From: hira@cme.nist.gov (Ron Hira)
Newsgroups: alt.culture.us.asian-indian
Subject: Re: What ails India.......?
Date: 16 Nov 92 18:55:56 GMT
Reply-To: hira@cme.nist.gov
Organization: National Institute of Standards and Technology

In article <1992Nov5.002813.1086@athena.mit.edu>, tyadav@athena.mit.edu (Tapesh Yadav) writes:
|> From: tyadav@athena.mit.edu (Tapesh Yadav)
|> Subject: Re: What ails India.......?
|> >|> 	 what is it that ails India?
|> >
|> >Ok, let's examine. Certainly one can blame socialism and big government
|> >for the problem, 
|> >but what is your proposal? Should India adopt a trickle
|> >down economic approach which has divided this nation for the past 12 
|> >years? Let's remember that the free market is not and should not be 
|> >sacrosanct. 

|>  Lets focus on more basic terms. As you mention it : its socialism vs.
|>  free market (capitalism). 

I don't think that one can have pure socialism or pure capitalism, and 
neither are necessarily desirable. So its not as basic as black or white,
as you try to paint it below.

|>  Socialism, to define terms, begins by assuming -
|> 	- each citizen has a right to economic benefits
|> 	- the state can ensure these benefits by whatever means
|> 	  necessary.
|> 	- the state should ensure these benefits by whatever means
|> 	  necessary.
|> 	- the needs of the many are more important than the need of one 
|>           individual
|> 	- the central problem in economy is in distribution.
|>  Free market begins by assuming -
|> 	- the central problem in economy is in production and opportunities
|> 	- free market encourages citizens to take risks and actualise
|> 	  opportunities
|> 	- individuals are best performing when they compete for self interest
|> 	- the society benefits as a consequence of this competition
|> 	- market forces are the most effective means of controlling managers
|> 	  and management
|> 	- market balances economic benefits received with abilities and 
|> 	  productivity of the citizen.
|>  
|>  IMHO, free market should be sacrosanct, because it deifies individual 
|>  freedom on economic domain. And because, any regional economy, let alone
|>  national economy, is too big to be effectively managed by a handful of
|>  politicians and bureaucrats. Failure of eastern bloc, perhaps, doesn't
|>  need amplification.

However, there really isn't a true free market system in place. Besides
the fact that the free market system breaks down miserably when economies
of scale are significant. I'm certainly not proposing that eastern bloc
socialism is a good alternative, just saying that the trickle down economics
of the 80's in the US is not a very palatable solution. The plain and
simple fact is that the rich got richer and the poor got poorer. Do you 
think that the LA riots were only caused by the King verdict? There
are areas where the government does and should have a strong hand in 
shaping the society; i.e., education. There is also a strong sentiment for
some type of industrial policy, similar to the one Japan has, and the 
US has had in such fields as defense and medicine.

To claim that the government is totally inept and should not be relied 
on to do anything is quite a defeatist attitude, and certainly doesn't
give much credit to all of the things that it has been able to do, like
subsidize that great university you attend. There is a place for gov't,
albeit a much smaller one for the Indian one.

If you want to talk about failures, I'll point to Herbert Hoover.

|>  First, like Maggie Thatcher did in U.K., India should begin by divesting
|>  and decentralising. For example:
|>  [1] It should sell off railways, airlines, HAL, telephones,
|>  radio, television, etc. etc. to stockholders and private mangement. 
|>  [2] Let telecommunication industry (TV, radio, newsprint etc.) be left
|>  to market forces. Means more jobs. Let people talk and hear each other, 
|>  instead of the govt propaganda.
|>  [3]... etc. etc.

I certainly agree with most of these proposals, but one has to eye the
political ramifications of such acts. TV and propaganda is definitely
a sticky issue, that cannot be magically cured just by selling the 
rights off to private investors. 

Are the people who are displaced by decentraization entitled to any 
compensation in the form of retraining or job placement?

What about free trade? Opening up the markets would spur competition, 
but who will benefit? Again, none of these issues are black and white.

Poland has been trying many radical reforms recently, and most of the
reformists were voted out of office in the last election. Note that 
Poland is a very homogeneous society, unlike India.

Interestingly enough, you don't mention education at all in the above, 
or the population problem that India faces. Those seem to me to be the
major issues that ail India today. 

|> >There definitely needs to be reform of their economic policies, but this
|> >is exactly what is going on right now. The fact that India is large, 
|> >diverse, and *democratic* is a significant problem in forcing capitalistic
|> >reform. 
|> 
|>  Am I misunderstanding you to mean that capitalism and democracy are 
|>  different and incompatible concepts. If so, I disagree. I think they are
|>  compatible, in fact essential to each other's success. Capitalism has
|>  to do with economics; democracy with legislation. Both relate to the
|>  individual's freedom in different aspects of individual's life.

You certainly misunderstand what I say in the above statement. Democracy
and capitalism are not mutually exclusive, nor are they mutually inclusive.
What I was referring to is that economic reform with a democratic government
is not an easy task. The countries that the IMF points to as being successes
generally have dictatorial rule, to ram those reforms thru; e.g., Chile had
and I guess still has Pinochet. To say that capitalism and democracy go 
hand in hand is *not* the case. Taiwan did not have much democracy, and 
I don't think that Thailand, nor South Korea are considered very democratic.

The major problem with free marketers is that they fail to recognize the
political side of things. Free marketism is not a panacea, it is a piece
of the puzzle.

Ron
Newsgroups: alt.culture.us.asian-indian