Thoughts on economics and liberty

Inoculating India against the mental disease of socialism

We teach children hygiene to protect them against bacteria. But we don't teach them economics to protect them against mankind's worst mental disease: socialism. 

In a democracy, voters choose amongst various policies on offer. In order to make good judgments, they must be enabled to understand the basics of economics. Else they'll fail to distinguish between good and bad policies, and thus between good and bad political parties. It is therefore not sufficient for children in India to be taught Engish, mathematics, science, geography, history and one Indian language. It is essential that they are taught basic economics, by which I mean non-mathematical micro-economics (not macro-economics – they don't need to know anything about GDP and such things). Such basic education should be imparted in year 7 and 8 when the child is able to sense his or her needs and make generalisations.  

Unfortunately, today even our smartest children – e.g. doctors, engineers, and lawyers, are economic illiterates. Their thinking on policy is absolutely confused, as confused as the actual illiterate (indeed often worse). Economics is the most counter-intuitive discipline, and requires some amazing mental gymnastics in order to understand its principles. Indeed, I would argue that most professional economists (particularly macro-economists) don't understand economics, either).  

If we try to apply our illiterate intuition to matters of economic policy, we will be quickly led astray – to socialism! Socialism is thus the disease of ignorance. Unfortunately, since almost no one in India understands economics (perhaps 1 out of 100,000?), Indians tend to vote with their 'instinct', not through their head. Therefore they vote for socialists, thus unwittingly destroying their own nation.

Given the abysmal level of basic economics education in India, finding good political leaders is virtually impossible. Even if such leaders are somehow found, persuading the economics illiterate electorate (both illiterate and educated) is next to impossible. And so India will continue its precipitous slide towards anarchy. I do remain an optimist, though, given that the internet now permits the liberals to radiate their message to India.

Once every child in India understands how the price system operates, India will be saved. Our children will then also understand how international trade works and how centralised planning (a crucial part of socialism) is the greatest folly. They will then readily appreciate how mercantalism (e.g. swadeshi) is self-destructive. Once our children understand such basic things,  India will become immune to the more dangerous forms of socialism. There may still remain some fuzzy welfare socialists – as there are in the West – but at least the main disease, of socialism, would have been eradicated.

Such education, to be imparted in years 7 and 8 in school, should make use of Hayek's foundational logic of information being local. I have tried to explain this in chapter 3 of BFN, which could well form the basis of the school coursework.

But our educationists themselves don't have a clue about economics, so they don't see its value, and hence won't implement this proposal. Our leaders like Sonia Gandhi are semi-literates who are blind to all logic including fundamental economics. And the BJP types are so confused that it is not worth mentioning their name. In other words, we face the classic chicken-egg problem: HOW can we educate children in economics without first forming a liberal government? And WHY will the voters want a liberal government if they don't understand economics? I'm hoping that FTI will find sufficient leaders in the coming years to break this vicious cycle.

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