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"As America changes from focusing on greater justice and prosperity than
it has had, to the kind of society it is becoming (political correctness,
no long-term investment, incredible self-indulgence), it is bound to lose
its no. 1 place. I predict that it will happen in the next 5-10 years
unless there is a substantial change in the cultural climate."
I'm not quite sure. No evidence anywhere on the horizon to show that USA
will stop being at the technological frontier => its real GDP per capita
can grow at 2-4% p.a. without any trouble for long after 10 years. I
expect it to grow at that rate for another 5000 years unless someone bombs
it out of existence. The only immediate concern is with its mismanagement
of the Social security trust funds. The CBO has a major report on that.
There is no problem with the culture here. As Julian Simon was wont to
challenge those who made such dire predictions, I am willing to bet one
chococate icecream that America will NOT lose its No.1 place in the next
5-10 years. Are you willing to take me on?
Prof. Guptara said:
"Those who focus on being no. 1 as individuals, say in sport or academics,
do well because the goal is clear and the rules are clear and the
preconditions self-evident. Those who focus on being no.1 as nations
usually end up paying too high a price (Nazi Germany, for instance)
because the preconditions and "rules" are not clear.
I want the national focus to shift from self-patting on the back on
achieving squeaky per capita GDP growth rates of 1.7% for 50 years, to a
feeling of Great Competition and a Great Falling Behind. That is why I
insist that we do not dilute this #1 thing. I want us to understand that -
even using PPP as the measure of income (which I really don't like), we
need to grow 230 TIMES in per capita income in the next 100 years to catch
up with the USA. See the chart I presented today. No squeaky thing like
"let us be just and prosperous" will achieve that. ONLY a national focus -
everyone saying how many more years we need to catch up with USA - will
make this happen. This is like putting man on the moon. We have to repeat
it, believe in it, and work for it. Almost impossible, now, to overcome
the handicap given to us by our leaders of the first 50 years, but we can
do it, I assure you.
Prof. Guptara said:
"The right policies produce prosperity relativey quickly, just as the
wrong policies produce poverty relatively quickly. It did not take
Singapore incredibly long time to emerge into prosperity and it has not
taken India a long time to slide."
Prof. Guptara said:
"Incidentally, we never had socialism in India, we had a "babu-raj" or a
collusion between certain industrial/commercial interests and certain
In comaparative systems analysis in economics we do not recognize any
babu-raj system. There is socialism or there is capitalism. I have never
been taught about any other economic system in any Ph.D. course. There may
be shades among each, here or there. But these two are DISTINCT things.
There are only two ways to operate an economic model, mathematically, in
all graduate level books.
a) centralized social planner who knows the social welfare function
b) decentralized economy with competitive firms and individuals
determining the solution.
Other complications can arise, such as the level of imperfection,
incompleteness, asymmetry, etc. But I leave that aside.
The first one, in which someone other than the actual player or
stakeholder is assumed to know more and better about that person's
condition, is called socialism. It is like saying that you, sitting in
Switzerland, know more about whether I need coffee right now, than me, the
I have covered this issue of definition at great length in earlier debates
with Professor Sitaramayya Ari, a self-professed Social Democrat at
Oakland, and many others, including Charu. One sample of my arguments:
This led to a great debate in which we realized that we Indians are all
liars if we do not admit that we are socialistic since, among other
things, our Constitution says so in the FIRST line. Also, remember that
Jal recently reported from Pachmarhi that the Congress has reiterated its
socialistic intentions. Are they all liars, from A to Z? Should they not
say that they are reiterating their commitment to the babu-rajism? Why
does everyone use the word "socaialism?" I am confused. Is this a
meaningless word to be used as a "joker" in a pack of cards?
As far as I am concerned as an economist, the mere fact that we have a
Planning Commission and that we even ONCE tried to run a linear (nor
non-linear) programme to determine allocation, prices, etc., is enough to
prove that we are socialist. I follow the stringent definitions advanced
by Hayek where ONLY socialists plan.
As Manoj said, intellectuals should first of all demystify their abilty to
dictate to the economy. That is a truly fatal conceit. That will
automatically cut out all or almost role for economists in the planning
commission, and 80% of our government ministries. You and I do not even
know what our own children want. How can we know what an entire economy
can need? I am amazed at the immense arrogance involved. We love treating
people either like babies who cannot think for themselves or who do not
know when to stop reproducing. Who are we to treat other human beings like
babies? Socialism is a state of mind as well as an economic system.
Even people who try to forcibly "preserve" our culture/ language when the
people themselves want bollywood hindi or rock music, are socialistic.
Basically, when you or I try to directly enter into the utility function
of another person, we are socialistic. Socialism = arrogance of the elite.
Capitalism = humility in which we accept that people can take their own
decisions; in which some of us are there to facilitate, but we do not
Prof. Guptara said:
"Further, there is no such thing as "pure" capitalism"
Yes. This is what is stated on the Preamble page.
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