Re: Reputation as a major check on malpractices

[Kush Khatri <free_voice@yahoo.com>]

Sanjeev: that was excellent.  I fully agree that sometimes I fail to
crystallize my thoughts.  That is why I can depend on you, Charu and
Prem Rallabandi (just to mention a few).  I fully endorse and second
what you have written on the future Indian Reserve Bank's role and
mission.

By the way, the Federal government does not incorporate businesses in
the US.  Only the state governments do that and have the authority to
do so.  The States have full authority over banking activities.  Banks
have to individually "enroll" in each state to do business.  That is
why in the US we do not have "National" banks. There are historic
reasons for that.  What Banks usually do is that they incorporate a
"holding" company and then that company goes into various states and
opens offices.

I got cut off in my last e-mail.  The federal government comes into
picture anytime there is interstate trade.   Regarding food
establishments, for example, the federal government does not have
direct authority (as you rightly pointed out)to shut down places. 
However, USDA (US department of Agriculture) "approval" has become a
good marketing technique for companies, doing interstate business. 
Federal government therefore exercises indirect "authority" by
threatening to withdraw this approval.  The federal government can
also come in indirectly through "safety" considertation-- both workers
safety and fear of contamination.  It is illegal, for example, to
knowingly "export" contaminated food from one's state. The point is
that historically the States in United States are entities in their
own right and have full judicial, commercial and administrative powers.

Central and state relations are very important with regards to a
diverse country such as India.  I think this is one area which cannot
be overlooked.  If there is some consensus on this highly important
issue(should states have judicial, administrative and economic
freedom?) then this time I can try to write something up as a
preliminary draft for the ideal manifesto.    Thanks for your patience.

Kush Khatri



Sanjeev Sabhlok <sabhlok@almaak.usc.edu> wrote:
>
> On Wed, 3 Jun 1998, Kush Khatri wrote:
> 
> > Thanks Sanjeev for your answers.  I wish I was in Hawaii!   
> 
> Hey! We can make a thousand Hawaii's in India! How about that!
> 
> Well, on the other point of yours, which was a strong attack on Alan
> Greenspan. Actually you had a point there which you did not articulate
> properly and hence lost that great opportunity to beat me in debate
(!).
> 
> Your point was about institutions. Well, the Fed is a great
institution,
> and is becoming even better each year with the tremendous amount of
> professional research going into this sector of monetary economics.
Thekey point you want to add (and I speak on your behalf now), is the
> following para in the Manifesto:
> 
> Independence of the Central Bank:
> 
> The Reserve Bank of India should be made completely independent of
control
> by the executive. The bank should be completely free to research and
> implement the best possible monetary policy for India based on the
current
> situation. The only focus of the Bank should be one: to keep
inflation in
> complete check. That is because inflation is the surest way to hurt
the
> lowest earning members of a society. Other economic goals, such as
> employment and growth, should be purely under the jurisdiction of the
> executive. 
> 
> How about that? Do you see my point about crystallizing your
thought? It
> is crucial that we do that, else, even when we see eye to eye, it
might
> appear to each other that we are in complete opposition!
> 
> Please also do not forget to take up the responsibility of creating
a 1000
> Hawaiis in India... [I remember your distaste for Tourism, but that
can be
> a great forex earner plus a great way to attract foreign investment
...]
> 
> Thanks,
> 
> Sanjeev
> 
> 
> 

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