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Re: quick resp.-Hongkong



---Sanjeev Sabhlok <sabhlok@rcf.usc.edu> wrote:
> There is nothing surprising about private banks issuing currency. That
> system, by the way, is far far better than the Fin. Min. of India
> borrowing hugely to create massive inflation whenver revenues run
>short of grandiose "plans" in which a bulk of money will in any case be
> misappropriated. There is little accountability in today's system of
> currency. That is one reason why the rupee has become practically a
> worthless piece of paper over the past 50 years.  
> 
> My request: let us not rush to judgment on such issues. 


And my request is that we do not jump to conclusions either.  Where
did I say that we have to maintain the same system as today's ministry
of finance? -- which you seem to be implying.  Government control is
one extreme and privatization is the other.  Surely, there is a way
inbetween on such critical functions of the national government? Have
you not heard of an autonomous central bank?  Or are they all failures?

SS:
>There is MUCH in  favor of private banks issuing curreny in India,
and >railways being  privatized completely, etc. Let us study an issue
and >if we find it is worthwhile to recommend a private effort then
let us >do that. 


Yes, keep studying an issue.  As if "study" is the answer to
evrything. Moreover, what does the issue of privatizing the railways
has to do with currency?  Or are you assuming that I am against all
privatization?

SS: 
> There is nothing that can run in Hong Kong successfully that cannot
run in
> successfully in India. Are we deformed/ morons/ idiots and are the HK
> people all brilliant/ honest/ whatever? Why do we eliminate good
models?
> Why can a thing that runs successfully in HK not run in India? 


Where did I say that we are a bunch of morons? or deformed idiots?

SS: 
> I am not saying that we follow the HK model; but let us never rule
it >out without a very strong justification, particularly since that
model >has created huge amount of wealth for that nation.


You may see Honkong as a nation, for me it was a city-colony. And
hence there is no comparison between a city-colony and a huge federal
state.

SS: 
> Let us discuss your justification in ruling out HK so summarily.
> 

Yes, let us.  It is quite simple and perhaps not "scholarly" enough. 
So after I am done please contact either a professor or a Ph.d to get
an affirmation.
There is something what we call as IGFs or Inherently Government
Functions.  Issuance of currency in my view is an IGF which cannot be
privatized.  Running a railway service on the other hand is not a
inherent government function. So why compare apples to oranges?
Regarding currency:  The government can do this either directly as is
done in United States or it can delegate that authority (through
proper legislative action) to a semi or fully autonomous authority,
such as the reserve bank etc.  Furthermore, in a federal system
issuance of currency will and should be the inherent function of the
national or central government. 
I am assuming that one day India will have a truly federal government
structure where State governments will have legal and economic
authority and that the federal government will get out of the banking
business altogether.  In that scenario which private bank will the
National government go to?  In a federal system the national
government cannot and should not delegate authority to one particular
state or a one particular institituion.  You see where your comparison
of a small, uniform, colony-city to a large, diverse, federal-state
was not valid beside being farcical.
If on the other hand you think there are no such thing as inherently
government functions, then there is nothing more to discuss as I will
not agree with that non-premise.
Now while you make your usual dash to a Ph.D or a Professor, I'll go
and do my own workout.   Good day.

Kush Khatri.

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