Re: free-markets in the time of anthrax

["venugopal" <gvvs@nird.ap.nic.in>]

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1. No, I have not said that government intervention is needed in all
walks
of life. There are definitely many grounds for asking for improvement in

government's performance, change delivery mechanisms, improve
transparency
and accountability, improve citizen's participation.
What I do hold is that just because somebody shouts in favour of free
market
and says
certain things are being done in support of free market, one should not
get
fooled and one should rather examine the facts coolly and analyse. I am
advocating basically a case-by-case approach. While there are definitely

clear grounds for reducing role of government on many non-essential
things
like hotels, I advocate greater and more effective role for government
in
basic core issues like reducing poverty, improving basic education,
providing better public health facilities, ensuring clean drinking
water,
safeguarding environment not for its own sake but for the sake of crores
of
people dependent on the forests and on such matters.
2. Nobody has any dispute that rights have to be ensured. The question
is
"whose rights?" Similarly, if you really think of it, there is honestly
no
control of government on 'cradle to grave'. You may think you are
completely
straddled by government controls even now. But, a tribal woman in
Kashipur
in Orissa perhaps does not find government omni-present at all.
Similarly,
it is a myth to think that we had 40 years of Indian socialism. Just
because
you inserted some word in Preamble of your constitution, it does not
mean
you have it on ground. Just because Banks were nationalized, it didn't
mean
that they gave loans professionally to really good and economically
viable
enterpreneurial projects taken up by the poor. Just because you built a
school and posted a teacher, it didn't mean that the teacher knew how to

teach or that he or she attended the village school  to really teach. If
we
go by the laws of the land as they exist today, there are many
legislations
which are crying to be implemented and they are not being implemented
due to
a variety of reasons. Land Reforms, Bonded Labour Abolition Act,
Inter-State
Migrant Workmen's Act, Prevention of Atrocities on SCs and STs Act, Acts
to
prevent tribal land alienation and so on. If one asks for implementation
of
these laws, which are on the statute book meant to be implemented with
sincerity, one does not become 'anti-growth'.
3. I think 'dignity of the individual' is very important and the present

model of 'free market' that is being advocated does not take this
concept
into account. A good society is one where not only you have economic
goods
and services being exchanged but where people see that their dignity is
recognised. Everybody wants to be treated with courtesy as an
individual.
Self-respect of the poor is diluted in a number of ways in our present
model
of development. If an individual has no choice but to go for that
activity
which is determined by the vagaries of global market, I would not call
that
scenario to be empowering the individual.
4. There is also a common misconception that the free market offers
greater
choices. I would n't say that one has more choices if for example, one
is
told he can have ten different types of Pizzas when one has no money.
Let it
be clear that western society per se does not give greater choices in
the
market in any inherent sense. It is basically relative prosperity, which
is
a function of historical inequalities and the fact of colonial rule,
which
is giving an impression of greater choices in western societies.
5. There is also the concept of 'social cost' which gets generally
ignored.
In the example of a worker being sacked, Mr Ashish, if that worker were
yourself, would you still have said that sacking you would amount to
saving
the society from paying unnecessary price in the long term?
I am sure you would say, 'ok, sacking is not a serious problem as long
as I
can refine my skills, reorient myself and go for a new job'. But suppose

opportunities for such reorientation are not available, then how would
you
look at sacking? I am not saying that that inefficient people should be
tolerated for life long. I am saying that one shoud be conscious of
these
issues and not blindly say that sacking is good in the long run,
thinking
that  it doesn't happen to oneself. I am all for use of science and
technology. But, suppose a particular technological modernization
initiative
in a small place renders 10 workers jobless. I would of course weigh the

benefits in terms of more turnover, more profit, cleaner environment etc

against the  cost of doing it. My only difference with the
free-market-enthusiasts is that I would weigh not only the cost of the
particular machinery but also the social cost of having ten people
roaming
around without work into my cost-benefit analysis while judging whether
that
particular machinery is socially desireable. If it is possible for the
surplus people to find useful employment, the social cost of
displacement
becomes less. If there are no avenues for their employment other than
becoming rikshaw pullers in nearby town or even thieves or prostitutes,
I
would put the social cost in that particular case to be high. Similarly
I
would put the cost of environmental damage in such category. I wouldn't
ignore social cost because social tensions do have an economic impact on
the
resources, as social tensions are the root cause of various shades of
terrorism, you need more police, more restrictions on individual rights,

more brutalities and consequently more violence in the society. In the
example you offered, Mr Ashish of  a widow with two children, I would
hope
that basic livelihood and shelter problems should be addressed by a
variety
of measures including government intervention. If they are not
addressed,
the long term  consequence will not be what you thought as landlords
ganging
up and refusing to let their premises to poor widows. I would urge you
to
note that the two kids will more likely turn into terrorists, if the
judge
gives no order in their favour, if the landlords gang up and if the
society
just does not bother to take care. If no viable alternative is left in
the
system, it follows that people will search their own alternatives
outside
the system. My only limited point is that when that happens, we should
not
blame 'a handful of trouble-makers with outdated philosophies' but
realise
the roots of the problems by recognising people's right to basic human
dignity.
 ----- Original Message -----
From: <ashish_hanwadikar@yahoo.com>
To: <debate@indiapolicy.org>
Sent: Wednesday, October 31, 2001 3:29 PM
Subject: Re: free-markets in the time of anthrax


> > Hi,
>     Why is it "Free-Market" advocates have to prove that "Free-Market"

> system works in practice? People think that is just an Utopia which
will
>
> never be achieved in practise. Plain rubbish! Why can't those who =
> advocate
> Govt. intervention in all walks of our life give a proof that Govt.
> intervention has indeed provided additional benefits to a society as a

> whole! I think freedom is a natural state. If somebody suggests =
> individual
> freedom is to be taken away (like restricting imports, taxing people =

> etc.)
> he has to  really make a case for Govt. intervention. Do our Member of

> Parliament and Govt. official explain you how Nationalizing Banking,
> Insurance, Shipping, Airlines, Water Supply, Electricity, Surface =
> Transport,
> Communications and Broadcasting, Education, Health and Medicine,
Sports,
>
> Culture etc. have indeed benefitted the Country? In the last 40 years
of
>
> Indian Socialism has anybody offered a single explaination of Govt. =
> control
> of our lives from Craddle-to-the-Grave? For that matter has any
country
> =
> in
> Europe or any Govt. in US has offered any explaination for more Govt.
=
> role
> in the society?
>     Politician love Govt. intervention because they love the =
> discretionary
> powers that come with it. By focussing us on the short term benefits =

> they
> take an increasing control of our everyday life. No wonder Keneysian
> policies are favored by Politicians and those with vested interests.
If
> =
> some
> worker's job is going to get saved by use of Keneysian principles, he
=
> will
> love that. What he doesn't understand is that he and others are going
to
> =
> pay
> a heavy price in the long run because of this stupidity! Ask a poor =
> widow
> with two kids who have been just thrown out of her apartment by her =
> landlord
> for non-payment of rent whether she believes in Property Rights and
she
> =
> will
> ofcourse say no! She loves it when judge orders the landlord to let
her
> =
> keep
> the apartment till she finds another one or till she finds a job. But
=
> people
> don't realize the fate that is going to fall on other widows in the =
> similar
> situation. Landlords after this will be very wary of giving apartments
=
>
> on
> rent to widows eventhough they are willing to pay the rent. Judge
might
> =
> get
> re-elected, the widow might get a temporary shelter but everybody else
=
>
> is
> screwed forever! Nobody asks the judge or politician to explain why =
> ignoring
> Property Rights in the widow's case is beneficial for the society!
> Regards,
> Ashish





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