Every political leader, a representative of “the people” realizes that nobody in “the people” like to face poverty. Yet, poverty is wide spread. Every government aims its political and ruling program at reducing scarcity and helping the poor. Often the statist argues that government is necessary because if there will not be a government, who will care for the poor, the depraved ones. Politicians often use this “altruistic” propaganda to lure the voters.
The only practical solution to the problem of poverty in masses is to increase the productivity of individuals. In absence of government interventions, for the rational profit motive, free market provides an explainable way to make most efficient way for the usage of resources and to minimize the wastage, thus free market naturally is the solution to poverty. Yet, by means of interventions, government induces irrationality in the market and hence, reduces the productivity while increasing the wastage of resources. Obviously, with reduced productivity and enhanced wastage of resources, the government itself becomes the cause of mass poverty and scarcity.
At the failure of all their agenda to reduce poverty, they further come up with same propaganda of “helping the poor”. Well, the end results of government interventions just come out to be opposite. Does government really want to help poor?

Inflation

In order to hide the evil result of government interventions, it becomes necessary for the government to play with its own issued “Fiat Currency” to manipulate the illusionary GDP figures. As a result, poor people become further poor while government keep emphasizing on the increased GDP rates. When a common man asks, how is that possible that with increase in GDP, poverty is also increasing? He gets the answer that although GDP is increasing at a fixed positive rate (Indian GDP is supposed to be 7%); the prices are increasing at much higher rate. Government than stress that although Gross Domestic Product is appreciable, but inflation is the cause of concern. When government decides the prices and inflationary rate, why is it increasing? Terms like Gross Domestic Product or National Domestic Product has no meaningful relation with productivity of market. When government introduces new currency either by printing currency, purchasing bonds, manipulating interest rates, or by announcing bailouts and help packages, those who use the money at first (obviously, the rich), may get benefits, but the same money becomes the reason of Inflation (Price Rise) and Poverty. No government takes responsibility of Poverty though.

Minimum Wages¹

Minimum wage law is commonly known as the saviour of poor and unskilled minority workers. What are its real effects? Minimum wage law forces employer to pay workers no less than Rs80/- per day. At a higher wage, more workers seek employment, but the employer suffers loss of income and hence desires fewer workers to employ. It is simple, if price of sugar will increase, one will use lesser sugar, if price of labour will increase, one will wish to employ lesser workers. In addition, when one can employ a better and skilled worker at say Rs100, why will he employ an unskilled workers at Rs 80/-? That is, the chances of employment for the poor become further less and he is forced to absurd poverty. On the other hand, because of general decrease in will to employ people, even the skilled labour suffers unemployment. Without employment, unskilled worker never gets a chance to work and improve his skills. Thus, he remains without work with any chance to gain any skills. He may choose to beg or be a robber. Obviously, unemployment increases crime rate too, further causing problems to poor.
Thusly, Minimum wage law is compulsory unemployment, reduction in production and it is an incentive to crimes in society.
Furthermore, employers, knowing demand for employment is more, can afford to discriminate between workers. They may employ only the workers of their own caste or religion, as they will have to give Rs80/- to whosoever they employ. Thus, minimum wage law creates caste and religious tensions, hence further crime in society.

Government Health Care²

Government health care system is another such propaganda that is meant to help the poor. First of all, government controls the medical fraternity and education board of India and does not allow free market to produce medical practitioners in enough quantity to serve the ever increasing number of patients. Than, government makes the medical education so clumsy, time consuming, tough and costly that seldom youth want to be a medical practitioner. Again, government forces those “so less in number” produced medical practitioners (doctors, nurses, medical assistants) to work “involuntarily” in villages at least salaries for first few years, and hence makes the medical sector unattractive. With so less number of medical practitioners, the cost of health care reaches enormous heights. In addition, doctors employed at government hospitals suffer the pressure of extreme work-load and to reduce that, they start discriminating and ignoring the patients. Obviously, the poor suffers. Government try to help poor by subsidizing some common medicines. Thus, the profit of medicine production reduces and hence investment also reduces resulting in scarcity of not only doctors and equipments, but scarcity of most common drugs and medicines too.
Government hospitals cannot be maintained properly because of lack of incentive of profits and the natural competition to provide cheapest, best and trustworthy services to the patients. Hence, although poor may go to government hospitals, they seldom get any proper services and treatment. On the other hand, the richer government officials often enjoys the benefits of government hospitals while the common middle class men prefers to go to private clinics.
Overall, only the people of the poorest section that suffers lack of medical services because of Government intervention.

Higher Education

As explained above, Government has a unique fetish to control the Higher education sector. Universities and higher colleges get massive government funding via tax-payers. Seldom has a poor kid gone to higher education. On the other hand, among the rich, it is customary to graduate, no matter they many of them never learns anything and even if they learn, they never uses it ever. While the poor, because of government intervention in education sector, suffers even a scarcity of good and cheap primary education.

Denial to earn an honest living

Government surely causes poverty through its interventions in market, yet government let the poor to earn a proper living, Government is not stopping any poor person to work hard and make fortunes, is it? Yes, government strictly denies the poor to earn honest living by enforcing various barring laws like permits, licenses, regulations, bureaucratic hurdles, zoning laws etc. A rich person can simply bribe the government official and start making money through his business, a poor man even cannot get enough land to open his tea stall nearby a main road. He will have to bribe the police constable, the municipality officials and many more. Thus, by stamping out potential competition from small business, government serves the big business of rich people. On the other hand, the poor again suffers unemployment, as they can not pertain to self-employment. Thus, they find only two possible ways for them, either to be a beggar, or to be some sort of criminal.

Way to Oligarchy

Government control over market is the reason of all types of corruption. In a free market, if a person want to accomplish a project, he need to pay the exact price that the project will cost, not more, nor less. Under government, the person can simply bribe the politicians and bureaucrats to favour him by employing certain policies to reduce the cost of his project. Thus, government control over market always turns out to be oligarchic in nature where some politicians and rich businessmen makes a cartel to maintain the monopoly and control the poor public.

Conclusion:

As one can see, not only the aforementioned government interventions but any form of government intervention in market destroys the natural order and ability of the free market to reduce poverty and create peace and prosperity. By means of cost control³ , government actually increases the prices of necessary commodities while production and supply reduces vastly, hence further causing poverty.
Whenever in whatever way government intervenes with market, it creates chaos resulting in wastage of scarce resources, unemployment, and reduced productivity. As a matter of fact, although politicians propagandize their political motives as to help and serve the public and poor society, the government actually is the worst enemy of poor and whatever way it intervenes with Market, it does so just to hurt and inflict poor further.
Hence, in order to really help the poor and let India progress, government needs to leave the Market Free. As free market will reduce the employment rate to zero, (human labour is scarce resource) productivity will increase and poverty will reduce.
No person able to produce and earn a good honest living will choose to be a criminal or beggar.
That will surely reduce the extremes of poverty and hence will reduce the crime rate too.

1. Inhumanity of Minimum Wage law, ReasonforLiberty [↩]
2. Abolition of Cost is Cause of Corruption, A discussion about socialized medicines, Reason for Liberty [↩]
3. Reason of price Rise and effects of Cost Control, Reason for Liberty [↩]

Talisman of Mahatma Gandhi – Radical Egalitarianism

“I will give you a talisman. Whenever you are in doubt, or when the self becomes too much with you, apply the following test. Recall the face of the poorest and the weakest man [woman] whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him [her]. Will he [she] gain anything by it? Will it restore him [her] to a control over his [her] own life and destiny? In other words, will it lead to swaraj [freedom] for the hungry and spiritually starving millions?
Then you will find your doubts and your self melt away.”
- One of the last notes left behind by Gandhi in 1948, expressing his deepest social thought.¹

We all have seen and read it at the very first pages of any of our school text books. We have been taught of that amulet so deeply as some Vedic Mantra, Ayat of Quran, Gospel of Bible or words from Guru Granth Sahib. It has been our religion, our mantra, the Mahatma Gandhi’s Talisman.
Have we ever realized its essence? Or have we been indoctrinated of the Gandhi’s talisman through our school text books, obviously authorized by the government boards of education?
Since our school days, Gandhi Ji inspires us all to think before we act, to check our words before we speak them, to control our senses before we see anything. We have been taught, not to see bad, not to say bad nor to do bad. Yet, we have never been allowed to decide what is good or what is bad, for Gandhi ji and most of the enlightened ideal leaders never accepted us to be intelligent enough to decide for our own self whether something is good enough to say, or do or see. We are obviously not entitled to decide for our own self, whether something is good enough to do, we are not enlightened and free enough to realize the narrow difference between good and bad. Hence, we need help to conjecture what is good to do and what should not be done, and Mahatma Gandhi’s talisman obviously is the key to our help.
Gandhi ji says that some act or something is good or aesthetically beautiful only if it is beautiful enough for all.² If whatever you do is good for you only, but it is not good for others, or all, it can not be said good. Majority cannot decide good or bad. The idea of good or bad, is essentially relative. Something can be good for one, but bad for others, and if the majority is authorized to decide what is good, than obviously, the minority is forced to accept it as good, without any option to oppose that. Hence, Gandhi certainly was not exclusively supportive of the Majority rule; obviously, he was not a supporter of enslavement of minority against the majority rule. He was proponent of the freedom and savior of minority against the majority. That is why he supported the idea of organized anarchy

“The State represents violence in a concentrated and organised form. The individual has a soul but as the state is a soulless machine, it can never be weaned away from violence to which it owes its very existence”. — Mahatma Gandhi³

Yet, was Mahatma Gandhi supporting the idea of freedom of the individual, the smallest minority, to decide for his self and his pursuit of good and happiness?
Was Mahatma Gandhi an existentialist, individualist, supporter of Individual rights and ability to be free and independent to rule and decide for his own life? Was Mahatma Gandhi a Libertarian? No, he was not, his idea of “organized anarchy” constitute a meaningful government and bureaucracy.
Based on Indian ethos and values, Gandhi added some powerful features for containing consumption and promoting social justice and equity. These are:
1) Village governments in which the village assembly controls resources and decision-making;
2) Decentralised production systems to curb distress migration to urban centres;
3) Self-sustaining local economies providing resilience to regional and global economic turbulence;
4) A low expense clean election system;
5) National governments accountable to local governance as a check against arrogance of the state;
6) Industry as trusteeship of the people, reinvesting in production of goods and services and not indulging in ostentatious consumption; and
7) Religions integrated as a positive force at the grassroots level.⁴
Gandhi was not a Libertarian; rather he was a socialist, a deep rooted supporter of the philosophy of Kant, the very basis of Marxism and Socialism. He was not an Individualist, nor he was supporter of Lockean law of homestead and property rights, he was not capitalist. Yet, he did not want the majority to rule over government and dictate for what is good or what is bad. In a sense, Gandhi was Minarchist, yet was he an Objectivist?
Who if not the majority elected government be the dictator for the individual to learn and act for what is good or beautiful for all?
According to Gandhi ji, materialism was corrupt and despicable thus, he was against the theory of capitalism, which gains its roots from the Lockean principles of Property rights. Gandhi ji also supported Marxism and defined class competition as the evil of society, he was a radical egalitarian and hence he considered the theory of Division of Labour as a poison to society.
According to Gandhi ji, one should not be self-righteous, self-dependent and self-interested while performing any action, rather, before acting, one must consider whether his act would be of any good for the poorest, weakest person one knows. That is, no one should be free to decide for his own pursuit of happiness, rather he should consider and chase the happiness of the poorest and weakest person one knows. Gandhi ji dreamed of the rule of weaklings and deprived, where the stronger and better workers, producers, creators are willfully subjected to serve the weakest, most depraved person one knows. Obviously, Ahimsa was his second most important mantra, as he knew that stronger could not be enforced to serve the weaker by means of violence, rather it could be done only by means of democratically renouncing self-interest, self-reliance, selfishness. Gandhi ji was the saint of selflessness. He wanted every one to devote his life willfully and peacefully with utmost devotion, for the improvement and goodness of the weakest of the person by means of Trusteeship⁵ .
Argumentatively, if every one becomes as spiritual as Gandhi was and determines to be selfless, always willing and acting only to serve the good of the Most poor and weak person he knows, it would be very easy to make the dream of Egalitarianism to be true. If every strong and better person were working willfully to fulfill the good of not his self, but of the poorest person, the materialistic, capitalistic, or individualistic difference between the stronger or weaker would be nil. For this, he proposed the idea of Trusteeship⁶ .
Gandhi ji’s Talisman, which we Indians have been indoctrinated throughout our student life, is actually the mystical potion of spiritual socialism that tends everyone to willfully and peacefully accept his duty to serve the poorest person one knows. Gandhi ji simply declined the importance of Individual life, and his right to pursue his happiness, his good, rather he inspired everyone to willfully accept the servitude of the weakest person one knows and to devote his actions for the goodwill of the poorest person.
Here comes the undeniable hypocrisy and psychological illness. How can one be selfless? How can one devote himself to think before acting, not his good, his profit, but the good of the other, the poorest? Gandhi ji’s talisman becomes a psychological poison for an individual because he naturally is selfish and tends to serve his own good. Gandhi ji’s talisman enforces him philosophically to consider himself a wrong-doer.
Conclusion: Gandhi was a Radical Egalitarian⁷ , his philosophical idea was socialism, yet he was a supporter of anarchism and opposed majority rule of state government. He was proponent of Non violence, yet, he wanted to destroy class differences and hence Division of Labour and capitalism but peacefully through spiritual indoctrinations. If capitalism and Individual freedom can be sacrificed for the cause of socialism, than one may call Gandhi a libertarian, otherwise he was not a Libertarian.

I am inviting those people who consider themselves as owners today to act as trustees, i.e., owners, not in their own right, but owners in the right of those whom they have exploited.
Supposing I have come by a fair amount of wealth—either by way of legacy, or by means of trade and industry—I must know that all that wealth does not belong to me; what belongs to me is the right to an honourable livelihood, no better than that enjoyed by millions of others. The rest of my wealth belongs to the community and must be used for the welfare of the community. Mahatma Gandhi⁸

1. Gandhi’s talisman [↩]
2. A tribute to an unlimited legacy, Gandhi’s concern for individual welfare lead him to distinguish between man’s basic needs and human acquisitiveness. As a result of his democratic temper, Gandhi argued that a thing could be considered beautiful only if it could in principle be made available to all. Tested against that principle, the Mont Blanc pen is a moral and aesthetic failure. Why Mont Blanc Pen is a moral and aesthetic failure? because not “ALL” can afford it. [↩]
3. Realizing Gandhian Democracy, People First India [↩]
4. Realizing Gandhian Democracy, People First India [↩]
5. Gandhi ji on Capitalism, Socialism and Communism, Applied Gandhi [↩]
6. Gandhi ji on Capitalism, Socialism and Communism, Applied Gandhi [↩]
7. Freedom Versus Egalitarianism, Reason for Liberty [↩]
8. Gandhi ji on Capitalism, Socialism and Communism, Applied Gandhi [↩]

“Concentrated power is not rendered harmless by the good intentions of those who create it.” -Milton Friedman

One may wonder what the great economist Milton Friedman was thinking while he uttered those words. May be he was thinking of the ill-effects of price controls and how does price control¹ causes shortage and hence excruciating conditions for the most poor men of society. He might be thinking of the ill-effects of socialized medicines², or may be he was thinking about the irrationality of minimum wage law and the manner that the very intention of improving the living conditions of poor workers actually condemns many to acute poverty and unemployment.
Minimum Wage Law in India
In 1920, Mr. K.G.R Chaudhary took the initiative by setting up boards in different industries to determine the minimum wages³ . It must be recognized that in those days, the British government held total control over all of the Indian industries and law bodies and Mr. Chaudhary was an agent of British Government. The idea clearly was not at all to improve the living conditions of Indian workers whom the British government considered as slave; rather it was to pacify any possible insurgencies. It was a British government’s vicious trap to divide and rule the Indian youth and workers for their own profits. At one hand, they were luring the industrial workers by the assumingly better living conditions they were promising to provide; on the other hand, they were simply crushing out any chance by native businessmen and entrepreneurs of British India to be a successful. That initiative also created a rift between those Indians who were engaged in the British government controlled industries as they were being lured for a better life and the other portion of youth that was not working for the benefits of British government. This political step obviously divided the Indian youth and workers and hence decreased strength for struggle of freedom.
After Independence, the new democratic government of India set-up a “Committee for Fair Wage” in 1948 to provide guidelines for wage structure through out the country, it was the beginning of Minimum wage law in India. Were Indian leaders, who are assumed to be the fathers of Independent India such fools that they failed to realize the vicious trap of British Government and hence established the poisonous minimum wage law, or were they simply following the steps of British government (being the new rulers of India) to keep the policy of Divide and Rule?
Consequences of Minimum Wage Law
The rate of unemployment is directly proportional to the overload of labour cost over productivity. Minimum wage law that forcefully raises the costs of unskilled and inexperienced labour and thereby increases the labour cost, while decreasing the productivity, certainly raises unemployment, also as no one can employ a worker at a wage below the minimum wage forced by the law, the unemployed youth fails to get any chance for employment (as it would be illegal) and hence suffers extreme poverty. Often economists ignore the fact that minimum wage law actually causes unemployment and poverty because of the shear fear of politicians and rulers, who just for making their vote bank keep exploiting the poor lot.
Consider a case of a private primary school engaged in providing elementary education to the poor kids of a society. The owner of the school is obviously not a rich person, he is managing the school to earn a living and in return, he is providing job for teachers he employs and a well-managed system of education to the kids of the society at affordable student’s fees. He cannot increase the student fees to that level at which parents would find it difficult to send their children to his school. Initially, he engages 10 teachers, 2 clerks and 4 menial workers at an average salary of Rs 1000-Rs 1500 per month. In September 2007, the national minimum floor wage was increased to Rs 80 per day (that is Rs 2400 per month) for all scheduled employments from Rs66 in 2004, to Rs 45 in 1999, Rs40 in 1998 and Rs 35 in 1996⁴ .
That is, the school owner is actually doing an illegal act by giving lesser salary to the ten teachers he has employed than the salary, which government has admonished to be given to the teachers (workers). Obviously, the teachers would be happy if their salary were increased from Rs1000-Rs1500 to Rs2400 per month, it would almost be double. If government forces the school owner to give the dictated salary to all his employees, he will certainly find himself unable to give that amount to his employees and hence he will be forced to trim the number of teachers, clerks and helpers to half. That is, if government forces the minimal wage law on the school owner, he will simply remove 5 of his teachers, 1 of the clerk and 2 of the menial workers.
That would increase the salary of remaining 8 employees but will certainly throw the unfortunate other 8 people in poverty and unemployment. They will hardly find any other job because all other employers will also suffer the similar inhuman conditions of lack of money to employ the job-seekers.
In case of teachers, the school manager has option to choose the best of the teachers and remove the average or below average teachers. In case of the clerk and the menial workers, he simply does not have such a choice because almost each of his employees is similarly skilled and efficient in those works. So how would he decide whom to remove and whom to keep as his employee? He may choose to employ those, who agrees to sign at the pay slim as admonished by the government, while taking lesser salary in turn of his favour to keep them at job, that is, he would be tempted to promote corruption. Otherwise, he may keep the workers of his caste or religion while removing the workers of other caste or religion. That is, the minimal wage law will force the employer to cause hatred based on religion or caste.
On the other hand, because of lesser teachers, the burden on each to teach the students appropriately will be increased, their working hours may increase. Government can certainly admonish another law to restrict the maximum working hours for employees. In that case, either the teachers will start ignoring the students, or the school owner will have to remove some of the students to balance the workload of teachers. The owner of the school will also suffer losses because he simply cannot increase student’s fees (government can admonish against that) because if he does so, the parents by themselves will feel to remove their children from school and hence stopping their education. At any further increase of minimum wage of the workers, the poor section will suffer further. Thus, the final sufferers of the inhumanity of minimum wage law are always the poor, the workers, the consumers and the producer.
Conclusion
Minimum wage law not only increases unemployment and extreme poverty but also, it increases tensions anger in between the various sects of the society based on religion and castes or race. It promotes racism, poverty and shortage.
It would be wrong even to think that the founders of India were fool enough to miss the true nature of minimum wage law, yet they kept following the British policy of divide and rule just to keep their political vote bank strong enough while the poor public is bound to suffer. Such inhuman policies are necessities of government to exist, hence government and politicians often lure the poor public by misguiding them and pretending that the politicians are with good intentions and want to help the poor, the reality is, government exists on the principle of violence, exploitation and robbery and enslavement of poor citizens.

1. Consequences of Price Control, Reason for Liberty [↩]
2. Abolition of Cost is cause of Corruption, Reason for Liberty [↩]
3. Minimum Wages Act India, Government of India [↩]
4. Minimum Wages Act India, Government of India [↩]

The skyrocketing prices of common commodities is becoming the main political issue around which, the BJP is trying to make their case against Congress lead government. It is true that government is responsible to the price rise, but can government control the prices or the price rise?
It is a common myth that producers, hoarders, speculators and dealers control the prices and tries to bring the prices as high as possible to make maximum profits at the expense of poor consumers who have no choice but to be exploited by such corrupt speculators, hoarders and dealers. It is certainly an irrational myth because to make maximum profits in a competitive market, the speculators, hoarders and dealers need to adjust selling their commodities at the minimum possible prices.

Who Decides the Prices?

The price of a commodity depends on its demand and its supply. Demand and supply being the amount of commodity the buyers are prepared to buy and sellers are prepared to sell, at all prices.

If supply is constant, The higher the price of a commodity, the lesser is its demand, the lower the price of a commodity, the higher is its demand.

As the speculators and sellers reduce the price of their commodity, the demand of that commodity increases. People obviously are willing to buy more shirts at Rs20/- per shirt and they will buy lesser shirts at price of Rs40/- per shirt. Since the lower price increases consumers, speculators and sellers tend to decrease the price to the minimal possible value so that they can outcompete the other speculators and sellers. Most of the consumers will opt to buy from that seller who is asking the least prices and hence, that seller will make maximum profits. Obviously, a speculator cannot decide price for his stored commodity any less than the actual cost of that commodity plus cost of its storing and his share of profit.
Thus, it should be clear that speculators could not decide the price variation of a commodity as price is directly proportional to the demand of consumers. A speculator or a seller may merely speculate the increasing or decreasing trends of the demand of a commodity and adjust the supply of commodity by either storing it or flooding the stored quantity of the commodity in market in accordance with their share of profit.

Can Government decide and control the prices?

Speculators cannot decide and control prices because they cannot force anybody, they cannot use violence against anybody. So, if a speculator decides to sell stored commodity at higher prices, he will loose his consumers, as they will have choice to go for that speculator and seller that provides the commodity at lower prices.
Yet, government can decide and control the prices because government do not need to look for the supply of a commodity, on the other hand, government works under the pressure of vote banks. In order to obtain maximum of the vote bank, government can actually decide the prices of various commodities lower than the cost of production and storage of those commodities. That is why, just in order to gain maximum vote bank, government can promise to sell wheat or rice at a price of Rs2/- per kg, or even at free of price. This is absolute corruption and fraud because the cost of production of any commodity or service is always higher than the price dictated by the government and hence government always works at loss that ultimately burdens the poor consumers, voters. Government can control the prices too because it has monopoly on violence, government can force all speculators and sellers to sell the product at the dictated prices; it can illegalize speculating and selling and may control selling services completely by collectivizing the market. Government can jail speculators, sellers and dealers if they do anything against the monopoly of government, government can kill them too by means of police force.
Obviously, government has no responsibility or need to look for the quantity, quality and supply of the commodities of which it dictates the prices because the basic means of government income is confiscatory, compulsory taxation. Yet, when supply of a product reaches too much lower and the demand increases too much higher, government succumbs under the pressure of demand and supply and resorts to increase the prices, that again creates havoc for the consumers.

Reason of Price Rise and Consequences of Price Control

In order to hide its irresponsibility and fraud, government often suggests that the reason of price rise is population explosion and scarcity of products. Yet, it is again a myth. It is true that Indian population increased almost 4 times since 1947, yet the thing to be noted is, Indian production increased 100 times (or more). So comparably, production is too much more in relation with present population than what it was in 1947 in relation with the population of 1947.
Price rise is direct consequence of Inflation¹ . As government has monopoly on printing fiat currency out of thin air, it keeps increasing the fiat currency. As a result, the purchasing power of citizens increases. Since the purchasing power of consumers’ increases, their demand also increases and it exceeds the quantity of available supply.
Whenever the quantity of demand of consumers’ increases than the quantity of supply the producers and sellers can provide, the situation of shortage occurs where the consumers are willing to buy, but the sellers and suppliers cannot provide, they have nothing to sell.
Such situations creates tensions within the society and may erupt in violence as every consumers suddenly comes to realize that although they have fiat currency, they have no wealth, they have been robbed and they are poorer than what they were years before. To avoid such situation, government feels forced to increase prices of commodities because price rise actually solves out the problem of shortage. At higher prices, demand of consumers decreases and tends to come closer to the quantity of supply available in market. Yet again, government may loose vote bank because of price rise, hence it resorts to price control again.
Price control is again a fraud and creates chaos in market. Due to lower dictated prices, demand of consumers remains high irrespective of the supply and that increases wastage of scarce products causing shortage. As production and supply never meets the demand of consumers in such scenario, the consumers suffers.

Solution of Price rise and Shortage

As price rise is result of Inflation and government’s monopoly on printing currency² , the solution of price rise obviously is a denial of fiat currency and acceptance of 100% gold standardized currency and end of government monopoly at issuing currency³ . The increase in supply of such money would always be ineffective and small and would be limited by the high costs of mining additional quantities of gold.
Price rise became a chronic social problem because government replaced the Gold standard of currency by unworthy paper currency whose quantity can be raised without limit and without cost. There is no other solution for this chronic problem.
In addition, the problem of shortage and all the frustrations, corruption and violence attached with it is because of the government control over prices. In order to avoid any shortage of any commodity in market, it is necessary for government to leave the market and pricing system free of any interventions and let the producers, sellers, speculators, hoarders and dealers take care of the pricing system.
Speculators and hoarders saves the consumers from shortages by speculating any change in the trend of demand and supply and adjusting the prices to that level at which, the demand of consumers decreases or increases to the equalizing levels of the available supply.
When demand is higher and supply is less, speculators increase the prices and hence decreases the demand to equalize it with the supply and hence saves the consumers from the frustrations of not being able to buy, and thus avoids any wastage and shortage.

1. Story of Money, What Causes Inflation? [↩]
2. Story of Money, What Causes Inflation? [↩]
3. Fiat Money Versus Gold Standard, Privatization of Currency [↩]

We have seen how the state planning for alleviating famine and food shortage fails miserably in a planned economy. Often in a mixed economy, government seeks proper control over the agriculture and food sector and that becomes the reason of corruption and further suffering at the times of need, scarcity and famine.¹
On the other hand, in a free market, the profit motive acts efficiently to assuage worst kind of shortage and famines and hence actually save the populace from extreme starvation.
In a free market, there is a tendency of price of wheat, rice or crude oil (or any other commodity that can be stored), to be equal to its expected prices say after 6 months or a year, that is, free market naturally depresses the unexpected price rise.
Whenever government intervenes with the market, the market moves away from this natural tendency and the consumers suffer unexpected shortage and famine.
The force behind the tendency of uniformity of present and expected future prices of a commodity in a market is the profit motive of free enterprisers. Any disturbance in prices provides a chance for higher profit rates and as the enterprises exploit it, the discrepancy in the prices reduces to minimal.

Solving the Shortage of Grains

To understand this, let us take the case of an unexpected flood or drought in an Indian region (say Bihar, or Andhra Pradesh). Because of drought, the production of wheat will be reduced (let us say it reduces by 1/12th of the average wheat production in an year). Obviously, because of the shortage in production, the price of wheat is expected to rise after say, 6 months. The enterprisers looking for making higher profits will speculate this expected price rise and will start storing the wheat at the current lower prices to save it to make higher profits in future by selling the stored wheat at higher prices.
Their speculative storing of wheat will result in a raise of current price of wheat, as there will be lesser wheat available to be sold to consumers, and the enlarged quantity of wheat for future will reduce the future prices of the wheat.
Because of current higher prices, the consumers will also start accommodating themselves to the shortage of wheat by reducing the consumption of wheat and checking the wastage. This thriftiness on behalf of consumers will allow them to sustain the time of absolute scarcity of wheat and that will further reduce the expected future price of wheat. Thus, at one hand, speculators will increase the current prices of wheat by storing it for future sales at higher prices, on the other hand, the increased available quantity of wheat for future and the thriftiness of consumers at present will reduce the expected prices of wheat in future. As a result, the maximum possible increase in price of wheat at the period of most scarcity will also be not very much more than the current price of wheat plus the storing and preserving charges of the wheat by speculators.
In absence of speculators, as most of governments illegalizes speculation for price control, the consumers will never realize the actual shortage of wheat because there will be no sign of scarcity by means of price rise and will continue consuming wheat as normal. On the other hand, although the stored wheat will satisfy the demand of consumers for first 11 months, there will be no wheat left for the next 12th month of year as the total wheat produced is already less by 1/12th of the average required for an year. Such a situation will not only make people suffer starvation but will also fail to reduce wastage when it could have been. In addition, it will provide further chances of bureaucratic governmental corruption.
The profit motive will also alleviate the situation of famine and scarcity by means of another natural force of free market that tends to equalize the price of a commodity at all places. At a time when Andhra Pradesh or Bihar is suffering famine and food shortage, the dealers at other parts (say Uttar Pradesh, Punjab or Tamil Nadu) will seek higher profit rates by selling their stored wheat to the consumers in Bihar or Andhra Pradesh. This will result in a slight increase in price of wheat at the local markets while the increase quantity of wheat available for Bihar or Andhra Pradesh consumers will reduce the unexpected rise in price of wheat at markets there. Thus, the shortage of wheat at a region will be spread to whole India and hence will reduce its effect to minimal, all will share the increase in price of wheat, and that will reduce any extra burden on the consumers of famine suffering area to negligible.
The speculators cannot store the wheat for more than a period of 12 months as by that time, the new crop of wheat will arrive in the market and that will reduce the price of wheat to normal.

Issue of Oil Shortage because of Corrupt Oil Barons

The same principles of free market will also tackle any unwanted situation in the market of crude oil and petroleum or any storable commodity.
In the previous post, while discussing the Market Anarchy² , one of my friends raised the issue of Oil Barons, asking what will happen to free market if the Arab Oil Barons tries to control the market because of their influence on oil production.
Let us assume that all Oil Barons of Arab makes a union and tries to control the free market by imposing an artificial scarcity of crude oil (although this is impossible because reducing supply of oil will reduce all income of those oil barons as they have no other means of profitable production).
The speculators of free market will certainly foresee the future shortage of oil and will maintain their oil storage to make higher profits. That will obviously increase the current prices of available oil and hence will introduce the thriftiness in consumers, making them more able to sustain the period of oil shortage. Consequently, it will reduce the chances of unexpected increase in price of oil at extreme periods too.
On the other hand, Indian free market will also tend to increase its oil production to make higher profits. In addition, profit motive will tend the oil producers of other nations (like USA or Russia etc) to sell their oil to the Indian market. That will obviously tend to spread the scarcity of oil through out the world and hence will assuage the problems of Indian market. Hence, although the economy of India and actually whole world, will suffer a comparable loss but that would not be of any considerable degrees. On the other hand, Oil Barons depend only on oil production, their loss at not selling the oil will be huge and directly pointed towards them, and that will break their union.
Conclusion: A free market inadvertently safeguards itself against any sort of scarcity of any commodity by means of the profit motivated market forces. As speculators guard the market and hence the well-being of consumers as true and honest soldiers (as their vested profits and interests are strictly attached with the consumers), the free market necessarily remains free of any discrepancy in the prices of any commodity.
Even the administrators of mixed economy have realizes the power of forces of free market that is why Indian government issued allowance of speculations over wheat few months ago³. Certainly, it is a positive step towards the Free Market.

1. Cultivating Famine, Reason for Liberty [↩]
2. Issue of Oil Barons, The Market Anarchy [↩]
3. Ban of wheat futures lifted, Speculation allowed, Economic Times [↩]

The only practical solution to remedy the problem of poverty is undoubtedly the increase in productivity of individuals, workers and the market as whole.¹ As productivity of individual workers and the market depends on the rate of technical advancement, inventions and innovations in the process of production, the most fundamental necessity to eradicate poverty is to provide a system for maximum possible technical advancement, inventions and innovations.
A free society working on laissez-faire free market capitalism provides the impetus to continuous economic progress by means of the profit motive that acts as the agent of continuous progress in production.

Cycle of profit motivated Innovations

To make profits above average and hence to be successful businessmen, entrepreneurs need to foresee changes in consumers demand before their competitors, to provide new improved products in the market ahead of their competitors or to cut the cost of production before their competitors may do that. Eventually, every innovation becomes general and the other producers and businessmen also either adapt the innovation or improve it further. Thus, the profits of the first businessman who introduced the invention decrease again. The only way for him and others to make higher profits again is to introduce further innovative improvements in the production and quality of products to satisfy the consumers demand at further lower prices. Thus, for any firm to continue making above average profits, it must frequently outrun its competitors and must act as an agent of continuous economic progress.
The competition for making higher profits increases the total production of market many folds and decreases the poverty of masses. A firm that brings upon an innovation in production increases its production, sales revenues and profits at the expense of the other producers who are not yet able to increase their production. Consumers shift to the products of that firm because it has better or equally good product to provide them at considerably lesser prices. The innovator hence makes outrageously high profits while other producers’ lower profits or outright losses compels them either to renovate and improve their production or to duplicate the innovation brought upon by the first producer. In a free-market, innovations hence, are not only necessary to make higher profits, rather they are necessary to make any profit at all, if no innovation and improvement, one may loose his business, profit and consumers totally. As the innovation becomes general, the total production of market increases manifolds, increased supply of products decreases the selling prices, and hence reduces poverty to great extent. Furthermore, generalization of innovation and decreased selling prices reduces the profit of producers and hence compel them to modernize, improve and invent further to bring more satisfaction for the consumers. The result obviously comes out to be in favor of consumers that may gain the better products at lesser prices and this is reduction of poverty. Thus, free market provides the profit impetus to innovate, improve production, and hence reduce poverty of masses. In addition, a special profit of innovation tends to disappear as the innovation become general and every other producer adopts them. In order to maintain higher profits, every producer who want to keep maintaining higher profits to longer periods need to repeatedly innovate and improve the production and hence bring down the poverty in masses.
In absence of freedom as the government regulates the market and bar down the profits, this impetus for innovation and invention decreases substantially and the consumers suffer poverty.

Government regulation is unable to provide impetus for economic progress

In a free market, the production and business is open to everyone. Even a penniless individual newcomer may start his new venture and bring upon innovative techniques of production to make profits. Those who have innovative ideas but lacks investment to implement can offer partnership to others who may invest in their ventures. A free market capitalist society provides enormous resources of investment for the new innovative ideas and that is absolutely impossible in a government regulated mixed socialist economy. In a free-market, where an innovative individual (though he has no money) need only to convince some of the financiers to invest in his innovative ideas, easily gets a chance to progress. In addition, the financiers keep looking and encouraging the innovators for making higher profits as that is necessary for them.
On the other hand, in a socialized government regulated market, the innovator need to convince everyone, a majority or at least a significant minority of his fellow citizens in order to implement his innovation. Even if he succeeds anyhow to convince the majority (most of whom have no idea of production process and innovation), he may not be able to get necessary finance because of government licensing system. Furthermore, while in a free-market he can have any preferable and most profitable agreement of partnership with the few financiers, in case of regulated market, he has no way to bargain for his individual profits as government confiscates his profits for the cause of the majority.
Thus, the government regulated system is such that no new innovator actually feels it profitable to devote his hardship and intellect to actually innovate, as he may never be able to make any high profits. In addition, even if some young innovator tries to bring upon innovation and improved changes, he may never succeed because of the bureaucracy, license raj, and political corruption. In such scenario, only a few already established corporatists that enjoys the government support may succeed in bringing upon any innovation an hence the common man always fails to make any fortune on behalf of his inventive innovation. Furthermore, as such system discourages any innovative improvement, the businessmen of such mixed economy regulated market not only suffers lack of increase in production, they are forced to adapt the already introduced innovation in other freer markets.
Once a friend asked me, why India fails in introducing any remarkable innovation or invention in market? The answer lies here; Indian market is not free enough and hence is unable to provide the required impetus necessary to bring any inventive innovation to increase production by itself. Another friend complained that in India people tend to copy or duplicate others innovation rather than engage their energies in innovating techniques further by themselves. The complaint may be true, and the reason is only that. Government actually hampers any impetus for innovation, while the world market forces Indian producers (the government supported corporatists) to duplicate the innovations brought upon by the entrepreneurs and innovators of other freer markets.
The more freedom a government institution provides to the market, the more innovation and invention that market brings upon to the civilization. Even Indian government realized this fact after 1991 and hence adopted the process of disinvestment and freeing up the market. As the Indian market, producers and individual innovators will get more freedom to make use of the profit impetus of free market, they will experience their increased potential to bring upon major innovative inventions in every sector of production and general life.
Individual Freedom is the mother of progressive innovation and that is necessary for civilization to be free of corruption, poverty, wastage of resources and scarcity.

1. The cure of Poverty is increase in productivity of Individuals of society, Population, Poverty and Productivity [↩]

Often the politicians assume that it is their responsibility to provide certain services like health care or education for the needy on behalf of the compulsory tax collected from the common citizen. Thus, they propose the single payer socialized Universal Health Care System¹ or Universal Education System² with the theme of Education for All, where everybody is free to take free advantages of the medical care or education system, while government pays for the cost of it. The general intention of such politicians who exhort such an idea is to gain the public vote; it is nothing different than bribing the voters monetarily in order to get their votes to make a government. Yet, the politicians are clever clowns, they never let the voters to realize their real intentions, rather they propagandize about the socialized system and suggest that it benefits the poor of the nation. The results obviously turn out to be opposite.

The Socialized Medicines

The idea behind socialized medicines is the forced economic equality³ of citizens, i.e. no matter you have earned money, you cannot have any better medical treatment than the lazy person who never thought of earning and saving for his medical security. Thus, the socialization of medicines is not only the abolition of causality of individual efforts and his earnings; it is abolition of the cost in spending of income.
As visits to doctor are free to individuals while the taxpayers collectively pays for them in socialized system, each individual realizes the benefit of his visit to the doctor, while millions of taxpayers pays for the visit. Obviously it is an insignificant amount, thus every individual is encouraged to take advantage of the system without considering the wastage. As a result, the number of visits to doctor increases abruptly. The absence of cost to the individual patient results in an enormous increase in the medical tests, hospitalization and surgeries performed, most of which remains unnecessary and that adds to the cost of system furthermore, also the system requires a huge bureaucracy to administer it and that further increases corruption and the cost to the collective. The result of the system is simply to raise the fees of doctors and medical facilities and to create scarcity of hospital beds and doctor’s time. The redundant medical tests and surgeries performed often delays the meeting of genuine needs of the patients and many a times, it becomes impossible for the patient to actually get the required treatment.
To solve out these problems, government thoroughly bureaucratize the medical field by controlling the doctors’ wages and price control of medicines, government also restricts doctors from practicing freely. Ultimately, the profession of doctor and medicines becomes unattractive and unprofitable and the talented individuals prefer not to opt for it. That further creates scarcity of efficient doctors. As government has no rational way to determine the necessary treatment in any individual case, the doctors starts denying the necessary treatment for the people, thus increases corruption.

Socialized System against Advancement of Technology

As the total cost of the medical care for the collective populace becomes unbearable and beyond the budget of government and scarcity of doctors, researchers and practitioners also increases the problems, government eventually starts opposing the advancement in medical technology. Any new technology, such as implantation of artificial heart proves to be major threat to the government’s budget. The free market incentives that work to reduce the cost of such new technologies before it may become available to the common mass are absent under socialized system. As government in no way can afford providing such technology to the masses freely, it actually starts opposing and restricting in advancement of new medical technology.
Furthermore, government deliberately excludes many categories of medical procedures ranging from cosmetic surgeries to bypass surgeries in order to contain the collective price of the Universal Medical Care System. Thus, people who could have afforded such medical procedures for their own help by their own money in free market are denied to have such facilities in socialized system.

Increase in Bureaucratic Corruption

As the Free Health Care System results in enormously increased demand of services and scarcity of doctors, medical facilities, hospital beds and resources, the medical sector becomes the free zone for political and bureaucratic corruption. As politicians and government official realizes that government cannot satisfy the demand of citizens, they start taking advantages of the situation through bribery, frauds and corruption. In order to contain the spending on collective medical care of whole populace and to increase the profits of the corrupt politicians, bureaucrats and government officials’ including doctors, government begins denying and prohibiting necessary medical procedures too to the common person. Not only the medical advancement is reduced and opposed by government, it also starts denying medical services to those citizens whom the government considers as only marginally valuable to the nation, such as infants or aged. As aged and infants does not pay any additional tax to the government budget, while their necessary demands of medical are high, they suffer neglect. On the other hand, government keep increasing taxes on the taxpayer citizens on the name of trying to provide necessary treatments for the poor, old and infants. Thus, the same socialized medical system that begins with an aim to provide funds for medical care of poor, infants and aged, turns out to be a sacrificial citadel for them.⁴
To believe that there can be something like “free lunch” is a great mistake. If government promises for free lunch, no one should be surprised to find out that it increases malnutrition and starvation. He may find himself on short rations of government in order to have fund for those whom the government considers more valuable than him on social and political priority. Thus, such socialized free-health care, or free-education for all, or free-lunch, food, water for the poor and underprivileged often proves to be phoney, corrupt and inefficient. Yet, government keep propagandizing such issues and programs just in order to keep its hold on political power and vote bank of the masses. Ultimately, all this increases extreme corruption in the system, and poverty and scarcity of resources and services for the masses. In order to reduce and ultimately remove the problem of corruption in India, Indians need to realize the irrationality of collectivism and to abolish it instead of abolishing the causation and cost of individual earning and living.
Huge number of such socialized programs including Universal Medical Care, Education for All, food for all, minimum wage rates and employment for all run by government in India are the actual cause of extreme corruption that we Indian suffers.
The POTUS Barack Obama and his Democrat comrades are also trying to push such forced economic equality on US citizens by means of luring the citizens and propagandizing such socialized programmes of Universal Health Care, Public education for all and many other such programmes. Obviously, their motive is to gain political mileage and promising vote bank to maintain their ruling power. Yet, the American citizens should realize the irrationality of such collective systems and prefer not to be the victim.

1. A discussion on Indian Health Care Problems, Indian Health Care–an Overview [↩]
2. The Myth of Complete Education, Education for All [↩]
3. Egalitarianism creates Forced Economic Inequality amongst the citizens that proves to be more drastic than the natural inequality of free system, Freedom Versus Egalitarianism [↩]
4. Socialized system turns to Common Minimum Program, The story of Socialism, Public Welfare and Brain Drain [↩]