[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
Response to Sauvik
---------------------------------------------------------------------
Please help make the Manifesto better, or accept it, and propagate it!
---------------------------------------------------------------------
[Before I continue, I would like to thank Vamsi very much for volunteering
to extend the life of IPI by renewing its domain once it expires next month.]
On the 15th July seminar by Liberty Institute (Barun's) in Delhi in which
Sauvik and I (among others) spoke, Sauvik said he disagreed with me on NIT
and promised to respond tangentially on the 18th in his weekly Antidote
(Economic Times).
Sauvik, I remembered this just now (21st) and pulled out ET of the 18th. I
believe you are only partially right when you say that welfare cheques (at
the pitiable level I am talking of?) reduce the incentives to depend on
family and friends - these things more complex than that. This point has
been covered somewhat in my paper though and I won't repeat the arguments
(this was Aiyar's point too). My request therefore: do read my paper in
full, including footnotes. Read also my response to the PMO expert (sent a
few days ago on IPI), and response to Ashok V. Desai. And then read the
mail I sent out earlier to IPI (copy below). I am talking of measely
amounts for the truly poor. I am talking of spending 1/6th of what we spend
today and using the rest for public goods like roads and ports.
As you are aware, liberals generally **do** believe in equality of
opportunity (unless you are a committed follower of Nozik). There is a
ground between extreme libertarianism (Nozikian) and Keynesian
(interfering) capitalism which is acceptable theoretically and can also be
implemented. You call for a new political movement in India, but extreme
liberatarianism is not likely to succeed in attracting any followers. You
say love is curbed by socialism. I agree, but I think it is curbed EVEN
more by urbanization. Private charity cannot resolve both large, and
remote, problems of poverty as in India. Read Ch. 12 of Friedman which I
circulated on IPI earlier (Prof. S.Roy has not obtained permission yet to
publish it!)
Your view on almost everything else is classical liberal; I value your
forthright views and your work in propagating these ideas. On the poor,
however, you have to come out clearly where you stand. Liberalism has to
allow - in its theory - for societal care of those those who are NOT
responsible for their poverty. Like most of India's poor today. Market
economies can never eliminate poverty by definition. They have to make a
conscious effort to deal with this issue.
So: do rethink; get into details; and put up your response here on IPI, not
tangentially in E.T.
THIS is where we DEBATE. Antidote is not a debating zone. At best, I can
write a piece for ET which will summarize the NIT concept; but it will fail
to do justice to the complexity of issues raised in these debates.
SS
(copy of my earlier mail - below)
NIT (Friedman's) requires that "[a]n extra dollar earned always means more
money available for expenditure". I tried to dovetail this theory with the
Indian tax rates schedule. I find that NIT will essentially boil down to a
supplemental system in India due to the vast gap in income between the
poverty line (for two in urban areas of Rs. 12,000 appx., today) and the
taxable levels which are above Rs.70,000. For those whose income falls in
the range [12000,70000], an "extra [rupee] earned always means more money
available for expenditure [to the extent of the full rupee]."
However, persons in the range [12000,70000] will clearly have the incentive
to show their income lower than Rs.12,000, similar to the incentive of
those above Rs.70,000 to show lower incomes [the tax evasion problem]. The
programme will in essence boil down to the proper identification of the
poor, and will not quite rise above the suppplemental system in India for
quite some time to come. Despite these conclusions, it is well worth
implementing, since it will give the poor of India some respite and
breathing space after many decades of independence, provided all other
subsidies are eliminated.
Kindly check out these estimates/ conclusions. SS
Year Rural Urban
Poverty line (Rs.) 1993-94 2470.08 3376.20
Poverty line (Rs.) approximate 1999-2000 4446.14 6077.16
Assume 1 parent supports 1 child; so multiply p.cap.income by two [these
are liberal estimates]
Poverty line for 2 persons 1999-2000 8892.29 12154.32
Calculations for urban areas:
Gross Income Taxable Tax payable
120000 100000 9900
100000 80000 5500
80000 60000 1000
70000 50000 0
50000 30000 0
20000 0 0
12154 0 0
10000 0 -2154
8000 0 -4154
6077 0 -6077
--------------------------------------------------------------------------
This is the National Debate on System Reform. debate@indiapolicy.org
Rules, Procedures, Archives: ../debate/
-------------------------------------------------------------------------