RE: a note on form; was: Suhrid Ganguly

[Charudatt <charu@iced.com>]

Sanjeev wrote:
		Charu's view:
		============
		> There is a thread running through a number of posts
here that assumes or
		> seeks to justify the premise "All of India's ills are
caused by
		> socialism and the only solution is capitalism, the US
system is ideal".

		II think my arguments need to be re-defined. Let me
summarize. I am sure
		that summarizing these points will help me, at least: 

		a) I do not claim anywhere that free markets (alias
capitalism) are
		perfect since the fundamental conditions operating in
the world are
		imperfect. Therefore we need always to check the
operation of these
		markets. Would you agree to that?

Agreed. My point is that in pure capitalism, power is proportional to
wealth. This can never be the basis of a just society.

		b) I find it very important to highlight that the
behavior of individuals
		in government is NOT charitable, or designed to promote
the welfare of the
		society. Both from my practical experience (as I am
sure, that of others) 
		and theory, it is clear that these individuals are also
maximizing their
		own welfare first. Do you agree with this?

No. Not designed to be charitable but the behavior IS designed to
promote the welfare of society. The design may be bad and not work. I
would propose that in a fair and representative government promoting
individual welfare and the welfare of society are largely parallel. I do
see this as true in small town governments in this country. The key is
that local elected officials have the power to make changes that
directly affect them and their neighbors.

		c) The question then boils down to this: Who is a better
judge of taking
		the following decision for the production of a commodity
Q (could be a
		telephone, a sugar mill or any other productively useful
asset):

			What is the socially optimum quantity of
commodity Q to be
			produced and at what price should it sell?

This is an oversimplification. Would you advocate slavery based on
market viability? In pre-1850 southern US states the market found it to
be socially optimal for majority white land owners. The agricultural
economies of those states could not have existed without it. 

		Should a bunch of private individuals (you and I: i.e.,
markets) decide
		upon this through their buying and selling decisions, or
should I (assume
		that I am the government) decide unilaterally in
whatever manner I know
		best (e.g., I could be benevolent, I could be taking
decisions on the
		basis of rent-seeking)?

You and I don't decide anything if we don't have the purchasing power to
make it count. I'd also point out that during WW2, the US was precisely
the latter option you describe- all prices and supplies were regulated
by the government in a pure command economy. It was this and massive
government debt and Keynesian pump priming that is credited with ending
a 15 year depression.

		Let the private sector "do" and let the government
"moderate"
		and "supervise." So we agree here, so far?
Yes.
		d) What is the name of the economic system in which
markets do the bulk of
		the decision making process? Socialism or Capitalism?
Obviously,
		capitalism. Do we agree on this definition of the word,
socialism?

You're only saying what socialism is not. This does not constitute a
definition. I will repeat that I prefer these terms be dropped entirely
as they are meaningless and are used to justify any kind of excess in
their name or as a bogey-man to blame- and this works both ways

		But do we want commanding heights by people who are not
controlled by
		forces of competition and supply and demand? Obvioulsly
no.
I disagree. Supply and demand is only one motivator. The forces of
control must also strive to be just. 

		f) When I say that socialism must go, I mean that 

			a) we must include in the Manifesto that the
"word" must go
			   from our Constitution
I am in violent agreement ;-).

			b) we must ensure that government contracts into
its own shell,
			   of running defence, foreign affairs,
infrastructure,
			   such other things, including control and
checks on business.

I disagree. My view is that the government in India is largely a force
that is non-representative and a law unto itself representing the
interest of only those who are privileged to be a part of it. If it were
representative of the interests of everyone through local councils,
accountability to constituents, and free availability of information I
would view this as positive. I don't subscribe to the view that the
state should wither away- but that everyone becomes part of the state
(as in democracy?).

		On the economic front, the key culprit is of course
socialism.

And I still don't know what the term means. Is the US a much more
socialist country because of state sponsored unemployment insurance,
welfare, and aid to families with dependent children (food stamps)? We
don't have any of these programs in India.

		A large, actually, a very large part of our economic
ills, including much
		(not all) of the causes of corruption, will simply
disappear as markets
		are allowed to operate more freely and the government
starts minding its
		business, of supervising the building of cities, roads
and ports, and
		other non-economic things that are its primary business,
such as national
		reconciliation and law and order. 
This statement, to me, appears to me, to be offered without any
supporting evidence. The argument that the US has free markets and is
rich therefore that's all we need is akin to arguing that all we need is
a feudal plutocracy like Saudi Arabia and we'll be as rich as them. I
maintain that the cause of corruption is unchecked power. This is
orthogonal to the prevalent economic model. Indonesia or Mexico are
examples of high corruption in market economies just as India is an
example in a state controlled economy.
		<stuff deleted>

		I am not an ideologue. I am not
		branding anyone as anything (MacCarthyism is not quite
an appropriate
		similie for the process of open debate that we are
having here). 

I did not mean to say that you were McCarthyist. I meant that the
arguments sounded oversimplified: "there is good /capitalism/markets/US
on one side and evil/socialism/state-control on the other". This kind of
argument is not particularly convincing to me.

		I am
		proposing for the Manifesto that we are hoping to write,
that we get rid
		of the word Socialistic from our Constitution. Even
Nehru did not put in
		that word. It required his completely misguided daughter
to do that. 

I agree entirely. In case you haven't noticed, I detest empty labels
;-D. Did you know that in the past 100 years at least 20 times,
amendments to the US constitution have been proposed that proclaim that
the country is based on the Bible or holds god as the source of guidance
and some such? Fortunately there has been enough of a check on
legislative power to prevent any of those bills from passing. Mrs. G.
probably had very little respect for our constitution to so lightly use
it as a pawn to get military support from the then USSR in response to
Kissingers games with Pakistan and China.

		Today, there are 5,000 private banks in the USA, with a
few of them
		approaching $1 trillion in assets. That is still not
scaring the US
		government to nationalize the banks recklessly as Indira
had done in 1969
		and 1981 (?). 
These are broad brush arguments and not that simple but here are a few
starting points. 
Banks are regulated. The S&L scandal of the 80's showed the need for
that. Though the nationalization of banks in India was a rather
transparent power grab, the (cynically) stated goal was worthy and
should be on the agenda of any government i.e. access to credit to all
people- not just people who already have huge assets. I know that there
were huge abuses  and many loans were outright theft but that IMO is
corruption built into the system. The same kind of theft on a much
larger scale characterized the US S&L scandal. Banks in the US are also
checked by the federal reserve and treasury bonds. I would also suggest
that banks probably pay lots of money to legislators on the form of
political contribution. I call this bribery Sanjeev prefers the more
genteel term "lobbying". I might add, that until less than 5 years ago,
interstate banking operations were prohibited, the reasoning being that
the bank should offer credit to the same community they took deposits
from. A recent development is that the mega-merged banks are lobbying to
shut down credit unions since they operate on lower margins and
represent some check to huge banks doing as they please in terms of what
they charge consumers. I will watch this experiment closely.

		So what "private power" of corporations are we afraid
of?
		Why do we create these myths when no private person -
not even the
		Chairman of Compaq or Intel, sleeps in peace, secure in
the fate of
	tomorrow?
I could cite lots of examples. How about the cable companies? No I
thought of a simpler example. Have you ever bought a music CD? You pay
anything from $12 to $20. A cassette costs $5-$8. Well it turns out the
production cost to press a CD is about 50 cents. I know this on account
of a local rock band I'm associated with that recently released a CD.
The question is why does a CD with the same IP (intellectual property)
content cost so much more than a cassette? The material cost of a
cassette must be about the same or more than a CD. The explanation I
come up with is collusion. Music sales are controlled by a handful of
corporations and they can charge anything they please unless someone
with comparable or greater power steps in representing the consumer.
This way the corporations get more powerful (and corrupt, and arrogant)
while keeping you and me in our places.

That's an innocuous example are there corporations I'm afraid of? Well
how about credit reporting agencies? They are a law unto themselves.
They are largely un-regulated and a stupid mistake by some data entry
clerk on minimum wage can ruin your chances of ever getting a loan or
credit card or an apartment rental lease. There is a strong case for
stringent regulation by a body that represents my interests.

Intel and Microsoft are near monopolies. I'm sure their corporate
officers sleep very well, despite Andy Grove's dictum "Only the paranoid
survive".

		I do not consider the US to be prefect. In fact, it
gained a lot from the
		influence of Mahatma Gandhi and became much the better
for it. I am saying
		that we have to define and discover our own capitalism
(i.e.,
		non-socialism, if you like). But let us take the worst
possible scenario.
		We try hard and can only duplicate another USA in India.
We fail to create
		our own, even better capitalism or whatever. So what?

I think we would have a better chance of success deciding what we want
that is achievable rather than pursuing the goal "duplicate the USA". I
think such a goal is vague and ill considered.

		Even if India became only another USA, I would be much
happier than I am
		today. I don't know if I speak for others on this. But I
do know I speak
		for you, Charu, since you have chosen to park yourself
here for many years
		now, and you have voted with your "feet" as they say, in
favor of an
		economic system that is not called socialistic by any
standard. I am sure
		that I could attract you back to India if I said that
you could get
		uninterrupted power, clean roads, water, and air;
continuous gas in your
		kitchen, telephones for which you don't have to wait for
years, nor pay
		bribes to get repaired, and even the internet. If I
could promise you
		freedom and funds as a researcher, you would be in the
seventh heaven.
		Even half of these things would attract most of us back
home. What to talk
		of becoming another "full-fledged USA"! "Half-fledged"
will do!

		Let us achieve the worst case scenario, first, then. Let
us make India
		into another USA. Do we agree on this, at least? 

No. There are valuable lessons and specific models to be duplicated.
There is a lot that I would reject. The individual goals you state are
desirable. There has to be a better way to get them than to murder and
enslave local populations, go to war with other countries installing
puppet governments to control their resources. Maintain a huge military
budget for the purpose of state economic pump priming. Forcing countries
to sell cheap (currency devaluation) so that domestically based
trans-nationals can loot their economies.

Let's figure out what we want, then we can figure out how to do it. The
goal "Duplicate USA" is IMO a waste of time.

		We will and can, of course, do better. But why do we
need to argue further
		about this "worst case"  scenario? (of course, we must
continue to debate,
		till we are very clear where we want to go, first ...)

I disagree with the characterization "worst case". This case is
improbable and to me not an option. Yes let's be clear where we want to
go.

-Charu