A panel of “experts” appointed by the Government has recommended raising fuel prices.  The panel, headed by Kirit Parikh,  recommended a hike in domestic LPG by Rs 100 a cylinder and PDS Kerosene by Rs 6 a litre. It is not certain that what the panel called for will be implemented. Rangarajan Committee and the Chaturvedi Committee reports in the past went unimplemented.  Many newspapers reported that the panel is for deregulating fuel prices. It is not at all evident that a Government orchestrated hike in prices would be a genuine deregulation. If these goods are underpriced, certainly, the hike would be a welcome move. A hike in prices will certainly reduce fuel subsidy burden.

The findings of the panel, it is said, will be unpalatable to the government battling inflation. An increase in fuel prices, however, can’t cause a general rise in prices. Only an increase in money supply would lead to “price inflation”. If fuel prices rise, people will cut down consumption of fuel or other goods. There will not be an increase in aggregate demand. There will be no “cascading effect on food prices”. When subsidies to maintain low fuel prices are removed, the prices of other goods might come down. It will also reduce the fiscal deficit. (A subsidy of over Rs 71,000 crores was given in 2008-2009, at the expense of the innocent, long-suffering tax payer.) Price controls, needless to mention, are not a solution to price rise. Government enforced price controls to deal with price rise, as several economists have noted, is like “trying to hold down expanding pressure in a boiler by manipulating the needle in the boiler’s pressure gauge”.

Unfortunately, in India, the prices of fuels and fertilizers are administered by the Government. It should be obvious that no bureaucrat has the necessary information to set the prices of these goods. Lacking profit-loss signals, the prices set by the government would only be arbitrary. It is true that sometimes the market sets the price higher or lower than necessary to clear the market, but no one has the wisdom to correct these discrepancies. The market, left to itself will set this right. If fuel prices are higher than justified, it will send out the signal that it is profitable to produce fuel. More people will enter the market. The supply of fuel will rise. This will bring down the prices. If fuel is priced lower, producers will get the signal that it is not profitable to produce it. Some producers will leave the market. Soon prices will move towards a level which will clear the market. The market is self regulating.

It is important to recognize how the profit mechanism coordinates the market if we are to understand the harmful effects of price controls. Usually, price controls are thought of as a way to curb excess profits. But, in the market there is a tendency towards equalization of profits in all sectors. No sector can be more profitable than any other in the long run. If a sector is more profitable, there will be excess investment in two forms. One, more people will invest I the sector. At the same time, people already involved in the sector will plough back the “excessive” profits.

Government price fixing has harmful, unintended consequences. If the government sets the prices below the market level, there will be chronic shortage. Such a policy fails to take in account why prices are higher. Prices can be high only when there is an increase in money supply or a decrease in supply of goods. Price controls do nothing to cure inflation, which is purely a monetary phenomenon. When prices are set low, less people will produce the goods and the shortage becomes more problematic. The product disappears from the market, and there will be immense pressure on the Government to raise prices, if it is to cure the shortage. If the Government sets the price above the market level, it would lead to unsaleable surplus.

It is true that if the Government gets out of the price fixing business, there would be a sudden rise in prices. It might be painful to most people. But such short term pain is much better than the chaos price controls create. Shortages and unsaleable surpluses are just two such consequence of price fixing. There are several other consequences. Price controls create black markets. Customers become a menace to sellers. The quality of service comes down tremendously. People will have to resort to means of production which are expensive. There will be hoarding and delays in production. People will waste time standing in queues and searching for products. Price controls lead to further controls, and may ultimately lead to socialism, which will entirely wreck the economy. In short, Government price fixing creates chaos.

Read more on it “Reason of Price Rise and Consequences of Price Control“

The Ministry of Home affairs, Government of India, is on the way to amend the Arms and ammunitions policy. The document issued by MHA says “Proliferation of arms and ammunition in the country disrupt the social order and development.” How true is it? As in many other issues, the conventional wisdom could be wrong. India has very strict gun control laws. In India, people were prevented from bearing arms by the British under Lord Lytton as Viceroy through the Arms act of 1878 after the mutiny of 1857. Though the Arms act, 1858 was repealed in 1959, Arms Act, 1959 was put in place, supplemented by the Arms Rules, 1962. As a result, there was improvement in several development indicators, after Independence, but crime rates in India have gone up several times, mostly in urban areas.

With all these gun control laws, we were not able to prevent the terrorist attacks in 2008, Mumbai. A reporter in the location was caught saying he wished he had a gun instead of a camera. Only people loyal to the British were allowed to possess arms. Many freedom fighters were opposed to this rule. Even Mahatma Gandhi opined in his Autobiography:”Among the many misdeeds of the British rule in India, history will look upon the act of depriving a whole nation of its arms as the blackest. “I do believe that when there is only a choice between cowardice and violence. I would rather have India resort to arms in order to defend her honor than that she should in a cowardly manner become or remain a helpless victim to her own dishonor.”

Proponents of gun control usually argue that gun rights will lead to high crime rates. Firstly, a criminal is a person who violates the law. Is it logical to assume that such a violator will obey gun control laws? A criminal planning to attempt a murder won’t think “Oh, I am sorry. I don’t have a gun. So, I am not going to do this!” In one way or the other, he will get hold of a gun or some other powerful weapon. Vikram Kona writes: “There are around 40 million illegal small arms in circulation in India. Most of them are either illegally smuggled in or manufactured in the illegal cottage industries. Criminals never apply for licenses, nor do they spend a fortune to buy illegal guns. They get them cheaply and easily on the black market, and use them against law abiding citizens with impunity.” Gun control would only disarm innocent, law abiding citizens. Secondly, there is no empirical evidence to prove that gun rights lead to severe crimes. Quite the contrary, in fact! Nations with the highest crime rates are the ones with the strictest gun control laws. The low crime rate of Switzerland is illuminating. Violent crime skyrocketed after gun measures were prohibited in Australia in the last 90’s. When Washington D.C. enacted a ban on handguns, homicide rate rose 200%, while the U.S. rate rose 12%. Often, it is argued that Gun controls are the reason for the low crime rate in UK. There are two points to be noted here. Crime rates were extremely low in UK, even before the hand gun ban. Crime rate rocketed after the ban. As it is said, “Your chances of being mugged in London are now six times greater than in New York.” A study by the US Department of Justice found that there were 40 percent more muggings in England, and burglary rates were almost 100 percent higher than in the United States.

It follows from the philosophy of self-ownership and the right to own property that people have the right to defend their lives and property- If necessary, by force. If so, people should have the right to bear arms. It goes without saying that people should be held accountable for their actions too. But, it makes no sense to punish a person before the criminal act is performed. It is absurd to prevent some people from being armed simply because there are people who use guns for wrong purposes. Why should ones rights be determined by the actions of others? Should a person be prevented from driving an automobile as others drive recklessly? (People killed by their own guns are an extremely rare minority) Charles Reese perceptively noted: “To believe that guns cause crime is as stupid as believing that hammers and saws cause houses. Cars and doctors kill a lot more people than firearms, but nobody wants to ban them.” There is even an NRA slogan: “Guns don’t kill people, people kill people.”

Not for a single moment am I saying that gun rights will prevent crimes. But, people will have a more chance of protecting themselves if they are free to defend themselves. Murderers, thieves and terrorists would think twice before attacking their victims if there is a chance that they are armed. Women and physically weak people could be made strong only through gun rights. It’s ridiculous to expect policemen to be omnipresent. Defending oneself is a skill which anyone can acquire.

It should also be said that a ban of guns won’t eliminate guns from the society. There will always be people who get hold of guns, just like people have access to drugs despite of strict penalty. Such laws can only be enforced selectively. Almost always, people who are not in good terms with the authorities will be punished. The real intention of the people in power is to increase their power through disarming people. Gun control is the greatest threat to individual liberty.

Most Indians are unsatisfied with the state of things. They long for a radical change. Some of them are conceited enough to think that they can change things for good if they rise to positions of power. Though some are slightly aware of the inherent systemic problem, their understanding is not deep enough. They fail to realize the complex level of understanding of social sciences it takes to bring about a change.They step into action instead of trying to bring about a radical change in the mindset of people through intellectual means.Recently I came across the manifesto of such a political party, Jago¹ . What makes this political party different is that it pays lip service to the free market economy. They vaguely understand the importance of a high level of economic freedom, but are unable to understand the inherent contradictions in their views. Let us analyze their political positions in some detail.

1. People would be granted individual freedom over and above a social minimum-which means: basic survival needs such as food, clothing, shelter, education, healthcare and security needs will be met by the Government.
   None of these basic services grow in the nature, or are absorbed from the atmosphere. They are produced by individuals. If some people are to be provided with these facilities, who is to produce them? What if people who produce them are not willing to share their produce? Will they be purged? Inflating the rights of man can’t be done without an outright infringement of their fundamental rights. Often people talk of the right to a free education or health care, for instance, without giving a moments thought to its cost. When some sane person opposes their Utopian dreams, he is casted off as a person who doesn’t care for the poor. It should be noted here that these services are demanded as people should have the freedom to pursue their self interest. Nothing is said of the self interest of their innocent victims. The fact that it is not in ones rational self interest to gain the unearned too, is evaded. So much for their belief that the free market economy is ethically superior. The “basic minimum” can’t be provided without mulcting the tax payer, and hampering capital accumulation. It is capital accumulation which makes high wages and a high living standard possible. The welfare state is totally incompatible with the free market economy. One can’t choose both. Both are mutually exclusive possibilities. They have made their choice. There is no other.

2. Soviet Russia made impressive initial progress.
   This is a distortion of facts. It concedes too much. The majority of people were starving themselves to death even in the initial phase. If even enemies of collectivism are duped by such propaganda, we can’t blame the communists for spreading them.

3. A Government is necessary for maintenance of law & order, enforcement of contracts, justice, defense, currency.
   All these services could be provided by the market, and in a much efficient manner. Apart from the inherent immorality of taxing people and monopolizing these sectors, it should be said that  Government is an  inefficient organization. As law, defense , police and currency are presently provided by the Government, most people have problems imagining how this could be done by the market. However our living standards shouldn’t be dragged down to the level of imagination of such retards. It is an elementary fact of economics that monopolies are bad for the consumer. It applies to defense , law and police too. Government control of money and credit , as we all know, had led to continuous debasement of money. Arbitrary credit expansion in not possible under a free, full reserve banking system based on Gold Standard.

4. Reservations would be replaced with free and mandatory school education.
   One interesting thing about most opponents of reservations is that they propose quality primary education as the solution. They are too dull to realize that free primary education is as, or more harmful than reservations. Both infringes personal freedom. There should be no such free gifts. Mandatory school education is abduction. Children of parents willing to homeschool their children, shouldn’t be dragged to Schools which are similar to prisons. Subsidization of education would only prevent most children from acquiring the education they would have acquired, if left alone.²

5. There would be only one syllabus for all schools and only one all India level examination conducted by only one board at class 12.
   Potential dictators want to decide what is good for the society, and ram it down their throats. The education scene can’t be improved by forcing everyone into the same mold. There is great variation in the skills and interests of various children. A common syllabus decreed by the Government does injustice to all sorts of children. They should be free to pursue their interests. Only competition among various modes of education for Objective truth would improve the state of education.

6. All infiltrators coming from Bangladesh and other countries are to be identified & punished.
   No one with the slightest understanding of the concept of liberty would support this. Government doesn’t rightfully own all the land of a country, hence and shouldn’t have the right to have a say in these issues.

7. Capital punishment for major crimes.
   Capital punishment is barbaric. One can’t be absolutely certain that a person has committed a crime in many cases. So, it makes little sense to take their lives off. Moroever, history proves that such severe punishment doesn’t prevent the likelihood of crimes.

8. All voters will get Rs. 800/- per month
   No comment is necessary on such stupid schemes.

9. Low tax rate would mean better compliance, more revenue and less corruption.
   It seems this conclusion is based on the fallacious “Laffer curve”. 1) It is not at all evident why Government revenues should be maximised. 2) There is no guarantee that a reduction in the tax rate would increase the revenue. It depends on the scale of reduction and several other factors.

10. The function of the government would be to see that no deforestation takes place.
    As long as there is demand for wood, people will grow trees. It is a profitable business. If a particular owner stops producing them, there is an opportunity to make profits and others will. Every good that is in demand will be provided by the market. If no one produces wood, someone can easily make profits by producing it. There will always be people willing to wait for years if it is necessary. There is no shortage of people to engage in such activities. Who is more likely to preserve a land and grow trees-A bureaucrat who has no incentive to preserve a land, and has to exploit the land as much as possible during his time, or a private owner who has every incentive to preserve the land, and grow trees as his revenues from the land depends on the preservation of that land?
    People are more likely to preserve trees when it is profitable to do so. In Europe, where private ownership of forests is far more common (Unlike in the US) less people complain of destruction of timber resources.

11. Population growth should be controlled.
    Population doesn’t impede development. New York City is highly populated. But a lot of wealth is being generated there. Japan is thickly populated. It is a very rich country.Holland, Monaco, Britain and Liechtenstein are thickly populated.Europe is a thickly populated continent, next only to asia, whereas African countries are heavily underpopulated. Hong Kong has a higher density of population, yet it is much wealthier than India and China.  Most people point out the large population of India and China, for instance, as a cause of underdevelopment.That’s plain nonsense. It is the lack of economic freedom, not population which makes countries poor.

12. Ban on child-labor will be strictly enforced.
    Banning child labor would only throw some many children and poor families into poverty and starvation. Children join the labor force only when it is an economic necessity. A ban on child labor doesn’t change the fact that these children badly need those jobs. Such children , in the words of Ludwig Von Mises, would “infest the country as vagabonds, beggars, tramps, robbers and prostitutes.”

By now, it should be evident that the goals of Jago party has nothing to do with Individual freedom. Libertarians should think twice before supporting such inconsistent defenders of Individual freedom. It would only harm our cause of pure liberty.

1. Jago Party website
2. Read more at Hypocrisy of Anti-reservation activists

In the case mentioned above, If I am a customer of Reliance Defense Company, and you are a customer of Tata Defense company, our dispute would first be set for arbitration in the court of the plaintiff (I)-which means: a court of, or patronized by Reliance Defense company. If the defendant (You) is found innocent, the matter has come to an end. If you are found guilty, then the arbitration would run in the Court of Tata Defense Company. If that court too finds you guilty, you would be punished. If it finds you innocent, the arbitration would move to an appeals court. The decision of the appeals court would be respected. If a person (defendant) refuses arbitration, the arbitration would be held in the court of the plaintiff, and the decision would be binding. So, a person who didn’t commit a crime will not refuse arbitration in normal cases. If he disagrees with the decision, he can take the case to his court, or a mutually consented appeals court. It is rational to assume that if the defendant and the plaintiff are customers of different Defense Companies, these Companies together might decide the court in which the arbitration would run. The courts would try to be as honest and objective as possible, as their profits depend on the number of cases they receive for arbitration. People won’t deal with dishonest Insurance companies, or their customers, as no sane person would want to be taken advantage of. So, a dishonest Insurance company would soon find it deserted by almost all its customers. An Insurance company which patronizes poor courts too would be soon deserted by its customers.

Wouldn’t Defense Companies battle?

Battles could be ruled out for two reasons.
1) Wars are costly and would result in high Insurance premiums. Most customers would desert Insurance Companies with high premiums.
2) People won’t deal with the customers of warring defense agencies as they would lose in any case. As of it, the customers of the warring agency would be forced to patronize another Insurance company, if they want to get into contracts with other people.
A court too should be honest if they want more cases handed over to them. What if a rich person bribes the court of Insurance company? If that is the case, most people won’t use those courts and Insurance companies. Nothing like that happens in the case of Government courts. People are forced to use them, even if they don’t trust them.

Fraud under Anarchy

Fraud would be kept at minimum as Defense Companies would lose their profits if they don’t. If a defense company engages in fraud, most of its customers would desert it, as people won’t deal with the customers of such a defense company, as they don’t have a legal recourse in case of crimes.

Poor under Anarchy

It is often argued that poor will be defenseless under Anarcho-Capitalism. However, the argument completely lacks sense-For several reasons.

1 ) It is very unlikely-nearly impossible that there would be extreme poverty as of now under anarchy.

2 ) Under the present system, a rich person can easily bribe a bureaucrat or a judge and get his things done as bureaucrats and judges are not risking their own funds. A private judge is risking his own funds and profits, and he would lose his income or profits if he isn’t honest or objective. It is very unlikely that bribery is going to work.

3 ) Customers would desert courts which have a poor reputation.

4 ) Insurance companies selling defense wouldn’t patronize corrupt courts as, if they do, their customers would patronize another Insurance company. Such a court would be soon out of business. Nothing like this happens under statism.

5 ) One might argue that public courts can work with proper regulation. It will inevitably founder upon these questions-Who regulates the regulators? What is the incentive? How does such a system make profit and loss calculations? Without profit-loss calculations, how does one know whether job is being performed well or not?

6 ) As Roderick Long has pointed out, “any court that got the reputation of discriminating in favor of millionaires against poor people would also presumably have the reputation of discriminating for billionaires against millionaires. So, the millionaires would not want to deal with it all of the time.”

7 ) Under anarchy, the media won’t have to spend most of its space on politics. They would divert more of their energy to exposing corrupt institutions and extraordinary achievements of men. People won’t deal with customers of dishonest defense companies, and these customers will be forced to move to another Defense company.

8 ) A rich person who commits a crime would suffer from boycott by his clients and customers when insurance companies reject him. Such a boycott affects the rich more than the poor.

9 ) Even if a poor person can’t afford to file a case, he can sell that claim, or part of that claim to a rich person. Such a system existed in Iceland. That would make sure that eventually, all sorts of criminals are punished. One can’t commit a crime against a poor person and go unpunished. If someone murders a poor person, the person who has homesteaded the estate of that poor person can file a case and get compensation.

Do Anarchists assume a change in human nature?

No change in human nature is assumed here. We, libertarians don’t take a rosy view of human nature. We see human nature rightly, and admit all its flaws. Three things have to be pointed out
1) If you believe human nature is flawed, you have to admit that the politicians and bureaucrats chosen by these flawed creatures too would be of that sort, and there would be no excuse for state action.
2) A change in human nature is not necessary for libertarian anarchy to work.
3) People with power lust are more likely to rise to the top under statism. The state attracts all kinds of rascals.

What libertarian anarchy does is that it leads to a system in which criminal acts are hard to perform. It also punishes those who resort to such acts in a just manner. Under the present system, a judge has no financial incentive to be honest and objective. He has only a moral incentive. Under anarchy, he would have both financial and moral incentive. Ask yourself which system will deal with criminals better.

Why Anarchy?

Almost every major problem mankind faces can be traced back to the state. The state drags innocent people into war. Involuntary unemployment results when a minimum wage law is passed and labor union coercion is sanctioned. Price controls result in shortages. Protectionism leads to poverty and wars. High prices and poor quality products result when Government monopolizes certain industries. Taxation prevents capital accumulation. Credit expansion leads to inflations and bubbles. Some estimates say that there were nearly 262 million deaths caused by the Government in the twentieth century. In the light of all this, I see no reason for a person who loves humanity to support the state. It should be obvious that in any sector, monopoly is bad. How do statists get around this fact? In any monopoly, there is an incentive problem. There is no incentive to provide better service at a low cost. It is not just that. There is no way to know whether the service is provided in the best possible manner in the absence of competition.

Isn’t voluntary taxation better?

Voluntary taxation is a contradiction in terms. Taxation implies that money is collected at the muzzle of a gun. How could it be voluntary? Lets forget the definitions for a moment. Voluntary taxation is defined by minarchists as, people are not coerced to pay their taxes. People are free to pay their taxes. But this sheer aspect doesn’t make the taxation voluntary. If an area milkman forces every other milkman to stop selling milk in your neighborhood, and then says ‘you are free to buy milk from him, by your own volition’, is that really voluntary, or are you forced to buy milk from him because he has eliminated all the possible options using force. Lets say you say ‘I want to raise my own cow and make my own milk’, to which the milkman forces you to do it. Although he is allowing you to pay him voluntarily, he is forcing you to seek anybody else’s services thereby making it involuntary taxation. The problem with minarchy isn’t just that state collects its revenues using coercion. State prevents anyone from competing with it.

Why do minarchists make an exception for defense, law and police? Some minarchists believe in the Non Aggression Principle. Why don’t they apply it to the case of Security? How monstrous is it to forcefully extort money from a person maintaining the pretense of protecting him? It could be argued that these are public goods and can’t be provided privately. But, this argument was refuted several times. In the past, most of the roads and lighthouses (Public goods theorists usually point out the case of light house. Ronald Coase has pointed out the fallacy. Light house owners charge people for using the harbor) were privately owned. By 1800 there were over 60 private road companies in the United States and by 1830 they had built over 400 private “turnpikes” (highways). Out of 46 Lighthouses in England in 1820, 34 were privately owned. There was privately produced law in the ancient Ireland and medieval Iceland, for instance. And several thinkers have envisioned how libertarian anarchy would work- and it sounds perfect.

Why do I want to impose anarchy on people against it?

Some argue if people don’t want Anarcho-Capitalism, imposing it over them would be violating their freedom. If you tell a thief to not rob from your house, will you be imposing your views on him? If someone takes your money by force, gives you stale food, forbidding you from buying food from anyone else, is that right or wrong? If you tell that person to not do it, will you be imposing your views on him? Will you be violating his freedom? That precisely is what Government does. It forcefully takes money, gives poor quality defense, and forbid us from buying the service from private organizations.

Is human nature consistent with anarchy?

State is a relatively new institution. Mankind has lived hundreds of thousands of years without a state. If so, is it true that human nature is not inclined to live under a state? How come we are living under a state then? Slavery and serfdom existed for a long time. Doesn’t that mean slavery is consonant with human nature? If so, how men got out of it? Obviously, when people realized the advantages of co-operation, people shifted to the present system. When people realize the advantages of anarchy, they would move into such a system. No change in human nature is required. Blaming human nature for being flawed doesn’t make any sense. People are mostly corrupt under the present system as people respond to incentives. Under statism, men have every incentive to be corrupt. To say that anarchy won’t work as human nature is flawed is tantamount to saying that capitalism won’t work as most people are poor. A person who makes such an argument fails to understand that it is precisely the lack of Capitalism which made the people poor.

Minarchy isn’t sustainable

There is no empirical or theoretical evidence to prove that a constitutionally limited government is sustainable. Government power has increased steadily in countries like United States and Britain. Tax experts like Irwin Schiff has pointed out that according to the law and constitution of United States, taxation is illegal. He is in jail now, and his book “Federal Mafia” is banned. That’s not an aberration, but the result of a limited Government. I admit that Anarcho-Capitalism was not the dominant form of social organization for the large part of human existence. But so wasn’t democracy or a limited Government. These are recent developments. The limited Government in United States broke down after 8 decades as of a civil war-But it took 1000 years for the near Anarcho-capitalistic system to break down in Celtic Ireland, and 290 years in Iceland. Who do minarchists support democracy and a limited Government then, when it is obvious that anarchy is far more workable?

How can one support Anarcho-Capitalism when it was never practiced anywhere?

It is true that pure Anarcho-Capitalism was never put into practice anywhere. However, that can’t be an argument against anarchy. A person who invents an electric bulb doesn’t have to prove that there were electric bulbs in the past. A new invention, innovation or theory is something which crushes all existing conceptions. It is unprecedented. I think this should be obvious and it makes no sense to argue against it.

Empirical Evidence for Anarcho Capitalism

Anarcho capitalism was not practiced in most parts of the world for most of the human history. However, there were societies which were really close to Anarcho-Capitalism. There was the law merchant in the past, as Bruce Benson has pointed out. Such a system has worked in Iceland, Celtic Ireland, American old west, British colonies in North America, Rhode Island, Albemarle, and Pennsylvania. There is a lot of historical evidence to prove that these societies worked really well and had sophisticated legal codes. Crime rates were strikingly low. In Celtic Ireland, it lasted for nearly thousand years. It was a civilized, advanced society as there was no Government administered justice. Even when these societies collapsed, it was not due to extreme anarchy, but due to contradictions in the anarchistic structure. Iceland is a classic example, where chieftains were granted more power, and religious issues led to a civil war.

Further Empirical Evidence: Present day Somalia

Somalia hadn’t a central Government since 1991. Yet, it has an efficient telephone system and mobile phone network, which is far better than that of its neighboring countries. The same is true of the electricity system. The situation is Somalia is much more peaceful than it was under the Government, and hence it is easier to do business there. There is a clan system which enforces contracts, though there isn’t a monopoly Government to enforce law. There was an improvement in 14 out of 18 development indicators after the collapse of the state in Somalia. One indicator was the same, and the other one, GDP, was blown up by the Government during its rule. Peter Leeson points out that “Under statelessness life expectancy in Somalia has grown, access to health facilities has increased, infant mortality has dropped, civil liberties have expanded, and extreme poverty has plummeted. In many parts of the country even security has improved. In these areas citizens are safer than they’ve been in three decades.” Even World Bank Economists like Tatiana Nenova and Tim Harford admit that things are getting better in Somalia. These Economists aren’t anarchists by any stretch of imagination.

The author begins by clearly stating that this is not a book about blaming Nehru. He doesn’t question the allegedly “good” motives of Nehru, and is of the opinion that he was an honorable man. It is not the ends Nehru had in mind he questions, but the means he used to achieve them. He takes for granted that not many would argue against helping the poor. Using violent coercive means to achieve this end, however, produces the exact opposite result. This should be obvious. Nothing good was ever done through coercive means.

Sabhlok, who served the Indian Government for eighteen years, knows from his own experience that such policies breed corruption, poverty and inefficiency. He remembers an IAS officer who joined with him in 1982 saying that his “sole objective in joining the service was to make money”. He was once asked by a young man whether he moved to the Assam cadre from Haryana cadre as more money is to be made in Assam. In all the years he served the Indian Government, he didn’t come across a single officer who even compares with the public officials he met in Australia, where he works now. I don’t have to quote extensively from his work. Everyone knows these facts.

I find it really sad that Sabhlok’s attempt to set up a liberal political party in India didn’t succeed. India badly needs politicians who have studied political economy from a Classical and Austrian point of view. India, needless to mention, has never known the concept of liberty. Even when our freedom fighters and other politicians used words like “freedom”, they never clearly understood what it really means. A hampered market economy was the intellectual default. This wouldn’t have happened if people who know better had spoken up for the cause of Individual liberty. And that precisely is what books like “Breaking Free of Nehru” do.

I have, however, several differences with the book. I would like to mention it here. I don’t think Nehru’s motives were good. I think we should be really careful when branding the motives of a person as good, when the end result is chaos. Good-By what standard? We should remember the words of Ayn Rand-“Do not ever say that desire to do good by force is a good motive. Neither stupidity, nor power lust is a good motive”.

The author says that, in India, there was forceful expropriation of property and land in the manner of Robin Hood. Several thinkers, including Ayn Rand and her followers, have made this mistake. Robin Hood, in my opinion, was actually a good guy. I shall quote the philosopher Tibor Machan: “Often it is Robin Hood who is held up as the role model for justifying taxation: Didn’t he “steal” from the rich to “give” to the poor? Well, not, not really. In the original version of the legend, Robin Hood did just the opposite: He stole from those who stole from the poor and returned the loot to the rightful owners. In those days the upper classes, from the king to all his cronies, routinely engaged in extortion. They disguised this, however, with the phony claim that everything belongs to the king and his cronies. Yes, monarchs and those who rationalized monarchy spun this fantasy and managed to sell it to the people that they where the rightful owners “of the realm,” that they had a “divine right” to rule us. This way when the bulk of the country went to work on the farm or wherever, they had to pay “rent” to the monarch and his cronies.”

Like the author, I don’t think that progressive taxation is compatible with Capitalism. It is true that marginal utility of money decreases with increase in wealth, and a rich person cares far less for a thousand Rupees than a poor person. However, this doesn’t contradict my position. There is a limitless need for wealth. The total utility of the wealth a person has should go on increasing so long as wealth has any positive marginal utility to him. There is a need for more wealth so long as additional wealth has any marginal utility. Progressive taxation would only undermine savings and capital accumulation. Taxation is completely incompatible with Capitalism. There is also the Inherent immorality of taxing Peter to pay Paul.

There are some statements in the book, which libertarians like me can’t agree with. Freedom, the author says, is good, and anarchy is bad. I can’t disagree more. Anarchy is the logical end result of total freedom. Anarchy and Capitalism are fully compatible. There is no justification for a bunch of robbers to take money forcefully from you and providing you services, forbidding that you buy from others. All services, including defense and security services could be provided by private individuals. Government is in fact a criminal organization which robs murders and drafts the citizens in a particular geographical area.

The author makes a case for Government regulations quoting an example of a coal miner working under dangerous conditions. However, it is not at all evident that there is a need for a Government to ensure safety for the worker. In case a worker dies in a free society, the Insurance Company of the employer would have to compensate the employee’s family. Insurance companies, hence, would have a policy to make sure that its customers ensure safe working conditions, as their profits would depend on it.

Another point where I disagree with Sabhlok is on social security and public funded education. We libertarians don’t want the poor to starve or children to go without education. Quite the contrary! We believe that the society would deal with these issues in a better manner in the absence of Government coercion. Under Capitalism, people who deserve such aid would not be many and could easily be taken care of by private organizations and voluntary charity.

All said, I highly recommend this book to anyone who wants to understand Individual liberty in an Indian context. Also visit his Freedom Team Of India website, and consider joining the Freedom team.

In his Biography, Greenspan wrote that he has always harbored nostalgia for the Gold Standard which guaranteed price stability. Further, he wrote that he doesn’t see the likelihood of its return in the near future and it is a necessary cost for the existence of the welfare state. What is this statement intended to mean? It is certainly that the Federal Reserve creates money out of thin air to fund the welfare state.Moreover,Greenspan got it all wrong.Price stability is both unachievable and undesirable. As Friedrich Hayek had once written ,the “impossibility of achieving in practice an absolute stabilization of the level of prices in a dynamic economy has been proven time and again.”

When he was asked in a recent interview whether he was wrong, he replied-”Well, partly.”
“A critical pillar to market competition and free markets did break down,’ Greenspan said. ‘I still do not understand why it happened.’” “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.” Was this the man who wrote this about the 1929 Crash that “The excess credit which the Fed pumped into the economy spilled over into the stock market–triggering a fantastic speculative boom.”? He blamed the fraud of Enron, WorldCom and Global Crossing on “infectious greed”. Wasn’t it Greenspan who wrote for the Objectivist Newsletter that “it is precisely the ‘greed’ of the businessman or, more appropriately, his profit-seeking, which is the unexcelled protector of the consumer?”
The greatest crime that Greenspan had done was not his inflationary policies during his term. It was that he “admitted” that his belief in enlightened self interest was wrong! Greenspan was just passing the blame to the market. Surely, this man is a hypocrite!

Education is a valuable tool required for survival of which the formal education forms a very small part. There isn’t anything special about education which makes it a birth right. Yet, I have found that a lot many libertarians make exceptions for education. Inspired by economists like Milton Friedman, they support programs such as “School Choice”. It makes one wonder whether they have any real understanding of the market economy. If they really believed in the superiority of the market in providing for the society, they wouldn’t have supported School Vouchers. They would have let the market take care of the situation.
There are several problems with the voucher system. The most important one is that School Vouchers don’t eliminate taxation. Public funded education is the exemplification of the Marxian idea “From each according to his ability, to each according to his need”.¹ Every one, including homeschooling parents, and childless ones are forced to pay for the education of the children who they may or may not care for. Tax payers pay according to their ability. Parents who recklessly produce children get according to their need. Nothing can be more monstrous than that. Taxation diverts production to fields which may not satisfy the needs which are more urgent for the people.
What most of the supporters of the voucher system pretend not to understand is that if Government is to fund the education of children in private schools through taxation, it is obvious that Government would have a say in how these funds are being utilized. One who pays the piper calls the tune. It would eventually lead to a total control of the education system by the Government. It goes without saying that under this system most of what children would be taught under this system in the name of Social sciences would be mostly Government propaganda. There wouldn’t be autonomy even in the case of private institutions. There would be a call for more accountability and regulation which would lead to stagnation and less innovation in the field of education.
On an entirely free market, schools would have to compete with each other in providing better education at a lower price. The voucher system clearly tampers with it. It reduces all incentives for cutting costs as the fee is not given out of the parent’s pocket, but from the Government. The result would be inefficiency and a high cost for maintaining the system. It in turn leads to less children receiving quality education.
Some schools would be out of business due to the voucher system. Schools which don’t accept the vouchers would find less people to pay for the education which it provides. Voucher system, needless to mention, breeds parasitism and dependency.
What most libertarians forget is that the voucher system is against the founding principle of libertarianism: The Non Aggression principle. No one has the right to take from other in the name of noble motives. To begin with, it is not a noble motive to take from the producer to give to the parasite. Coercion is hardly a libertarian principle.
It is interesting that the supporters of this program call it “School Choice”. What does that mean? Should the tax payer be molested in order to provide parents with enough choice? There are always enough options to choose from under a free market. The voucher program would only reduce this choices by leading to Government dictated syllabus and curriculum. It is utterly naïve to think that Government would fund the education without having a say in it. Notice the secret admission of the proponents of this policy that the government is a failure in providing its citizens with quality education.
Why are these libertarians calling for free food, housing or health care when it is well evident that these are more important and urgent needs than education? If they have real faith in the superiority of the market, why don’t they call for an all-out privatization? The answers are not obvious.

1. Story of Socialism and Public Welfare, Reason for Liberty

“As the idea of contract enters the Law of Marriage, it breaks the rule of the male, and makes the wife a partner with equal rights. From a one-sided relationship resting on force, marriage thus becomes a mutual agreement. Nowadays the position of the woman differs from the position of the man only in so far as their peculiar ways of earning a living differ. Woman’s position in marriage was improved as the principle of violence was thrust back, and as the idea of contract advanced in other fields of the Law of Property it necessarily transformed the property relations between the married couple. The wife was freed from the power of her husband for the first time when she gained legal rights ever the wealth which she brought into marriage and which she acquired during marriage. That marriage unites one man and one woman that it can be entered into only with the free will of both parties that the rights of husband and wife are essentially the same — these principles develop from the contractual attitude to the problem of married life.”

Dowry is also a case of voluntary trade for mutual benefit. Some might find it crass to link marriage to trade. In their eyes, marriage must be done solely out of love. They totally miss the point. No one is forcing anyone to pay dowry or accept it. If a girl wants a boy who loves her without any monetary ties associated with it, she is free to seek such a person. Then she should be willing to wait for such a person and accept him when she finds him. She would have to narrow her search. If she is consistent, she wouldn’t look at the job or income of the guy she is going to marry. That too would be crass and materialistic. She would marry solely for love!
Some people mistakenly say that dowry has made marriage a trade and bride a commodity. In the first place, marriage would be a trade even in the absence of dowry as people are trading sex and love to get back the same in return. In the second place, it is the bride’s family which pays dowry. Certainly, it is the groom who is treated as commodity here. It should also be noted that usually the bride’s family look at the job and income of the groom. Doesn’t that make it a trade? Doesn’t that make that girl a prostitute, as she is trading love and sex for money? Feminists usually say that marriage is slavery. But, as Murray Rothbard had pointed out, in most families the husband goes for work and looks after his wife. It certainly means that it is the husband who is treated as slave here.
Collectivists usually bring up the case of work place sexual harassment. They ask what would be done if the employer sexually harasses the employee in a libertarian society. What they fail to understand is that sexual harassment is a crime and the employer who sexually harasses his employee would be punished if the victim files a case and proves it. Law would be much more efficient in a libertarian society as the lawyers have both moral and financial incentive to be objective. In a statist society the lawyers have only a moral responsibility. Moreover, in a private organization it would be in the interest of the employer to avoid such incidents as it is expensive and would keep female employees away. In a government organization, that is not the case. What is implicit in the collectivists question is that they assume that in most cases, women submit to such harassment. If that is case, it would mean that women are trading sex for her salary, job and all the benefits which come with it. Doesn’t that make her a prostitute? Do these collectivists sympathize with prostitutes?

1. Nathaniel Branden accused, Ayn Rand

“It is a deep fear of the responsibility and risk of having to make one’s own decisions and accept the consequences, with no ultimate authority to appeal to for guidance and to blame in case of failure. This is the reason for such cries as “We must have strong leadership in this time of crisis,” “We need new and better leaders,” and “God, give us a leader “.

People who fear responsibility find it easier to call for leaders, even when those leaders may become tyrants, than to accept the risk and effort of looking for solutions to the problems that beset them.
Upon examination, such people usually prove to be suffering from a deficiency of self-esteem—lacking a sense of personal efficacy and worth, they feel a sneaky, uncommitted doubt about their ability to survive in a world where they will never be provided with the unearned. Those who persist, in spite of all evidence to the contrary, in believing that totalitarianism makes a nation strong are revealing a sneaky admiration for dictatorship. Such an admiration springs from a psychological dependency which cannot conceive of having to be free and thrown on one’s own uncertain resources.”
We are now getting to the other part of the problem-Why people are attracted to men with a dark side. Men have always had a fascination for the dark. They had worshiped fire and thunderstorms. As long as there are rejecting or tyrannical parents, people will have a fascination for such men. They want others to treat them as they were treated as a child. It is a severe mental disorder. It is an addiction, worse than any narcotic addiction or alcoholism. Nothing good can come out of such a relationship. Masochism is all there is behind this perversion. Some turn to the other side of the coin warding off their pain and tender feelings as weaknesses.
Camille Paglia, another female writer, who is known as the Ayn Rand of 90’s in her writings, find fault with abused women as they are weak; that they might be enjoying it covertly. I am not to question the merit of her argument, which could be right or wrong, as the case might be, but it is no coincidence that Paglia; Rand are Nietzschean’s. It is also, not a coincidence that Nietzsche, who believed in eliminating all weaknesses and tenderness, was a German. It was the brutal parenting in Germany, in those days, inspired by many writers including Shrebers, which created a Hitler, and many men who would march to his tune. Hitler, who was afraid of his father, too believed in rooting out all weaknesses and instilling cruelty. So, did his humiliated followers. Pseudo-strength and cruelty, they thought would let off their secret shame. It didn’t!

Many of you would have read of the merits of the superior culture of pre-World War I Germany. “Children were all disciplined and well behaved, as military cadets.” It is the very same culture which they praise, that paved way for a dictatorship. It was then believed that the will of a child is to be broken for him to be easily manipulated later. A child manipulated that way could be manipulated as easily, later, by an adult. She, in fact, would seek men who would be in control and manipulate her that way. She roots out her pain and humiliating imagining all these manipulations and abuse to be expressions of strength. It is such manipulations which makes things easier for Hitlers, Stalins; Saddams. Some learn the art from being once manipulated that way. It is worth noting that Saddam, Hitler, Pol Pot; Stalin all were extremely tortured as children.
It is the early idealization of parental figure, based on a faith-Which means: not based on any rational evidence, which is the very root of this neurosis. It is the belief that children should love their parents. It is the belief that one shouldn’t be true to oneself, but act on a sense of duty. All religions and variants of totalitarianism, including statism are based on such faiths: that some acts or emotions are good in, by and of itself, and that one should act against his own self interest. Such notions help them to repress what was done to them in their childhood. They imagine themselves to possess a love which, in fact, is only a vague apprehension they can neither define nor cure. What else is the path towards virtuosity? When it comes to their mind what was done to them, the only solution it would occur to them would not be to hate their parents, but to idealize their acts. The same happens to men in a dictatorship too. They try to evade their hatred acting it out on others, by torturing their own selves or seeking others who would do that job much effectively. How far they are from their true selves! They haven’t even the wits to know such behavior was motivated by power hunger, humiliation and revenge and not by any benevolent motive. Love, discipline and charity aren’t to be instilled by a sense of duty. The only solution is to have their hatred rightly directed. One would ask: What is to be gained by such hatred? My answer is: No one gains anything by faking reality. No one can oppose injustice giving moral sanction to it. It is much better to have that hatred directed rightly. It is much better to be true to one self. Does that mean one should act on it? Not necessarily!

“Even if it were true that there is a Hindu temple under every mosque in India, what was under the temple? Most likely an Adivasi Shrine. How deep shall we dig?”

This is the reason I am not at all sympathetic towards Anti-Reservation activists. It is also not at all evident that confiscating all property and distributing would cure the problem of poverty. It would only lead to chaos and poverty for all.
Let me quote some libertarian theorists in this issue. Rothbard writes in “Egalitarianism-As A Revolt Against Nature” that “It is not enough to call simply for defense of the “rights of private property”; there must be an adequate theory of justice in property rights, else any property that some State once decreed to be private” must now be defended by Libertarians, no matter how unjust the procedure or how mischievous its consequences.”
Or of the man who might be the current possessor by purchasing the land from Henry Jones X? If Smith and his descendants are lost to antiquity, then title to the land properly and legitimately belongs to the current Jones (or the man who has purchased it from him), direct application of our theory of property titles.” “Suppose that centuries ago, Smith was tilling the soil and therefore legitimately owning the land; and then that Jones came along and settled down near Smith, claiming by use of coercion the title to Smith’s land, and extracting payment or “rent” from Smith for the privilege of continuing to till the soil. Suppose that now, centuries later, Smith’s descendants (or, for that matter, other unrelated families) are now tilling the soil, while Jones’s descendants, or those who purchased their claims, still continue to exact tribute from the modern tillers. Where is the true property right in such a case? It should be clear that here, just as in the case of slavery, we have a case of aggression against the true owners-the true possessors–of the land, the tillers, or peasants, by the illegitimate owner, the man whose original and continuing claim to the land and its fruits has come from coercion and violence. Just as the original Jones was a continuing aggressor against the original Smith, so the modern peasants are being aggressive against by the modern holder of the Jones-derived land title. In this case of what we might call “feudalism” or “land monopoly,” the feudal or monopolist landlords have no legitimate claim to the property. The current “tenants,” or peasants, should be the absolute owners of their property, and, as in the case of slavery, the land titles should be transferred to the peasants, without compensation to the monopoly.
Ludwig Von Mises’ ideas are entirely opposite in this regard. He writes in “Economic Freedom And Interventionism :“Under the conditions of the capitalistic market society this program of land reform no longer makes any sense. In the market economy the consumers daily decide anew who should own the material factors of production and how much anybody should own. By their buying or abstention from buying the consumers allot control of the material factors of production to those who know how to use them in the best and cheapest way for the satisfaction of the most urgent wants of the consumers. Ownership of land means in the market economy the sovereignty of the consumers. The owners are mandatory of the consumers as it were, bound to employ their property as if it were entrusted to them by the people. When they fail in this regard, they suffer losses. Then they are forced to improve their management or, finally, they go bankrupt. Others who know better how to serve the consumers replace them.”
I would have to state that I am totally in agreement with the views of Rothbard in this issue. Property appropriated wrongfully should be given back to the victims of his descendants wherever they can be traced.

If we are to attain a state of complete liberty, the majority of the population must have a reasonably good understanding of Economics. People should realize that inflation is expansion of money supply and booms and busts are the result of it. They should be able to trace back shortages to price controls and unemployment to minimum wage laws and labor union regulations. They should be made aware of the fact that taxation is bleeding the economy and regulations are strangulating it. The study of economics should be an essential part of everyone’s education, especially the first hand and second hand dealers of ideas. A clear understanding of economics is necessary if we are save the civilization. It is the ideas which are held by the majority which determines the economic policies a society adopt. Hence, the burden is on everyone’s shoulders. The task demands an exacting morality. But, the rewards are worth the effort.

The teachings of economics are usually derided as it seems to be totally against the notions of conventional morality. For example, selling Gas during a cyclone at a higher price is the most logical thing to do and is beneficial to everyone stuck in the cyclone, but society gets furious whenever such a thing happens, and is considered as “Price Gauging” and is usually outlawed. Capitalism is also said to be the cause of alienation and other mental diseases. Karl Marx introduced this concept of alienation out of his hatred of the producing class, but it was later supported by psychologists like Erich Fromm and even some popular novelists like Chetan Bhagat. Such notions are the result of ignorance of the immense benefits Capitalism and a division of labor society bestows.

Capitalism is a politico-economic system based on the concept of individual rights. Capitalism is the only system which grants individual freedom to its citizens. A society with fundamental structure as capitalism was implemented largely as the result of the ideas of enlightenment age philosophers like John Locke and the founding fathers of United States. A philosophy which upholds reason-that reason is capable of dealing with reality, and the fact that there isn’t a life beyond grave have played a large part in the flourishment of Capitalism.

It is usually believed that a Government is required for the proper functioning of the society, but nothing can be further from the truth. Government is an agency which is given the power to initiate force against any individual in the society for the sheer purpose of preventing initiation of force in the society, but if the initiation of force itself is wrong and immoral, how can the government be the entity to prevent initiation of force. All services and goods, including defense and security services could be provided by private individuals. Some intellectuals argue that doing away with the government would provide private agencies with an unregulated power to employ force. Well how is this any different from giving unregulated power to a government agency, hence this argument contradicts itself, as who will regulate government bureaucrats and politicians other than themselves?

Economic freedom and political freedom are indivisible. Both are in fact, the different aspects of the same thing. It is usually said that we have all the political freedom we need, sadly we lack the economic freedom we could use. Most people think that the right to vote gives political freedom to the citizens. Then there are people who think that economic freedom means that a job or income is guaranteed. They usually utter bromides such as “a hungry man is not free” or that economic freedom means “the freedom to starve”. All these people are way off the mark. Economic freedom means one would be free to pursue his economic goals without the initiation of physical force from others. If a person wants to start working at a wage lower than which the labor unions and government legislation decree, he would be allow to work in a system which guarantees economic freedom. The employer would be free to hire a person, and the employee would be free to work. Economic freedom is a necessary, though not sufficient condition for economic security. It is widely believed that government measures such as social security are necessary for economic security, though the exact opposite is true.

One of the main reasons why people turn their deaf ears towards the teaching of economics is because of the morality of altruism. They are too dull to think for themselves, they think that one man’s loss is another man’s gain. The other reason is that to understand the theorems of economics, one needs a long chain of thoughts. What appears to be true in first glance, may not be true in reality. Irrational, short term interests too happen to play a large role in the opposition to economics and its teachings.
Envy plays a much larger role in the hatred of economics, as most people want their superiors to be taxed and humiliated. Whatever the reasons, it is evident that the vast majority of the people don’t agree to the teachings of economics. Their ignorance is taking us on the path of destruction. If we are to save the world, we should turn to the teachings of economics and other social sciences, which all lead to the same conclusions in the matter of social organization.

Isabel Paterson was of the opinion that most of the harm done on earth is basically by good individuals. They support wrong policies because they are well intentioned. They don’t wish harm on their fellow citizens. Unable to see the consequences of the ideas and policies they support, they bring greater harm than malicious individuals. It is true that most of the individuals are well meaning, at least on a conscious level. They stick to conventional morality. Ayn rand doesn’t seem to be completely unaware of this. Consider these words of her about the Twentieth century Motor company-

“We saw that we’d been given a law to live by, a moral law, they called it, which punished those who observed it—for observing it. The more you tried to live up to it, the more you suffered; the more you cheated it, the bigger reward you got. Your honesty was like a tool left at the mercy of the next man’s dishonesty. The honest ones paid, the dishonest collected. The honest lost the dishonest won.”

However, it is not true that the people who stick to the conventional moral code are entirely innocent. Their intentions were well expressed by these words of Rand:

“We weren’t so innocent either. We didn’t do it just because we believed that the drippy old guff they spewed was good. We had another reason, but the guff helped us to hide it from our neighbors and from ourselves. The guff gave us a chance to pass off as virtue something that we’d be ashamed to admit otherwise. There wasn’t a man voting for it who didn’t think that under a setup of this kind he’d muscle in on the profits of the men abler than himself. There wasn’t a man rich and smart enough but that he didn’t think that somebody was richer and smarter, and this plan would give him a share of his betters’ wealth and brain. “

It might not be true that all who hold wrong ideas are evil. Barbara Branden rightly asks “We shouldn’t denounce someone who does not understand what we learned only yesterday. Were we evil the day before yesterday?” While some of the people hold wrong ideas mistakenly, there is overwhelming evidence to say that a lot many of them are motivated by evil intentions. It is evident from the fact that most of the innovators were opposed by the majority of the masses.
Great businessmen were called robber barons. It is also interesting to note that most people who hate big businessmen, inventors and innovators love and admire dictators. So many publications in my state shed crocodile tears when Saddam was murdered. Those publications criticize Bush, but it seems that they criticize him only because they think America to be a leading capitalist country. Another striking fact is that though a lot many people are sympathetic towards socialism, and in the days of Soviet Union praised the stupendous achievements of Soviet Union, there was no brain drain to Soviet Russia. Today a lot many people praise the achievements of Cuba in health care and other aspects, but still there is no brain drain to Cuba. Why is that so?
It is also worth noting that the greatest supporters of Socialism and totalitarianism are intellectuals. It is not surprising when we consider the fact that intellectuals are dependent on the state for their survival! How could some one evade the glaringly obvious fact that the freest nations are the most prosperous and the poorest ones are the most controlled?

“Throughout man’s history, money was always seized by looters of one brand or another, whose names changed, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, and deprived of honor. Yet through all the centuries of stagnation and starvation, men exalted the looters, as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised the producers, as slaves, as traders, as shopkeepers—as industrialists.”-Ayn Rand

Thousands of years back, when Rehoboam’s main tax collector Hadoram set out to collect his revenues, Israelites met him with all their might. Stones were thrown upon him that he had to die. History tells us that power and authority were always opposed when first imposed, though the opposition did wear off in course of time. How do we fare up with the ancient Israelites? When did we learn to praise the power hungry as ‘aristocrats of the bureau’? When did our perceptions get so muddled, mind so feeble and soul utterly devoid of self-respect that a biblical story is needed to remind us of our folly?
Wealth is goods made by man. Wealth, as such doesn’t exist simply on earth. It doesn’t simply grow on trees. It is not absorbed from the atmosphere. Wealth ought to be produced, and it is produced by individuals. It is man who creates the character of goods as wealth. What is produced by individuals rightly belong to them. No body else can have a rightful claim on it. To say that someone other than the producer can have a claim on wealth would mean that it belongs to the person who hasn’t produced it, but not to the producer. Nothing can be more ridiculous than such a claim.
If wealth produced by a person belongs to him, it should be obvious that taxation is robbery. Taking the produce of another person is definitely robbery. I don’t think I have to point out that robbery is evil and immoral. What is shocking is that most people don’t see taxation for what it is. They fail to realize that to tax is to rob. Of all the nonsensical notions held by man, the most ridiculous is that taxation is voluntary. If taxation is voluntary, why is it conducted at the point of a gun? Is it possible for a person to evade taxes? If it is not possible for one to evade it, then by what code of logic is it voluntary?
People are so used to the practice of taxation that they are unable to think of a world without it. They are unable to think logically and realize how monstrous it is to rob Raman to pay Rehmaan. When it is pointed out that taxation is robbery, statists argue that we get goods and services in return for the taxes that we pay. They totally miss the point. Why not let the people keep their money and have them spend it on whatever goods and services they consider necessary? Why forcefully extort money from them? Is it possible for the government to provide services to people according to their contribution of tax money? If it is possible to do so, what is the whole point of it? Implicit in the notion of taxation is the belief that wealth should be redistributed. Taxation redistributes wealth in a reckless fashion.

Most people are of the opinion that wealth should be distributed fairly so that the poor would be taken of. There are several problems with this notion. No matter what ones need is, a person doesn’t have a rightful claim to the wealth produced by another person. Even if a person is poor and starving, he doesn’t have a right to another person’s wealth. The notion of redistribution as a fair practice takes wealth as a given. They naively believe that wealth would be produced no matter what policy the government adopts. They fail to realize that taxation reduces the incentives for both the producer and parasite to produce. Why should a person work if sustenance is guaranteed to him? Why should he educate his child at his expense if education is provided free of cost? Why should he pay for health care if it is free for all. While it is true that all do not depend on government for these services, it should be taken in account that a vast majority of people become parasites given a chance. The fact that most of the children study in government funded schools and most avail “free” health care is enough evidence to justify this conclusion. Consider the case of education. Most children are forced to go to government funded schools as their parents are taxed to fund it. The same goes for health care and other services.
Another fallacy regarding taxation is the the money taxed out of the private industry is spent on the public sector. However,the government doesn’t spend the money just as the tax payer would have spent it. If government spends just as the tax payer would have spent it, it would have no excuse to step in and tax. It is also said that there should be some government investment to stimulate growth, to reach a particular level of growth, especially in the case of underdeveloped countries. Nothing can be more ridiculous than that. Government spending is consumption and not investment. Investment is done to serve the ultimate consumers and not the investor himself. In the case of government spending, money is spent in a manner which makes government bureaucrats and politicians happy. It is consumption, pure and simple.

It is also held that taxation helps the poor. Behind this belief is the notion that people would keep on producing wealth no matter what government does to their wealth. When government taxes around 40% of the income of individuals, businessmen would not be able to expand production. It reduces incentives to take risks. Would anyone take a lottery if he has to divide the prize among those who hadn’t paid for it? Taxation also reduces the wage rates received. Wages are dependent on productivity of labor, which in turn depends on the capital invested. It is taxation which tampers with capital accumulation and reduces the lives of the vast majority of the population to poverty.

Why is it that men have no empathy for victims when they are all praise for their tormentors? We will have to get to root of the problem to find an answer to it. It’s understandable that a complex mode of reasoning is needed in the case of Anti-trust laws and it is part of the reason why they hate Bill. It is impossible for a young or ill informed person to take a strong stance on such an issue. Does the same go for Saddam? Who knows not that he is a brute? It proves to us how much people can repress, how much they can hate a superior man, and how deep a fascination they have for the evil. They might deny it with all their sincerity not knowing the roots of their emotions.
Roots of Anti-Americanism, environmentalism, statism, and socialism all could be traced to it. If they find US imperialism brutal, wouldn’t the same go for what controlled nations do to their own citizens? Why do the men who plan on so short a range in the case of economy, think of the ‘environment’ in terms of generations? If men know it not on a conscious level, it is only because there is a lot of repression going on. Repression is the clue! The same reason could be given for anti-capitalistic mentality. People repress their feelings of inferiority and incapability in dealing with reality. Their repressed feelings come to the surface as anti capitalistic mentality

Capitalism is the only politico-economic system consonant with human nature. No other system pays respect to individual rights. Mankind made all its progress since the basic structure of the society was made capitalistic. The nations which were the most capitalistic made the greatest progress. The progress that the less free nations made were parasitic on the freer nations-through imported machinery and medicines from semi-capitalistic nations. The pace with which Capitalism wiped out famines, decreased the infant mortality rate and increased the life expectancy is shocking indeed. Population used to grow at a rate of around 3% in every century. But, population grew at the rate of 300% in the nineteenth century.
Most of the children used to die before the age of five before the advent of Capitalism. Capitalism gave them a chance of survival. Industrial revolution was an offshoot of Capitalism, not the other way around. It was not a pure, unregulated, uncontrolled Capitalism, but the difference even the hampered Capitalism made is for all to see.
All this facts we would expect that people would be in support of Capitalism. We would expect that intellectuals would fight for individual freedom and Capitalism. Unfortunately, that doesn’t seem to be the case. The dominant ideology everywhere in the world is statism. Intellectuals are largely anti-capitalistic. Ludwig Von Mises digs deep into the minds of Anti-capitalists in his classic “Anti-Capitalist Mentality”.
Envy, he says, is a widespread phenomenon. Most intellectuals envy the wealth of businessmen. Most people are unable to fulfill their ambitions in life. When it so happens, they are reluctant to admit that his failure is due to his inability or laziness. Such a person is in search of a scapegoat. He finds consolation in the idea that Capitalism is a monstrous system and doesn’t reward people according to their abilities. The fact that people cling to this idea like a neurotic is because deep inside there are aware of their inability.
The professional intellectual is a relatively new phenomenon. They hadn’t a means of survival through intellectual means before Capitalism. Why do they oppose Capitalism when the fact is that they survive due to Capitalism? One reason could be that it is people who are unemployable otherwise who turn to intellectual profession. Deep down they have a feeling that they are not market worthy.
Moreover, it is likely that intellectuals would think that their work is of high value and they should be rewarded accordingly. They find it humiliating that men in other professions earn considerably greater than them. They don’t realize that they are incapable in their own tasks is evident from the fact that are unable to appreciate the value of Capitalism and freedom. Incapable intellectuals think that they would be rewarded better in Socialism. It never occurs to them that the men in power would decide whom to patronize under socialism. Or,they know it well. They are aware of their own incapability to survive in a free market.
Whatever one might think of Capitalism, there is one thing no honest person can’t evade. The degree of a nations prosperity is the degree of its freedom. The richest nations are the most capitalistic ones. America and Hongkong were nations of poor immigrants. These nations reached where they are today through individualistic means. One can’t fail to see the prosperity of United States, Hong Kong and Japan, the collapse of Soviet Union and various nations which embraced socialism at some point in their course.
If a person genuinely wanted to help the poor, he would find out why some nations are rich and why some are poor. He can’t evade the fact that difference lies in individual freedom.

Is it the high promiscuity in our society which the left liberals are trying to point out?

No man should have the right to say that others should provide him with education or the means to it. Nothing is a birth right. No one says that everyone ought to be provided with food and shelter. No one asks whether people would walk naked if government is not to provide them clothes. Yet, no one opposes public funded education. There is nothing unique about education that would make it a birth right. If so, why is it that such a notion is widespread? It is because the state has emitted propaganda which would make it get a hold on children from the beginning of their lives. If they are taught right from their childhood that their life belongs to the state, it would be hard to take that notion away from them. They would cling to it, like a neurotic. If anyone later tells him that is not the case, they would act as if just a button has been pressed and they have suddenly turned helpless and neurotic.

Public funded education is just a trick of the state and its parasites to control the minds of its citizens. Remarque was right when he said the First World War was created by the tricks of schoolmasters. Bonheoffer was just being honest when he said the Second World War was the inevitable product of good schooling. Mises wasn’t amusing himself when he said “A healthy illiterate is always better than a crippled literate.”He most certainly meant it.

Education is largely controlled by the state in most part of the world. Even in private institutes, the syllabus is decided by the government. Currently, what is taught in schools and colleges as social sciences is mostly government propaganda. Competent teachers in the humanities either have to go without jobs or teach at lower rung institutions. If education were taken from the clutches of the government the schools would compete in deciding their curriculum and finally reach closer to the objective truth.

It is a wide spread myth is that due to government funded education, children who would have no chance of getting an education otherwise gets a chance-that they get a fair start in life. Nothing could be farther from the truth. On a free market, where there is no taxation, regulations, unemployment and inflation-where there is free trade and high capital investment, no one other than lazy bums would be incapable of providing their children with education. Even in the hampered market that we have, there is overwhelming evidence that private unrecognized schools teaching slum children are three times as better as public schools. What the proponents of public education forget is that the money spent on public education is taken from the tax payer and taxation hampers production and reduces the incentives to produce. It reduces wages in the long run and hence makes private education out of reach of most parents who otherwise would have been able to pay for private education.

One of the most fallacious arguments in favor of public funded education is that all children should given ‘equal opportunity’. Left liberals have given their own twists to Adam Smith’s views on the subject. Some of the modern classical economists of now, and the previous century, including Milton Friedman are of the same opinion, which brings into contradiction all of their views. Even Bentham believed children are to be given a firm foundation in Utilitarianism. Come On. Let’s define our terms. What is meant by ‘equal’? What is an ‘opportunity’? How could two children born to different parents be given the same opportunity? Could they be given the same opportunity, even if they were born to the same parents, if born in a different time-space? Aren’t opportunities floating around us all the time? Are they to be thrown into ones lap or to be seized?
It’s usually asked “What would become of them who are not willing to educate their children? Such a question might as well be put as “What would become of the masters if the slaves were let free?”

And the answer is: They’d starve. ]]> http://www.reasonforliberty.com/education/education-a-birth-right.html/feed 0 http://www.reasonforliberty.com/economy/poverty-causes-and-cure.html http://www.reasonforliberty.com/economy/poverty-causes-and-cure.html#comments Tue, 13 Jan 2009 12:27:51 +0000 Deadman On Campus http://www.reasonforliberty.com/?p=1770
Of all the problems which the mankind faces, the greatest one is poverty. The history of mankind is full of famines and starvation deaths. Manipulative do-gooders have always proposed false remedies for poverty. Their remedies have only aggravated the very problem it was supposed to solve. The poor relief in ancient Rome and England tell a sad story. There is overwhelming evidence that all governmental interventions have unintended consequences. Yet, a great majority of the population supports such schemes.
If poverty is the fate of the majority of the living men on earth, and that all the remedies proposed to alleviate it leads to chaos, does that mean that it nothing could be done? Obviously not! There is no reason for poverty as we see now to exist if the ideal social system of the free market is instituted. Of all the nonsense written on poverty, the worst is the notion of vicious cycle of poverty. It has no theoretical or empirical basis. If it were true, mankind would have never risen out of the cave. We wouldn’t have achieved all the progress if poverty begets poverty.
A similar bromide which is uttered by most collectivists is that “The rich gets richer and the poor gets poorer”. Nothing can be more absurd than that. The poorest of today lives much comfortable than the richest of the past. It must be true that there is a huge gap between the rich and poor. But, the gap is not widening and the cause of the poverty of some is not the riches of the other. What the word ‘rich’ meant in the feudal era when people lived on the precipice of starvation and most children died out of it before long? The so called rich in those days couldn’t afford food, clothing’s or anything for that matter which the ‘poor’ can afford now. Once the majority had enough to eat of good quality food, the gap between the rich and the poor would never be an important issue no matter how many exotic delicacies are exclusively available to the rich.
The most popular remedy put forward in solution to the problem of poverty is redistribution of wealth. The supporters of redistribution schemes take the wealth which exists as the given. According to them, the only problem is the allocation of the resources. Their mind is too feeble to get the fact that wealth doesn’t simply exist on earth waiting for its allocation. Wealth is goods and almost all goods men use ought to be produced. One can’t redistribute wealth without reducing incentives for people to produce it. One can’t tax the rich without reducing the incentives for the productive to produce and the parasites to look for a job. One thing is for sure. The more you tax the less will be the total wealth produced as a whole. It is also obvious that the wealth which exists presently in the society, if divided won’t cure poverty. It should follow from both these facts that to solve the problem of poverty, more wealth is to be produced. Taxation can only impede the production of wealth. The greatest economic charity is saving and capital accumulation, which increases the capital invested per head and hence, the wages. This precisely is what taxation and government regulations prevent from happening.
If low wages are the cause of misery of some, it is easy to imagine what the effect of unemployment must be. However, there is nothing inherent in the free market which causes unemployment. Human wants are unlimited. There is always work to do no matter how the human society progresses as goods are physical phenomena and desires are mental phenomena. What causes unemployment is minimum wage laws and labor union coercion. When a minimum wage law is set, employees who are not worth that much gets fired. The same happens when labor unions forcefully set wages above the market level. It affects the employees who are the least skilled. It should be obvious that laborers have every right to organize. What I am against is not labor unions per se, but the forceful tactics of labor unions. The real victims of the so-called pro labor legislation is the least skilled among the laborers-mostly blacks and Dalits. What is shocking is that those who profess to be the defenders of the little guy are those who support such laws. Another farce conducted by the governments is make-work projects such as NREGA. Supporters of such programs such as Amartya Sen and Jean Dreze pretend not to know that the money for the program is taken away from the tax payer and if that money remained in their hands they would have created more employment and higher wages. They don’t even respect arithmetic.

Inflation is another redistribution scheme which affects the most poor. Contrary to the popular belief, inflation is an increase in paper money not backed in gold caused by the central bank (RBI in India, Federal Reserve in the US).Most people are unaware of the fact that the Central bank expands the supply of money and bank credit and this is what causes the prices to rise every year. If the central bank is abolished, prices would fall every year as the production of goods increase every year. In fact, prices have fallen continuously from the mid half of the eighteenth century to 1940 in the United States. It was the abolition of the gold standard in 1933 that caused the price rise later. Inflation is worst form of taxation, as it taxes both the poor and rich alike and the ones most affected are orphans and those who depend on pensions and annuities.
What lies behind these redistribution schemes is the belief that equality is some ideal goal, or that envy should be appeased. Why is equality an ideal? Why should people pander to the envy of the incompetents? The answers are not at all evident. The collectivists have no sane answers to give to these questions. The wealth of some is not the cause of the poverty of the rest. The rightfully understood interests of people are not in conflict with the interests of others. If the personal wealth of Bill is confiscated and divided among the poor, it can’t match the good he has done to humanity. The economic significance of the money the rich spend on luxury is negligible. Most of the wealth of the rich is invested in production, which means to serve the ultimate consumer.
We see that the richest men on the earth are running around like Santa Clause’s. What is interesting is that almost all of them are largely anti-capitalistic. They don’t realize that they are harming the poor by sending out the message that wealth distribution cures poverty. There is one way in which the poverty of the third world nations could be solved. It is by an increase in capital invested. If these nations encouraged foreign investment, businessmen would have invested capital and the wages would have gone up, as it would lead to more production. The only cure for poverty is a free, uncontrolled, unregulated market. But, this is not the goal of the anti-capitalists. They pretend sympathy towards the underprivileged, but oppose everything that would remove their misery!

Inflation is everywhere, an increase in the supply of money and bank credit caused by the Central bank. Money is manufactured in a complex process, in which government securities are purchased by the Reserve Bank of India (RBI), which is accompanied by the creation of new and additional checking deposits for the treasury. When the quantity of money is increased in this manner, too much money starts chasing too few goods and the purchasing power of money decreases, which leads to a rise in prices. It should be kept in mind that the rise in prices is merely an effect of inflation and the real cause is that the money supply has been “blown-up”, or overextended.

Ask yourself these questions. Who is more likely to misuse his power?-A politician who acquired power through promising to deliver or the businessman who acquired his power through delivering goods and has to keep on delivering goods if he wants to keep that power? Who is more likely to serve the public? A businessman who has both financial and moral incentives to do so, or a politician who has only a moral responsibility? More importantly, how can a businessmen misuse his power? He can’t, on a large scale, without the help of the government. If it is true that the greed of the businessman is harmful to the society, why is it that the life standards of the people have improved in countries of high economic freedom (which means: countries known as capitalistic countries) since the beginning of the industrial revolution? The answer is that in a free society, there is no conflict between the rightfully understood rational interests of people.

If you look deeply and think you would understand that what is usually considered as resulting from the greed of businessmen is actually the result of government intervention in the economy-Monopolies, for instance. Most of the people are not economists and they are not able to understand the bad consequences of such evil government policies. They are not qualified to do so. But, they are competent enough to decide what all they have to buy from the market and where to buy them. To take a concrete example, when asked to decide between protectionism and free trade, most of the public would opt for protectionism not knowing that it would lead to a decline in their living standards. If they are free to decide whether to buy foreign products of lower prices or domestic products of higher prices, they would buy foreign goods. Why not make things simple and leave things for the market to decide?

Natural Monpoly is a Myth

The fear of monopolies is rational, if it is fear of government monopolies. It must seem surprising, but it is Anti-Trust laws, and other government interventions which are designed to check monopolies which lead to monopolies. If IBM decides to get into the Automobile industry and undersell its competitors it is likely that anti-trust laws would check its entry. Laws against insider trading prevent business executives from accumulating capital and becoming competitors to big business. Taxation prevents small businessmen from accumulating capital and competing with big businesses. Protectionism prevents foreign competitors from entering a nation. Government licensing prevents people from entering industries and thus it leads to a society in which people hold a virtual monopoly over services. The same goes for pro labor union legislations which gives a virtual monopoly to its members in a particular profession.

In the whole of human history, no private firm was able to set its price independent of the market. On the other hand, several evil political leaders and philosophies were able to acquire power and misuse it. Yet, it is not political power or dictatorships that people fear. It is the market.

Human wants are unlimited. There is no limit for the work to be done in this world. To assert otherwise would mean that we are in the Garden of Eden and have no need left to be satisfied. I don’t think that I have to state that we haven’t reached such a state and will never ever do so. It should follow from this that in a non-coercive society, there is no reason for involuntary unemployment. In a free society, free of government regulations and taxation, there would be employment for everyone who is willing to work.

Economists and other intellectuals who make a case for make work schemes pay no attention to this fact. I will let one among them to speak. “Take the case of education. There is an estimated under-supply of 400,000 schools. Can you imagine the number of jobs we would create if we decided to address this? Simply having one teacher per class, instead of the current one per five classes, would create two million jobs. The construction of the schools, canteen services for them, and all the eco-systems around each school would create millions of more jobs.” says the “brilliant” journalist, Sainath.

If there were truly an undersupply of schools, the market would have solved the situation (provided schools aren’t choked by government regulations which prevent them from making profits). Businessmen seeking profits would find the situation appealing and step in. The fact that they haven’t proves that it apparently isn’t the case. It is understandable that what Sainath would have meant is that there is a need for education. Need, however, is not demand. Need, to be demand, should be backed by adequate purchasing power.

“Government spending cures unemployment”, is an old fallacy in economics. It is backed by no theoretical or empirical evidence. The amazing naiveté with which the intellectuals push this theory is shocking indeed. I hope that everyone would agree that two and two equals four. If this much is understood, the fallacy in this view becomes evident. The government doesn’t create wealth. Everything that it spends is taken from the innocent tax payer-directly or indirectly. (Inflation is an indirect form of taxation.) If this very money which the government spends is let to the tax payer, he would have either invested it or spent it on consumption. Both would have created as much employment or more. There is no reason to believe that private spending creates fewer jobs than public spending. There is no reason to believe that a bureaucrat, who has only the moral responsibility, in general would spend the money more efficiently than the tax payer who has both moral and financial responsibility. Another fact which is being forgotten is that the money taken from the tax payer won’t be spent in the same manner the tax payer wants it to be spent. If it were so, there would be no reason for the government to step in. The tax payer would have managed by himself. The fact that the tax payer is being called to spend for some ventures is adequate proof that no one would willingly spend for these projects.

I have said that what the government spends is the money of the tax payer. How moral is it to tax individuals for ventures which they may not approve of? Wouldn’t taxing A to spend on B reduce incentives for both-the productive and the parasite? Wouldn’t taxation preventing employers from expanding production and prospective employers from being employers itself? Such coercive actions would indirectly lead to more unemployment, not less.

It is worth examining why the very problem of involuntary unemployment exists. If there is no limit for the work to be done, why should some people go without jobs? The answer is: Government regulations and labor union coercion. If a minimum wage is set at a particular rate, employees who aren’t worth that much would be laid off. The same goes for labor union coercion. Labor unions use coercion to prevent employees working a wage lower than they have decided. Intellectuals who advocate such measures are hurting the poorest among the workers-the very people they claim to protect!