Thoughts on economics and liberty

Why does LARGE SCALE corruption continue in allegedly non-corrupt Kejriwal’s Delhi?

On 15 April 2015 I wagered Rs.1 lakh with Arvind Kejriwal that he will COMPREHENSIVELY FAIL to remove corruption. Of course, he refused to accept the wager. (So did Modi – both cowards).

Corruption has been FLOURISHING in Kejriwal’s Delhi. Now we have a damning report:

On 3 April 2018, the Comptroller and Auditor General (CAG)’s report on corruption in Delhi administration was tabled in the Delhi assembly. Click here to download the report.

The report “revealed several irregularities across departments under the Aam Aadmi Party-led Delhi government” [Source]

According to the CAG report, the scam is similar to the fodder scam that rocked the Bihar in 90s when Lalu Prasad Yadav was the Chief Minister. [Source]

Of course, this is not unique to Kejriwal’s government. This is CHRONIC AND FOUND ALL ACROSS THE COUNTRY. NO EXCEPTIONS. BJP and Congress governments, too, are thoroughly corrupt.

What did Kejriwal say in response to the CAG report? This tweet.

Apparently “doorstep delivery” would have “destroyed this mafia”. How wonderful would that have been – one more “easy” solution like “Jan Lokpal”.

If only removing corruption was as simple as cooking up one harebrained scheme after another.

But what does “doorstep delivery” possibly have to do with the causes of corruption in the PDS system? Who is going to deliver rations o the doorstep? Are these some “gods” who are magically honest? Where is the doorstep? Are the poor people of India always waiting at their doorsteps for these “delivery gods” to knock on their door? And is this process of doorstep delivery free? Who pays?

Naturally, such thinking is typical of those who have no understanding of the causes of corruption. So let me cut and paste briefly from the SBP manifesto.

==EXTRACT FROM SBP MANIFESTO==

No Indian baby is born corrupt. Indians were known for impeccable integrity when the British came to India. Even today, Indians in the West are valued for their character. It is badly designed systems, with wrong opportunities and wrong incentives that motivate even the honest to become corrupt. Nothing wrong with Indians, per se.

So why have so many Indians chosen to become corrupt? The answer is two-fold. Our system creates:

  1. opportunities for corruption. Our government directly engages in business (which is not its business). It builds and manages infrastructure and services directly, which it should procure or privatise. It interferes unnecessarily in a vast range of occupational, production and trade decisions. The discretionary regulatory environment in which the government has a finger in every pie, has allowed politicians and bureaucrats to indulge in world-highest levels of corruption, thereby corrupting the entire country; and
  2. incentives for corruption. In our badly designed electoral system, politicians lose a lot of money when they contest elections. They must therefore (an invariant law of nature) necessarily recover their costs after they are elected: with interest. On top of this, we pay our politicians and bureaucrats poorly.

We have created a perfect storm of opportunities and incentives for corruption. And then we blame our politicians for being corrupt.

Simplistic solutions (e.g. Jan Lokpal) do not address incentive design challenges. Yes, there must be stern punishment of the corrupt, but such punishment can only form a small part of an overall, well-thought out system. Incentives involve not just the stick, but also the carrot. More importantly, we need to eliminate opportunities for corruption. Numerous countries have very low levels of corruption without having any Lokpal. Punishment is relevant only after opportunities are eliminated and positive incentives applied.

===END OF EXTRACT===

A man who created the simplistic (and ultra-stupid) “solution” called Jan Lokpal has now come up with yet another simplistic “solution” – deliver people’s rations to their doorstep.

Sadly, when the causes of something are really deep, you can’t apply band-aids and expect the problem to go away.

Cancer can’t be destroyed by applying a cosmetic cream.

Now, the above simple extract in SBP’s manifesto contains very deep insights, that require extensive elaboration. So the SBP manifesto itself provides extensive elaboration. And in BFN I’ve explained this in at least two full chapters (4 and 5), although to properly understand the causes fully will need a good understanding of the entire book.

In particular, there is an important section entitled, “Eradicating Poverty” in BFN which explains how poverty must be eliminated efficiently without distorting incentives. Just a few quotes, below:

==EXTRACT FROM BFN=

Eradicating poverty is a matter of fundamental importance. We cannot be truly free without equality of opportunity; and we cannot have equal opportunity without a minimum standard of living for all citizens including a high-school education of decent quality for all our children.

The free society needs to eradicate poverty while ensuring that people do not become dependent on state support.

Everyone is responsible to work as hard and effectively as they possibly can before their insurance claim for poverty can be considered. No one is free to be deliberately poor in a free society.

The formula for ensuring equality of opportunity in a society is, therefore:

• Expect everyone in the society to produce the greatest possible wealth they can through free markets.

• Transfer a sum directly to those who failed to rise above the poverty line despite their best efforts, through an objective and non-discretionary process that will bring their incomes above the poverty line.

We note that the direct transfer of funds to the poor has to be linked to a requirement that the concerned person has worked to the best of his capacity. The second thing we note is that in the two-stage process outlined above, the consideration of equity, or more correctly of equality of opportunity, comes into the society’s overall decision-making only once. This consideration occurs at that point of a free market outcome when we have sufficient information to allow us to keep the poor above the poverty line.

Why must the payment be made directly? Because indirect alternatives involve endless fine-tuning of a host of mutually incompatible ‘welfare’ policies, subsidies and the like. These indirect schemes not only do not reach the intended persons but are wasteful and always interfere with free markets, leading to completely unintended outcomes. Tragically, indirect schemes are a fertile area for every policymaker’s imagination; such fertile imaginations have led to a quagmire of complex and inefficient regulations, programmes and subsidies in the name of the poor. These policies include the public distribution system, an alarming range of poverty alleviation programmes, subsidies of all sorts, forcing private builders to set aside houses ‘for the poor’, preventing rents from rising, preventing parts of industry from using power looms and so on; there are thousands of such policies in India. Such policies, which incur mammoth administrative costs and involve high levels of corruption, have depleted India’s capacity to provide equal opportunity to those who really need it. Bureaucrats and politicians steal crores of rupees from such programmes, in league with corrupt businesses.

==END OF EXTRACT==

So, a summary position why Kejriwal is and will be A MAMMOTH FAILURE (guaranteed, 100 per cent), below. If he has the guts he will take my bet, even now. The man is an arrogant fool (and coward), and won’t. He will grovel and apologise for his claims of corruption against others, but he can’t fix corruption in HIS OWN GOVERNMENT.

What are we trying to do with PDS? To address poverty.

Arvind needs to understand that PDS is the WORST POSSIBLE WAY to address poverty. It will ALWAYS be inefficient (horribly expensive), even if corruption can be magically eradicated.

Arvind needs to work on system reforms. He has to shift from the current HOPELESSLY CORRUPT system to a new system where incentives ensure that everyone is honest and competent.

Now, I don’t have time to repeat everything – that has already been said at great length. All there in BFN and SBP’s manifesto.

But Arvind REFUSES TO READ BFN (his email). He is a moron and produced the most third rate “book” Swaraj (MY CRITIQUE).

He simply doesn’t have the mental capacity to understand governance systems or basic economics.

We need to write him off, along with all other nitwits like Modi and Rahul Gandhi.

I would not have wasted time on Kejrwal’s yet another puerile “solution” but for the fact that there is someone in AAP who considers himself liberal and so I’m trying to show him some basic facts about AAP and AK, and am writing this to ask him to STOP wasting time with socialist dunces (and worse – such as people like Somnath Bharti).

Now, let me move on to other important things.

Sanjeev Sabhlok

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