Friday, August 23, 2013

Why the Indian Rupee is Falling Against the US Dollar?

Indian currency rupee is depreciating quickly against the US dollar recently. It has lost 14% of its purchasing power against US dollar since the beginning of May, 2013. It is one of the worst performing currency in Asia. It hit its lowest level of 65.56 rupee/dollar last week. All the efforts of the Indian central bank RBI is failing in stemming the fall of rupee in the Forex market. Why the rupee is depreciation against US dollar and other currencies like Euro and British pound? What is the root cause of this devaluation? I analyze these questions in my economic report below. In nutshell, Indian government and RBI's loose monetary policy is to blame for this fall in rupee's value.


Sunday, August 18, 2013

Societies Without the State

The frequent question which people ask me whenever I talk about free markets and a totally free society without a presence of the State is, can we humans organize our societies without the help of the State aka government? Few go as far as saying, that without the State life itself is impossible! Some of the questions people ask are fairly typical Statist responses e.g., who will build the roads in the absence of the State or who will run the schools, hospitals, gardens etc., or who will provide protection - police as well as national defense etc. In my past write-ups I have already tackled the issues of privatized roads and highways, privatized national as well as local defense, privatized schooling etc.

Not only this, many people ask me to show them some real life examples of some Stateless societies. Today I want to tackle this issue of living or historical examples of such Stateless societies. People will be surprised to know that in our own backyard, i.e., in Indian neighborhood, there use to be and still are many Stateless self governing people and societies. Specifically I want to discuss the Stateless people of a region called, Zomia (figure 1 below). Yale political scientist James C. Scott discusses this area and its self governing Stateless people in detail in his brilliant book, The Art of Not Being Governed: An Anarchist History of Upland Southeast Asia.

Figure 1: James C. Scott's Zomia
Scott's book is a welcome contribution to the Libertarian literature. It is an important anthropological work throwing much needed light on the history of people who are deliberately living outside the reach of the State. People who are repelling the State from their lives by using different techniques like swiddenng (shifting) agriculture, having no written language but only oral histories, living on highland mountain regions where the State can not enslave them easily, living in small groups and remaining very mobile, and reliance on millenarian religious prophets for waging a constant revolution against the State. These people are self governing themselves. They have deliberately adopted such unique culture to avoid being State subjects.

Scott begins his book by turning the official narrative of people living in urban valley States as "civilized" and people living in highland mountains away from the State as "Uncivilized Tribal or Barbarian" on its head. Such type of history is a product of court historians who work for the State. It is important for the State to demonize people who are deliberately escaping their enslavement, and so they hire intellectuals to write such propaganda history depicting state evading people as tribal or barbarian. They will call them primitive people who are untouched by urban modernity. It is important for the State to demonize these self governing people to stop its own enslaved population from getting attracted to such zones of refuge and running away. As Scott said, the rulers of Han China built the Great Wall of China not only to repel the outside invasion, but also to stop its own population from running away to outside zones of refuge. According to Scott, the so-called civilized people are actually State's slave subjects and thus living a horrible life of paying taxes, doing force labor work for State officials and dying in State wars as cannon fodder. Whereas the so-called uncivilized tribal barbarians are not-a-State-subject, and thus they live freely without facing any of the predicaments which State subjects face.

These Stateless Zomia people use different State repelling techniques. I discuss them very briefly here.

Tough Location, Mobile Lifestyle and Shifting Agriculture
The State officials will enslave the population if it is living in an easily accessible areas like valley plains. But, it will be very difficult to enslave people who are living in tough terrain like upland mountains or hills. These kind of inaccessible locations are the places of refuge for these Stateless people. Scott writes,
Briefly put, such strategies include fleeing to inaccessible areas, scattering and breaking up into smaller and smaller groups, and pursuing subsistence techniques that  are invisible or unobtrusive.

The quickest available refuge lies, generally, farther up the water courses and higher in the hills. "If we have to run, we will run up into the hills", reports a Karen village elder. If they are pursued, they retreat still farther upstream to higher altitudes. "Then they came and looked for us so we fled upstream". And: "The third time they came we came up here". 
We are seeing people fleeing State depredations even today in this on-going financial crisis e.g., many Americans are now renouncing their citizenship because of heavy tax burden; and French citizens running away etc. The difference between these US and French State subjects and the Stateless people of Zomia is, that these State subjects are running away only when the exploitation burden is becoming unbearable whereas Zomia people don't want to get exploited by the State at all; They want to live free forever.

Dispersal in small family groups and communities is also important because that way they won't be visible to the State official eyes who are always looking out for people for enslavement. Zomia people are also very mobile. Mobile lifestyle is again important for running away from the State if they are pursued.

These people also rely on shifting agriculture called swiddening (slash and burn farming). Such techniques helps them remain invisible and mobile. Scott writes,
The pattern was to open many small, scattered, unobtrusive plots; the same principles of dispersal and invisibility governing the behavior of human refugees also governed their agricultural choices. Where possible, they chose crops needing little care, crops that matured quickly, root crops that could not easily be destroyed or confiscated and which could be harvested at leisure. People, fields, and crops were each deployed to evade capture.   
Oral History and Absent Writing
Zomia people don't have any writing or texts. In the language of the valley State officials they are so-called 'nonliterate' people. As Scott says, Bringing preliterate peoples into the world of letters and formal schooling is, of course, a raison d'être of the developmental state. But, as Scott shows in his book, these people are not preliterate but postliterate. They left writing and texts deliberately to escape the State. They adopted an oral culture also to stop the State from emerging from their own societies. Orality is one of their defense techniques against the State. These people knew writing before they escaped the encroaching State. Here is Scott again:
The case for the "strategic" maintenance (if not creation) of nonliteracy, however, is cut from the same cloth. If swiddening and dispersal are subsistence strategies that impede appropriation; if social fragmentation and acephaly hinder state incorporation; then, by the same token, the absence of writing and texts provide a freedom of maneuver in history, genealogy, and legibility that frustrates state routines.
To understand the full details of this technique of Orality I will advise my readers to go through Scott's book thoroughly. In brief, writing is a tool mostly used by the State officials as Scott says, but the social value of literacy, in turn, depended on the state bureaucracy, an organized clergy, and a social pyramid where literacy was a means of advancement and a mark of status, and, As in the Roman case, so much of the practice of literacy was directly dependent on the existence of a particular state and its bureaucratic routines: knowledge of state documents, law codes, chronicles, record keeping in general, taxes and economic transactions, and, above all, the structure of officeholding and hierarchy linked to that state made literacy a sough-after prestige good. Scott declares that, An oral tradition is, in most respects, inherently more democratic than a written tradition.

Millenarian Prophets 
Zomia people also are big followers of millenarian prophets and their prophesies. The major reason for such following is, that such religious movements help these fragmented people to get united and rebel and fight against the encroaching State. As Scott mentions,
In settings that range from Buddhist to Christian to Muslim to animist, messianic holy-man rebellions seem prevalent. It is surely worth considering the proposition that such movements are the characteristic form of resistance among small, divided, acephalous societies that have no central institutions that might help coordinate joint action.....To put it somewhat differently, one might say that the shape-shifting and simplified forms of escape social structure among egalitarian groups had the consequence of stripping them of the structural means for concerted action. Mobilization was possible only though charismatic prophets who stood above and outside kinship and lineage rivalries.
By using above discussed varied techniques these people are evading the State since last two thousand years. Although with the advancement in technologies in the 21st Century, modern nation States are more in a position to bring these diverse people under its yoke, but still, these people are resisting and fighting to remain free. Fortunately, the nation States themselves are becoming weak in present, as we are already seeing across the globe in this on-going economic crisis. Bankrupt States are so desperate that they have started exploiting their own subject population beyond reasonable limits, and because of that many citizens are now fleeing. With the weakening States, the probability is increasing that more and more people will be able to escape the State tyrannies. And if the valley States become weaker, then, the people of Zomia can also continue their free existence.

As this brilliant work shows, it is not only possible to live without the existence of any nation State, but, in fact, it is possible to be totally free and thrive. The only thing which is impeding humanity's freedom from the State is the mental enslavement of subject population. State citizens simply can't imagine their life with their government! Their lack of imagination of a Stateless society is what is stopping them from escaping their enslavement. As I said, in the backyard of India itself many people are living without any kind of State apparatus. We just need to study and understand them. Once people will know and realize that their life without the State is very much possible, they will be free like the people of Zomia. 

Saturday, August 10, 2013

The Future of Democracy in India

Yesterday the Surat City Citizen Council organized a lecture by Lord Bhikhu Parekh on The Future of Democracy in India in the Southern Gujarat Chamber of Commerce and Industry auditorium here in my hometown Surat. Since Lord Parekh is a big name amongst the Indian intellectuals - he is a member of the UK parliament house of lords, a Professor emeritus of Political Philosophy at the University of Westminster and Hull, a Padma Bhusan, and, importantly, a member of Overseas Indians' Global Advisory Council which advises prime minister Manmohan Singh - I went to hear him. Below I briefly summarize his lecture with my critical remarks.

Prof. Parekh's lecture was music to my ears, at least till the time he discussed his solutions. Prof. Parekh blasted the Indian democratic system and counted many of its flaws like no deliberations in policy making (e.g., dysfunctional parliamentary system where politicians don't discuss anything and pass important bills), government officials not working for the welfare of masses (e.g., political corruption) etc. He was very melancholic about the future of democracy in India. The audience agreed with Prof. Parekh. The chairman of Surat Citizen Council said that, he thinks, the Indian democracy is not working properly.

One thing is getting clearer to me from my such public event experiences, that many people are getting disillusioned with democracy. Many Indians are slowly realizing that democracy is a system which is failing them time and again; that even after 65 years of independence from the British Raj, there are no big perceptible changes in India; that corrupt politicians are busy improving their own lives instead of working for the general masses. Basically, as Hans Hermann Hoppe said, Democracy is the God that has failed! This is all crystal clear for someone who knows the true nature of the criminal gang, the State. But most people don't understand this thuggish nature of the State, and so they are still groping in the dark about why the democratic system is failing them. They don't understand, including Prof. Parekh, that the democratic system is designed to fail the people! But it is a fantastic success, so far, for the system designers i.e., the State officials themselves. As the French classical liberal economist Frédéric Bastiat said, The state is that great fiction by which everyone tries to live at the expense of everyone else. The German sociologist Franz Oppenheimer exposed the true nature of politics in his brilliant little book, The State: Its History and Development viewed Sociologically. He said,
There are two fundamentally opposed means whereby man, requiring sustenance, is impelled to obtain the necessary means for satisfying his desires. These are work and robbery, one’s own labor and the forcible appropriation of the labor of others. Robbery! Forcible appropriation! These words convey to us ideas of crime and the penitentiary, since we are the contemporaries of a developed civilization, specifically based on the inviolability of property. And this tang is not lost when we are convinced that land and sea robbery is the primitive relation of life, just as the warriors’ trade—which also for a long time is only organized mass robbery—constitutes the most respected of occupations. Both because of this, and also on account of the need of having, in the further development of this study, terse, clear, sharply opposing terms for these very important contrasts, I propose in the following discussion to call one’s own labor and the equivalent exchange of one’s own labor for the labor of others, the “economic means” for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the “political means.” (full text available here).
The State is an epitome of the use of the "political means". The State and its officials are parasites who live at the expense of the productive class of the society. There is no wonder then the system of Democracy, which is just one form of the State, has failed to fulfill peoples' expectations. It is foolish to allow some thugs to rule over your life and expect them to not loot you! It is foolish to give a monopoly power to these thugs over the use of violence and think they won't use violence against you! It is foolish to give a monopoly of judiciary power to these thugs and expect them to rule in favor of you! It is foolish to think that the State officials are there to work for you! It is foolish to think that they are your servants and you are their master in the democracy of the people, by the people and for the people! Democracy is of the State, by the State, and for the State only. No amount of counter arguments by people like Prof. Parekh is going to change this eternal Truth. And it is better people understand this eternal Truth quickly if they want to change things for better or want to survive the exploitations of the State.

After elaborating how the democratic system is failing, Prof. Parekh discussed his solutions briefly. During his lecture he talked about finding alternatives, but his solution was no alternative at all. He wants to keep the democratic system, but just wants to tweak it a bit. He wants to reform the democracy but not substitute it with some other better system. In fact, he said that there is no better alternative of democracy! When he was saying all these, I was remembering Einstein's definition of insanity: doing the same thing over and over again and expecting different results! Prof. Parekh must understand that the system of democracy itself is inherently flawed political system. Mere reforming it is never going to work. The problems which are created by democracy are never going to be solved by that same democracy! As long as the status quo is maintained, things won't change for better. Prof. Parekh is a political philosopher and I am sure he must know about the better alternative of democracy: the Anarcho-Capitalist Society. The Hoppean Private Law society is well capable of curing human problems. I didn't get a chance to discuss the idea of a private law society with him, but it is important for people to familiarize themselves with it. To think that without the State society can not be organized is to exhibit one's ignorance of theory and human history. There were and still are many societies around the world without any State e.g., Zomia.

During this lecture, the kind of questions the audience asked also reflected the sheepish behavior of the masses. Most of them were eager to know the name of one politician who can successfully rule over their lives and lead India to fantastic successes. This shows that even after 65 years of so-called independence, people are mentally slave of their governments. They are yearning for a Messiah to come forward and be their savior. People obviously were thinking about Gujarat chief minister Narendra Modi when they were talking about that one political leader who can save them. Most were thinking of better to have an authoritarian leader like Modi at the helm of the nation than some dysfunctional democracy! These are ominous signs for India as Prof. Parekh also thought. I was remembering the German society during the time of the rise of Hitler. They were also thinking the same like many Indians today. We must remember, that Hitler also came to power in a democratic way via majority votes!

In the end, Prof. Parekh said that the future of democracy in India is bleak and the country will continue to languish with the same democratic system. He saw no alternative of democracy, but as I said above, the alternative is available: the Anarcho-Capitalist Private Law Society. People only need to understand this system. As long as the idea of a Private Law society is not getting a firm hold in peoples' minds, India will suffer at the hands of dreaded democracy.              

Saturday, August 3, 2013

Neither Amartya Sen Nor Jagdish Bhagwati

Recently Nobel prize winning Indian economist Amartya Sen created lot of flurry by saying, that he does not want Gujarat chief minister Narendra Modi as his prime minister or India's prime minister. In the economic academia world the debate is on-going between two rival camps about how to make the Indian economy and society progress. Amartya Sen is on one side of this debate and Columbia economists Jagdish Bhagwati and Arvind Panagaria are on the other side. Sen's growth model gives priority to social sectors of education and health, whereas Bhagwati and Panagaria are for more economic growth first. Here I want to show you that both Sen and Bhagwati-Panagaria are wrong. Indians neither need the Sen model nor the Bhagwati Model. What Indians need is total freedom from the parasitic State aka the government, which none of the above mentioned models are promising or even talking about.

Let's briefly take a look at both Sen and Bhagwati model. Sen's ideas re his social engineering model for the Indian population is mainly presented in his most recent book, An Uncertain Glory; his recent CNN-IBN interview gives a quick recap of his ideas. Whereas Bhagwati-Panagaria social engineering model is presented, also in their most recent books, India's Tryst With Destiny and Why Growth Matters. You can see Bhagwati criticizing Sen in this interview while discussing briefly his ideas. In the outset itself I will inform you all that I haven't thoroughly read their books and this article is not a detailed review of those books. I am mainly criticizing Sen and Bhagwati's underlying statist ideologies which drive their academic work and, importantly, policy prescriptions.

Sen is an outright socialist so there is nothing much to discuss about his ideas. Twentieth century has emphatically demonstrated the failures of socialism/communism and its main vehicle, the State. As Ludwig von Mises so brilliantly demonstrated almost hundred years ago in his extremely important but so far neglected work Economic Calculation in the Socialist Commonwealth, in the absence of market price and profit and loss system, the socialist planners won't be able to economically calculate anything; they won't be able to allocate resources where they are most urgently needed by the consumers. The failure of world socialism/communism in the form of the fall of former USSR and the Berlin Wall (also Cuba, North Korea etc.) gave ample demonstration of Mises's theory of impossibility of socialist economic calculation. Sen wants government to provide services like health and education, but theory and history both show, that this is an impossible task. Governments can't provide anything let alone education and health. As Murray Rothbard said, the State is a gang of criminals, writ large, and a gang of criminals can't produce anything; they can only consume and destroy society's wealth. Professor Sen unfortunately doesn't understand this political reality of the true nature of the State, and we will see below Professor Bhagwati is also oblivious of this fact. As Professor Robert Higgs said recently, The State is Too Dangerous to Tolerate.

The biggest danger actually comes from people like Jagdish Bhagwati who walks under the banner of Laissez Faire Free Market economics, but actually loves  - or at least not hate - the State simultaneously. His model of governmental interventionist liberalization is nothing but socialism masked behind the veneer of free market capitalism. Prof. Bhagwati and Panagaria give priority to economic growth (their track I reforms), but their ideas and policy prescriptions are all in the wrong direction e.g., in chapter 7 of their book 'Why Growth Matters' they discuss their Track I and Track II reforms and say, therefore the need for sustained and accelerated growth, which is progressively more inclusive in its impact, remains acute. Likewise, the redistributive programs must be made more effective even as they expand with the intention of providing greater benefits to the poor. This strategy calls for future reforms to proceed on two tracks, Track I: reforms aimed at accelerating and sustaining growth while making it even more inclusive, Track II: reforms to make redistributive programs more effective as their scope widens. This is nothing but an advocacy for 'Crony Capitalism/Fascism' and not true 'Pure Free Market Capitalism'. Bhagwati is in favor of redistributive policies and he wants to, in fact, make them more effective! He wants government to enact all these Track I reforms. This is like putting the wolf in charge of the hen house!  Not only this, his Track II reforms of making redistribution more effective advocate things like 'school vouchers' and 'public private partnership (PPP)' in social development projects. This is again pure fascism where the hand of evil State is ever so present. The true champions of Laissez Faire economics like Mises demonstrated the failures of such government interventionistic middle of the road policies (read this). The middle of the road policies of Bhagwati leads straight to full fledged socialism, as we are already witnessing during this world financial crisis. Government interventionism results only into running away inflation, acute periods of business boom and bust and wealth transfer from productive class of the society to the unproductive class. Bhagwati doesn't understand, that without cutting the Gordian knot of government, the society and economy can not progress let alone grow. The striking growth which Bhagwati talks about in his book was all an illusion of central bank money printing, which is now exploding in an on-going bust in the Indian economy where growth figures have come down dramatically. Bhagwati accuses Sen of harming the poor people twice, but his own policies are no better and will equally harm the poor people ultimately. By (falsely) walking under the banner of Laissez Faire Capitalism, Bhagwati advocates government interventionism. He is doing more damage to pure Capitalism then prof. Sen who is a known socialist. Prof. Bhagwati is India's Milton Friedman who similarly damaged the cause of Freedom by advocating things like central banking, school vouchers, withholding tax etc., etc.

What the Indian economy and society really need is true radical ideas of people like Murray Rothbard and Hans Hermann Hoppe. As the ideas of both Rothbard and Hoppe show, what the Indians need is total freedom from the parasitic grip of the State. Prof. Sen and Bhagwati don't see the mortal danger of a 800 pound Gorilla in the room i.e., the State. Any reform which ultimately is not aimed at totally dismantling the State is going to fail. We don't need these phony reforms. What we need is a total change in the present status quo. As long as the State is present, it will continue to exploit productive people for its own gains. If Prof. Sen and Bhagwati truly want to care and help poor people and humanity overall, then, they will have to understand this fact. As long as the idea of the State is not going to be erased from peoples' minds, things will not change for better. Indians have tried both Socialism and Interventionism in past, and they both have failed. Let's give one try to 'Pure Free Market Capitalism' by dismantling the State.