they will get most of it. The idea involves a helicopter, and is outrageous. Read the piece to find out what he proposes.

Social Uplift: Ways Out Of The Poverty Trap
This section has articles that discuss innovative ideas which are already being practiced on a small scale, and suggests that they be tried out on a larger scale.

Education: A Sadly Unreformed Sector
In Lion’s Looks, Rabbit’s Liver Swami heavily criticizes Nobel Prize winning economist Amartya Sen for his suggestions on education that go against the very concept of free choice.

In Pitfalls Of Universal Education, Swami cautions that schools the world over are producing functionally illiterate graduates. He offers possible solutions in the next column, The Challenge Of Functional Literacy.

In this section, Swami picks up a fight with environmentalists who, he says, are diverting the attention from issues like unclean water and air to non-issues like global warming. He also warns us against the threat of green fascism. And he ridicules weather experts and their stand on global warming when he asks (in his son’s words) – “they can’t even forecast tomorrow’s weather properly. How can they forecast 100 years ahead?” Some good articles in this section include –
Ashok, Teri Ganga Maili Ho Gayee,
How Markets Protect The Environment,
The Threat Of Green Fascism,
Nature Is The Cruellest Killer, and
Clean Water Or Hot Air?

Freedom Of Expression
In From Live-8 To African Al-Jazeera, Swami says that Africa would be better served by investing in building a Africa-wide independent news reporting network similar to Al Jazeera. According to him, while the US and Israel are not very pleased with Al Jazeera, it is making a big difference to the Arab countries in the form of small but significant concessions being given to people by autocratic rulers who find themselves being the constant focus of public attention.

A Liberal Atheist Demands Respect exposes Muslim hypocrisy in the context of the Danish cartoon controversy.

International Relations
This section is governed by Machiavellian (I say Kautilyan) maneuvers. Swami provides suggestions on and exposes myths relating to Indian Foreign Policy. He is for civilian nuclear co-operation with the US and warns against sinking too much money in deals with unreliable energy suppliers like Iran, Venezuela, Nigeria and even Russia.

Swami has covered a vast amount of territory in the articles that make up this book, and these are just a year and a half worth of articles. Swaminomics has been running for just under two decades. Hope it goes on for another two.

The End of the Age of the ‘Free’ man

The strangest thing happened when I wrote this post. After having spent the better part of three hours reading, thinking and writing, I made the post and updated the tag cloud. I even checked wordpress tags related to my post. To my surprise, when I come back to see it, the post that I see published is an unfinished draft written about two hours back. When I log out and log in, the post has reverted back to a draft. So if you did read the draft that mentions hell too many times and even throws in the holocaust for dramatic effect, ignore it. The following is a minor rewrite of the post. Thankfully I retrieved a complete copy from my RSS feed. Don’t think this is a joke. It really did happen.

Today’s Economic Times had an article titled The End of the Age of Friedman, by guest columnist J. Bradford DeLong. Among other things, the writer states five principles which Friedman believed in, and then rates some of the more prominent world leaders of the 1970-80s on that basis. He then goes on to mount an attack on Milton Friedman’s ideas – (pure) democracy and the idea of free market are not scalable; they are not just in their distribution (of fruits of labour) – and questions whether they are relevant in this day and age. While he does maintain that market economies are better than certain other economies (referring to Soviet style planned economies, I hope), on the whole, he is bearish on the very idea of competitive market economies and pure democracies. He prefers social democracies which have produced the wealthiest and most just societies the world has ever seen. The piece ends with him putting words into Friedman’s mouth and providing replies to them. To better understand what he is talking about, along with the above mentioned article, you might also want to take a look at Shleifer the (counter-)revolutionary and What Makes a Miracle – Some myths about the rise of China and India.

There are very few things that I hold sacred in my life. And freedom – to speak, write and do as I please – is the most important of them all. When people ask questions on whether democracy is really the right system of government when a modified system might be more ‘just’ or ‘equitable’ (DeLong), or nonchalantly declare that some amount of socialism in the beginning is ‘good’ for the economy (Bardhan), they better have some solid reasons to do that. Consider the following paragraph in DeLong’s article –

“Nevertheless, the distribution of economic welfare produced by the market economy does not fit anyone’s conception of the just or the best. Rightly or wrongly, we have more confidence in the correctness and appropriateness of political decisions made by democratically-elected representatives than of decisions implicitly made as the unanticipated consequences of market processes. We also believe that government should play a powerful role in managing the market to avoid large depressions, redistributing income to produce higher social welfare, and preventing pointless industrial structuring produced by the fads and fashions that sweep the minds of financiers.”

Who are these ‘anyone’ and ‘we’ who feel that market economies are useless and that governments should wipe people’s ass because they cannot fend for themselves? I surely don’t. It is, in fact, those who head the ‘social democracies’ DeLong thinks so highly of (including the biggest pseudo-capitalist democracy in the world – the United States Of America), who think that way. And that is why they keep finding themselves in a deep hole every twenty years or so. And so do other countries (including India) who ape (depending on their economic ‘system’) every thing the US, England (sorry, Great Britain. England is so much easier) and Russia did at various times in their history.

Whether or not you have a problem with democracy in its purest form (what the hell is this pure democracy I keep chanting about, you may ask. A ‘pure democracy’, according to me, is a system of government which is not a mobocracy wearing the garb of democracy) and market economy that is the lifeblood of such a system, depends on your perspective and your ultimate goal. If the goal is government-mandated tax-payer subsidized equitable distribution of wealth or egalitarianism or similar ideas that do not require that the person having the idea pay for it, then sorry, market economy is not for you. If your goal is maintaining the superpower status of a country through military supremacy, then market economy might help you as long as you don’t try to pull a fast one on it.

My focus is the individual. Everything else – society, community, nation – radiates from that single entity. So any economic theory has to take the individual into account. Laissez-faire (free market to some) is the best economic system because it puts the individual before everything else. The scalability criticism does not hold water because the same can be said about any economic system (why is the biggest ‘social democracy’ facing a crisis? Who pays for universal insurance and universal health care? …). Instead of assaulting laissez faire, it would be more beneficial to concentrate on the various laws and measures that countries adopt from time to time to protect special interests or various sections of the society. For, that is the root case of all problems, surely not the fact that people are free!

Milton Friedman was probably one of the few economists who argued strenuously that governments should let their people have more economic freedom, instead of using economic thumbscrews on them. He is not called a libertarian for nothing. So, stop playing around with ideas like freedom. Only those people who do not have to bother about what freedom really means can afford to do that. If you write off democracy as a viable form of government, you undermine the very concept of freedom. And the day government decides what portion of your income must be spent in what manner (which unfortunately is the case in most countries today), you can be sure that you are definitely not living in a ‘purely democratic’ country.