Sanjeev Sabhlok's blog

Thoughts on economics and liberty

Comments on Chitra Sudarshan’s review of my book

I welcome reviews of my book, Breaking Free of Nehru, whether positive or negative. Indeed, I look forward to useful information that I may take up for further investigation. Unfortunately, this particular review (here), despite being sympathetic to my work in many ways, has technical flaws that have meant my work has been misrepresented quite significantly! For a classical liberal to be depicted as an unthinking libertarian can lead the liberal to serious heartburn!

I appreciate that a reviewer's job is very hard and thankless, and it is not hard to get away from one's preconceptions about terms like 'capitalism' and 'free markets'. So while I thank Chitra Sudharshan for her review, could I suggest she consider reading the book once again, with a mind that is open to reading carefully and understanding what I'm trying to say? The points below may help in Ms. Sudarshan forming the correct impressions about the contents of the book, should she read the book again.

"Sabhlok equates ‘freedom’ with capitalism, believes that Adam Smith had all the right answers, and that laissez faire is not only economically sound, but morally superior. … And he is not quite happy with the steps taken in the last 18 years – he believes India has far to go in the free market path yet. …Sabhlok’s holding up of the US, the UK and Australia as perfect capitalist examples for India to follow is naive at best."

My comments:
While Ms. Sudarshan has got the broad idea correctly, the way it is represented shows she has clearly failed to appreciate that I'm not advocating a 'free market' in the sense of freedom to cheat or harm others, but in the sense of the freedom to be moral. It is thus the freedom to be good that I'm advocating.

What could possibly be wrong with the demand for freedom subject to accountability and integrity? I'm calling for a free market with good regulation so that accountabilities are enforced. This is what I have actually written: "We can define markets that are minimally regulated in the manner discussed above, as ‘free markets’." The discussions preceding this comment talk (at huge length!) about the need to ensure accountability and prevent cheating, harm to health and safety, environmental damage, and so on. Indeed, I've discussed at quite some length the ethical failures found in the market and what needs to be done to reduce them.

I've also got major sections in Chapter 2 and in the last chapter (through the Online Notes) outlining good regulation and the kinds of processes we need to consider before framing regulations. We need good regulation, not absence of regulation! No unregulated market do I advocate!! Unfortunately, all this finesse, the complexity of argument, the detail, has been lost while simplifying my message to make me sound like an extremist.

Hayek had this great problem as well. Even after his death people (including the Australian Prime Minister Rudd) constantly misrepresent him – poor man. No one reads him. Even if they read him they don't really read him. Virtually the first thing he said in his book, The Road to Serfdom was, 'Probably nothing has done so much harm to the liberal cause as the wooden insistence of some liberals on certain rough rules of thumb, above all the principle of laissez faire.' I'm not a wooden 'liberal'. I have not only cited Hayek in terms of why the market is to be preferred for its price system and allocative efficiency, but I've extensively outlined why good regulation is needed.

I feel that Ms. Sudarshan has 'read' my book, but not really read it. How could she miss out tens if not hundreds of signals about good regulation and accountability strewn across the book? For instance she has completely ignored the concept of accountability that I have discussed at length in the Appendix. I have insisted repeatedly that there is no freedom without accountability. That is my fundamental claim, made repeatedly and persistently. But that was perhaps not made sufficiently persistently!! for Ms. Sudarshan has completely misread the message of the book.

More details on this concept of freedom are provided in my second (sister) book (currently manuscript) The Discovery of Freedom. I hope Ms. Sudarshan will read that some day to understand what I'm trying to say.

Re: comparison with US, Australia etc., I've not suggested they are perfect! Far from it. I've had this to say: "most of ‘my’ ideas are road tested, many of them being things I have seen and experienced first-hand as practical working solutions to the problems of governance in the USA and Australia. Some of my ideas, of course, go well beyond the levels of freedom experienced by citizens of these countries; for I assure you that even these countries could do with more freedom." There are many freedoms that are unnecessarily blocked in the West.

But this book is not about the many defects of Western nations. I have (briefly, again) touched upon their defects in my second book, The Discovery of Freedom, currently a draft manuscript. I have said they are NOT role models, but they have got many things right. I have plenty of thoughts about what needs to be improved in the West (and part of my job in Australia involves helping to make such improvements).

But my point in this particular book is that the differences in ethical behaviour between the West and India are so vast (On a scale of 1 to 100 on corruption, India is at 99 compared with, say, Australia, at 1) that we will be better off in India by not wasting time thinking of improvements to be made by the West, and focus on getting our own house in order.

India is a moral midget compared to the moral giant – the West (on average! I don't claim that everyone in the West is a saint, or even that sainthood is a requirement for a moral society. Please do read me carefully!). So we should not worry about why the Western giant is not even taller, and focus, instead, on our improving own tiny height – a height in comparison where we cannot even rise above the soles of the feet of a fly stuck in garbage? The total corruption found in India is a shame to humanity. I've called for hanging our heads in shame.

"Sabhlok does not seem to be aware of studies that show otherwise: that land ceiling laws can actually facilitate industrial development and growth as they did in Japan and Taiwan. This is just one instance of how misplaced his criticisms are of certain progressive steps that the Indian government took in the early years"

My comment
Of course I'm aware of a range of research in this area! But the research is highly mixed in its findings. Some research shows minor benefits to the poor; other research shows significant harm to farm productivity. The examples of Japan and Taiwan are not comparable since in India land ceiling was not even 'properly' implemented except in communist Bengal and Kerala – and we know how little any of these reforms have helped these two states in any way. They are among the worst performers in India – which is not to say that India performs better than them in any significant way!

But the main point that Ms. Sudarshan has clearly missed that this book is not about economic 'benefit'! This is a moral book, not an economic book. The debate I'm having in this book is a MORAL DEBATE – not an 'efficiency' debate. I'm talking ethics, not economics.

The point in relation to 'land reforms' is this: Of course if we steal someone's property and give it away to someone else, that someone else will 'benefit'. But the much DEEPER question is the moral one: is theft a moral option for anyone in a free society?

I couldn't care the least if India became rich at the expense of its ethical foundations.

That is my main message. We want an ethical country first. Then comes wealth. Not the other way around.

Sanjeev. 8 April 2009

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Mythical barriers to joining politics

Sanjeev Sabhlok

(This article was published in the March 2009 issue of Freedom First)

The February issue of Freedom First carried some of the best writings published in this magazine over the past fifty years. But most of these writings perhaps fell on deaf ears, for they advocated freedom at a time when few Indians cared about freedom. Indeed, Indians don’t seem to care much about freedom even today. Law and order has deteriorated, and corruption has become entrenched, but defenders of liberty are nowhere to be seen on the political stage.

Since the Swatantra Party wound up in 1974, virtually no liberal has bothered to contest elections. Yet the basic entry fee for contesting elections in India has remained low – merely a security deposit of Rs. 10,000. There is also no obvious shortage of people with liberal inclinations. And while many young liberals with families may be hard-pressed to contest elections, thousands of retired liberals can surely be mobilized for the defence of liberty.

So why aren’t liberals contesting elections regularly and in sufficient numbers? Are they scared of ‘dirty’ politics and electoral violence? Do they believe elections are too costly? I will show below that these barriers are not as bad as we make them out to be. In any case, the existence of such problems is all the more reason for us to join the fray and fight to change the system.

Myth 1: Indian elections are excessively violent
The belief that our elections are excessively violent is somewhat overdone. Of course, there is some electoral violence, but its magnitude is small in comparison to India’s size (we should avoid comparing India with developed countries at this early stage of our development). Of our six lakh villages, only a few hundred will experience violence, with possibly a few hundred people injured and a dozen or two killed. Booth-capturing is also the exception than the norm. Similarly, the Indian Police is particularly good at protecting candidates: virtually no candidate is assaulted or killed of the many thousands who contest. And so, while we should take due precautions, merely contesting elections won’t (generally speaking) kill us.

Myth 2: Money wins elections
The second myth relates to money. We know that many parties spend crores of rupees in elections. Accordingly I was recently told: “You require at least 2 crores to fight a parliament election.” True, most corrupt parties do such things but why should we copy these corrupt gangsters? Aren’t we different? We believe in integrity. We do not break the law, even though we disagree with it (I strongly disagree with limits on electoral expenses). We must therefore stick with the Rs. 25 lakhs expense limit prescribed for parliamentary elections. Raising this amount is far easier than raising Rs. 2 crores, particularly for outstanding liberals with good networks.

Then there is the belief that money buys electoral results. It is thought that basti wallahs sell their votes for “Rs.250/- cash, a packet of Biryani and a sachet of country arrack”. But the reality is that voters take money from whosoever gives it to them, but then vote (in the quiet secrecy the polling booth) for the candidate they actually believe in. I know of a politician who disbursed Rs.35 lakhs in slum areas in Mumbai in a single night but lost the election! In any event, bribing every voter can be astonishingly expensive, costing over Rs. 30 crores per constituency! No one spends that much in any election.

At the broader level, I question why even Rs. 25 lakhs is really necessary. Some reflection will show that electoral results depend primarily on the following four things.
a) The message. While the average voter is not interested in the details of policy, he wants to know what the proposed policies will mean for him. A well-tailored campaign can make a great difference, and that does not mean throwing money around.
b) Time spent talking to the electorate. Good candidates spend a lot of time in their constituencies to build networks of supporters.
c) Quality and commitment of the candidate. Good candidates speak coherently and demonstrate commitment to their constituents’ interests.
d) Credibility of the bid. The Indian voter is highly strategic and doesn’t waste his vote on independent candidates or on ill-prepared ‘one-man political parties’. He wants to know that the candidate he will vote for has a genuine chance of becoming a part of government.

While money can facilitate these things, it is not the key driver of success. If liberals do their homework and work as a team, then even Rs. 25 lakhs won’t be needed to win. Ask the Janata Party which trounced the corrupt Congress of 1977. Or ask the Telugu Desam of 1982, or Asom Gana Parishad of 1985. Many of these parties were formed weeks before elections and barely spent any money, but won huge majorities.

Time to stop making excuses!
If contesting elections is not that dangerous nor that expensive, then why do we find so many excuses? Highly successful organisational leaders tell us with a serious face that they “don’t have the leadership capability to lead India”. If even these excellent people think they can’t lead us politically, then who can? The local gangster?

Nandan M Nilekani of Infosys wrote in Imagining India that he is “quite unelectable” – thus conveniently washing his hands off politics. Apart from the fact that it is highly presumptuous for anyone to assume the response of the voter, all that the voter really wants is a demonstration of good citizenship, not some mythical glorious leadership. I therefore ask Mr Nilekani and others like him to stop making excuses and join politics as good citizens. Give our voters a chance to elect good people.

Maybe (I hope I’m wrong on this one!) some liberals have big egos which will receive a rude jolt if they lose elections. If the idea of losing elections prevents people from contesting elections, let me assure them that fighting elections honourably will be seen by every right thinking person as a sign of good citizenship. Indeed, the benchmark in politics is so low that any good person who enters politics will be highly regarded. Beyond that, the true liberal must never be bothered about victory or defeat. We are obliged to do the right thing irrespective of results. The fight for freedom is too important for us to make our fight contingent on future success. Let us first get out there and fight for our freedoms. Let the fight succeed whenever it will; that is not for us to worry about.

A good liberal platform needed
The real gap today is not of funds or potential leaders, but of a platform where good people can assemble and offer a viable alternative to the voter. That is what the Freedom Team of India (FTI) aims to become. FTI has now developed a professionally designed website ( and well-written brochure. Please take a look at these for yourself and ponder your future plans. Do you want to continue making excuses for the rest of your life or are ready to work as a team to start defending your liberties?

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My peeve against intellectuals, officials and businessmen in India

By 2000 I had developed a strong aversion (better expressed as ghrina: sense of detestation or disgust) towards most officials and businessmen in India who are mere stooges of corrupt politicians. Not from them can one expect to get a good country to bring up one's children, for they are all going in only one direction: money making through corrupt means (or, at best, conniving with the corrupt).

But even as my faith in officials and businesses declined precipitously, I retained some faith in public intellectuals. However, by 2005 I had begun to develop a strong ghrina even towards intellectuals. I have since decided that most 'elites' of India are not worth listening to since they talk a lot but do nothing. Worse, they consort with the corrupt and take pride in such dalliances.

Indeed, India is flooded with 'advisors' today – a dozen of them clustering on top of each rupee coin ('rupee a dozen'). They cluster particularly around policy makers like bees around honey; they write articles and publish books, but they only have lame excuses to make to avoid entering active politics. That would not be so bad if they did not then go out of their way to consort with corrupt politicians.

Many Indian intellectuals tend to be stooges with absolutely no self-respect. They seek audiences with corrupt politicians, they accept awards from them, get photographed with them. They suck up to the corrupt to form part of committees established by governments. Never during this whole process is any tough question asked, never the thunder of public challenge issued. What they should do each time any Minister approaches them for anything is to demand a declaration of assets, a declaration of certified accounts of his elections – and of his party, and spit hard (metaphorically speaking, of course!) on any politician who doesn't prove his or her honesty. You want my advice: first show me you are worthy of my advice. But they don't! You'll find them rolling out the red carpet for corrupt politicians every day.

Therefore I now prefer to spend my time talking only to simple citizen-doers who are untainted by a desire to run around corrupt politicians. Particularly on FTI we should avoid mixing with idle intellectuals who carp and criticise but refuse to undertake any action as citizens.

Liberty did not advance in its early years (17th and 18th centuries) through those who only wrote books (which is always a necessary accompaniment), but by those who actually participated in politics. From Machiavelli, Hobbes, Locke, Milton, Burke, Jefferson, to Paine and beyond, about 80 per cent of the initial impetus to freedom came from doers – liberals who recognised their obligations to society and humanity. It is only in the 20th century that liberals seem to have stopped leading politically in the West and limited themselves to writing books or novels. That might be acceptable in the West but it certainly is not in India, where even rudimentary advances in freedom have yet to be made.

Let's hope Indian liberals are made of sterner stuff than most Indian public intellectuals and will step forward to defend their and their fellow countrymens' liberty – by joining the Freedom Team.

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When will I enter full-time politics in India?

(This post is work in progress). A member on FTI asked me about my political plans for India. This is the current situation.

Joint responsiblity
I have wanted to be in full time politics since 1998, but various constraints have prevented it. My family commitments must get first priority. The reform of India is a task for all of us – indeed, of all citizens – not mine alone by any means.

I do expect to come back when financially not significantly worse off (not just for one year or two, but for my entire life). Sharad Joshi gets a substantial UN pension for life – that has left him free to do politics full-time upon his return from Geneva. Therefore he is the only full-time Indian liberal politican today. I am not so blessed, and my attempts to seek funding so far have failed, though I remain hopeful

For instance, I had offered to work in 2000 with CCS for life for a relatively small amount – only $20K US per year indexed for life – but that was too high for CCS to afford at that stage. Now my financial situation is far more complex, and the amount needed to get me to India full-time may exceed $150K AUD pre-tax to pay my mortgage, etc. The fact that I didn’t stay on in India in 2000 has turned out be a good outcome. It forced me to gain experience in a developed country bureaucracy – and also forced me (as I started writing my book/s) to think more clearly about what I stood for. The importance of leadership became clearer to me thorugh experiences in Australia. These things wouldn’t have happened if I had continued in India as part of CCS.

In addition, I’ve been looking for appropriate jobs over the past 3 years that will take me to India but have not been successful on that front yet. If nothing comes up I expect to be able to return in 10 1/2 years at age 60 when I will get an old-age pension in Australia (provided I continue my citizenship) which will mean I could retire from work here and work in India with fewer financial constraints – but that will also mean I won’t be able to contest elections. Delaying for 10 1/2 years is not my preference.

One possibility is that once 1500 members join FTI, there will be sufficient momentum and funding for people like me who want to return and work for FTI and politics full time. Currently, working as a ‘full-time’ second, unpaid job is all I can afford.

Btw, I am aware that similar constraints may apply to a number of others on FTI as well. One thing I don’t want is for any of us to reduce focus on our primary responsiblity – towards our families – for the sake of our secondary (joint) responsibility (country). The liberal must know his priorities. No one is better placed to look after our families than us. If I hear of any liberal who has acted irresponsibly towards his family (and I’m guilty of that at least in part in terms of time I devote), I’d know the liberal has some work cut out for him.

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