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Re: wisdom? Whose?



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[Topics under debate]: GOOD GOVERNANCE
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vamsi@siliconcorp.com wrote:Charu datt wrote:

>
> > Perhaps you could explain the 'ultimate folly' of the following
> > reasoning:
> >
> > Suppose a village has 50 potential phone subscribers.
> > Since the cost of laying cable/fiber from the central office
exchange to
> > the village exchange will be divided among 50 customers as opposed
to 50,000
> >
> > customers, in an [urban] area of higher population density, the
initial
> > cost a non-subsidized operation needs to charge subscribers is then
1000 times
>
> > what an urban subscriber would be charged. This would cut the the
pool of
> > potential subscribers to 5 from 50, driving up the cost to 10,000
times an
> urban
> > line, thereby reducing the potential traffic to the point that it is
now
> > unprofitable for a non-subsidized operation to provide phone
service-
> > and phone service thus never becomes widely available in rural
areas.
> >
>
>     There is a thing called "mobility" (even under a socialist
setup!).
> Thanks to mobility these people can move to areas that would permit
high
> investments and high returns on infrastructure - no amount of
subsidization
> can make up for this improvement!!  Although it would be nice to have
a garden
> in the desert it is just not practical.  Government's effort to create
"a
> garden in the middle of the desert" really hurts everyone.  For
example, the
> entire Telecom sector in India is growing at a much slower rate than
say
> China's or America's thanks to our lop-sided policies of charging high
lisence
> fees to feed the rural telecom effort.

[I'm not necessarily endorsing this view, but explaining the logic used
to justify
it:]
Yes, there's mobility, and _eventually_, if rural areas remain 'deserts'
[ie no
electricity, roads, safe drinking water, AND no telecom] people will
leave those
areas, it will cost more to get people to live there to produce food,
food prices
go up, and farm wages will have to rise to the point that farm workers
stay in
rural areas, and they have the purchasing power to attract the private
investment
into the 'desert'.

The key word here is 'eventually', the process would take time and would
involve a
great deal of upheaval in the interim as the transition took place.
Suddenly
yanking food subsidies can leave a lot of people in the position where
they
literally cannot afford enough food for themselves and their families,
and hungry
people will do desperate things- societal norms break down in the face
of hunger.
Governments all around the world subsidise food prices- this includes
the US and
the entire EC [as an historical aside, both the french and russian
revolutions,
among others, were sparked by food riots, and the US came very close to
seeing
food riots during the depression of the 1930s].

The point is that governments [and whoever has the power] will always
try to do
some kind of social engineering to steer the direction of societies to
their
percieved advantage or their notion of 'good' [usually the two are
synonymous].
Usually the people who do this also realize that if the transition
they're trying
to achieve involves a great deal of displacement [e.g. war, hunger,
revolution],
then the process will be unstable and the outcome less predictable.

> We can't oppress the consumer of one
> part of the country to feed some joe shmo in another part - it is
> undemocratic!!  Instead, the Government should encourage relocation.

Presently in India we do just that- food prices are kept low by
mandating that a
certain percentage of the crop must be sold to the government at a
'procurement
price' so that residents of urban areas can afford to eat. So we're
effectively
taxing farmers and farm workers, so that food remains affordable, so
that hungry
people don't start a revolution- and, btw, this, and the high urban
civic
spending, does encourage relocation to cities.

>
>
> > The same argument applies to electric supply, and governments
worldwide
> > do subsidize rural electrification- possibly because it is
considered
> > socially desireable to provide an incentive for some people to
continue to
> live
> > in rural areas and grow food for everyone else even though there is
not an
> > immediate and tangible 'profit' that any accounting course could
help us
> > calculate, though I suppose we could dispense with this 'ultimate
folly'
> > and allow food prices to rise to the point that people move out of
the
> > cities and back to the villages and we revert to being an agrarian
society
> with no
> > use  for things like electricity, telephones, and technology in
general.
> >
>
>     Or simply encourage rapid expansion of infrastructure by
dismantling the
> self-serving license raj altogether.  No one has to live in caves
then!

Not that I endorse licence raj, but I fail to see how 'rapid expansion
of
infrastructure' will happen in areas where it is unprofitable.

> Your argument for Government subsidies ignores the oppression and
"robbery"
> committed elsewhere.

If your ideal is no government action, then in your ideal world, food
prices would
be very high, reflecting the high wages to compensate poor quality of
life
involved in living a rural area. In getting from the current system to
that state,
thousands, perhaps millions would die of hunger. The price of even a
minor
financial misfortune could easily end up in death by starvation.

> This kind of transfer of wealth has one flaw: it doesn't
> help create new wealth!  And hence, instead of the population growing
> wealthier, we see a gradual degeneration - trademark of socialism!!

I don't endorse the abuses of the power given to those who are supposd
to use it
to the ends of social stabilization, but at least part of building a
dynamic
society is creating conditions that make it possible to restart after
failure-
that is where the the 'socialistic' safety net [based on wealth
transfer]
paradoxically nurtures the entrepreneurial drive.

My point is that, at least sometimes, it does make sense for
governements to
intervene in commerce, as with food subsidies, and in the course of a
transition,
a governement's actions can soften or eliminate the misery and
dislocation that
social and technical transition bring about- [btw, that's what
capitalist tool
Greenspan keep professing to do so this would not seem to be an
exclusively
socialist activity].

-Charu



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