Global warming or climate change is a worldwide disquiet that needs to be addressed in a proper way. Scientific studies have regularly provided enough evidences regarding the regarding the human activities that harms the natural balance of our planet by producing large amounts of greenhouse gases (GHGs), most notably Carbon Di Oxide (CO2) by burning fuels. Now when it is established that global warming is a real concern, why is it that the world’s leading power, the United States is not able to legislate enough stern laws to check the pollution, emission of greenhouse gases, human activities that are causing global warming and to provide better greener ways to lead the world. The United States is the biggest contributor of green house gases, specifically the Carbon Di Oxide emission from coal based power plants, the Energy Information Administration (EIA) of U.S reports that the United States’ Greenhouse Gas emission grew by 12% between 1990 and 2001. The global warming has already raised the average global sea level by four to eight inches during the last 100 years. Scientists believe that the increasing levels of GHGs may cause acute climatic and health impacts on humanity. Despite of all these known facts, the government of United States under the leadership of President George W. Bush rejected the Kyoto Protocol of 1997 and refused to sign the agreement that required United States to reduce its GHGs emission rate to 5% to 8% below their average level of 1990 by 2008 to 2012. On the other hand, Bush supported the idea of voluntary research and efforts at enhancing energy efficiency. In 2002 at Climate Action Report to the United Nations, Bush administration accepted the risks from global warming and informed that the GHGs emission of United States will increase by almost 43 per cent between 2002 and 2020 if the US government does not take stern actions to reduce GHGs emission1 In July 2004, Bush administration again accepted in their report to Congress on U.S. Climate Change Science Program that that the most probable explanation for global warming since 1950 is the increasing levels of carbon dioxide from human activities. However, Bush administration maintained their position to not to opt for any compulsory policies to reduce the emission of GHGs until more conclusive evidences about global warming are not produced. Global warming is affecting everybody on the earth and it is the cause of serious damages to all. Yet, no country initiates to take stern steps to reduce their reduction of GHGs. In his journal regarding Global Warming and its affect, Bradford Mank raises the question “Is Injury to All Injury to None?”2 The idea is simple, since global warming is definitely hurting everybody, yet, the prevention requires immediate actions that may prove to be commercially unviable, hence the governments throughout the world and specially the US government hesitate to bring about any concrete change in their policies to reduce emission of GHGs. Maybe, the injury to all is nobody’s concern.
On January 20th, 2009, when Barack Obama took charge as the 44th president of US, everybody hoped for better involvement of United States government and Congress in the bid to reduce the emission of GHGs worldwide3
Yet, apart from some policy changes, the new administration of US also failed to take any concrete and defining step to face the dangers of global warming and to resolve to reduce the emission of GHGs significantly.
Federal/National Climate Policy
The Copenhagen Climate Summit failed4 to impress anybody and despite all the hopes attached with Obama, no significant change was visible. Obviously, Obama administration had a great deal of immediate problems to tackle with including the recession period of 2009, the huge stimulus and highly increasing national debt along with the socialistic burdensome programs like healthcare reforms. However, a change was visible in the attitude of administration and on January 26, 2009, the House of Representatives of US Energy Independence and Climate Legislation, the Congress also passed the American Clean Energy and Security Act, both the legislations were meant to encourage renewable energy usage and increase energy efficiency. The Cash for Clunker program suggested the US administration’s initiative towards the greener options, the Cap Carbon Trade plan showed positive approach towards greener US, and US government also started trying to encourage innovators and entrepreneurs to create greener jobs.5 . The Clean Energy Job and American Power Act provided many programs that will raise funds from government to invest in the inventions and development of greener options for electricity requirements and will provide huge opportunity of green jobs.6 Yet, on bigger plan, there is no strict path towards achieving and implementing some policies that would lead US to reduce the emission of GHGs to about 5% to 8% below the level of 1990′s.
Not only that, all these positive steps towards clean air, green surroundings, clear atmosphere and cooler globe faced opposition within the senate in the form of The Dirty Air Act. The Dirty Air Act attacks the Clean Air Act directly. Many big oil companies and some senators along with their lobbyists claimed that Environmental Protection Agency’s (EPA) statement about the dangers of carbon pollution does not show any major threat to public health or welfare. If the Dirty Air Act passes, the US consumption of foreign and domestic oil will increase further and that will undo all the positive steps taken towards greener USA.7
One of the main reason behind the inability of the Congress of US is the powerful US corporate that funds in electoral campaigns. The business partnerships of US provide a space of such political forum where the motives of big enterprises cannot be ignored. Obviously, the big conglomerate like BP America, DuPont, and General Electric etc cannot afford to let Congress restrict their source of profits. Furthermore, no government would like to hurt the economy of the nation by almost destroying the leading industries of the country. The big oil companies deny accepting Clean Air Act, or any other proposal to reduce the carbon consumption.
William R. Cline in his book The Economics of Global Warming explained the expected economic damages that may be caused by global warming. He suggested that if the damages caused by global warming are smaller than the costs of reduction of emissions from fossil fuels, deforestation and other sources, than the attempt to discourage usage of carbon or fossil fuels is irrational.8
Self-interest is the main motive of any person that drives him to take rational decisions and implement them properly. Thus, if it is shown that the economic losses due to global warming are much more than the losses one will face by reducing carbon consumption, than naturally, the person will opt to reduce carbon consumption because that will be lesser loss for him or her and it will be healthier option too. Thus, it is easier for individuals to opt for greener options while it is difficult for the government or Congress to resolve and adopt policies to control carbon footprints. The reason being, as a collective, Congress or US government cannot think for individual losses, they will only think for the better profits of maintaining relations with big conglomerates, big oil companies and industries like GE, DuPont etc. The evil nexus of government and corporate will never let the greener options establish themselves in the market because the government will keep stimulating the conglomerates. Yet, an individual by himself can opt for greener, hybrid cars, which will consumer lesser fuel, the individual as a consumer may rift the market towards the greener options available in the market. The key to the trouble of global warming is consumerism. Consumerism is the principle of Free Market, which states, “free choice of consumer should rule the market, or, the consumer decides the economic structure of the society”.9
As it is clear that the public realizes the dangers of global warming much better than the Congress or US government, the citizens should opt for the free market principle rather than waiting for government to take proper actions. If the consumers prefers and demand green alternatives, clearer energy resources, fuel efficient cars, energy efficient appliances, renewable energy resources and other appliances to reduce their individual carbon fingerprints, than the producer, manufacturers and providers will be forced to provide environmental friendly alternatives for the society. Consumerism is the boon for human development (Reason for Liberty, 2010), and hence, if the individuals, the consumers consider that global warming is greater loss and hence they should opt for greener options, than the entrepreneurs, innovators and manufacturers will themselves be heralded towards providing greener options because that will be the more profitable execution for them. Once the big conglomerate start producing greener alternatives, the government will also feel no objection to provide greener policies, also, when consumers themselves will demand green market, green goods, green services and lesser carbon fingerprints, then the role of government will be minimal in case of improving the conditions of global temperatures.
Performance of States on global warming platform
Stephen Lacey reports that some of the states are moving faster towards green renewable energy options than the federal government or Congress. California, New Jersey, New York, Arizona and Ohio are not only proving to be great market for renewable energy resources like solar energy and wind energy, the state governments are also promoting the renewable energy options to far extent. Recently, Texas got rid of its eight coal power plants.10 Texas not only opted for nuclear alternative, but the Texas government approved plans to supply 35 per cent of power needs through renewable energy resources.
Stephen Lacey further reveal that the interference of state government in market through the SREC program is benefitting few large companies at the expense of many small companies.11 The picture clarifies the reason why the state governments are running faster towards greener US with lesser carbon footprints. The federal government deals with higher degree of market interference and hence, the Congress remains in effect of big business to create corrupt nexus that cannot decide for better greener options. State governments on the other hand have lesser power to interfere with the market, hence they are a little faster, yet, if somehow the government is decentralized and restricted from interfering the market, that is, if the market is left free, then the market will force the entrepreneurs, manufacturers, producers and business conglomerates to provide better, greener options to reduce the GHGs emission and ease the acute global warming conditions, the reason being, consumers demand “green” solutions to the global warming crisis. The demand of green alternatives by consumers will prompt the free market to create green jobs and will incentivize the entrepreneurs and energy industries to innovate better energy efficient renewable energy resources extraction.
Conclusion: The Actual Way to Improve Climate
It is quite clear that the US congress and federal government is lacking will and strong leadership to bring about any significant change in the policies to reduce pollution and greenhouse gases emission. The nexus between politicians, big business conglomerates and oil companies seems to be evil enough to thwart any possible change in the attitude of Congress towards the acute need of reducing carbon dioxide and other greenhouse gases emission. It is evident that if nothing would be done to prevent or slow down global warming, there can be disastrous consequences on whole world. US federal government and Congress find it self unable to deal with the situation because the Congress cannot afford the economic turmoil if it breaks relations with the big business conglomerates and oil companies. Instead of taking firm and stern actions to compel the big industries to reduce their carbon footprints, Congress tries to cajole them to agree with a cap on carbon. Pete DuPont stated clearly that “global warming looks like neither the alarmists’ serious threat, nor an immediate crisis that requires governmental control of America’s economy to reduce it”, He suggested that Congress should consider the costs before passing policies on Global Warming.12 In such a scenario, it is difficult to believe that the big conglomerates like BP America, DuPont, and General Electric etc will accept the necessity of time so easily. Yet, there is a hope to save the earth against the ill-human activities. The individual citizens of U.S and whole round the world can force the conglomerates, politicians and governments too by denying their interference and monopoly in market and by demanding better, greener and feasible energy options.
Once the consumers themselves decide to reduce their own carbon footprints, the big companies will be forced to follow the suit. Congress, federal government and state government meanwhile should stop interfering with the market and let the new players, competitors, entrepreneurs and innovators provide better and efficient energy solutions so that the big conglomerate of US may also feel compelled to work towards a greener future. The key for a better, greener and safer world against the glooming danger of global warming is in the hands of consumer and in the policies of free market. The nexus between government, politicians and big business need to relieve the market to create greener world.
- Climate Action Report, 2002, Ratification of Kyoto Aside: How International Law and Market Uncertainty Obviate the Current U.S. Approach to Climate Change Emissions [↩]
- Bradford Mank, 2005, Standing and Global Warming; Environmental Law, Vol. 35 [↩]
- Oliver A. Houck, 2009, Break Through: From the Death of Environmentalism to the Politics of Possibility [↩]
- BBC News, 2009, Why Did Copenhagen fail to deliver a climate deal? BBC News, 22nd December, 2009 [↩]
- Legislation, Energy Independence and Global Warming Committee of US, 2010 [↩]
- Clean Energy Job and American Power Act, 2009 [↩]
- Dirty Air Act round up, 2010 [↩]
- William R. Cline, 1992, The Economics of Global Warming, Institute for International Economics Washington DC [↩]
- Reason for Liberty, 2010, Consumerism is a Boon for Human Development, Reason for Liberty, April 19th,2010 [↩]
- Stephen Lacey, 2008, U.S State Solar Debate: Will SRECs Create Unhealthy Market Concentration? New Hampshire, United States [↩]
- Stephen Lacey, 2008, U.S State Solar Debate: Will SRECs Create Unhealthy Market Concentration? New Hampshire, United States [↩]
- Pete DuPont, 2009, Time for Inaction on Global Warming, Congress should consider the costs before passing “cap and trade” The Wall Street Journal [↩]
It is probably an often thought question, but rarely answered correctly by most of the people. What makes a country like India poorer than a country like say America? I have tried to answer this question since I was a kid, then as an adult.
Lets see, most people might answer to that question as “India is poor because it lacks so and so
“India is poor because it lacks infrastructure western countries have”, or
“India is poor because of lack of education among people”, or
“India is poor because its very corrupt, and it has politicians who manipulate people etc etc”.
The problem here is simple, almost all these answers are effects, India does not have the infrastructure of western countries because India is poor, it doesn’t need that infrastrucutre, you cannot spend Rs 500 million per year on a road which brings per user cost is Rs 5,000 per month, and the average salary of people using that road is Rs 10,000 per month. Why not? Because if you did build a luxury road like that for people this poor, you are wasting resources more than you are creating them. When India becomes richer better infrastructure will follow, even if govt is the only entity building it, they will have more money to spend on infrastructure. You cannot create prosperity by creating one effect and hoping other effect will follow.
Similarly, the stuff about Indian people being educated, well if you are going to work on a construction site for all your life(someone has to work there), there is no point in spending so much money on your education which could have gone towards creating more job opportunities for you. By trying to create this effect, by educating 100,000 workers who will be working on manufacturing all their lives, and then ending up with having jobs for only 60% of them isn’t really a better outcome.
A bit matured people who understand how things worked, they will come to the conclusion that India is poor because it has less money than America, therefore India is poor and America is richer. But then that was incorrect too when you will find out that Indian govt has the power to print any amount of money possible. Why can’t Indian govt print more money, give some to everyone and make everybody richer. Apparently its not that easy as it may sound, when money supply is increased, prices of commodities rise soon thereafter. So even if poor people are given a lot of money, that will just raise the prices of the various commodities they might buy thereby bringing them back to same level of poverty as before(more or less).
I know a lot of people who know the correct answer to the question stated in the title. India is poorer than US because it has less capital than latter, and capital isn’t the same thing as money.
What is Capital
So the question comes, what is ‘capital’ and how is it different from money? To understand it we must understand first what is money. Money is nothing but a medium of exchange, we don’t really intend to consume money, we only keep money because everybody else accepts it and then we can acquired the final resource which we really intend to consume.
Capital is essentially any commodity or goods, or even service, which is used to hold value across time. In simple words, if you do not consume a good or a commodity, but only keep it for later consumption then that good serves as capital. Because in most of the cases we keep money for the future consumption therefore money is the most common form of capital, but if you bought a car which you intended to start using only 2 years later then that car is your capital(although I don’t see any reason why you would want to do that, but that’s beside the point).
When I say India has less capital than US, what does that really mean? Does that mean Americans can defer their present consumption more than Indians can? If we look at savings rate of both the countries, Indians can definitely beat Americans savings rate hands down, so shouldn’t that mean Indians must have more capital than Americans? The truth is, America has a lot more capital buildup than India, therefore despite of not deferring a lot of their present consumption for the future one, they can still manage to create more ‘future resources’ than India.
For example an American family may only save 10% of their savings for future or invest 10% of their income for future, but because the total amount of capital they have is much more than an average Indian family which might save about 40% of their income, their capital results in more consumer goods than what an Indian family’s capital results in.
Simply put, in order to be as rich as America, India will have to accumulate as much capital as America has. Artificially achieving the same literacy rate as US by govt spending will not make India as rich as US, because people won’t have as many jobs to do. Building an infrastructure through government spending will also not make India as rich as US as it won’t be worth spending so much on infrastructure when there isn’t enough capital to put that infrastructure to proper use.
This may be a very simple thing to say, because its like saying ‘in order to be rich you need to acquire a lot of bank balance’, which sounds like common sense, but in this case its like most people seem to think that if you take thousands of dollars of loan for education, you will automatically become rich, or if you buy a bigger house, you will become automatically rich.
How do we build up more capital?
Lets first take an example of Robinson Crusoe who got stranded on an island. He catches fishes everyday from 8AM to 5PM and eats them. Since he just landed on the island, he catches these fishes by hand and he is able to catch 25 fishes everyday. Since Crusoe came from a modern society he realizes that he can build a net, and that will enable him to catch a lot more fishes. Unfortunately, he also realizes that he cannot just blink and wish a fishing net, he must build it, and making a fishing net requires 5 days of his work. The problem in front of Crusoe is that if he starts to work for 5 full days to build that net, then he won’t be able to catch any fish therefore he will starve to death.
Crusoe in this scenario faces the problem of lack of capital. He needs capital to sustain himself until he extends the structure of production(that is from using only hands to catch fish, he uses hands to build a fishing net, which he uses to catch fishes. He realizes that by building that fishin net he will be able to catch 300 fishes everyday.
So Crusoe has 2 options, he can either:
a) Consume only 20 fishes everyday, and store the 5 unconsumed fishes; Keep on doing this for 20 days, which will accumulate him 100 fishes, which are good enough for him to sustain himself for five days he won’t be able to work.
b) Catch only 20 fishes each day and spend that extra time in building the net, so he will be spreading his 5 days of work, over 20 days.
In either of the two cases Crusoe has deferred his present consumption of 5 fishes everyday so that after he builds the net he is now able to produce and consume a LOT more fishes everyday. He can either catch 300 fishes and maybe consume them all, or make more dishes out of them, etc etc, or he could continue to catch only 25 fishes everday, work less and have more leisure time, and spending the remaining time in working on art, literature, maybe music etc.
India is exactly like Crusoe without the fishing net, and America is exactly like Crusoe with a fishing net. Because its easier for America to produce a lot without giving up a lot of present goods, America has a lot of time to spend on art, literature, music, etc. This is the exact reason why American atheletes and sportsmen win so many medals in Olympics, they have the disposable income and time to train themselves for sports, whereas in India we still spend most of our time catching fishes by hand.
In order to build more capital, you require two things:
a) People should be willing to put a lot of present goods for later consumption
b) When they put their present goods for later consumption, nothing should reduce or steal away their capital from them
The first task isn’t really that difficult for India, since we already have high savings rate. The second task is actually the most difficult task in India. You may ask, why? The answer is simple because the way we understand reality, we don’t think people should be allowed to accumulate capital.
Let me elaborate what I meant by nothing should reduce or steal away the capital from people who are deferring their present consumption for future. In the above example of Crusoe, lets say Crusoe’s fishes got rotten because they weren’t stored properly, so his capital has been destroyed, now to achieve the same earlier result he will have to build his savings again.
Take another scenario, lets say Man Friday, is another cast away, who drifted to the other part of the Island, he also catches fishes by hand, but he is able to catch only 10 fishes because he is not that good with catching fishes. When Crusoe was saving 5 fishes everyday, Man Friday decried that Crusoe was being unfair and hoarding fishes, also Crusoe being more dexterous with fishing, must feed Man Friday some of his fishes. So everyday Man Friday raids Crusoe’s extra fishes and consumes them in the name of making the society more equal. In this case again Crusoe’s capital has been depleted, and he will never be able to build that fishing net, and although Man Friday and Crusoe will be a bit more equal, they will remain poor. In fact soon Crusoe will realize that he has no incentive to really starve himself by 5 fishes, so he will either consume all 25 fishes or will catch only 5 fishes each day.
So how does capital get depleted, or stolen away, or reduced from the person who is building it? The answer is simple, because the way most Indians think, and always thought, was that we cannot allow one man to have all the wealth of the society, even if he built it all. So we like Man Friday in the above example, continously rob Crusoes of the Indian society, through taxation, which ‘we’ consider perfectly ‘justified’, or through a fiat currency and fractional reserve banking system, about which most of us don’t even care, its left for economics students who were educated by the western economists who don’t even understand how capital works.
What ends up happening is that we never grow rich. It was only until 1991, when Indian economy was liberalized and a lot more capital accumulation was allowed, and since then we have seen a LOT of economic progress, but still most people do not see or understand the function of capital, for them, capital means something to do with capitalism(which is technically correct, capitalism is a system where capital reigns means of production), and under capitalism ‘rich grow richer and poor go poorer’.
A society with more capital takes care of its poor better
Lets look back at the previous example of Crusoe, had Man Friday allowed Crusoe to build his net, Crusoe would have been able to produce a lot more fishes everyday, and then Man Friday could then provide Crusoe with some other services, in exchange for his fishes. Lets just say all Man Friday is good at is dancing, and creating stories and telling them passionately, since they both are stranded on an island, Crusoe might value this entertainment service a lot, so Crusoe works all day catching 300 fishes, and gives 100 fishes to Man Friday in exchange of Man Friday’s entertainment services.
Had Man Friday stressed on equality, all the way along, Crusoe’s net wouldn’t have been built, and Crusoe would have remained relatively rich(because he caught 25 fishes everyday and consumed 20), and Man Friday would have remained poor(because he caught only 10 fishes everyday and was able to consume only 15). Please note that in the society with more capital(ie, when Crusoe built a net), Crusoe was consuming 200 fishes everday, which is almost double of what Man Friday was consuming(100 fishes), and socialists decry that rich has gotten richer in capitalism and poor poorer, but Man Friday in the society with more capital is much more well fed and richer than Man Friday in society with less capital. This is exactly what we see in America and in India, a poor in America is still richer than even the average guy of India. All this is only facilitated if we stop believing in the redistribution of wealth and start allowing building up of capital.
Prostitution is considered as misdemeanour or a “lesser” criminal act in almost all United States except Nevada, where the state government allows licensed brothels.
The police investigate and arrest persons involved in prostitution, even FBI glorifies itself from time to time while fighting against interstate prostitution.
A proper examination and understanding of the activity of prostitution and its prohibition explains that prohibiting or il-legalizing prostitution is a wrong step causing wastage of resources, reducing the quality of life and the individual liberty in the society.
What is Prostitution?
Prostitution involves buying and selling of sexual services, it is simple act of mutual benefits between two consenting individuals without any compulsion.
Having sex is not a crime; exchange of money is also not a crime because there is nothing wrong or illegal in exchange of money between two individuals. So, why is it illegal?
Most of the critics against the legalization of prostitution usually claim that if prostitution is allowed freely, the strong evil men may force women to involve in prostitution.
Forcing anyone to do anything is an obvious crime, force or compulsion is simply against the individual rights of any civilized society, but prostitution does not involve any force or compulsion on anybody, it is simple exchange of money for the service provided with mutual agreement.1
Sex as a Trade
People say that sex should be allowed only in marital limits and hence prostitution should be illegal. What people do not realize is marriage or a consensual love relation is nothing but transaction of love. If a man provides his girlfriend some precious gifts and in return she favours him with sexual affection, then it is no different than prostitution, similarly, a married woman providing sexual benefits for her husband in exchange of love and security of married life is nothing but trade of sex, transaction of love. What makes prostitution different from such love relations is the polygamous nature of prostitution. Thus, people opposing the demand of legalizing prostitution are not against the exchange of money for sexual services, rather they are against the polygamous nature of prostitution. Recent scientific researches show that it is quite natural for both males and females on biological levels to have a polygamous attitude and a desire to be in intimate relationships with many partners2 and animals of other species also get involved in activities like prostitution.3
Prohibition never helps
The Constitution of United States stands firm on individual liberty stressing on freedom of speech, religion and trade. Thus, illegalization of prostitution, which violates the premise of inalienable right of Individual, is simply against the Constitution that confirms full freedom for consenting adults for having mutually beneficial agreements, relations and transactions.
Prohibition never helps though it causes wastage and corruption. Alcohol consumption was prohibited from 1920 to 1933 through Volstead Act, which made Bootlegging as an underground industry, home producers created whiskey and gin. The prices of alcohol skyrocketed in black market sales of alcohol because of heavy demand and corrupt governmental officers who surreptitiously helped the black-market4 . Government lost a huge amount of tax from bootleg alcohol and it became impossible to check the quality of alcohol thus produced. The unsafe alcohol caused many accidents. Government spending to prohibit alcohol consumption increased $4.4 million to $13.4 million annually. Coast Guard spent at an average $13 million per year to check the prohibition during 1920′s. Government thought that prohibition would solve many social issues but the result was just opposite. The criminal activities increased as a result of prohibition. The homicide rates increased up to 66% during prohibition.5
History teaches us that prohibition never helps, rather they increase wastage of useful resources and causes increase in crime rates. Prohibiting prostitution also leads to similar results.
Legalization reduces crime rate
Prohibitionists suggest that legalizing prostitution may increase crime, but the facts say opposite. Serious crimes, such as rapes, homicides, robbery, kidnapping are noticed to be increasing because of prohibition. Countries that allow prostitution as legal activity do not suffer from high frequency of violent crimes. Canada, France, Israel, Singapore, United Kingdom all allows prostitution and all have lower crime rates than the crime rates in US.6
After being charged with a sex-crime, a woman faces the social stigma and she becomes unemployable and hence forced to get involved with further criminal acts. Once she is jailed, it becomes impossible for her to gain any other means of living and that enforces her to work as prostitute for longer than they otherwise would. The experience of jail further makes women prone to get involved in other serious crimes.
When police bans brothels, motels or other places where prostitution might generally be practiced, prostitutes find themselves forced to work in neighbouring streets and hence spoiling the neighbourhood. The dangers for prostitutes also increase many folds and they find themselves unable to care for health and safety precautions. Such prostitutes can easily be soft target for serial killers and sociopaths.
Better way is to legalize prostitution in certain areas of cities where the prostitutes and their clients may work in safe environment.
Other criminals who consider prostitutes and their customers as easy target to rob, blackmail, or rape also remains unchecked. Many a times, even the corrupt police also engage in corrupt exploitation of prostitutes. Thus, the criminals realize that prostitutes or their customers are most unlikely to report to police and that provides them an incentive to commit crimes against such people.
If prostitution is legalized, such people would not flinch from reporting any criminal activity against them and that will reduce crime rate.
Legalization promotes health care
Prohibition causes health hazards. Because of laws against prostitution, most of the prostitutes often find themselves forced to involve in unsafe sexual activities. They cannot go for medical help too because of the fear of police. Prohibition on prostitution thus increases the probability of unsafe sex and the spread of sexually transmitted diseases like syphilis, gonorrhoea, Chlamydia and herpes. If prostitution is legalized, the prostitution can be monitored and medical facilities can be provided to them and that will control the spread of such diseases.
A public health review of World Health Organization7 states:
“In Kenya, where the importance of chancroid in HIV transmission was first described in the late 1980s, interventions targeting sex workers and STD patients were implemented. Reported condom use by sex workers has since increased to over 80% in project areas and the incidence of genital ulcers has declined. Chancroid, once the most common ulcer etiology, now accounts for fewer than 10% of genital ulcers seen in clinics in Nairobi, Kenya.
In Senegal, HIV prevalence among pregnant women has been below 1% for more than a decade. A strong multisectoral response, an effective STD control programme and early legalization of prostitution have been credited for this low level. Special clinical services, for example, offer regular examination and treatment for registered sex workers. Not only has there been a significant decline in STD rates among sex workers and pregnant women between 1991 and 1996, but genital ulcers are also no longer common and chancroid is reportedly rare.”
It is very reasonable to legalize and regulate prostitution and medically monitoring the sex-workers and hence providing a safe environment to their client. Legalizing prostitution will also encourage the sex-workers to learn more about health issues, and ways of prevention. Canada, France, Denmark, Israel, Singapore and many other countries that have legalized prostitution have much less number of people living with HIV AIDS and the number of deaths due to HIV when compared with the records of US.
Legalization of Prostitution and Social Condition
The societies that have allowed prostitution as a legal activity are providing much better social environment for the individuals. Countries like Canada, France, Denmark, Israel etc are spending much more of the percentage of their GDP on education and health-care than what US government spends. The suicide rates in such countries is also lesser.
Legalization of prostitution promotes individual liberty and privacy; it also provides a way for the poor to alleviate their situation. In a free society, it makes no sense for the government to dictate people, specially the poor one that they cannot take money in exchange of the service they are willing to provide freely. Legalizing prostitution will also promote the privacy of individuals about their intimate relations and it will reduce the stigma the sex-workers suffer.
Prohibition on prostitution causes a lot of wastage of resources. The law-enforcement bodies that devote a lot to monitor the prohibition on a harmless activity in between consenting adults can be used for better works and prevention of serious crimes. That will certainly help the society to reduce the crime rate and establish peace. Legalization will also reduce the police corruption and dangers of underground industry and provide safety for the sex-workers against organized crimes.
Conclusion: Prostitution is such an activity that harms nobody. Legalizing prostitution will serve the society in better way because that will tend the police to direct their efforts towards preventing and solving actual crimes which involves clear exploiter and victims and that will help the cause of justice. Legalizing prostitution will also help in improving the health care and social condition of United States.
- Reason for Liberty, Discussion on the issue of Prostitution on Objectivistic perspective [↩]
- Dr. James J. Hughes, Monogamy as a Prisoners Dilemma: Non-Monogamy as a Collective Action Problem [↩]
- A New York Times report, on a recent scientific research signifying that even monkeys get involve in money transaction for sex, that is Prostitution. [↩]
- Nancy Nixon, Nancy Nixon discusses over the effects of Prohibition on Alcohol during 1920 to 1933 [↩]
- Mark Thorton analyzes the policy of prohibition on alcohol consumption during 1920′s, stating that Alcohol Prohibition was Failure, Mark Thorton [↩]
- Crime Statistics in Canada, 2006, Canada Government [↩]
- Bulletin of the World Health Organization, Bull World Health Organ vol.79 no.9 Genebra 2001, Richard Steen [↩]
India was one of the earliest issuers of coins since circa 6th century BC. Indians never used paper currency before 1770, when the Bank of Hindustan under British Empire. The General Bank of Bengal and Bihar, which was established by Warren Hastings1 , also issued paper currency in 1773. It should be noted that Indian currency is known as Rupees since long. Rupee is derived from a Sanskrit word “Raupya”, which means silver, the silver coin was always the currency of India. With the discovery of vast amounts of Silver in U.S and other European colonies, the relative value of silver reduced a lot in comparison to gold, that incident is known as “the fall of rupee”2 .
With the fall of silver in 1873, Indian Currency Committee suggested British India government to adopt for gold standard and in 1898 British government instead of adopting a Gold Exchange Standard, pegged Indian rupee with British sterling.
After Independence, Indian government started minting Indian coins (rupees); Indians thus never got a gold standard for representing their money
Now since last 63 years, Indians have so much used to the government issued currency, cycles of inflation and depression and always increasing price rise, that even talking about gold standard and private coinage seems to be impossible. Yet, since Indians were in habit of using private monometallic coins in past, it is imperative to discuss the issue of private coinage. Taking the premises of Freedom for everybody and the Self-Governance (Swaraj), which has been extolled by the Indians as a basic Mantra of life, let us examine the case of private currency carefully.
How the Private coinage will work?
The private coinage will work just like any other commodity (say mobile phones, or jewellery or wrist watches). Minters will produce coins of different shapes, sizes and weight according to the desires and demand of his customers. The free competition of the market will set the price of the coins of the minter. Second issue is about the trouble that the coins may create when weighed or evaluated at every deal or bargain. It is true that it would be difficult to evaluate the purity of gold coins every time a transaction would be made. To solve that issue, the minters will stamp the coins and guaranty the weight and purity of the coin. Private minters can guarantee the coins just like the government do. The profit will be, when government mints, there is no competition for government to be truthful, alert and honest, it is monopoly of government over minting coins, but when the private minters will guarantee their coins, their guarantee will weigh more because if the private minter will cheat, he will loose his market and consumers to other honest minter. Just like a government paper currency or coin holds the governmental promise to pay the bearer of that note an amount equal to the price of that paper currency or coin, the coin of private minters will also hold the promise from the minter that he would pay an amount of gold equal to be mentioned on the gold coin of his brand.
People against the idea of private currency will say that it would increase the chances of frauds. Same people never object to the miserable record of the governmental frauds, swindles and mismanagement. Every time the government issues stimulus to a particular industry, or forgives the loans of some conglomerate by explaining that it is working for social profits, the government actually is committing a fraud against the general public. Every time a person faces the devaluation of his savings in governmental currency because of extreme price rise and inflation, it is the example of regular fraudulent and untrustworthy behavior of the government regarding paper currency issuance and minting coinage. In case of private minters of gold coins, the chances of inflation and abrupt price hikes will lessen to minimum. More over, the free market competition for consumer satisfaction, the various minters will compete to be more honest and better customer service providers. The more a particular private coinage minting agency will be honest and better product and service provider, the more will be its consumer base and profits. Thus, in free market private coinage system, the competition for profits would be competition for honesty and consumer satisfaction. In addition, the problem of fake currency will also be eliminated because each private coinage agency would try to defend their brands by their own and the government also will be able to devote all its energy to safeguard the private minters against duplication and fake currency. In case of private coinage, one can trust that the government will prevent and punish frauds. The integrity of private open market operators cannot be discarded in favor of government monopoly, because in case of monopoly, there is no need for the government to be honest, but in case of private free market operators, to be honest is prerequisite for gaining any profit and healthy share of consumers.3
Furthermore, whole market works on guarantee of standards. A medicine store sells a tablet of aspirin of mentioned weight and dosage, a butter seller sells packed butter slices of mentioned grams of butter. The buyer trusts these guarantees, and they prove to be true. In a case when a person buys a product with a certain warranty and guarantee and somehow the product fails to prove the standard mentioned, than in most cases, he gets a replacement for the ill-manufactured product. That is, even if by mistake a product of a company fails to fulfill the standards demanded by the customer and provided by the manufacturer, then either it pays back the money of the customer or replaces the product with new and better one. Market of mobile sets, or laptops or packed meat, butter or cheese, or other things does not fail even though government does not hold a monopoly on any of the products. Thus, we can trust that the customers of a private minter will be safe against any possible fraud because of the presence of other competitors of the minter in market. The minter’s customers themselves will be keenly alert about the weight and fineness of the coins just as they remain while buying and using other commodities.
The problem of wear and tear of currency
The current government regulated currency, paper notes and coins holds no worth in themselves apart from the governor’s pledge to pay the bearer of the note or coin, a definite amount of money. The value of money obviously keeps going low and lower because of inflation and price rise. Along with this, the paper currency issued by government often suffers wear and tear causing further loss of money. Most of the governmental coins are eroded or torn out and government keeps forcing the usage of same old notes and coins. The old rag-tagged coins and paper notes are to be considered of the same value as of a fresh note or coin. By doing so, the government actually forces a certain type of price control over the old paper notes and coins and provide them the equal price as that of newer notes and coins. Because of this, the older coins and notes are overvalued, while the new notes and coins suffer undervaluation. All this amounts to nothing but mal-investment. Everybody loves to circulate the older worn out coins and paper currency while they have a tendency to keep newer notes and coins safe.
Consider the case of free market where minting of coins is not a monopoly of government. Assume that there are gold coins of 10grams well circulated in market. After a few years of constant usage, the coins may suffer wear and tear and lets say that they weigh only 9 grams of gold after 10 years (assume). In a free market, a coin that has been reduced from 10 grams of gold to 9 grams will not be overvalued and it will gain only the price of 9 grams. Obviously, nobody would like to use the 9 grams coins at the price of 10 grams of gold, hence the worn out coins will be driven out of the market, or they may be used at reduced price. Thus, nobody would be deceived by the forced insistence of overvaluation to the older coins. This will avoid malinvestment. To solve out the problem of wear-tear of the coins, the private coin minters can either set a time limit on their stamped guarantees of weight or agree to provide a new coin in exchange of every old coin with reduced weight. Thus, there will not be any compulsory standardization of currency, which is a feature of monopoly of government.
Since long governments have tried to control the currency circulation in market so that they can restrict and control the progress and prosperity of citizens. Yet, from time to time, private bankers have issued their own minted coins (Know more about Private Coinage and Good Money)) . The gold standard with privatization of issuing currency and minting coins will not only end the monopoly of government over currency, which is the major reason of acute price rise and inflation, but also it will avoid any chance of fraud as the free market will tend the virtue of more honest and better services for gaining more consumer base and high profits. In addition, if coin minting is privatized, the government can also try to serve the public by ensuring security against any sort of fraud. In any case, privatization of currency would be a much better option than the monopoly of government over currency.
- Warren Hastings (1841), an essay by Thomas Babington Macaulay.” Columbia University in the City of New York [↩]
- The Fall of Rupee, CRN India [↩]
- Know more about the evils of Monopoly of government in Market and currency read What Has Government Done To Our Money by Murray Rothbard, One may listen the whole book and save the audio link here [↩]
Indian government declared Education as a fundamental right for all Indians on 1st of April 2010. Was it a fool’s exercise on the April Fools day? It seems so.
By staging education as a fundamental right, government obviously insured a very well crafted vote bank issue based on altruism that will keep the ruling political parties in good colours. Political parties will not only gain votes over the issue, rather the government will also gain a further seemingly appropriate cause to rob the wealth-producers by means of taxes to implement all the required infrastructural development programs for the fulfilling of the dream of “Education for All”. Certainly, that will provide a vast canvas for further scams and swindles in the infrastructural development sector. Thus, for the political parties with their political motives, education as a fundamental right looks pretty good. There will be many new government schools that will provide governmental jobs for many Indians in education sector. The problem is will the new schools overcome the failure of the already existing governmental schools?
What about the drop-out rates?
There is a governmental school within the range of 2-5 KM near almost every village or slum of India, that is, lack of governmental schools is clearly not a big issue.
The problem is not about the children who never attend school. Such students are separate and very fast diminishing category. About 50% of children who join up in Class I drop out by Class VIII and that can be suggested as the major problem.
Despite all the mid-day meals and similar programs, governmental schools fail to keep the children intact with their governmental education. Now no matter whether government declares it a fundamental right or necessity, if the parents and their children simply do not prefer the idea of investing their time in such governmental schools, than this idea of education as a fundamental right will remain only a paper exercise that will never be a reality, although the governmental robbers will keep robbing the middle class of India and will burden them with more and more taxes to facilitate the education for all those who does not want that education and are certainly not interested in it.
According to the National University for Educational Planning and Administration (NUEPA) total enrolment in primary classes (Class I to V) was 134.4 million in 2008-09. In Classes VI to VIII, the total enrolment had dramatically dropped to 53.4 million. Now, if government considers that education is literacy, than it is acceptable that primary classes will provide the required education as a fundamental right, but what if more than half of the total students decide not to study any further the primary classes? Will government force them to continue their “governmental schooling” until all do not clear out the VIII class?
The problem is not that parents do not have money to educate their children properly; the problem is the poor quality of governmental education. Governmental education actually provides nothing to an upcoming citizen rather it burdens them with heavy books and senseless exercises that will never help him by any means throughout his life. Even if every Indian becomes a well educated graduate, not everyone can become an IAS officer, some may prefer to be a barber, or a shopkeeper, or a gardener, farmer, or may be taxi-driver. As some prefer to be a doctors and engineers, some other may prefer to be peons and beetle shop owners, or snacks vendors or simply “chai-wala”. Now no school provides any fundamental knowledge about how to be a better “chai-wala” or a better “paan-wala” or a better barber, or a better street-sweeper. There are so many jobs that people may prefer to do rather than going and wasting their time in the schools to clear out the VIIIth class exam. Can Government Issue a law that no person can be allowed to work and earn if he is not VIII class pass? That is, one cannot work as a laundryman, or a barber, or home-helper, or a “bawarchi” or chai-wala or any similar minion works if he is not VIIIth pass.
The Right to Education Act covers children in the 6 to 14 years age group, precisely for the classes from VI to VIII. So may be the idea behind the right to “governmental education” is meant to abolish child labour.
However, that will be a fraud against the children who prefer to go for all those minion works that are never touched by school education. Why should a child work so hard and waste all his time in learning the maths, science and languages of VI to VIIIth classes when he knows that it will never help him to be a good barber or taxi driver? For him, better education would be to attend a barbers shop and learn how to cut hairs with ease and provide consumer satisfaction for the consumers. If a child is looking for maintaining a shop owned by his father, he will certainly learn educate himself much more in his father’s shop under the tutelage of his father rather than in a governmental school. For such children, if government forces them to attend schools up to VIII or Xth class, than it will actually be forced child labour for those children and they will not earn even a penny for that unwanted labour.
Market is the Best Educator
A doctor practicing medicines in market since last 5 years is obviously much more apt than a freshly graduated medical student is. The market actually teaches the medical student how to treat the consumers, how to fight the diseases and save the patients. School and college education provides the base, and market furnishes the education.
In case of a barber though, no college, no school provides any base for becoming a successful barber. One needs to go to a barbers shop and practice there. For a forthcoming doctor, if he attends school and than college, education helps in strengthening his base, but for a forthcoming barber, only the market, that barbers shop can provide the necessary education and practice. Forcing him to go to school to get “governmental education” will be similar to burdening him with child labour and disallowing him the “necessary education”.
Conclusion: right to education may prove to be a good vote gainer for the ruling parties in upcoming elections, it will certainly increase the vast canvas of governmental corruption and swindles and will burden the Indians with extra taxes, yet it will remain only a paper exercise meant to fool the public and that is why education was announced as “fundamental right” right on fools day. It is inappropriate and unnecessary to expect every child of age group 6 to 14 years to go to school because for many such children, governmental school education itself proves to be child labour, while the market provides them the proper necessary education they require and search for. Thus, if government does not make it compulsory for every citizen to be at least VIIIth pass if he wants to work and earn an honest living, it is impossible to expect the RTE to work any better than a paper exercise. But if government makes it compulsory, than education will not remain a right, it will become a torturous duty imposed by dictatorial despotic altruistic politicians, because than, the certificate of VIII class pass will become the necessary license even to work and earn an honest living freely. Most of the times, these politicians displays slavery in the colours of freedom and compels the citizens to buy their enslavement at the expense of freedom.
Often statists try to color the inhuman governmental wrongs as ‘Humanitarian’ stern acts for the safety and benefit of all.
Can one really justify the Iraq Invasion by US as a Humanitarian act to save the Iraqis from the tyrannical regime of Saddam Hussein? One may say that Saddam was a real danger for Iraqi people and by overthrowing his regime, US actually served the welfare of Iraqis. They may say that although American Invasion killed Iraqi people, but those deaths were accidental and if Saddam’s regime has continued many people might have suffered death, penury and tortures under his tyranny.
Yet such justifications of foreign invasion is futile because nobody can know, what the future harms Saddam’s tyrannical government could have caused to the innocents or those harms if calculated properly could have been more than the harms and killings the American invasion caused on Iraqis.
That is, there is no actual reasonable way to say that Saddam would have caused any more harm to Iraqis than whatever has been actually caused by American invasion. Since there is no such real way, there can be no moral humanitarian justification for Iraq war. Nor such justification can be put forth to the American Drone invasion on Pakistan territories. Innocents are being attacked and killed in Pakistan. Children, mothers, elders are suffering the attacks. One can never say that had America not attacked Pakistan using drone missiles, Pakistanis might have suffered much more.
Since we cannot calculate about the harms that would have been caused if America had not attacked Iraq or Pakistan, we simply cannot determine the moral proper course of action, yet one thing that we know is, we should not directly murder or harm or injure the innocent, we should not jeopardize their economic and social life.
Yet that is what being done in Iraq or Afghanistan or in Pakistan by the American government, and all this is under the fake mask of Welfare of people, welfare of those people who are under attack, who are innocent and who are being killed regularly.
As a matter of fact, wars can never be justified.
Now a days, American government and media are also trying to paint Iran as a dangerous state under a tyrannical head of government. Every second day media covers an article how Iranians are suffering tyranny under Iranian regime. Will this be any moral base to justify yet another invasion by America?
Bombing civilian places full of innocent people was in no means necessary to oust Saddam, or to end his tyrannical regime. Nor is the use of very high explosives with the unmanned drone fighting planes on Afghanistan-Pakistan border, which every now and than kills the innocent public ‘unintentionally’.
How can the defenders of Iraqis or Pakistanis or Afghans claim that these deaths of Innocent people were accidental? They actually were pre-planned cold blooded murders, meant for the safety and welfare of those who were killed.
The so-called ‘smart weapons’ used by US forces, like Drones, Aerial an artillery bombardment etc failed hugely to defend the innocents, rather they killed the innocents, and are killing.
Doctrine of Double Effect
Again, government supporters claim that US forces did not aim to murder those innocents rather those innocents were unavoidably in the region of attack hence they were killed. This is known as Doctrine of Double Effect. It states that, if the injury to the innocent is controllable and proportionate, than only one can attack the culprit without considering the harm to the innocent. One cannot bombard a cricket stadium full of thirty to forty thousand audiences just because one of those audiences is a supposedly high profile terrorist. That is, just in order to encounter one terrorist or tyrant, one cannot jeopardize the life of whole audience of the cricket stadium. At most, one may try to shoot the terrorist with his gun without fearing that his missed shot may kill an innocent. Yet, in case of Iraq invasion or Drone attacks in Afghanistan and Pakistan, the killing of innocents is obviously wayward and absurd. Many more innocents were killed without any proper success of actually killing or punishing the terrorists.
Obviously, all such humanitarian grounds in support of US forces invasion on Iraq or Afghanistan and Pakistan are futile. So, was the issue of nuclear warheads with Iraq a proper reason to invade Iraq, or can it be a proper ground to Invade Iran?
We now know that the intelligence reports that suggested that Saddam’s regime had nuke powers were fake and false, yet the Iran is beyond any doubt a Nuke power. Yet, Iran with Nuclear arms is a very minute matter.
USSR had tens of thousands of nuclear warheads and sophisticated delivery vehicles that were always kept in constant readiness. Yet USSR never threatened or ‘Blackmailed’ USA. How can a minute and much weak nuke Iran be of any threatening consideration to USA? Or How could have been Iraq any threat to USA even if Saddam had nuclear power?
US army also claims that Pakistani warheads are under threat and Al-Qaida may try to control them, hence they say that it is necessary to attack and end the Taliban and Al-Qaida outfits involved in Pakistan. The thing is, it is sincerely not wrong to try to kill the Taliban or Al-Qaida members, but US government has no authority or right to endanger and actually murder the innocents while trying to notch the terrorists.
Furthermore, can government justify the extremely large military budgets for which the common people are being confiscated of their wealth by means of taxation?
Attacks on our own citizens
It is not that a government can only kill the innocents in other countries. Many a times, government does not even flinch away from the possibility of killing its own citizens and that too for their own welfare.
During the Indira Gandhi regime in 1984, when a handful of terrorists lead by Sant Jarnail Singh Bhindranwale occupied the Golden Temple, Indian government ordered attack and firing on the Golden Temple. That act was named as Operation Blue Star that killed Thousands of Innocent people along with Bhindranwale’s supporters. Those innocent people were simple religious people and Indian government actually was supposed to safeguard them. Similarly, many innocents were killed during the formation of Bangladesh by the Pakistani government.
The programmed massacre of Muslims in Gujarat against Narendra Modi’s state Gujarat government after the Godhra attack is yet to be forgotten. The list of fake encounter cases of central and state government police and special task forces keep on increasing month by month and it is all done under the mask of protecting and providing a secure welfare state for the same innocent citizens who are being butchered.
Conclusion: Just like other social welfare policies of government, the war and conflict safety policy of government also fails absurdly and instead of being a welfare state, a government lead state often turns out to be a warfare state, while wars brings no good for any one ever.
Fiscal deficit is a common trend of current socialist mixed economy governmental regimes all round the world.
Fiscal deficit is an economic phenomenon of collective state where the government’s expenditure exceeds the total revenues collected. Fiscal deficit gives the idea to the government about how much it need to borrow from the available sources to attain the budget requirements.
In India, the Reserve Bank of India performs the deficit financing. Government may also borrow money from other banks of the money market.
Reserve Bank of India does not produce wealth, but yes, it does produce currency by printing out notes out of thin air to meet the fiscal deficit requirements. When the RBI print out currency to fulfil the requirements of government, the currency reaches the market and that causes inflation and acute price rise.
The current acute price rise in India (especially in food sector) is evidently the result of the government stimulus it provided on behalf of borrowing from RBI that in turn simply print and dolled out currency in the market to increase the liquidity. Now those “stimulus” for the market is causing problems for the common man. That is, although government borrows money from RBI, which in turn, prints out money at the demand of politicians and government, the actual borrower who suffers the burden of debt is only the common man of India who has to face the yawning mouth of inflation every second day.
India’s fiscal deficit for the April to December 2009 was $66.9 billion.1
So we can say that Indian government works on the principle of “Aamdani Aththanni Kharchaa Rupaiya” (expenditure exceeds income), and to maintain the expenditures, government burdens the common man with the always exceeding debt.
Anjalika Bardalai the senior economist and editor of Economist Intelligence Unit said in March 2009 that the fiscal deficit is probably the biggest downside risk that we see to the Indian economy.2
Reserve Bank Governor D. Subbarao also expresses his converns regarding the failure of regulated economy.
“I worry that in resolving this financial crisis perhaps we are sowing the seeds of the next crisis…next crisis could be a currency or a fiscal crisis,” Subbarao said.3
India is no new to the threat of extreme debt and bankruptcy. India faced the similar situation in 1990 when Indian government was forced to accept liberalization. Obviously, nobody would like to have a repeat of 1990 fiscal crisis. Yet, it is a possibility. To reduce that risk, Indian government strictly needs to control its expenditure and reduce the burden of welfare state, that is, government need to disinvest further.
The Fiscal Crisis of Euro Zone
The evidential repercussions of governmental expenditures and debt burden on the Euro zone countries are a matter of thought for financial world. The crisis began in Greece and is expanding to Spain and Portugal. It would be foolhardy to believe that the crisis will constrain itself to the weaker economies of Europe alone.
In 2008, when Pakistan faced bankruptcy due to its fiscal debt, economist warned that Ukraine, Kazakhstan, and Argentina could also slide into a downward spiral towards bankruptcy, and to that list, now we have added Greece, Spain and Portugal. Ex-IMF chief economist Simon Johnson openly stated that the UK should also be considered in the category of nations at the verge of bankruptcy because of huge governmental fiscal deficits.4 There is no reason to doubt the ex-Chief economist of IMF because of the fact that the euro-zone governments are predominantly welfare states with extreme high fiscal deficits year by year. The budget situation in all European countries is extremely weak with no hope for a manageable budget any soon. The government obviously provides huge welfare benefits for the citizens in shapes of free-education, Universal Health Care systems and other socialistic patterns that obviously increase huge collective wastage of resources produced by citizens.
Simon Jones said, “They seem to show no awareness at all that much of Europe is facing a serious crisis and it’s not limited to Spain, Greece and Portugal, it’s also going to include Ireland. I think Italy is also very much in the line of fire. There’s a very serious crisis inside the Euro zone.”
The only way for these economies to avoid the situation of bankruptcy is to reduce their fiscal deficit to minimal and that is possible only by reducing the governmental expenditures, i.e. by restricting government to very limited or no power to interfere with market.
During the Global Meltdown, when the government of major countries were announcing “economic stimulus” for the market, socialists were claiming how the Market is unable to be free and needs governmental help. I mentioned how the Economical Stimulus are not a Cure it is Venom5 . The current situation throughout the world is evidential proof for that opinion.
The world is still to learn a simple fact that there is no such thing as a Keynesian free lunch, that government does not produce anything, and whenever it robs individuals of their wealth for the purpose of welfare of society or nation, such crisis evolves to brutalize every individual.
US, the most powerful Borrower
Larry Summer once asked in US Congress “How long can the world’s biggest borrower remain the world’s biggest power?”6
The question signified its strength when Moody’s Investors Service cautioned that the triple A credit rating of the US could not be taken for granted.
For its grandeur position as a citizen friendly government providing them free gifts, entitlements, subsidies, stimulus, educational helps, Medicare, Medicaid and other social service programs, US government keeps borrowing money from Fed by issuing T-bonds. President Obama has also dreams of Universal Health-care and Free Education for US citizens. Further government need funds to keep its worthless and terrorizing schemes of War on Terror. The unaware citizens feel good and strong at such governmental gestures and politicians keep on playing with the future of citizens, burdening them with further huge debts, announcing further social programs like Universal Health care and free education. The current national debt on US is around 13 trillion. President Barrack Obama signed ceiling of $14.3 trillion public debt on February 12, 2010. The yearly Public debt chart shows that US debt never decreased and it will always keep on increasing.7
Renowned economist, editor of Financial Times and author of “The Ascent of Money: A Financial History of World” Professor Ferguson stressed that
The long-run projections of the Congressional Budget Office suggest that the US will never again run a balanced budget. That’s right, never.8
Such huge national debt increases the fears of default and currency depreciation, and an immediate hyperinflation that push up real interest rates. The higher interest rates drag down the growth further while the private sector also suffers the burden of debt. In addition, to pay back and avoid bankruptcy, government tries to increase revenues by confiscating private property, increasing taxes that in turn dilapidate the private sector completely causing extreme unemployment, poverty, food crisis, riots and complete chaos.
According to International Monetary Fund, the developed countries need to manage their fiscal deficit within a decade in order to avoid defaults. Worst condition of nations under debt is of Japan and UK, than Ireland, Spain, Greece and at sixth place, is US.
Conclusion: The economic stimulus proved out to be venom; the western countries are now in a deep fiscal crisis while India and China are facing the huge inflation problems. The collective welfare statist ideology is wrong at its base and the world need to understand that the only cure for the Market is Freedom from any sort of Governmental interference.
With such huge debt burdens, the governments now need to heed the libertarian urge for free market. Governments need to restrict their welfare programs. There should be no government interference in market. Governments now need to work for reduction of expenditures and reduction of debts.
- India Apr-Dec fiscal deficit at $66.9 bln – govt, Reuter India [↩]
- ‘High fiscal deficit, biggest risk to India’ Anjalika Bardalai, senior editor/economist, Economist Intelligence Unit. [↩]
- Next crisis could be related to currency or fiscal: RBI, D Subbarao, Governor of RBI [↩]
- The UK should be seen in the same category of countries as Greece and Spain, who are facing severe debt problems, a leading economist has said, Ex-Chief Economist of IFA [↩]
- Economic Stimulus is not Cure, it is Venom, RFL [↩]
- Larry Summers’ killing Question on US Fiscal Deficit, NYTimes [↩]
- United States public debt, Wikipedia [↩]
- Professor Ferguson,
A Greek crisis is coming to America, Financial Times [↩]