Tuesday, December 1, 2015

India and Capitalism

In this book review I am going to take a look at a very important book written by French sociologist Professor Jean Baechler, The Origins of Capitalism. What differentiates the Western civilization from the rest of the world is its capitalist spirit, which, sadly, started waning in the last part of the twentieth century. What makes the Western world materially richer and better than other parts of the world in the past two and a half centuries is its economic system of Capitalism. Jean Baechler discusses important questions like what is Capitalism? Where did it come from and when? What are its distinguishing features? Why was it essentially a western phenomenon and now a Western export?

This book and its teachings are important for a country like India, which is still reeling in poverty in this twenty first century. If India, or any other country, wants to make economic progress then its people will have to take these teachings to their heart,  understand the forces that are responsible for material riches and try to realize these forces. Understanding why the Western world thrived and the rest of the world was left behind is the real beginning of making India rich again.

Baechler's book is divided into three parts.
  1.  In the first part Baechler begins his analysis by critically examining Marx's theory (or non-theory!) of how Capitalism came into existence. He does this to use Marx's analysis as a spring board and a point of diversion for his own analysis in later sections. I won't spend time discussing this part here.
  2. Part two is where Baechler begins his own analysis of the origins of Capitalism. This part is titled, What is Capitalism? As the title suggests, Baechler begins his analysis by clearly defining the concept of Capitalism. As he makes it clear, the systematic study of the origins of any phenomenon requires that one defines it clearly because the whole analysis follows from this definition. If one defines the phenomenon under study wrongly then he is bound the draw wrong conclusions about it. Baechler distinguishes Capitalism from all other economic systems by its incessant search for economic efficiency: By nature therefore, every economic act is rational, and aims at maximum efficiency. Economic efficiency, however, is limited (with a good deal of variation) by the interference of other values - religious, magic,ethical political and soon. Now, the most original feature of Western Capitalism, which distinguishes it radically from all other economic systems, is its real efficiency. It is the first system that may be characterized by a massive and, up to now limitless increase in production, circulation, and consumption.
  3. After clearly defining and distinguishing the Capitalist system, he goes on to discuss its essential features in the next section. 
  4. The last part of the book contains a detailed discussion of the origins of Capitalism, which contains a systematic discussion of "the Genesis of Bourgeois", "the Genesis of the Market", "the Genesis of the Entrepreneur and the Technologist", and "Genesis of the Laborer and the Consumer". 
Instead of going into the detailed discussion of the whole process of how Capitalism came into existence, I want to focus on the major results of Baechler's study of origins of Capitalism. As I said above, the teachings of this book is important for India and all other countries who are aspiring to grow rapidly i.e., raise the material standard of living of their populace.

Factors Responsible for the Rise of Capitalism
Baechler's search for the origins of Capitalism takes him in the realm of politics. He discovers that the origins of Capitalism lie in the realm of politics. The way in which the political scenario emerged in the European Middle Ages (beginning from the 11th Century onward), it gave rise to the system of Capitalism. Here is Baechler,
I consider that the key to the problem of the origins of Capitalism is found on the side of the political system. (p. 40)

These brief remarks bring me to a decisive conclusion: The degree of capitalist activity achieved in any given society is defined by the intersection of two curves. The one is determined by the area governed by the society, by the number of people in the society, and by the amount of wealth created by a given state of technology. The other is determined by the degree of autonomy the state grants to trading activities. The more that the State undertakes to arrogate the surplus to itself and to redistribute it as well, the less will any capitalist activity be able to take place. In the extreme it will disappear altogether (p. 41)
The expansion of capitalism owes its origins and raison d'etre to political anarchy. (p. 77)
The implication of this finding is clear for India. As long as the behemoth State of India (i.e., the Indian government) is meddling with the economy, which it is doing since 1947 in the post-independence era, this country is never going to see any significant capitalist activity. Economic efficiency of the economy will remain low resulting into problem of low standard of living of its mass people. The high level of meddling of the Indian government in the economy and the resulting low capitalist activity is also responsible for the problems of poverty, unemployment, inequality etc., etc. 

Baechler, after defining Capitalism as Capitalism is the state the economy must attain when nothing arises to hinder its law, the law of efficiency, goes on to chalk out his model of a Capitalist society. Here are the essential parts of the Capitalist society. 
  1. The producers have as their sole objective the search for maximum profits, not at all in order to enjoy the goods of this world, but simply for profit itself.
  2. The intellectual activity of the society be entirely devoted to the creation of scientific and technical procedures that permit the lowering of costs. 
  3. The laborers reduce their leisure and rest time to the minimum compatible with survival; their adaptation to variations in the economic apparatus is to be perfect and immediate (which means a perfect aptitude for changing their residence, employment, and qualifications); and 
  4. The absorption of production by the social organism suffers no impediments. 
Now these conditions are hard to realize 100% in reality. Why? because every society up to now has raised some or the other kinds of obstacles which have hindered the essential processes of a capitalist system outlined above. Here is Baechler again:
up to now, every society has placed obstacles in the way of the pursuit of economic efficiency. This has been done either in a general fashion, by retarding economic activity as much as possible, or only by repressing such and such aspect of the model (the entrepreneur, technology, labor, inelascity of demand, limitation of the market etc.). However, all societies have not established the same obstacles, which gives a precise scale for classifying societies in terms of their economic activities. One society has gone the greatest way in getting rid of all obstacles, western society. (p. 59) (emphasize mine).
The Indian society hardly meets these conditions in the modern time, especially after the so-called independence in 1947. The powerful Indian state, being run from Delhi by politicians and bureaucrat, has never allowed the producers to follow their profit motive by making their industries more efficient. In fact, the producers were not allowed to function at all during the central planning era when the public sector got the "commanding heights" i.e., the state itself was trying to run the economy. When it failed in doing so, it, instead of dismantling all regulations and controls, it only slightly loosened its grip on the economy while continued to regulate and micromanage the economy to this date. The Indian producers, instead of following their profit motive in the market by serving their consumers in the best possible way, are busy buying out political support for their businesses to remove their competition! They are spending all their energies in political maneuverings instead of serving their consumers in an honest way. They are compelled to do so by the state management of the economy.

The intellectual activity is also stifled in this country since ages. The public schooling system has created unemployed armies of graduates who are good for doing nothing. Public schooling, instead of changing the social, political, and economic order, is only reimposing the same social, political and economic order on the next generation. The state is meddling has created so many impediments for the intellectuals in this country that most intellectuals leave this country the moment they get the chance to do so. The phenomenon of brain-drain (sic) is a clear example of this issue. The political, social and cultural environment of this country is a big hindrance for the talented people, and this is the reason why they are not in a position to divert their activities in entrepreneurial and technological activities.  

And the laborers of this country also hardly meet the conditions of a capitalist system outlined above. The labor market of this country is extremely rigid because of various state controls and regulations.

The internal market is also highly restricted because of myriad of state controls and regulations.

No wonder Capitalism never emerged in the Indian subcontinent! And as long as the Indian state is meddling in all aspects of the Indian economy and society, it won't ever emerge in future also.

Baechler, in the end, sums up his thesis:
  1. The specific feature that belongs only to the capitalist system is the privileged position accorded to search for economic efficiency.
  2. The first condition for the maximization of economic efficiency is the liberation of civil society with respect to the state.
  3. This condition is fulfilled when a single cultural area is divided in several sovereign political units.
  4. So that all these potential factors lead to all their consequences, it is also necessary that the value-systems be modified to the detriment of religious, military and political values, and that demand be liberated. 
  5. Only the West has experienced an evolution where all these conditions were met.
As I already mentioned above, these conditions are not at all met in the post-independence India. The civil society is still in the firm grip of the state control. The value system is also heavily against capitalist mentality. Religion is still the driving force of the majority of the society. Young people, instead of becoming entrepreneurs, still dream of a government job and joining the political system. Politicians, and not entrepreneurs, are still hold the high status symbol. Military people are seen as heroes, and not the entrepreneurs. And, the Indian subcontinent is not divided into small sovereign political units, like it use to be in antiquity. Diverse population is forcefully merged into a one big Indian state after the independence by some politicians. As long as this behemoth state is alive, situation for the commoners will never improve.

Saturday, November 28, 2015

Bihar Liquor Ban

After a thumping victory against Narendra Modi and his nationalist BJP party, the new CM of Bihar, Nitish Kumar, has announced to fulfill one of his many election campaign promises of banning liquor sell and consumption in Bihar beginning from 1st April next year. After this imposition of ban, Bihar will be one among few of states in India, including Gujarat, my home state, were liquor is totally banned since 1960s, where liquor will be banned by the state government. In this short write-up I will analyze the economics of this liquor ban. People must know what will be the consequences of this ban. Will it become successful in achieving its stated goals?

So why Nitish wants to ban the sell and consumption of liquor in Bihar. Let's hear the stated goals of this policy from his own mouth:
My government is committed to fulfilling promises made to women during the election campaign. There was a surge of complaints from women about male members of the family resorting to drinking and creating nuisance, which also affected the education of their children. (source)
Will the ban achieve this end? If we see theory and history of alcohol ban around the world and in India then the answer is, a definite No (for those who want to know the detailed reasoning for this "no" can refer to Mark Thornton's wonderful book, The Economics of Prohibition).

Let me give a brief analysis of why this prohibition of alcohol sell and consumption in Bihar will fail in achieving its stated goals. First of all, let us remind ourselves that since the beginning the modern man (Homo Sapiens) has resorted to some kind of use of addictive drugs/drinks for religious or spiritual experiences or for simple recreational purposes (for evidence see here). In India itself the ancient Rishi-Munis and other people were known to consume Soma Ras, which was kind of hallucinating drink (see here). This history tells us that consuming such drinks is very natural for human beings, and something that is natural to humans is impossible to remove by such governmental bans. The ancient habits are not going to die quickly or die at all. Government trying to impose its will - or other peoples' will - on others will always fail because of basic human nature. Such bans have never worked in history, and will not work in future too. Actually the issue here is of moral character. Government - or other people who are hiring the government agents to impose their wills on others - has no moral right of stopping people from voluntarily consuming whatever they want to. It is none of government's business to interfere in peoples' lives as long as they are not physically harming others.

Apart from this problem of the ban going against basic human nature, other worst consequences will follow this ban. A basic knowledge of the laws and demand supply will make this point clear.

First, in the aftermath of this ban, the supply of liquor will become less which will increase its price at a given demand. This higher price will make the liquor industry more profitable, which will now attract illegal sellers i.e., bootleggers, liquor barons, mafias etc., into this market because selling prohibited liquor illegally is a very risky business and a crime which can only be carried out by such criminal people. Entry of such mafias will make this once peaceful market into a violent one! Crime will increase. More people will go to jail for a victimless criminal act of consuming liquor. People who are addicted to liquor, which includes everyone who is consuming it in present and many future addicts, will have to now find new sources of income to buy high price costly liquor now, and for that they will resort to petty crimes like theft, robbery etc. If males where creating nuisance in home before this ban, they will create more nuisance after the ban to get more money for consuming liquor. If they were spending 100 rupees on liquor before the ban, now they will have to spend 200 for the same! This means less money will be now left over for their children's education compared to before the ban scenario!!! Not surprisingly, the government policy will, once again, achieve the exact opposite goal compared to its stated goal.

Second, the quality of liquor will also deteriorate once the ban will be imposed. Alcohol prohibition will make the liquor more potent. Because liquor is banned, those who will sell liquor in the underground market will produce low quality liquor e.g., hooch. Many people will die consuming this hooch like we have witnessed time and again in Gujarat where liquor is banned since 1960s (for example see here).

Third, police force will now be busy in imposing this ban leaving aside the important work of apprehending real criminals. This means, those real criminals will have a free play now, which in turn will increase other types of serious crimes in Bihar.

All these means, what is mainly a health issue right now will become a criminal and bigger social issue because of this ban. The Bihar government, instead of making lives better of its people, will make their lives even worst. What more can you expect from the government?

Btw, this proposed ban is just yet another addition in so many bans that Modi's BJP government has already imposed on innocent people of this country (see the growing list here). This new inclusion in this list is coming from Nitish Kumar, whom many are seeing as a new PM of India! This only shows that all these politicians are one and the same. BJP or JDU or Congress, it just doesn't make any difference to the lives of people of India. As I am saying since long, all these political parties don't represent true choice in front of people. True choice is between having a state ruling over us or not! As long as people are trapped in the false choice of voting for the lesser evil, situation is not going to change for better.
    

Saturday, October 3, 2015

RBI Governor Rajan is Lying

Last Tuesday the central bank of India, RBI, announced its much awaited last quarter monetary policy. The present governor of RBI Dr. Raghuram Rajan was under tremendous pressure of his Delhi masters to reduce the interest rates. Not disappointing his masters, he reduced the repo rate by a big 50 basis point. Raghuram Rajan has an image of an "inflation warrior"; a "monetary-policy hawk"! He is quite famous for his so-called "anti-inflation stance". People think that he was at loggerheads with his Delhi masters, especially the finance minister Arun Jaitley. Many well-known international investors have praised his stubbornness to reduce the interest rate; many even thought of nominating him for a "Nobel Prize" in economic science (it is a different matter that there is no Nobel Prize in economic science; the present prize is given by the Swedish Central Bank in the memory of Alfred Nobel!).

So, is Raghuram Rajan an "inflation warrior" or is he "inflation creator"? Is he really at loggerheads with his Delhi masters or he is complying with them whenever they demand him to? The key to answer all these questions and to understand Raghuram Rajan is to observe his actions, and not his words. Listening to his speeches will make one feel as if Rajan is seriously worried about inflation, but when we look at his action we see something very different. Remember, at the end of the day, it doesn't matter what you say, but it matters what you do.

Is he inflation warrior or creator? 

To understand this answer we must first clearly understand what inflation is. Today's mainstream economists define inflation as a "rise in the general price level". Is this definition correct? Inflation, traditionally, was never defined in this way. Prior to 1980s the true definition of inflation always was a "rise in the supply of money and credit" e.g., read this Wall Street Journal article showing the evolution of definition of inflation. Why did the mainstream economists change the definition? Because they wanted to divert gullible publics' attention from the real cause of inflation, which is the rise in the supply of money and credit, to its effects, one of which is rising prices! Once you change your focus from the real cause of inflation to its effects, it is easy to blame everyone else but the real culprit who is creating inflation. In today's time the central bank - in India RBI - is the monetary central planning institution which has a monopoly over printing rupees. That means, it is the RBI which is solely responsible for creating inflation in the Indian economy. Rising prices is just one of the chief effects of inflation; it itself is not an inflation (please read this one page article on inflation by Henry Hazlitt to understand this phenomena).  

Once clarifying the definition of inflation now we can see that Raghuram Rajan is no "inflation warrior". He, in fact, is the main guy who is creating inflation in the Indian economy just like his predecessor governors. Since assuming the governorship of RBI in September 2013, Rajan has decreased interest rates from peak 8% in January 2014 to 6.75% today (data here)! That is a big cut of 1.25 basis point. RBI reduces interest rates by increasing the money supply in the economy, and that is what IS inflation. The commercial banks will now pyramid their own money supply on this base money provided by RBI and inflate the currency more (to understand the mystery of banking please read Rothbard's brilliant book, The Mystery of Banking). So, Rajan is the one who is creating all the inflation that we see in the Indian economy. To think that he is an "inflation warrior" is a mockery of economic science.

And these continuous reductions in last one an half years' time also shows that Rajan is not at all at loggerheads with his master Delhi government. Whenever they demanded an interest rate cut, he has sooner or later followed their orders notwithstanding his rhetorics against inflation.

This is not everything about Raghuram Rajan. During the recent rate cut press interviews he said few things which will outrage most sane people. In an interview with newspaper The Hindu, Rajan said that, Common man is always benefited by a rate cut. Really? How so? His twisted logic, and I quote, is this:
I think bringing down inflation is the most proper move we have done. Once inflation comes down, keeping rates at a very high level increases the cost for the entire economy. I receive letters periodically from pensioners who say they used to get 10 per cent on their deposits, but now they are getting only eight per cent. However, they don’t realise that they got 10 per cent when the inflation was 11 per cent. Even though they got 10 per cent returns their principal was eroded by a greater amount every year. So, real value of savings were going down. 
Today, if they are getting 8 per cent with inflation at 6 or 5.5 per cent they getting a real return of 2.5 per cent, which is compensating the erosion of their principal so real returns have gone up.
On the surface this arguments looks plausible, but to see why Rajan is wrong we have to only see how the government statisticians measure inflation. Government inflation numbers are based on wholesale prices where prices are always lower than the retail market. Not only that, they only include selected goods in their inflation basket, and the selection of these goods is arbitrary depending on the whims of government politicians and bureaucrats. The highly aggregate macroeconomic inflation numbers hide all the differences in the life styles of individuals in this country. The inflation numbers may go down on government and RBI records, but in ground reality the prices never come down; in fact, they keep on rising year over year e.g., I have never seen prices of most products that I consume go down like many common men of this country (see here). The whole exercise of measuring inflation by taking prices of selected goods in consideration is dubious. It doesn't reflect the ground reality of how people are living and facing real prices rises in their day to day life. Rajan's above arguments are totally disconnected from the ground reality. He is living in his ivory tower with his dubious official numbers. He forgot what the famous phrase about the use of statistics, which is falsely attributed to the British Prime Minister Benjamin Disraeli, says: "There are three kinds of lies: lies, damned lies, and statistics." Rajan is just fooling the pensioners and other hard working saving public of this country with his misleading false arguments. He is not realizing that millions of poor people of this country, who earn their daily bread, never receive any pension! They don't even have any bank account where they get any interest. Their wages are

Above all, as I said above, inflation is not rising prices! It is the increase in the supply of money and credit for which Rajan himself is responsible. Rising prices is only one of the chief effects of inflation. Rising prices definitely do not benefit the common man, but the worst part of inflation is its other effects in the forms of the business cycles and the rising inequality of income where poor gets poor and rich, richer. The manipulation of interest rate results into boom-bust cycle in the economy which hurts the whole economic structure and thus every one of us. The distribution of money by RBI to its favored unproductive debtor class hurts the productive creditors (i.e., savers) of the economy.

Conclusion

So RBI's rate cut policy can never help common men. Rajan is outright lying when he said that. Rajan is not an "inflation warrior". He is the prime creator of inflation in India. Only dismantling RBI and bring the Gold standard back, we can think of doing anything good for the common men of this country.



Sunday, September 13, 2015

BJP/RSS, Sanskrit and Raja Rammohan Roy

Since Narendra Modi and his BJP party's Hindu nationalist government has come to power in Delhi last year, there is a relentless onslaught of Sanskrit language education and India's glorious past's propaganda. Modi government's education minister Smriti Irani has, so far, forced Sanskrit language teaching on the Kendriya Vidyalaya schools displacing the learning of German language (see here, and here) against the wishes of many parents (see here). BJP's home minister Rajnath Singh said that, Sanskrit is most useful for science, technology! (see here) In this speech he can be seen disparaging English language. BJP/RSS Hindu nationalist also hijacked the recent 102nd Indian Science Congress (see here). In a Science Congree, they presented a paper titled ' ‘Ancient Science Through Sanskrit’ with other papers on mythical planes capable of inter-planetary travel and unproven claims of scientific breakthroughs in pre-history!

So, is Sanskrit language and education based on it are very important for India's progress? I am recently reading a book edited by eminent Indologist A L Basham, A Cultural History of India. While reading a chapter on Modern Literature by Krishan Kriplani, I came across a letter written - in 1823 - by Raja Rammohan Roy to the Governor-General Lord Amherst opposing the opening of a Sanskrit college in Calcutta. The fact that a leading social reformer like Raja Rammohan Roy opposed the Sanskrit language education piqued my interest in this letter, and I immediately downloaded it. It is a fascinating read. It totally exposes the present BJP/RSS government's Sanskrit language propaganda. The history behind this letter is also very fascinating and extremely important today. I briefly discuss both this letter and its history below.

I am sure all Indians know the name of Raja Rammohan Roy very well. He is known as the "Father of Modern India". He also carries a title of "The Father of the Indian Renaissance".

So why did the father of modern India, Raja Rammohan Roy, opposed the imposition of Sanskrit language education in India by the British government? The answer lies in the letter written by Roy himself, but before I reporduce that letter, here is the brief history of the circumstances which led Roy to write that letter to Governor-General Lord Amherst. I quote:

LETTER TO LORD AMHERST xll  
The share of Raja Rammohun Roy in inducing the Government to interest itself in the introduction of English education in India is well known. We have already mentioned that in 1813 the Director of the East India Company  decided to set apart a lakh of rupees from the revenues of the  country for educational purposes, when the question of the  utilisation of this amount came up for discussion, there arose  a difference of opinion among the high officials, including  the members of the Council of the Governor-General ; one  party wished to devote the Government grant to giving  stipends to Pandits and Moulvis and scholarships to Arabic  and Sanskrit students and to publishing oriental manuscripts  for the revival of classical learning, and were called the  Orientalists. The other party were for establishing schools and colleges on the model of English public schools for the  spread of western scientific and literary education and were  called the Anglicists. The battle raged for several years, till it was finally settled by the memorable decree of Lord Bentink's Council of the 7th March 1835. Rammohun Roy had a large share in bringing about this momentous decision. At first the Orientalists were in the ascendant and succeeded in securing the Government grant for their purpose. In 1823 Raja Rammohun Roy addressed to Lord Amherst, then Governor General, a long letter which would alone immortalise his name. In it he advocated by unanswerable arguments the introduction of western education after the English model.  The story has been told in full detail by Miss Collet. All we need point out here is that, but for Rammohun Roy's seasonable intervention, the introduction of English education in India might have been indefinitly, at least for a long time, postponed. Though no immediate satisfactory reply was given to his letter, the success of the cause of the Anglicists now become assured ; for when Rammohun Roy wrote on behalf of  the dumb millions of India, demanding modern scientific  education, it was felt that the ultimate triumph of the plea  could not be far off. (source: The Life and Letters of Raja Rammohun Roy). 

Isn't this fascinating? Nobody taught me, or I am sure others too, in the classroom Rammohan Roy's fierce battle against the Sanskrit language indoctrination in favor of English language Western scientific education! Thanks to Rammohan Roy and his struggle against Sanskrit language education that India could progress in the following centuries and catch-up fast with the modern world.

Now I reproduce his letter in entirety below.



The letter is absolutely fascinating and important too just like its history. I quote some important lines from this letter below:
When this Seminary of learning was proposed, we understood that the Government in England had ordered a considerable sum of money to be annually devoted to the instruction of its Indian Subjects. We were filled with sanguine hopes that this sum would be laid out in employing European Gentlemen of talents and education to instruct the natives of India in Mathematics, Natural Philosophy, Chemistry, Anatomy and other useful Sciences, which the Nations of Europe have carried to a degree of perfection that has raised them above the inhabitants of other parts of the world.
This shows that Raja Rammohan Roy very well understood the importance of English language western scientific education for progress. He also understood how Sanskrit language kept the vast Indian populace in darkness for ages! I quote him again:
We now find that the Government are establishing a Sangscrit school under Hindoo Pundits to impart such knowledge as is already current in India. This Seminary (similar in character to those which existed in Europe before the time of Lord Bacon) can only be expected to load the minds of youth with grammatical niceties and metaphysical distinctions of little or no practicable use to the possessors or to society. The pupils will there acquire what was known two thousand years ago, with the addition of vain and empty subtilties [sic] since produced by speculative men, such as is already commonly taught in all parts of India. 
The Sangscrit language, so difficult that almost a life time is necessary for its perfect acquisition, is well known to have been for ages a lamentable check on the diffusion of knowledge; and the learning concealed under this almost impervious veil is far from sufficient to reward the labour of acquiring it.
If it had been intended to keep the British nation in ignorance of real knowledge the Baconian philosophy would not have been allowed to displace the system of the schoolmen, which was the best calculated to perpetuate ignorance. In the same manner the Sangscrit system of education would be the best calculated to keep this country in darkness, if such had been the policy of the British Legislature. But as the improvement of the native population is the object of the Government, it will consequently promote a more liberal and enlightened system of instruction, embracing mathematics, natural philosophy, chemistry and anatomy, with other useful sciences which may be accomplished with the sum proposed by employing a few gentlemen of talents and learning educated in Europe, and providing a college furnished with the necessary books, instruments and other apparatus. (emphasize mine)

 Roy, very rightly, saw that how the Sanskrit language education will be retrogressive for India and its millions of poor citizens. This shows how dangerous the effects can be of present BJP government's efforts of promoting Sanskrit again at the cost of more liberal and enlightened system of education. If allowed to implement their Hindu plans, the present government will sure take India back to Jungle and its Vedic rituals!!! Raja Rammohan Roy saw this danger of Sanskrit monopoly coming and opposed it in his time, which resulted in India progressing under more liberal enlightened system of education. If we will not see this same danger and do something about it then last centuries all progress will be in vain as we will be back in 1500 BC Vedic age!!!


Friday, September 4, 2015

Lessons from Gujarat Patel Riots

The state of Gujarat again, after a lull of few years, erupted in violence in the form of caste related riots last week. The Patels (Patidars, a mainly land owning caste in Gujarat) are agitating for reservation status under the leadership of a young but confused Mr. Hardik Patel. There are many lessons that we can learn from this past week events. I will discuss them one by one below.

Firstly, I above said that Mr. Hardik Patel is confused. I said it because his agitation for reservation status is based on wrong ideas. The real struggle in society is not between Patidars and other OBC caste or SC or ST or Open cateogry caste. The real struggle is not between Hindus or Muslims or Christians etc. The real struggle in not between Rich or Poor. The real struggle is between, the tax paying class of the society and the tax consuming class i.e., The Tax Payers and The Tax Consumers. Nineteenth century American political philosopher John C. Calhoun identified this struggle very clearly. He wrote:
In an extended critique of The Federalist, the pre-Civil War Southern political philosopher John C. Calhoun argued that any system of taxation inevitably divided citizens into two antagonistic groups - the net tax payers and the net tax consumers:
… it must necessarily follow, that some one portion of the community must pay in taxes more than it receives back in disbursements; while another receives in disbursements more than it pays in taxes… The necessary result, then, of the unequal fiscal action of the government is, to divide the community into two great classes; one consisting of those who, in reality, pay the taxes, and, of course, bear exclusively the burthen of supporting the government; and the other, of those who are the recipients of their proceeds, through disbursements, and who are, in fact, supported by the government; or, in fewer words, to divide it into tax-payers and tax-consumers.
And this class division of society is due to the existence of the state (ask government) and its taxation which helps state officials to remain in power via their welfare-warfare state system. We must not forget that government's "reservation policy" is just one tool of its overall welfare state policy which it uses to win votes and gain public support to remain in power (notwithstanding which political party whether BJP or Congress or AAP is using it). If we see carefully then tax paying class of the society includes SCs, STs, OBCs, General category, Hindus, Muslims, Christians, Men, Women, Rich, Middle Class and even Poor people etc. And the tax consuming class also includes people from these very same categories! The government forcefully takes money from the productive tax payers and hands it over as freebies to parasitic tax consuming class.

So actually the tax payers should be revolting against this whole parasitic welfare system of which reservation system is just one sub-system. All Patidar Patel tax payers should be opposing this parasitic system instead of demanding their share of it! As long as the government can tax the tax paying class, it will continue its welfare policies creating conflicts in society, which will lead to many such riots in future. People must realize that their real enemy is not their own fellow human beings, but the parasitic state officials who are using the policy of "divide and rule" to keep them busy in in-fighting when they rule over them without any big problem.

Mr. Hardik Patel, during his Ahmadabad speech, also said that Patidars will only be ruled by that party who will give it freebies in the form of "reservation"! But the real question is, why anyone will want to be ruled by someone? Are Patels so weak and lazy that someone else is required to rule over them? Are Patels some political party's slaves? Why do they want to be ruled? Why not they rule themselves by becoming productive members of the society and becoming free of any kind of government support? The main issue that most people forget here is that the society doesn't depend on the government for survival, but the government depends on the society for its survival. Remember, the state is a parasite which is sucking the blood of host society to survive. The society comes first always and then comes the state, which depends on it!

Secondly, during this riot we again witnessed the fact that the state officials and their police force is in existence only for their own protection and welfare. According to the views of the statist political theorists, e.g., Thomas Hobbes who insisted on the need of the state, the state exists for the protection of the Life, Liberty and Property of its citizens. How wrong these ideas are was again proved during this riot. The state police, instead of protecting peoples' lives, liberty and property, was itself busy destroying all of them. They killed innocent people. They vandalized innocent peoples' property (see here, here and here). Instead of creating peace and order, they spread chaos everywhere. If you still think that the state is necessary for a peaceful organization of human society then you are inviting more such troubles in future.    

Lastly, as I said above, the real struggle here is between the tax payers and the tax consumers. As long as people are "divided and ruled" by the state officials, our society will never become just and peaceful.   

Thursday, August 20, 2015

China's Yuan Devaluation and It's Impact on India

Last week the Chinese central bank PBOC (People's Bank of China) devalued their currency Yuan, which created kind of a earthquake in the international markets. Immediately after that the Indian rupee started weakening against Dollar. In my latest economic report I discuss why Chine decided to devalue their currency, and what impact this move will have on the Indian and World economies.

Thursday, July 16, 2015

What's Wrong with Greece?

Greece is in a big trouble. Their government lost their sovereignty to foreign creditors after they were bailed out by them for the third time! This is not a fix of this problem, but only kicking the can down the road by politicians. One day, in future, Greece government will have to repay their debt one way or another. The bankruptcy and insolvency of the Greek government is a global phenomenon. Many world governments are heavily indebted and they will get into big troubles in future. In my latest economic report I discuss the Greek problem, its implications and a possible solution.

Saturday, July 11, 2015

The Origins of the Pristine State

As I have mentioned elsewhere, the modern nation state societies in which we all are living are not more than 500 or so years old. If we study the human societies around the world then they exhibit different organizational patterns, and the state is only one of these various organizational patterns. People who are living under these nation states might feel as if the condition in which they find themselves today is present since time immemorial. Many a times, during discussion with various people about the future Anarcho-Capitalist society which will be without any nation state, I frequently hear, that the state has always been with us since the beginning of time, and it is never going to go away; we have to live with it, and tolerate its exploitations! These people don't know the human history. The real question for us to understand today is, how the first original states came into being? Whether the nation state is with us since the beginning of time? In this article I will explore these questions.

I have just finished reading Prof. Marvin Harris' important book Cannibals and Kings where he discusses the origins of the, what he termed, Pristine States. Marvin Harris' this chapter is very important for understanding the true nature of today's nation states. Marvin Harris begins this chapter with this wonderful lines:
In most band and village societies before the evolution the state, the average human being enjoyed economic and political freedoms which only a privileged minority enjoy today. Men decided for themselves how long they would work on a  particular day, what they would work at - or if they would work at all. Women, too, despite their subordination to men, generally set up their own daily schedules and paced themselves on an individual basis. There were few routines. People did what they had to do, but the where and when of it was not laid out by someone else. (p. 101)   
I am sure this paragraph itself is a shock to the citizens of modern nation states. Folks today usually think that people who are living in the urban locality under the rule of the nation state governments are the most blessed ones and civilized, but this is a myth. Today's citizens are nothing else but slaves of the state politicians. They work dog bone hard just to pay taxes to these politicians first and then only keep the rest to live their wretched lives. After describing this condition of primitive people, Harris writes this:
With the rise of the state all of this was swept away. ... In many ways the rise of the state was the descent of the world from freedom to slavery.  (p. 102) 
Exactly. The leisurely and free life which our ancestors were living in the olden days were gone once the state came into existence amongst them. You may be thinking that if the existence of the state is going to enslave the people, then, why they brought it into existence in the first place?! Why didn't they try deliberately to stop it from forming amongst their society? The answer to this puzzle is that some societies have actually done that; they have put in place the kind of institutions which stops the process of state formation amongst them e.g., oral culture, migratory life-style etc. (for more on this please read this important book, The Art of Not Being Governed). And, as Prof. Harris explained in Cannibals and Kings, the process of cultural evolution is blind just like the process of biological evolution. People who are involved in the making of these changes in the present time mostly do not know exactly what will come out, as a final result, of these changes in future. Only after these events have passed and their results are in front of us, we can see, in hindsight, its evil effects. Those people who are making present day changes are just trying to solve their present problems. If they knew, in foresight, that their present actions will enslave them and their progeny in future, then, they will surely not make those changes and try to find some better alternatives. Anyway. I am digressing. Let's come back to our main theme here and discuss the origin of the pristine states. How did the world descend into the slavery of these states from a world of freedom and leisure? Prof. Harris provides the short answer:
The rise of pristine states would appear to be best understood as a consequences of the intensification of agricultural production. ... A key part of the process by which the state's structure of subordination developed involves the distinctive nature of the institutions responsible fore rewarding production-intensifiers in sedentary pre-state agriculture villages. (p. 103)
In primitive village societies there were village leaders, who were known as "big men". Their job was to motivate other people to do work hard and produce more to support the increasing population. The reproductive pressure amongst the human society is always present, and this pressure results into intensification of the production process. Prof. Harris explains the role of these "big men":
In their purest, most egalitarian phase, known best from studies of numerous groups in Melanesia and New Guinea, "big men" play the role of hard-working, ambitious, public-spirited individuals who inveigle their relatives and neighbors to work hard for them by promising to hold a huge feast with the extra food they produce. When the feast takes place, the "big men," surrounded by his proud helpers, ostentatiously redistributes - parcels out - piles of food and other gifts but keeps nothing for himself. Under certain ecological conditions, and in the presence of warfare, these food managers could have gradually set themselves about their followers and become the original nucleus of the ruling classes of the first states. (p. 104)  
As Prof. Harris discussed, these "big men" were also war leaders because of their ability to marshal other peoples' support for the war effort, and his having control over the large chunk of village resources, which are required to fight the costly wars. This means today's states have their origins in the warfare and conquest. Now, the major difference between these "big men" chiefs of old times and today's nation state leader politicians is that the former were still dependent on their population for the hard work and increase of production i.e., they were not in a position to coerce their people to work hard for them. If people refused to work hard then these chiefs were not in a position to force them. They were still dependent on the wishes of their people unlike today's politicians who can coerce people to work hard and pay taxes. Prof. Harris illustrates this process with an example of a Trobriander people of New Guinea:
So, even though they feared and respected their "great providers" war chiefs, the Trobriand commoners were still a long way from being reduced to peasant status. Living on island, the Trobrianders were not free to spread out, and their population density had risen in Malinowski's time to sixty persons per square mile. Nonetheless, the chiefs could not control enough of the production system to acquire great power. There were no cereal, grains and yams rot after three or four months, which means that the Trobiand "great provider" could not manipulate people through dispensing food nor could he support a permanent police-military garrison out of his stores. An equally important factor was the open resources of the lagoons and ocean from which the Trobrianders derived their protein supply. The Trobriand chief could not cut off access to these resources and hence could never exercise genuine permanent coercive political control over his subordinates. But with more intense forms of agriculture and large harvest of grains, the power of "great providers" evolved far beyond that of the Trobriand chief. (p. 110)
This shows that as long as the reproductive pressure in not resulting into intensification of production process and as long as people have alternative ways of living their lives without depending on the "great provider (i.e., the state or, as we call today, the government), the chiefs can't enslave the people permanently. This is the reason why today's politicians try every bit hard to make sure that none of the citizen slaves escape the country easily. They don't keep any avenues open from where people can become independent and live their lives freely without any need of the state. People are deliberately made hopelessly dependent on the great Nanny government. Today's politicians are the "great providers" who redistribute (all types of welfare programs) the production to win enslaved peoples' votes and remain in power.

With the increasing reproductive pressure and ensuing intensification of production process then slowly the pristine state started to come into being. Here is Prof. Harris again:
The larger and denser the population, the larger the redistributive network and the more powerful the redistributve war chief. Under certain circumstances, the exercise of power by the redistributor and his closest followers on the one side and by the ordinary food producers on the other became so unbalanced that for all intents and purposes the redistributor chiefs constituted the principal coercive force in social life. When this happened, contributions to the central store ceased to be voluntary contributions. They became taxes. Farmlands and natural resources ceased to be elements of rightful access. They became dispensations. And redistributors ceased to be chiefs. They became kings. (p. 113)
And the kings, over the period of time, became today's politicians.

Once these pristine states came into existence, they waged war on their neighboring villages and enslaved them too. This gave birth to the secondary states. And this completed the process which we witness today in its fullest form. This cultural evolution is continuing, and as I have noted in my past articles, today's states are now becoming weaker. They will be replaced by some other form of societal organization in future. I just wish that that future society will be a Libertarian free society where there is no place for any type of physical aggression or threat of aggression either by individuals or their voluntarily formed governments. I am also aware of the blind forces of this evolution, but as Prof. Marvin Harris very passionately says, if we want to improve our future and escape this slavery then the knowledge of underlying factors of this slavery is very important. The prime reason why he wrote this book is to precisely spread this knowledge amongst us so we can escape such ill results in future. If today's generation equips itself with the knowledge of our cultural history then it is possible to make a better future for ourselves. If not then the future of our human societies is definitely uncertain. 

Saturday, June 20, 2015

Hindus and their Holy Cow

After the sweeping election win of Narendra Modi and his Hindu nationalist BJP party last year, there is a barrage of Hindu propaganda coming from Modi and his government about the so-called glorious past of India and the sacred Hindu culture. Hindu fundamentalist forces, under the tutelage of Modi and his government, are busy attacking the Muslim and Christian minorities while BJP's backers, the RSS, wants Modi government to declare India as a Hindu nation! BJP governments in various states like Maharashtra and Haryana have gone so far as to ban the eating of cow beef totally saying that for Hindus cow is sacred. The myth of India's Holy Cow perpetuates and gives a (phony) justification to such draconian measures of these state governments.

What I want do in this brief article is reveal the reality of the Hindu Holy Cow. I will present the underlying cause of this old Hindu ban/taboo on eating cow beef. What factors are driving this ban? How and when this ban originated? What were the realities about eating of animal meat of Indian Hindus, especially the present non-beef eating upper Brahmin caste, before this ban/taboo came into effect slowly? I will give answers of these questions. Searching for this Truth will also expose the myth which the fundamentalist people are spreading about the Indian culture. I am right now reading Columbia anthropologist Professor Marvin Harris' wonderful book Cannibals and Kings where he explains the origin of not only this taboo on eating cows but also all other kinds of religious taboos like a ban/taboo on eating pigs amongst the ancient Israelites and the Muslims today. Harris devotes one full separate chapter on explaining the origins of the Indian Holy Cow i.e., ban on eating cow beef. I will use Harris' quotes to explain this historical taboo, which is still working under Modi and his Hindu nationalist BJP government, but in a different political garb.

Harris' main line of argument about the origin of culture - including such religious bans - goes like this:


So, this is the origin of human culture. The reproductive pressure results into intensification of production process which in turn results into depletion of ecological resources which then leads to different cultural practices like the Hindu ban on eating cow beef to counter the deteriorating benefit-cost ratio of standard of living and survival. Religion provides just an excuse and a motive force to enforce such bans which are necessary to maintain the population from dying off in the face of such ecological depletion.  

What is the origin of all kinds of religious taboos on eating animal flesh? I said all kinds of animals because the Hindu ban on eating cow beef is not unique in the world. Muslims also have a religious ban on eating Pigs. Single common principle is behind all these bans. Harris provides the answer:



This principle applies to the ban on eating Cow flesh by Hindus as well as ban on eating Pigs by Muslims. As I have said above, this ban has nothing to do with Cow as some Holy animal which should be worshiped for its own sake. In fact, the treatment of Cow by the Hindus as mostly a scavenger animal speaks amply about the real treatment given to it by them! Oxens and Bulls are given more importance because they are the ones which are most useful in agriculture. Cow gives birth to these Oxens and Bulls and also provides essential nutrient in form of milk and its products so it is allowed to wander here and there to scavenge on trash and stay alive. The ban is a practical cost-benefit calculation by the Hindus to protect their standard of living. Religion is a powerful proscription tool for this ban to become effective and so the religious veneer was applied historically to this ban.

The history of Hindu holy cow is also quite revealing looking at the present worship of cow by Hindus. Historically all ancient Vedic people use to eat animal flesh with taste, including, and more often by, Hindu Brahmin priests! In fact, these priest had the monopoly over animal sacrifice and eating. Here is Marvin Harris again: 


This is the real history which no one teaches in the classrooms. Around the 4th century BC, because of production intensification and ecological depletion cows became more important alive for farming rather than dead for her flesh, the Hindu farmers one by one started implementing this ban on slaughtering cow. As Harris explains, it were the low caste Hindu farmers who stopped eating cow flesh first because they can't afford to lose their cows during one or two drought seasons (if they kill cattle in drought then when rain again arrives they are left with no cattle for farming, which became main source of food supply by then). But when commoners stopped eating cow beef, the elite Brahman priests were still lustily eating it!  

So, the Hindu holy cow is just a cultural phenomenon which has its roots in cold cost-benefit calculations by human beings for their survival like all other cultural traits. My purpose of presenting this history is to expose the lies that the present government and its Hindu nationalist backers are spreading. The ban which was started to safeguard the standard of living of people has became a political tool today. Politicians are using it for the same purpose of their own survival i.e., winning elections and remaining in power to plunder people! I personally have no problem whatsoever with peoples' eating habits. Everyone is Free to Choose whatever they want to eat as long as they follow the Libertarian principle of Non-Aggression i.e., they don't physically harm or threaten to harm other humans and their pet animals, which is their private property. In the end, as Marvin Harris said, when it comes to survival, economics mostly trumps over religion:

   
This means, as long as the cost-benefit ratio is in favor of Cow as alive animal, the ban will remain in place. The day eating cow again becomes more beneficial, don't be surprised to see Hindus themselves start slaughtering and eating cows again! Ultimately, it is a matter of survival, and when it comes to survival, history is evident that, humans will not hesitate in killing and eating other humans also (as many past Cannibalistic societies have done)!!!  

Thursday, June 11, 2015

Modi's Myanmar Gamble

A day before yesterday the Indian military commandos, allegedly as said by the Indian government official Rajayavardan Rathod, crossed the border of Myanmar (Burma) to attack and kill some 50+ so-called separatist rebel fighters. This cross-border attack came in the wake of an attack on the Indian military forces in Manipur few days back by these rebel fighters who killed some 20 Jawans of Indian army during that attack. Narendra Modi government's Junior minister for information and broadcasting Rajyavardhan Singh Rathore said the government had taken the bold step to strike at militant camps and he congratulated Prime Minister Narendra Modi for doing so ... He also told ... it was a signal to neighbours that India will not tolerate militant attacks from across its borders. "It is undoubtedly a message to all nations that harbour any intentions - be it the west or the specific country we went into right now. Even if there are groups within countries that harbour terror intentions, we will choose the time and the place of hitting them." These hawkish statements by Modi government ministers has sent alarms specially in Pakistan, and its government ministers and military generals are reacting strongly. After this reaction too, the Indian defense minister, Manohar Parrikar, continues to issue hawkish statements. He said, "those who fear India's new posture have already started reacting". "If the thinking pattern changes, lot of things change. You have seen for the last 2-3 days. A simple action against insurgents has changed the mindset of the full security scenario in the country." 

Parikkar is correct when he said that, full security scenario in the country has changed after these cross-border strikes. The security scenario in this region is now more unstable after these war mongering of Modi and his government ministers. Indians, Pakistanis, other neighboring country citizens and the world at large are slowly drifting towards a greater danger after every such war actions by the Indian, Pakistani and Chinese governments. All the war mongers who are cheering these strikes should not forget the fact, that the India-Pakistan border in Kashmir and this whole region of South-Asia is a very vulnerable geographic region from the point of view of security (e.g., read this very important book War at the Top of the World: The Struggle for Afghanistan, Kashmir and Tibet of war journalist Eric Margolis). Any small policy mistake, and there are always chances of making such mistakes, by these war hawk politicians can turn the whole region into a Nuclear holocaust because not only the Indian government has Nuclear bombs, but more importantly, even Pakistani government and mad military generals also have them too! By resorting to these war actions, Modi and his government is taking India and the whole world closer to this Nuclear Holocaust. One must understand that, war is never an answer of any problem. It can only lead to further problems.

The major issue here is that the Indian state is trying forcibly to keep the whole region together, which historically was never together. These small so-called separatist movements are actually secessionist movements. What these rebels are fighting for is not their own rule over Delhi and India, but for their autonomy. They just want to separate from the Indian state, and there is nothing wrong in it. Two people or regions of people can stay together for long only via voluntary agreement and mutual consent. Just like in a marriage when one spouse is not happy with his/her partner, he/she can take divorce, so similarly when some people don't want to be ruled by the Indian state, they must be allowed to separate peacefully. If they are not allowed peacefully, like what the Indian state is doing, then this bloodbath will be the unfortunate end result, which ultimately is not good for anyone. In these bloody battles of States for supremacy, the whole region will be ruined one day.

On the other side, I also feel that Modi has initiated these foreign wars just to bolster his dwindling support in India and to deflect the attention of public from failures of his domestic policies. Even after one year of coming to power in Delhi, his government is not able to do anything substantial, especially about the failing Indian economy. Modi's dream projects like the Swaccha Bharat Abhiyan or the Make in India campaign are producing no concrete results (as expected); He has also failed in reigning in his ministers from spreading communal hatred in the country. Also, his many, tax payer funded, foreign trips are also not producing anything substantial on the economy or foreign policy front. His party BJP lost horribly against AAP in Delhi elections, and he must be fearing similar rout in the coming elections of Bihar and other states. His BJP party is nothing except his own (false) charisma, which is now fading slowly. His empty rhetorics are getting exposed with the every passing day in the eyes of the Indian voter public. Fearing all these, just like a typical politician, he has decided to divert nation's attention to foreign front via these cross-border military action. This ploy of politicians of deflecting attention outside the country during the time of internal crisis for their rule is very old e.g., Indira Gandhi used it in 1971 to bolster her grip on power, war mongering about Kashmir is the bread and butter issue for the Pakistani politicians, America's Bush Jr. used the Iraq war to bolster his falling local ratings and to win second term etc. Hitler's Nazi party colleague and his right hand man Hermann Göring revealed this age old trick when he said,
“Why of course the people don't want war. Why should some poor slob on a farm want to risk his life in a war when the best he can get out of it is to come back to his farm in one piece? Naturally the common people don't want war: neither in Russia, nor in England, nor for that matter in Germany. That is understood. But after all it is the leaders of a country who determine the policy and it is always a simple matter to drag the people along, whether it is a democracy or fascist dictorship, or a parliament or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked, and denounce the peace makers for lack of patriotism and exposing the country to danger. It works the same in any country.”  
Indian citizens are well advised to be careful before they start cheering these war actions. Cheering for a war and fighting an actual war are two totally different things. War is a pure horror, which will ruin this country (if you want to see what horror war is then take a look at these ghastly pictures from Iraq war here (These pictures are real horror so viewers discretion is advised). Modi and his irresponsible ministers are playing with fire when they are inciting hatred not only in India but with other countries too. These rhetorics can win them elections, but, most importantly, it can very well turn India and this whole region into rubble also. Support any kind of war mongering only if you want to destroy this country. It is important to pierce through the war propaganda of Modi and any other government whether that be of Congress or AAP or any other political party, and work for worldwide Peace. Love and Peace can only result into progress. Hatred and war will always ruin humanity.  

Friday, May 22, 2015

Should You Monetize Your Gold?

Narendra Modi government has launched a new scheme of "Gold Monetization" [sic]. We all know that the Indian government, whether of Manmohan or Modi, has waged a war against Gold since long. This scheme is yet another weapon of government in that war. In my latest economic report I analyze this scheme and its realities. I also, briefly, discuss what Gold actually is.

Monday, April 27, 2015

India: A History

I have recently started reading John Keay's India: A History From the Earliest Civilizations to the Boom of the Twenty First Century published by the Harper Press.

What I want to do in this write-up is to do a live review of this book as I go on reading it. This blog will continue to update as I read one chapter after another reviewing them in succession. I will present my own analysis and comments in the following paragraphs as well as reproducing choicest excerpts from the book, especially the ones which are more relevant for today's India and the kind of issues that are discussed in present time e.g., Nationalism under Modi government.

When I was reading the first chapter The Harappan World, one thing struck me hard is the fact, which anyone who has studied the Indian history deeply knows well, that this country, which is generally called India, was historically never a one country. The present political form of this country as one geographic territory is a phenomenon which is only as old as the so-called Indian independence from the Britishers. Even during British Raj, whole India i.e., its main independent principalities like the Nizam of Hyderabad or the Maratha Empire or the Rajputs of Rajashthan were never under one rule of Britishers. Even at their height of colonial rule, as Keay shows in his book, Britishers were only ruling around 95% of geographical territory. So, the whole idea that is being taught inside school classrooms in history classes that it was an Indian struggle against the British Raj is faulty and wrong. There was no one India at that time. Only independent principalities were struggling to hold off the Britishers from their own territory. This historical fact has a deep root in ancient history of India. India never was one country. I quote Keay in this regard:
Despite the pick-and-preach approach of many nationalist historians, geographical India is not now, and never has been, a single politico-cultural entity. In fact, its current three-way division between Pakistan, India and Bangladesh, far from denying some intrinsic unity, is a notable simplification of its traditional plurality. (p. 7)
This historical fact blows a big hole in the whole nationalist propaganda movement of Narendra Modi and his Hindu nationalist government. In this country nationalism, like Germany under Hitler, is almost impossible because of its cultural diversities. The present India was put in place artificially and forcefully by Sardar Patel after independence from the Britishers. And because this unity is forceful and artificial, I don't think it will remain in place for very long time in future. We already see many secessionist movements where different states are trying to secede from the Indian federal State e.g., Kashmir, Assam, Punjab in past, Bengal, Bihar/Jharkhand etc.

Chapter 2 Vedic Values (C1700-900 BC)
Once Harappan civilization collapsed, the stage is set for the entry of that mythic Aryan race in India. Looking at the similarities between Sanskrit, which was used by these Vedic age Aryan people, and other languages around the world like Latin and Greek, one can say that these languages sprang from some common source, and after analyzing the similarities between these languages - the work of Philology - one can say something about the origins of these Aryan people.
Using and developing this new discipline, scholars at first called the elusive 'common source' language (and family of languages which derived from it) 'Indo-Germanic' or 'Indo-European'. This changed to 'Indo-Aryan', or simply 'Aryan', after it was realized that the ancient Persians had indeed used their arya word in an ethnic sense; they called themselves the 'Ariana' (whence derives the modern 'Iran').  (p. 21)
Given the vast spread of Indo-Aryan languages, an Aryan homeland was soon being sought somewhere in the middle of the Eurasian landmass. Most scholars favored the steppes of southern Russia and the Ukraine, or the shores of the Caspian. (p. 21)
It looks like arya must have entered India some time between 1500 BC and 1300 BC.  (p. 27)
 Another important thing to understand about these Aryans is whether they invaded these lands or just migrated and in that migration spread their Aryan Vedic culture in the then present local population, whom they called Dasa, through assimilation? Looking at the archeological and other evidences Keay speculates:
Aryan ideas and influence were initially carried by work-seekers and traders, not warmongers. (p. 28)
... the process appears simply to have been one of gradual acculturation requiring neither mass migration nor enforced concurrence. A small admixture of fortune-seekers, traders or teachers who happened to be in posession of a superior technology and of a pursuasive ideology could and did, if prepared to compromise with existing custom, create a convincing and lasting veneer of Aryanization without apparently antagonizing anyone. (p. 29)  
Admittedly, indeed on their own admission, the arya cattle-rustlers of the Rig Veda did antagonize the dasa. But they also compromised with them, adopting dasa technology, dasa cults and dasa vocabulary, and inducting dasa clans and leaders into their society. Despite the importance attached to purity of Sanskrit, there is even a hint of dasa-arya bilingualism ... the arya may have secured recognition of their superiority by a process no more deliberate and menacing than social attraction and cultural osmosis; thus the Aryan invasion and conquest of India could be as much a 'myth' and a 'red herring' as the existence of an Aryan race. (p 29)  
With the Aryans now in India, next we will move to the Epic Age. Look for more in future.
  

Thursday, April 2, 2015

Narendra Modi: The Banker?

Yesterday the prime minister of India, Narendra Modi, spoke at a financial inclusion conference organized as part of RBI’s 80th anniversary celebrations. The kind of advise he was giving to the central banker of India, Raghuram Rajan, shows a sign of the kind of troubles that are coming in future for the Indian economy. The height of hubris with politicians is that they always think as if they are knowledgeable about everything; as if they are omniscient. They want to impose their own faulty ideas on the whole country. This is especially true with Narendra Modi. Since coming to power last year, he is constantly pushing the whole nation in a direction which he thinks is right for this country. He is driving everyone crazy to fulfill his personal dreams like Swaccha Bharat or Make in India. He did the very same thing yesterday also in his speech by directing RBI and commercial banks to do bidding for his own personal dreams. I analyze some of his agendas for the banks below.

1. Banks should fund marginal farmers in a way so that no farmer commits suicide due to excessive debt.

This is truly bizarre. This is like trying to cure a patient by bleeding him more! The very first reason why farmers are committing suicide is this excessive debt itself so the question is, how giving more loans and making farmers more indebted is going to safeguard their lives? Allowing them to borrow more will in fact worsen their situation further. And, it is none of Modi's business to tell bankers to fund marginal farmers or anyone else. Modi is not a professional banker. If we have free market banking then all banks will take extreme care when giving loans to anyone. That way, those farmers who can not afford to pay back their loans will not be heavily indebted to begin with. If banks give loans to sub-prime borrowers then that will destabilize the whole financial structure of Indian economy in the long run as bad-debt pile up on bank's account books.    

2. Banks should give up the fear of non-performing loans while lending to marginalized sections of society and to those excluded from the formal financial system.

This is sign of a big danger. Again, Modi is not a banker and he is not going to face the bad consequences of ignoring non-performing loans so he can utter such nonsense. By giving such illogical advise - and a kind of forced direction to the banks to work on - he is going to put the whole financial structure of Indian economy in danger. Raghuram Rajan is already warning about piling on bed-debt in infrastructure sector (see here). If banks will give up the fear of non-performing loans then that will bankrupt and break every banks in the end, and that in turn will destroy the whole economy. When banks will declare mass insolvencies, there will be big bank runs, money printing by RBI to rescue these banks which will result in hyperinflation, tax payers money will be gobbled up to bailout these banks or depositor's money stolen to bail-in them, and many more such dire consequences. Only an irresponsible person like Modi can make such comments.  

3. Banks should fund more small businesses and entrepreneurs to help increase employment and productivity.

Again, Modi is neither a banker nor an economist. Who says that funding entrepreneurs and businesses will create employment and increase productivity? The fundamental question is, from where that funding is going to come? If it is coming from prior real saving then that will generate wealth if entrepreneurs use that real pool of saving to serve the consumers well, but if it is coming from RBI's money printers, which is the likely case, then it will destroy the economy in the forms of boom-bust cycles, inflation and wealth inequality.

Employment and productivity increases come via prior production of real goods, saving of these real goods, investment of it in profitable way and accumulation of physical and human capital. Money printing is not saving.

4. They should partner in knowledge funding so that the poorest of students can be financed to be able to pursue courses of their choice.

Once again, Modi is asking the banks to fuel a "student loan bubble" in India just like in America. American banks have created a huge "student debt bubble" which is now threatening the US economy (see here, here, and here). If the Indian banks are forced to follow Modi's dictates then very soon that student debt bubble will put the Indian students and the economy in big danger too. When poor students will not be able to repay their student loans, they will also commit suicide like farmers today! It is none of Modi's business to ask bankers what to do and how to do.

5. Banks should convince their employees to let go of the cooking gas subsidy so that it can be used to make these cylinders more affordable to the poor, who still use choolahs.

Well, I think, first Modi can let go his 10 lakh rupees suits, everyday new fancy clothes, costly foreign tours etc., and do some productive work in the market before advising others to do the same. He is a leader of this country and should lead by example instead of empty rhetoric!!!

6. Bankers should fund farmers to grow more trees where crops have failed to reduce carbon emissions and maintain soil fertility.

Modi wants to use banks to stop (non-existent) "global warming" too!!! This is height of arrogance and stupidity.  

7. RBI must ensure the paper and ink used in minting currency is Indian and not imported.

This is at best ridiculous. His is pushing his Hindu nationalism virus everywhere. First, there is nothing great in having a paper currency. In fact, the government paper currency is the root cause of all problems that the Indian economy is facing. Second, what's so great in using the Indian paper and not a foreign paper and ink? According to this logic, India should stop importing everything from outside and just kill itself!

As I have said above, Modi thinks that he is an expert in every field and since coming to power is taking everyone for a ride in his dream car as if other people don't have their own dreams to fulfill. Why the whole country should go mad after dreams of this one guy is the most important question? Why should people live their lives according to wishes of this one man? Why not let everyone freely live their lives as long as they don't aggress upon others lives and property? As long as this fundamental question is not answered and implemented, this country is going nowhere.
nks should give up the fear of non-performing loans while lending to marginalized sections of society and to those excluded from the formal financial system.

Read more at: http://www.livemint.com/Politics/1HbCTFREol3UoViPFkzLYL/The-10-important-points-Narendra-Modi-made-at-RBI-event.html?utm_source=copy
at a financial inclusion conference organized as part of RBI’s 80th anniversary celebrations

Read more at: http://www.livemint.com/Politics/1HbCTFREol3UoViPFkzLYL/The-10-important-points-Narendra-Modi-made-at-RBI-event.html?utm_source=copy
at a financial inclusion conference organized as part of RBI’s 80th anniversary celebrations

Read more at: http://www.livemint.com/Politics/1HbCTFREol3UoViPFkzLYL/The-10-important-points-Narendra-Modi-made-at-RBI-event.html?utm_source=copy

Monday, March 9, 2015

RBI's Inflation Targeting

In recent budget finance minister Arun Jaitley announced a new monetary policy measure called Inflation Targeting (see here). This is what the measure in specifics is, "the apex bank adopt the new Consumer Price Index (CPI) as the measure of the nominal anchor for monetary policy. And that the RBI set the target CPI inflation level at 4 per cent (+/- 2 per cent) to be achieved through its monetary policy tools."

So, what is this inflation targeting? Is it good for the Indian public and the economy at large? Or is it just another tool of fleecing off the (sheep) public? I answer these questions in my new economic analysis below.

 

Monday, March 2, 2015

Budget 2015 Analysis

The much awaited budget of Modi government came and gone. In my latest economic report, instead of focusing on specifics of this budget,  I analyze the fundamental ideological issues that are driving the actions of the present government in this budget and other policies. Instead of focusing on specifics, it is important to concentrate on these underlying ideologies which is going to affect the future of billions of people in India.




Tuesday, February 10, 2015

The Meaning of AAP's Win in Delhi

So after a heated pre-election day campaigning and lot of mud slinging by - mainly BJP and its PM Narendra Modi - the political parties, Arvind Kejriwal and his Aam Aadmi Party (AAP) won a landslide victory capturing 67 out of total 70 seats. BJP got only 3 seats while Congress got nothing. Many newspapers are calling this as a AAP tsunami sweeping away the "Modi wave"! This landslide victory means many things. Below are my reflections on these new developments in the Indian politics.

First, this landslide victory of AAP is a sure indication that Narendra Modi and his BJP's nonsense propaganda of Hindu nationalism, Ghar Wapsi, Hindu women having 4 children, attacks on Christian churches in New Delhi, opposition to festivals like Valentines Day etc., and other such nefarious tactics of dividing people on communal lines - like what Modi was doing in Gujarat since last 15 years - will not work in this country where people are hungry, not having clothes on their body and roof over their heads. Hungry people don't need religion; they need 'roti'. They voted for Modi because they (falsely) believed that he will provide 'roti, kapda and makan' to them, but after coming to power he has done nothing but talk; he wore 10 lakh rupees suit made in London while talking about "Make in India". His hypocrisies are now exposed. 

Second, those who were thinking that Gujarat is developed because of Modi are ignorant of Gujarat's entrepreneurial culture. Giving credit to one guy Modi for Gujarat's prosperity was one of the biggest insults to the Gujarati people that I have ever seen. After coming to power Modi has done nothing about the economy because he can't do anything. Running the economy is not a one man's job.

And finally, in this euphoric time, we all must remember, that AAP and Kejriwal are also not true alternatives. In few years time he will also get exposed because he won't be able to deliver on his election promises of giving freebies to everyone. Development and growth is only possible when people have Freedom; when there is a Free market capitalist system. Socialism, whether practiced by Narendra Modi, Rahul Gandhi or Arvind Kejriwal, will never work. In the end people will have to realize that all these political parties are no real alternatives because they are all one and the same thing i.e., part of the criminal gang. The only True alternative is Liberty and its Free market capitalist system.

In the end I am happy to see the Modi cult exposed. I am happy that, in the present situation, there is at least some strong opposition rising against Modi's fanatic Hindu nationalists. Modi and his fascist forces must be stopped in their tracks when they are raising their heads, and rise of AAP is kind of a sign of that stopping break.