India! I dare you to be rich

Category: Public policy

The producer is ALWAYS anti-social. Policy makers should maximise consumer (not producer) welfare. Bastiat’s proof.

Bastiat proved 170 years ago why the public policy maker must NEVER consider the interest of the producer; only the interest of the consumer.

Every politician must be trained to fully appreciate this basic truth.

Unfortunately, we know too well about the special pleadings of the producers, and how they will ALWAYS seek to over-ride the public interest through protections and subsidies for themselves.

Download all of Bastiat’s sophisims here.


Take the case of any producer whatever, what is his immediate interest? It consists of two things; first, that the fewest possible number of persons should devote themselves to his branch of industry; second, that the greatest possible number of persons should be in quest of the article he produces. Political economy explains it more succinctly in these terms: Supply very limited, demand very extended; or, in other words still, Competition limited, demand unlimited.

What is the immediate interest of the consumer? That the supply of the product in question should be extended, and the demand restrained.

Seeing, then, that these two interests are in opposition to each other, one of them must necessarily coincide with social interests in general, and the other be antagonistic to them.

But which of them should legislation favor, as identical with the public good—if, indeed, it should favor either?

To discover this, we must inquire what would happen if the secret wishes of men were granted.

In as far as we are producers, it must be allowed that the desire of every one of us is antisocial. Are we vinedressers? It would give us no great regret if hail should shower down on all the vines in the world except our own: this is the theory of scarcity. Are we iron-masters? Our wish is that there should be no other iron in the market but our own, however much the public may be in want of it; and for no other reason than this want, keenly felt and imperfectly satisfied, shall ensure us a higher price: this is still the theory of scarcity. Are we farmers? We say with Mr. Bugeaud: Let bread be dear, that is to say, scarce, and agriculturists will thrive: always the same theory, the theory of scarcity.

Are we physicians? We cannot avoid seeing that certain physical ameliorations, improving the sanitary state of the country, the development of certain moral virtues, such as moderation and temperance, the progress of knowledge tending to enable each man to take better care of his own health, the discovery of certain simple remedies of easy application, would be so many blows to our professional success. In so far as we are physicians, then, our secret wishes would be antisocial. I do not say that physicians form these secret wishes. On the contrary, I believe they would hail with joy the discovery of a universal panacea; but they would not do this as physicians, but as men and as Christians. By a noble abnegation of self, the physician places himself in the consumer’s point of view. But as practicing a profession, from which he derives his own and his family’s subsistence, his desires, or, if you will, his interests, are antisocial.

Are we manufacturers of cotton goods? We desire to sell them at the price most profitable to ourselves. We should consent willingly to an interdict being laid on all rival manufactures; and if we could venture to give this wish public expression, or hope to realize it with some chance of success, we should attain our end, to some extent by indirect means; for example, by excluding foreign fabrics in order to diminish the supply, and thus produce, forcibly and to our profit, a scarcity of clothing.

In the same way, we might pass in review all other branches of industry, and we should always find that the producers, as such, have antisocial views. “The shopkeeper,” says Montaigne, “thrives only by the irregularities of youth; the farmer by the high price of corn, the architect by the destruction of houses, the officers of justice by lawsuits and quarrels. Ministers of religion derive their distinction and employment from our vices and our death. No physician rejoices in the health of his friends, nor soldiers in the peace of their country; and so of the rest.”

Hence it follows that if the secret wishes of each producer were realized, the world would retrograde rapidly toward barbarism. The sail would supersede steam, the oar would supersede the sail, and general traffic would be carried on by the carrier’s wagon; the latter would be superseded by the mule, and the mule by the peddler. Wool would exclude cotton, cotton in its turn would exclude wool, and so on until the dearth of all things had caused man himself to disappear from the face of the earth.

Suppose for a moment that the legislative power and the public force were placed at the disposal of Mineral’s committee, and that each member of that association had the privilege of bringing in and sanctioning a favorite law, is it difficult to divine to what sort of industrial code the public would be subjected?

If we now proceed to consider the immediate interest of the consumer, we shall find that it is in perfect harmony with the general interest, with all that the welfare of society calls for. When the purchaser goes to market he desires to find it well stocked. Let the seasons be propitious for all harvests; let inventions, more and more marvellous, bring within reach a greater and greater number of products and enjoyments; let time and labor be saved; let distances be effaced by the perfection and rapidity of transit; let the spirit of justice and of peace allow of a diminished weight of taxation; let barriers of every kind be removed—in all this the interest of the consumer runs parallel with the public interest. The consumer may push his secret wishes to a chimerical and absurd length, without these wishes becoming antagonistic to the public welfare. He may desire that food and shelter, the hearth and the roof, instruction and morality, security and peace, power and health, should be obtained without exertion and without measure, like the dust of the highways, the water of the brook, the air that we breathe; and yet the realization of his desires would not be at variance with the good of society.

It might be said that, if these wishes were granted, the work of the producer would become more and more limited, and would end with being stopped for want of sustenance. But why? Because on this extreme supposition, all imaginable wants and desires would be fully satisfied. Man, like Omnipotence, would create all things by a simple act of volition. Well, on this hypothesis, what reason should we have to regret the stoppage of industrial production?

I made the supposition not long ago of the existence of an assembly composed of workmen, each member of which, in his capacity of producer, should have the power of passing a law embodying his secret wish, and I said that the code that would emanate from that assembly would be monopoly systematized, the theory of scarcity reduced to practice.

In the same way, a chamber in which each should consult exclusively his own immediate interest as a consumer, would tend to systematize liberty, to suppress all restrictive measures, to overthrow all artificial barriers—in a word, to realize the theory of plenty.

Hence it follows:

That to consult exclusively the immediate interest of the producer is to consult an interest that is antisocial;

That to take for basis exclusively the immediate interest of the consumer would be to take for basis the general interest.

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Solar energy is not currently viable without subsidies. May take another 35 years or so to become worthwhile.

[This is a placeholder post for my personal research on this topic]

I’ve been somewhat under the impression (based on books and articles such as Rifken’s Third Industrial Revolution) that solar energy is on the cusp of becoming commercially viable, even for homes. For instance, Rifkin states:

The commercial growth in solar and wind technology is reminiscent of the dramatic growth in personal computers and Internet use. The first personal computers were introduced into the mass market in the late 1970s. By 2008, there were more than one billion. Similarly, the number of Internet users more than doubled in the first decade of the twenty-first century, reaching two billion in 2010. Now, solar and wind installations are doubling every two years and are poised to follow the same trajectory as personal computers and Internet use over the next two decade

Feed-in tariffs have opened the commercial floodgates for solar and wind-generated power by giving early adopters lucrative incentives to enter the market.

In Aragon, Spain, GM’s production facility has installed a 10-megawatt solar plant on its roof, which produces enough electricity to power 4,600 homes. The initial investment of $78 million will be paid back in less than ten years, after which electricity generation will be virtually free.

Even homeowners can now turn their houses into mini power plants. For an upfront cost of around $60,000, a homeowner can install solar panels on his or her roof and generate enough electricity to power much or all of the home. Any surplus can be sold back to the grid, and payback can run anywhere from four to ten years.

Twenty-five years from now, millions of buildings—homes, offices, shopping malls, industrial and technology parks—will have been converted or constructed to serve as both power plants and habitats.

For example, plans are being developed for a multibillion dollar project, called Desertec, which will bring energy generated from solar and wind technologies from the Sahara desert, via interconnector cables, to Europe—providing more than 15 percent of the European Union’s total energy needs by 2050.

Elisabeth Rosenthal, writing in the New York Times, recounts the story of a rural woman living in Kenya who had to walk two miles once a week to get a motorcycle taxi and drive for three more hours to a town to recharge her cell phone battery for a 30 cent fee. Recently, her family sold some farm animals to buy an $80 solar power system. A single solar panel now affixed on the tin roof of her hut provides enough electricity to not only charge the cell phone but also power four overhead electric lights. Although the statistics are still spotty, it appears that families across Africa are installing solar panels and analysts predict a quick scale-up as millions of others follow suit into the Third Industrial Revolution. What’s going on in Africa heralds a historic transformation as households leapfrog from the pre-electricity era directly into the TIR age.

Now, from this it would appear that this technology is either viable or very close to viability.

Then, there are write-ups which claim grid parity has already occurred. What is grid parity?

Grid parity (or socket parity) occurs when an alternative energy source can generate power at a levelized cost of electricity (LCoE) that is less than or equal to the price of purchasing power from the electricity grid.

A news report in 2012 announced that grid parity had been achieved in Australia. Deutsche Bank has announced that grid parity will be achieved in all 50 US states by 2016.

UBS has proposed a model in which solar energy becomes viable by 2020, if it is linked to an electric vehicle (EV). It assumes a 20-year life for the solar energy system, a 10-year life of the car, and 4% cost of capital.

The cost of producing solar energy has apparently plummeted (source)

Grid parity is illustrated below:


But Matt Ridley is a powerful thinker and when he says that all this is pure hype, I decided to investigate briefly on my own.

Both wind and solar are entirely reliant on subsidies for such economic viability as they have. World-wide, the subsidies given to renewable energy currently amount to roughly $10 per gigajoule: These sums are paid by consumers to producers, so they tend to go from the poor to the rich. [Source]



A solar watt in 1970 cost something like $66.00. This afternoon, a solar watt is $0.66 to produce, and it’s going down, down, down. So it’s on a 20-year exponential curve. [Source]

Well, that sounds nice. What is the truth?


See this: We first need to understand the concept of levelised cost of electricity

The levelized cost of electricity (LCOE), also known as Levelized Energy Cost (LEC) is the cost to build and operate a power-generating asset over its lifetime divided by the total power output of the asset over that lifetime. It is the cost at which electricity must be generated from a specific source to break even over the lifetime of the project.

The truth is that solar energy levellised cost is still huge. MASSIVE.

Is the Tesla solar battery a good idea – today?

No. This article makes it clear enough.

Solar will need subsidies till beyond 2050

This is a bit shocking.  This chart (taken from the article linked in the previous sentence) shows that solar will need subsidies till beyond 2050. That’s not good!




Solar energy is definitely going to be ONE of the various cheaper forms of energy IN THE FUTURE.

But it is currently not cheap enough for people to install on their rooftops (along with a battery).

When will the system (PV generation plus battery) become cheap enough to compete with electricity networks? Probably within the next five years.

But at the moment, don’t install solar without a someone else paying you for it (generally, some type of subsidy that rips taxpayers).



Grattan Institute

Grattan Institute shows that governments have wasted money on solar subsidies

Governments’ support for the development of solar PV technology was poorly considered and implemented. [Source]

It shows that solar COULD become viable – but not there yet. The report is quite exhaustive.

the cost of solar PV take-up has outweighed the benefits by almost $10 billion.

By the time the subsidies finally run out, households and businesses that have not installed solar PV will have spent more than $14 billion subsidising households that have. Australia could have reduced emissions for much less money. Governments have created a policy mess that should never be repeated.


Kurzweil thinks solar will constitute 100 per cent of our energy production by 2033

2033: 100 per cent of our energy from solar
We are applying new nanotechnologies to the design of solar panels, and the costs are coming down dramatically. A recent report by Deutsche Bank said that ‘the cost of subsidized solar power is about the same as the cost of electricity from the grid in India and Italy. By 2014 even more countries will achieve solar grid parity. So I do believe that within 20 years we could get all our energy from solar energy. I presented this not so long ago to the Prime Minister of Israel, Benjamin Netanyahu, who was actually my classmate at MIT’s Sloan School of Management, and he said: “Ray,do we have enough sunlight to do this with?” and I said: “Yes, we’ve got 10,000 times more than we need. [Source]

I don’t quite see it this way. I believe fusion could well be 100 per cent by then.

Could be 10 years away

Solar Power Viable Within A Decade, Says IEA

“The take-off is around 2025 to 2030,” the agency said. “By then the cost of solar will be $100 per megawatt hour (MWh) and will compete with fuels facing carbon prices of $50 a tonne.”

That sounds like a long time away. Much longer than 10 years.

It’s never there. Always ten years away.

Will renewables become cost-competitive anytime soon?

The answer: No!

Viable Battery Backup for Rooftop Solar Still Years Away

Solar Energy Delivers Too Little Bang For Billions Invested

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The continuing disgraceful inhuman menace of the caste system in India. India Untouched, a documentary by Stalin Kurup.

A couple of years ago I had come across (and commented on) a snippet from the documentary India Untouched, by Stalin Kurup. I never got around to seeing most of the documentary.

Today a snippet from this documentary chanced my way on FB and I was reminded by a FB friend that it is from this documentary. 

Stalin has written a blog post about this. I understand extracts from this doco were broadcast on Satyamev Jayatate in 2012.

It is unfortunate that I had not got around to seeing the whole documentary in 2013. This is absolutely mandatory viewing by anyone with any interest in India's future.

Today, I saw the whole documentary – nearly two hours.

It can be clearly said that whatever the reasons caste was originally designed for, it is now playing the role of the biggest enemy of India, on par with socialism. 

If you never got around to watching this documentary, please do so. I'm linking all four parts below.

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Scandinavian countries are super-capitalist with the terrible baggage of a HUGE welfare state

This is my further comment on Kanishka Sinha’s FB post, that I referred to here.

In this I show Kanishka that the laws of economics are INVIOLABLE. They never change, no matter where you go or live. I will also, by the end of this post, more clearly distinguish socialism from capitalism.


There is no doubt that on most economic benchmarks Scandinavian countries (Denmark, Norway, Sweden) are highly successful. They are up there among the richest 20 nations in the world, their national debt is manageable (not like the Greek socialist state, for instance), and their people even claim to be happy. [True, there is some detail, e.g. huge private debt in Denmark, but I said “most” economic indicators, not “all”].

So what is going on here? Are these guys an example of successful socialist countries, or are the capitalist in some way, or do they follow some other, “third way”?


Levels of freedom





Political rights, 2015, Freedom House





(higher numbers are worse)
Civil liberties, 2015, Freedom House





(higher numbers are worse)
Index of Economic Freedom, Heritage House/ Wall St Journal





global rank
Press freedom, Reporters Without Borders 





global rank
Property rights index102246global rank

Without going into too much detail (there are plenty of other, similar, indicators), this list of indicators shows that unlike India (which is a HARDCORE SOCIALIST, UNFREE SOCIETY), the Scandinavian countries are FREE countries, with the world’s strongest property rights systems. They are fundamentally NOT socialist. Socialist countries DO NOT have economic (or other) freedoms. The whole idea of socialism is for the state to dictate who does what, and to manage the economy centrally.


Does the price system work in these countries? ( they use administered prices, like with socialist India?)

Denmark has a “thoroughly modern market economy” [Source]. “Denmark boasts a modern market economy in which the prices of goods and services are determined in a free price system.” [Source]

Market restrictions?

There is no minimum wage in Denmark. [Source]

Labour market flexibilty: In Denmark, the employer’s right to hire and fire their employees whenever they find it necessary is recognised. [Source] This suggests labour market flexibillity at a level that is totally unheard of in any socialist (or even most capitalist) society.

Trade policy?

Denmark advocates free trade [Source]. “All Nordic countries have a commitment to free trade” [Source].  The Economist describes these as  “stout free-traders who resist the temptation to intervene even to protect iconic companies”  [Source]


These countries had a period of greater state intervention in the society, but have become market oriented at a level not heard of in most parts of the West.

In the 1970s and 1980s the Nordics were indeed tax-and-spend countries. Sweden’s public spending reached 67% of GDP in 1993. Astrid Lindgren, the inventor of Pippi Longstocking, was forced to pay more than 100% of her income in taxes. But tax-and-spend did not work: Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993.

Since then the Nordics have changed course—mainly to the right. Government’s share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France’s and could soon be lower than Britain’s. Taxes have been cut: the corporate rate is 22%, far lower than America’s. The Nordics have focused on balancing the books. While Mr Obama and Congress dither over entitlement reform, Sweden has reformed its pension system (see Free exchange). Its budget deficit is 0.3% of GDP; America’s is 7%. [Source]

Private management of public hospitals and schools

An example of their private orientation is their operation of schools and hospitals.

Denmark and Norway allow private firms to run public hospitals. Sweden has a universal system of school vouchers, with private for-profit schools competing with public schools. Denmark also has vouchers—but ones that you can top up. When it comes to choice, Milton Friedman would be more at home in Stockholm than in Washington, DC. [Source]


This doesn’t mean that these are free societies in every respect. They have a strong egalitarian focus, implemented through redistribution. This welfare system has led to some rather extreme negative consequences, as outlined in Manipulism and the Weapon of Guilt: Collectivism Exposed by Mikkel Clair Nissen. I’ve provided key extracts from this book here.

I won’t go into details of this, but it is clear that the welfare state is both unsustainable and harmful to human motivation and dignity. There is no doubt that these states will pull back on the excesses of their welfare state as people realise it is not going to work. There is no free lunch. The sooner these countries understand that, the better for them. While they may not go down the path of failed states like Greece, they will face increasing challenges in maintaining their standards of living if their most productive people start working less (or migrate to other, less taxing countries).


So what are we to make of this?

Well, to understand this, we need to go back to the two fundamental theorems of economics.

First you must recognise that free markets ALWAYS work best. That’s what the first theorem states. The market ALWAYS creates the most efficient allocation and thereby maximises wealth. Once that has been achieved, you can, if you so wish, transfer funds to meet your egalitarian objectives. You can redistribute “endowments” to create any pareto optimal outcome you wish, through the market. That’s the second theorem.

All economics graduates are taught these basic theorems early in their graduate year. These theorems take tens of pages of non-trivial formal proofs. Kanishka, you perhaps learnt these theorems, as well, didn’t you? (Or does ISB not teach theoretical economics?). 

But note clearly that reallocation as part of a welfare state is NOT socialism. It is redistribution within capitalism. Socialism involves denial of property rights, denial of the price system, denial of free trade. Clearly the Scandinavian countries are extreme-CAPITALIST societies on these indicators. These capitalist institutional features allow them to generate vast amounts of wealth; which they then redistribute.

The excesses of their welfare state have undoubtedly reduced their potential wealth by harming incentives at two levels: at the top, where high taxes reduce incentives to work; and at the bottom, where excessive welfare reduces incentives to work. The documentation of the adverse effects of welfare makes clear that the welfare system is NOT a good idea and should be curtailed.

However, it is fundamentally incorrect to talk of Scandinavian countries as being socialist.

Yes, in casual talk, even I refer to excesses of welfare state as socialism, but socialism is actually quite a different beast.

To identify socialism, look at India, Kanishka. Look at PROPERTY RIGHTS. Look at PRICES. Look at LABOUR MARKETS. Look at TRADE.


Debunking the Myth of Socialist “Success” in Scandinavia

IEA Book (free): Scandinavian Unexceptionalism: Culture, Markets and the Failure of Third-Way Socialism

The economics of freedom: lessons from the Nordic countries

See relevant chapters of this book by Tom Woods.

Some links I had jotted down but forget whether I reviewed as part of writing this blog:





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