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India! I dare you to be rich

Further perspectives on Arvind Kejriwal, and request for more info.

A couple of weeks ago, there was an inconclusive discussion on FB. A commentator wrote:

AB i will continue to work in AAP coz i genuinely like the concept of swaraj and Janlokpal.. I myself am a believer in participatory democracy. Let people decide what they want…

providing an alternative to Modi is not the solution. But creating systems so that whoever comes to power is accountable to the people in whatever he does is the solution. Since no one is prepared to do it, AAP will do it.

Unnecessary laws and restrictions in form of 'licenses' and 'permissions' should be in the dustbin, where they belong. Swaraj will empower the people to remove whatever laws they feel are unnecessary. it will empower the people to use the budget for their viillage/ town as the please.. I dont want some self proclaimed 'expert' from the planning commission to dictate his terms to every citizen.

My response: I agree on most things you are saying. However, in a party system, it is Arvind's ideas that rule the roost. He is a blood red socialist, and won't allow your dream of "Unnecessary laws and restrictions in form of 'licenses' and 'permissions' should be in the dustbin, where they belong". That's my dream, not Arvind's. Arvind wants to tie up the country in 100s of more licenses, permissions, price controls and everything else. I have written EXTENSIVELY re: the abolition of Planning Commission, in BFN and on my blog. Where has AK ever said such a thing?

AB Hmm.. Yes he hasnt spoken about getting rid of the planning commission in those specific words.. but he has spoken a hundreds of times about concentration of power in hands of the few, the lack of accountability among those few, and the need to increase public participation in the functioning of the executive. This essentially what 'Swaraj' is all about. The people living in a locality should have the say in the money that is going to be spent for that locality. The finance ministry should not tell them how and where to spend the money.

There are too many things wrong with our country. I believe in the concepts of Swaraj and Lokpal entirely. for the rest, i am sure he doesnt have an opinion either.. his is very passionate about political decentralization. So that people will decide what laws they need and what they dont.. This is surely not Socialism, is it?

As far as "Arvind wants to tie up the country in 100s of more licenses, permissions, price controls and everything else." i dont think that is true.. The people will decide if they want such laws.. and no one would want the license raj to continue.

ANd on the issue of price controls he has said only this ' If the people living in parliament can fix prices, then the people should have a say in it and not the elected representatives only.' On the issue of electricity he said "We will put forth all pricing models and mechanisms, it will spark off a debate and at the end the people will choose the model they feel suits them the best'. If 550 people have the right to decide on the prices, then they shouldnt.. and the people should..

In the last few days i have had two debates regarding governance and economic policies.. the links of the two debates are below. [Sanjeev: I've gone through these; link not provided here] I would be very happy if u go through those and comment on my understanding of the situation.. BFN helped me a lot in forming those opinions.

My response I'm now very confused about what Arvind wants. Why, if this guy is not socialist, does he take crores of rupees from hardcore communist, Bhushan? Why does he studiously avoid meeting me/ debating with me. I find it really implausible that Arvind, who has called himself a leftist publicly, has suddenly started talking about releasing control over the economy. 

Continuing the discussion

OK, time for me to close this discussion. I'm going to be hasty, hence not concise. I hope AB will bear with me.

I note that AB has read BFN but missed a key point (which has perhaps been more clearly discussed in DOF – but unfortunately that book remains a patchy draft). The point he has missed is illustrated below (taken from draft DOF) [click for larger image]

Note the key difference between the socialist and liberal: the former gives primacy to the society, the other to the individual. That is the first and most significant difference. The rest is merely detail.

I accept "participatory democracy" as a mechanism to get us an accountable government, but I don't see it as an end in itself.

I can't therefore agree with AB's comment :I myself am a believer in participatory democracy. Let people decide what they want…"

No! People cannot be allowed to decide "what they want". Thus, for instance, majorities cannot be allowed to trample on minorities. All social decisions must be tightly constrained through constitutional methods to prevent misuse of power.

Democracy is NOT an ideal. Liberty is. Democracy merely empowers the society to replace its governments. It serves almost no other functional purpose in life. Therefore, constitutional restrictions on government, and rule of law, are the key, not democracy.

If we agree that democracy CANNOT impose unnecessary restrictions on our liberty, then "unnecessary restrictions" in India could not have arisen in the first place. Indeed, had the original (Ambedkar) Constitution not been DESTROYED by Nehru and his godchildren, the Indian government could not possibly have imposed the hundreds of unnecessary restrictions it did (and does). All these restrictions were collectivist enterprises, through a socialist constitution.

Now that our original constitution has been destroyed entirely, it would be entirely improper to blindly "empower" people. Whatever empowerment has to be done must be done under strict constitutional constraints.

There are, for instance, no automatic rights in the liberal states "empower the people to use the budget for their viillage/ town as the please.."

In this particular case I assume you are referring to funds collected within the village. If villagers are receiving funds from outside (e.g. city dwellers) then wherefrom do they get a natural right to use these funds as they please? But, of course, all funds should be accountable. The state government must be accountable for state level funds, and so on. What we need is good governance systems.

AB's question "So that people will decide what laws they need and what they dont.. This is surely not Socialism, is it?"

Yes and no. If people don't impinge on others' liberties, then they SHOULD surely get the laws they "want". But what if they want to create a big government which steals property, taxes heavily, and stops enterprise? Would they still be entitled to these laws? No. Then they would be supporting socialism. So the question is misplaced. In some cases this leads to socialism, in others not.

The mere fact of Swaraj doesn't tell us whether it is socialist/ liberal. The PURPOSE of swaraj is the key. If it merely represents unchecked "participatory democracy" then it is socialist. If, like what I advocate, it represents well-organised professional and accountable local government, then it is not socialist. My guess is that Arvind uses the subsidiarity principle (Swaraj) as a socialist concept. I use it as a classical liberal concept. These are poles apart.

PRICES

"we will put forth all pricing models and mechanisms, it will spark off a debate and at the end the people will choose the model they feel suits them the best'. If 550 people have the right to decide on the prices, then they shouldnt.. and the people should.."

Well, I hope AB will appreciate why this statement is PURELY socialist. A price is an exchange value voluntarily determined by buyers and sellers. These, being free citizens, should be free to decide themselves. There is no role for the government. ONLY a socialist government interferes in prices. Why should 550 MPs have a "right" to determine prices? Our MPs are our SERVANTS. Why should our servants determine prices in the marketplace? Let only citizens determine prices.

Arvind's desire to determine prices, and his refusal to question the "right" of MPs (our servants) to set prices, reflects a socialist mindset. Arvind should be challenging the socialist Constitution of India, the socialist mindest of MPs who want to determine prices. Instead, he wants more direct democracy in such cases.

UTOPIAN DIRECT DEMOCRACY

Swaraj as conceptualised by Arvind is super-utopian. There is no way that people can "decide" prices directly. The only democratic way is the market, but Arvind is clearly not referring to that.

TENTATIVE CONCLUSION

AB has understood many market ideas very well – and indeed clearly understands them FAR better than Arvind. However, even AB needs to distinguish between democracy as a mechanism to remove tyrants (classical liberal), and democracy as an end in itself (socialist).

I am still not clear that Arvind is a classical liberal. I'd like to invite AB to provide me with details about AK's statements that prove he respects the INDIVIDUAL and allows people to buy, sell, produce and otherwise manage their own affairs without unnecessary imposition by government.

If I find strong evidence of such a position, I'll go out of the way to support AK. But I need strong evidence. Till then, all I have are previous statements of AK and Yogendra Yadav/ Bhushans; and all these statements are deep red socialist.

AB, over to you.


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Sanjeev Sabhlok

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7 thoughts on “Further perspectives on Arvind Kejriwal, and request for more info.
  1. Sameer

    There was a lovely comment by a friend on one of my facebook posts. I’m quoting him…

    “Democracy is the theory. Liberty is the practice.”

    I added to this…

    “Unfortunately, people almost always see it the other way round. Hence we end up with a right to vote being peddled as a duty and individual rights are diluted beyond recognition.”

     
  2. Ayush Das

    Sir, I do not think Arvind is a socialist.

    He does not want to set price controls for everything. From what I understand – its the opposite.

    Govt has fixed prices for sugarcane farmers – so price of sugar does not increase/decrease abruptly and increase burden on common man. Farmers are not allowed to export when the rates are good, but receive no help from govt when rates are low or while they suffer losses. Is this fair?

    In fact, the situation is so ridiculous right now that – the cost of production exceeds the sale price (govt set rates). Thousands of farmers have committed suicide, thousands are protesting violently (and some even died cause of police firings etc) every day. Yet govt seems utterly unconcerned. It is really an unbelievable situation.

    It is strange cause on one hand govt wants to deregulate petrol & gas prices – VERY GOOD. No prob. But then why double standards for the poor sugarcane farmers?

    So he in fact is fighting for better rates for the farmers. Complete deregulation may also be a bad idea – for it will cause inflation (in a country where 67% of the population still lives under $2 a day).

    In a situation like this – sir – your classic liberal ideas could also produce dangerous results. (As it can lead to high-inflation & severely impact the poor). What do you think sir?

    Also I fail to understand how in a situation like the above – free-market dynamics have not kicked in – and why these farmers do not move on to some other produce that gets them better profits (instead of continuing with loss making – sugar).

    I have no clue about economics etc, but this is just my basic interpretation of things.

    I will however say that they oppose Wal-Mart – and NOT for the right reasons. Their arguments on Wal-Mart issue are very basic. The debates in Parliament were much more nuianced & extremely well-argued on both sides.

     
  3. Sanjeev Sabhlok

    Ayush Das, AK is as much knowledgeable about basic economics as you are. Hence you make incorrect assertions repeatedly throughout your comment.

    a) “Govt has fixed prices for sugarcane farmers – so price of sugar does not increase/decrease abruptly and increase burden on common man. Farmers are not allowed to export when the rates are good, but receive no help from govt when rates are low or while they suffer losses. Is this fair?”

    That is a huge issue that I’ve raised repeatedly for the past 15 years. No government has any business in regulating prices. Let Arvind say that, not that he will fix prices.

    (b) “Complete deregulation may also be a bad idea – for it will cause inflation (in a country where 67% of the population still lives under $2 a day).”

    This illustrates TOTAL ignorance of basic economics. I’d urge you to think through carefully. If prices rise, farmers will produce more. Won’t they? etc. Read any basic book on supply-demand curve.

    Btw inflation is caused PRIMARILY by deficit financing and government debt which leads to more money being “printed”. That is a huge issue, but not related to prices of commodities. That relates to socialist governments and central banks.

    (c) “why these farmers do not move on to some other produce that gets them better profits (instead of continuing with loss making – sugar)”

    A HUGE number of farmers’ children are leaving the farm sector. That’s one of the direct causes of price intervention.

    (d) And yes, he also opposes FDI in retail – because he doesn’t understand basic economics.

    What you’ve said doesn’t make him anything other than a confused socialist.

    s

     
  4. Ayush Das

    Okay, I get it. Thanks.

    But even in that case – since sugarcane was selling at ‘lower’ than its correct market rate (cause of govt regulation & price control) – it WILL almost certainly cause sugar prices to increase until they return to their ‘correct’ market value.

    Don’t get me wrong – I was not suggesting that we should keep regulating prices. In fact I am totally & fiercely FOR de-regulation & non-intervention of the govt.

    I was merely suggesting that it may be a bold move, difficult to implement and might have ‘SOME’ consequences on the poor. It did happen in Pak where prices of sugar increased SIGNIFICANTLY almost beyond the reach of the poor & common men, and it was a cause for widespread protests (am not aware of the exact cause for increase though, maybe failed crops or something of that sort).

    Here in India Govt’s HAVE toppled on the increase of potato/onion prices in the past. Esp when we have gotten used to subsidized gas, kerosense & paying a certain price for sugar. You are aware of how people opposed & protested in Greece, when govt tried to cut down on welfare benefits that they have gotten so used to.

    But I would still say, de-regulation is the only way to go.

    You are right. I have no clue about ‘Classical Liberalism’ or even basic economics. The first place I stumbled upon that term was your blog. Have no formal education in econ. I know you are a strong proponent of classic liberalization. And apparently the great Chanakya too advocated the same model.

    I believe you and am excited, but can only subscribe to it FULLY – after reading & understanding it for myself.

     
  5. Sanjeev Sabhlok

    “since sugarcane was selling at ‘lower’ than its correct market rate (cause of govt regulation & price control) – it WILL almost certainly cause sugar prices to increase until they return to their ‘correct’ market value.”

    Step 1. Initially prices WILL rise in Year 1 upon price decontrol.

    Step 2. Farmers, on seeing better prices will plant more sugarcane. This time, supply will increase significantly. Demand being unchanged, prices will reduce from its year 1 value.

    Step 3. More innovative and creative farmers will adopt higher yielding cane in Year 3 , and supply will increase further even as demand remains fixed. Prices will further fall.

    As a rule, with freedom to produce and sell, innovation is the rule, and relative prices of EVERYTHING have tended downwards over time, allowing people to buy newer and more things. I’m not referring to absolute prices, but relative prices.

    Now, “might have ‘SOME’ consequences on the poor. It did happen in Pak where prices of sugar increased SIGNIFICANTLY almost beyond the reach of the poor & common men, and it was a cause for widespread protest”.

    Of course, no deregulation can or should be done without advance preparation. Since government has created problems it must solve these, as well, BEFORE deregulating.

    In other words, government will need to allow free imports of sugar at the same time, so supply of sugar is abundant and prices don’t rise AS MUCH as they would otherwise have.

    Once total freedom to produce and trade has been established, the system will work out its own solutions, MUCH better than government can.

    Pl. keep reading. Economics is not too hard, but it does require consideration of a range of impacts which are not self-evident at first sight.

    s

     
  6. Apoorv Bhat

    yeah.. Arvind is not in favour of fixing prices on of all commodities. he only says, commodities whose prices are fixed by the government, should not be fixed by the govt alone.. they should include people in this..
    how will the people be included then? The government should put all pricing models in Public Domain. Let the people choose what model they want..

    I agree. this is not liberalism.. But this is shade better than the current system where a bunch of bureaucrats decide everything.

    I hope the next step after this is complete and total de regulation,..I am not sure of that,, i hope this is the next step.. This is the only problem is have with AK’s economic policy.

    I will post some videos where he discusses the concepts of swaraj and its model of governance, since u have asked me to, in the blog above..

    The entire focus of swaraj is to have strong local governments at village and city level.. Gram Sabha in the villages and Polling booth-sabha (The Municipal corporations with be cut up into small sizes on basis of polling booths. EVERY public servant in the area will be TOTALLY accountable to that polling booth-sabha..
    This is exactly what he wants:-
    “If, like what I advocate, it represents well-organised professional and accountable local government, then it is not socialist. ”

    watch this video for the same..

     
  7. Sanjeev Sabhlok

    Apoorv

    1) “how will the people be included then? The government should put all pricing models in Public Domain. Let the people choose what model they want.”

    Well, I must say that doesn’t answer the question. How precisely will people choose? Let’s say that government wants to raise prices of petrol. What “model” will be offered to the people? Where? How will people “pick” the model/s?

    2) Re:”Gram Sabha in the villages and Polling booth-sabha (The Municipal corporations with be cut up into small sizes on basis of polling booths. EVERY public servant in the area will be TOTALLY accountable to that polling booth-sabha”

    This fails to account for transaction costs. Those in busy jobs will NEVER have time to come to these meetings. Instead, unemployed and idlers will have plenty of time to come to these meetings. Does AK even remotely understand the costs of these meetings?

    He should study the Regulatory Cost Measurement Manual that I’ve helped author in Australia. Without demonstrating net benefits, this policy is absurd.

    Let him follow FTI’s policy template and try to prove that his policy will work. There are many much better ways of delivering results. He should consider reading Buchanan and public choice theory.

    There are VERY GOOD reasons why governments exist. Their accountability is crucial, but his models are entirely incorrect. They will create chaos and ensure that no one will ever join ANY government job. I find it odd that he has so much confidence in his ideas without having even the remotest training in policy design and implementation.

    s

     

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