US and its government.

[Sanjeev Sabhlok <sabhlok@almaak.usc.edu>]

On Wed, 22 Apr 1998, Kush Khatri wrote:

> average people
> come to united states not necessarily because they will become
> super-rich, but because as long as they have a job--any job--they can
> expect a reasonably good quality of life. To me it was a surprise that
> there was an uninterrupted power supply, continuous clean water
> connection, a sewage system that worked and surprise of all surprises
> people had continuous cooking gas in their homes!  

These facilities are not that difficult to set up and maintain. If we can
set up and maintain nuclear plants, then this is peanuts for our
engineers. But here is where economics comes in. Even engineers cannot
overrule the laws of supply and demand, as well as the irrationalities of
intervention into prices by non-market forces (e.g., big officials, etc.).

Economics says that if there is a demand the supply will follow. Unless,
of course, you strangle supply, and distort prices, as we did in India all
along. For example, can you believe that things like waiting lists could
exist in the West in any nation? Of course not! The moment there is a
waiting list (i.e., demand for a particular product), the competing
companies will jump into the market with great force and increase the
supply to meet the demand. 

But we have had the privilege of having huge waiting lists for phones when
we were serving a most microscopic fraction of our population. We don't
need Communications ministers to solve our problem. We need to let
businessmen - Indians and others (whoever supplies at lowest cost) - solve
the problem of shortages by use of markets. That means of course, that our
government will have to completely (and I really mean that) get out of
things like control of prices. 

Just as there is no method known to any man (including rocket scientists),
to constrain a wage upward (minimum wage), there is no method known to
anyone in the world to constrain prices downward (administered prices). 
There are only arbitrary and purely political reasons for such
intervention. We want to get rid of anyone's discretion in the system. I
am perhaps one of the "humbler" government functionaries who can readily
admit that I am completely incompetent in performing these functions of
fixation of prices and wages, etc. 

In fact, I am quite convinced that government should not spend time and
energy in these wasteful and harmful activities. Let the govt. focus on
defence, external affairs, infrastructure, national reconciliation, etc.,
and leave the day to day running of the economy to business.

  Compare this to the middle east and other countries
> where a foreigner always remains an expatriate, is never treated as
> equal and granting of citizenship is more of an exception.
> It is this what attracts people to this country and not necessarily
> the business opportunities that exists here.

You mean that people come here because of the ease of getting citizenship?
If such ease were to exist in North Korea, would you go there? The US is
first and foremost a land of economic opportunity. Other things like
"fair immigration laws" are only secondary.

> Just one last point.  It is true that utilites here are privately
> operated.  But once again credit is due to the citizens and local
> governments(Public Utilities Commissions and Boards) and excellent
> record keeping and audit systems.  Utility companies are well
> regulated, but not controlled by government(local and state
> governments)  Once again private utilites, in my view, are a tribute
> to good government as much as they are to business enterprise.  It
> strenghens the earlier discussion we had that without good government
> businesses cannot function optimally.

Good government means getting out of business and promoting competition.

Even monopoly by a private sector is often better than a monopoly by
government since the government can check the private monopoly while the
private citizen cannot check government monopoly (we need checks and
balances, remember? Even government needs to be checked, all the time).

Thanks, Kush, for a very interesting discussion. 

Sanjeev