Thoughts on economics and liberty

The laws of economics NEVER bend. So if a Lokpal comes in, without changing policies, guess what will happen?

I've repeatedly explained that the Lokpal Bill does NOT address the causes of corruption. It merely tries to catch those who are corrupt. That would be fine if 1 per cent were corrupt. But the SOCIALIST POLICIES in India GENERATE CORRUPT people in the MILLIONS (including  ALL Ministers). So the task being given to the LP is TOTALLY futile.

Without policy change the disease of corruption CANNOT be cured. It is NECESSARY to build a system where the incentives are designed to ensure that only the honest enter, and policies do not generate corruption.

But, of course, that requires POLICY thinking – which is clearly well beyond the ken of people like Anna Hazare or even "smart" people Arvind Kejriwal, and Kiran Bedi – it would appear.

ONLY well-thought out policies, based on a sound understanding of ECONOMIC incentives, work in real life. Everything else is a waste. But such deep thinking is so rare as to be almost totally absent in India. (Hence the socialist nightmare that India is still going through – its SHODDY thinking has cost it millions of lost lives and created unbelievably bad governance.) 

Yesterday I put out this parody by Jaspal Bhatti about how India could come to a standstill if the LP Bill is introduced. His was an extreme take (comedians must exaggerate), but Sharad Bailur has said it VERY WELL and succinctly on FB. Here's his comment, below.

Sharad Bailur  on Facebook

He (Jaspal Bhatti) is right. The country WILL come to a standstill. Here is my take from my article due to be published in Freedom First (October issue):

'Put yourself in the shoes of a government servant. You have been (reluctantly or inefficiently) doing the work assigned to you lubricated by bribes up to now. Tomorrow a Lokpal (pristine and uncorrupt and a firm devotee of Anna) ensures that your bribe gravy train comes to a dead halt.

Will you still do the work? Or will you stop doing the work? Remember there is no clear way to punish a government servant for not doing his work. You cannot get rid of him. His job is secure under a government mandated law.


So the pressure will mount on the Lokpal to the extent that it will become impossible for the Lokpal to continue to do any useful work – or if ‘Economic Determinism’ works, as it must, the Lokpal himself will become the fount of corruption.

There will therefore be an additional layer of bribing to be done to get your work done.'

My further comments

In economic theory there is a thing called UNINTENDED consequences. Bad policy has LOTS of unintended consequences.

Poor Anna and his team are so innocent about the LAWS of economics that their actions are likely to – in the worst case – significantly put a brake on the economic growth of India. In the best case, these actions will have NO impact on corruption, which will merely be driven underground.

Only when "educated" Indians begin to learn to think carefully, when they realise that the laws of economics NEVER bend (for these are based on human nature) will the BASIC commonsense ideas I have been preaching start to resonate in India.

Currently the PEOPLE of India in their collective wisdom have elected these thugs (who are naturally very bad policy makers) for the past 60 years. They are clearly very frustrated but they don't realise that the system is now designed to ONLY allow thugs to enter. 

In their state of utter confusion they fail to understand that they need people like me – both honest and competent – to take charge of India's governance. For I CAN fix India's problems – through good policy. But they would much rather elect the same incompetents they've always done (I gather that BJP – yet another socialist party, a mere branch of Congress – is now the favourite!)

But of course there is no one to advise them about good policy. Our journalists have almost no understanding of economics, except a couple of notable exceptions. Indians take policy advice from economic ILLITERATES. What can be done?

They used to say in the past: यथा राजा तथा प्रजा. For a democracy this has become: यथा प्रजा तथा राजा. It is therefore crucial for the public to become educated, else thugs will rise to the top.


कृपया अर्थशास्त्र के नियम समझने की कोशिश कीजिये

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4 thoughts on “The laws of economics NEVER bend. So if a Lokpal comes in, without changing policies, guess what will happen?
  1. Sanjeev Sabhlok

    Vishal Kumar Singh (on FB)

    This is absolutely correct Sharad and the risk is the value of bribe will go up as the official has to take into consideration of risk of being caught in lokpal.

  2. Atish

    The laws drafted in JanLokpal are draconian to a large extent. If implemented, it could cause serious paralysis in decision making process. Not only that it does not provide any mechanism to check on its own. The idea of Lokpal came into existence when other investigation agency have become ineffective in dealing with corruption. But one has to also think what is the guarantee that Lokpal will not become corrupt. Also Lokpal will have discretionary powers and no accountability to anyone. Which in turn could become a biggest problem. As someone rightly said, “Power corrupts, absolute power corrupts absolutely”. The reason of corruption is mainly due to bad governance. The centralization of power make the system worse. Decentralization is power is must in order to curb the corruption. For instance, despite draconian laws (Severe punishment for an offence), corruption in China is rampant whereas in contrast HongKong has got liberal law and least corruption in World.

    The Lokpal suggest a absolute concentration of power and could result into absolute corruption. There is a misrepresentation among people of India that “Lokapl is magic wand.” Once it implemented, it will curb all the corruption. But i think a very few people understand that issue of corruption is prevalent in system because of “bad governance”. Without solving the root cause of the problem, one cannot get rid of corruption.

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