Re: US and its government.

["BDP India" <bdp.india@mailexcite.com>]

Hi,

I would like us to go more in details of how do we want the government to bring changes
we propose. I think more than 100 million people in India will agree that open market
economy is better than a closed one. I am also sure that most politicians and policy
makers are also aware that competition is better than government running every segment
of the industry. But we all know that degregulation does not come cheap. And the
government has to be the leading partner to bring about such change. For example,
deregulation of Airlines industry in the US in the 80s were initiated by the US congress.
Discussions and arguments by the industry leaders, airline employees, unions and
customer groups were presented to the congress for them to enacted laws to bring
deregulation in the airline industry. For the first ten years Airline industry went
through layoffs and failures. Pan Am, Eastern and People Express were few of the
casualities. This is what Indian politicians  are scared to get into. Another point
to mention that even if government wants to get out of a industry, it has to be heavily
involved as a refree in the initial phases of deregulation. That is what people will
ask when we will say deregulation and getting the governement out of various industries.
Another example,  Telecom industry went thru massive troubles when the private monopoly
AT & T was broken in 1984. Before the telecom act came in light in 1996, congress
worked over three years to figure out details of the act. Guess what in the first
phase of the implementation, it did not work. Congress has been working over 3 years
to deregulate the Utility industry, and had ordered to deregulate last year. But
with arguments from various groups, they have backed out from deregulating it indefinately
at this point. 

Here I am trying to bring up two points. First even though government has to get
out, government has a very important and involving role in maintaining free markets.
I think details of how do we propose government involvement in such free markets
in India  
has to be part of our manifesto.

Secondly, we need to have a plan. I think I have mentioned it before. Once you get
government out of any industry, it brings layoffs. If the effect spills over from
one industry to another, recession, inflation and unemployment do follow. And if
a government does not have a plan, all the talk of deregulation is not very attractive.
We know as what Russia has gone through. One could say that because India has some
private enterprise, effects will not be that harsh. But as a thinking voter I would
not count on it till the "ideal" political party can tell me details of their plan.


Having said that, I would like to discuss as what steps will a government take in
India to privatise banking. Going forward I would like to bring up issues which matter
to average middle class citizens of India. I think average citizens goes through
hell even to get their own money out and deposit in a bank. Any takers.
IF we all agree that banking industry is fine in India the way it is today, then
we can move on.

Thanks,

Utkarsh

>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
>
>



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