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Veering off the track!

Administrative Note:
Week's Agenda: Social Conditions
  Minimum Wage
  Rules regarding Safety of Personnel at work to be made clear
  Introduction of Social Security Net
  Introduction of identity card
  Removal of Age discrimination at work
  Creating conditions so that reservations will no longer be necessary

On Wed, 7 Oct 1998, Vinay Chandekar wrote:

> I agree with Arvind that whatever rules are passed should be done
> after creating the conditions for it and as to why they can not be 
> implemented in presend-day India.

The rule of equitable representation is NOT dependent on social
conditions. It is the principle on which we have associated into a
democratic republic. 
> For that matter, I think, this defence of Free markets is coming rather
> late in the day.

This effort on IPI is NOT a defence of anything. Best policy in many cases
needs some regulation, or even intervention, or worse (!) direct supply by
government. Asking for free markets in most cases is not something new.
Shenoy, Friedman, and many others asked for it - and were resisted by
arrogant people who thought that they knew better than the common man and
could "plan" everything. These were feudal people who wanted to enter into
other people's utility function and treat the whole of India as they would
treat a bunch of babies. They wanted to be the mythical "Social planners."

I do believe that Hayek, Shenoy, Friedman, Subroto Roy, and others are
right on more things than one. Even Greenspan. The purpose of this debate
is to find out where they are wrong, and to correct those defects. 

I would recommend very pointed critiques rather than generalizations about
IPI (which is NOT a defence of free markets, for example, but a defence of
good sense and good policy). I would request you, in the format of the
Rules of Debate, to suggest clear, hard hitting short paras which are
intended to over-ride the work already done. That will be highly welcomed.

> Just a couple of lines about why the commodity-producing nations have 
> remained poor. Here also the market distorting factor of buyers being 
> fewer (developed countries ) and suppliers being many comes into play. 

Markets do not distort in such things. If the fewer people of the
developed countries will not eat all the beetroot or coffee that you
produce in the developing nations, then it is neither the markets nor the
westerners who have distorted anything. These westerers are already fat,
and growing fatter each day. How much do you want them to eat? Poor guys
are dying out of the excess food we produce for them (as well as they
produce for themselves)! Have mercy on them. They just don't want our milk
powder, or our wheat, or our potato chips. They have eaten and are full.
So: stop producing these things for selling abroad. Stop giving free power
to farmers.

Diamonds are NOT perishable, they are a luxury good, their demand is quite
differently determined than the demand for cotton or for coffee. You can
hoard diamonds if there is excess supply. You cannot hoard cotton or
sugarcane. If you like, you can start producing diamonds in India. I have
no objection.

Markets are the LEAST DISTORTING mechanism. All other human interventions
are emotive, irrational, and dangerous. Particularly in areas where
perfectly competitive markets can easily operate. Let us not whine about
markets in general, but realize that there are two sides to any picture.
None cares for the other, per se. Both want goods/services. They will
demand SOLELY based on the signals received through the Price vector. If
we, like fools, produce excess coffee, and the west treats it like junk,
that is not a distortion. It is OUR foolishness. Period. Let us switch to
producing other things.

If there were futures markets in India, much of this would be controlled.
Less junk would be produced. But we of course don't like markets, do we?
We think of futures traders as "speculators" to be hated with all our
might. Fine. Let us carry on the way we are. As I said in 


Enjoy Being the World's Poorest. Have fun! Blame everybody else but

> For these and many other reasons, it is Most important to follow
> market - measures that are compatible with the economic development of
> an individual country. What suits america doesn't have to be suitable
> for India.

As I said many times earlier, I don't care what America follows or does
not. There is a huge debate on all issues in this country too. I care for
the best policies for India. Please propose the best policies: we will be
ever grateful and eternally beholden to your wisdom. No pre-judgments or
stereotypes please. We are NOT copying anyone.

> To bring this to a Scary end - let us not follow Bill Clinton into His 
> methods of doing things economically and personnaly. 

Sorry: I couldn't catch you on this. Where are we following Bill Clinton?
I'm concerned. Why are we not debating on issues? Please revert to issues
and let us quit personalities. The debate will be richer if we talk of
precise things we have in mind or we want to see in India. 


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