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.

Sex as a Trade

Preparing for work

Prohibition never helps

Prohibition never helps

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.
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 Organization 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.

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Do we want better technology, superior products and services that are more effective?

Human desires are infinite and so is his potential. We want better medical services, information technology, better telecommunication services, better heating and cooling devices in our homes and office rooms. We desire better toothpastes, toothbrushes, better hair oils and shampoos, better and more verities of food, wine, better cleaning products, better cell phone, better ipods, better televisions, better laptops, better internet, we all want better and improved.
It is our want that drives the market to innovate and provide new technologies, services and products.
We want better and faster vehicles, satellite phones, and internet access. We need clean and filtered water, we need lifts and elevators, we need homes, we need security we need better services, we want more options.

Consumerism makes it possible. We are receiving everything we wish for and the market is providing them. Free market is nothing but a group of billions of people working together with free will, innovating and inventing further for the improvement, free market is also a system that joins billions of people together, yet provide full freedom for each individual to live for himself, at his own conditions with his own efforts. Nobody is pulling legs of other to rise higher. Market competition is nothing but a constant try of innovators and entrepreneurs to learn and satisfy the hearts and minds of consumers. Consumers are undoubtedly the kings of free market.
It is all consumerism, to desire better and to have full freedom to make one’s dream come true.
The socialists call it devilish, they say people do not need improvement, they say materialistic quest for making life better is futile. They say all this improvement in standards of life is waste. They ignore the real effect of all these changes. While blaming consumerism and crying anti-consumerism songs, they just hide away the evidences of improvement in human conditions.

Since the start of civilization, wise people are trying to search a self-sustaining system that may serve the common person rather than just the aristocrats and the rulers.
Free market is the quest for that riddle. Free market provide the system through which, the billions of unplanned desires and wants, billions of unorganized and independent economic choices succeeds in creating a self-sustaining system of production and provision to satisfy and serve everyone.
Now socialists, anti-consumerists decries against this system, they say consumerism provides too much for too many, they say it is not necessary and it is wastage. They say people does not need these things, they are mere senseless materialistic wants.
The question is, are the consumers buying those things that are not required? Who dictates the difference between a need and a want? Some religious guru, or some socialist dictator?

One’s desperate need is fulfilled by Other’s want for Leisure

The fact, which makes the free market sustainable, is “the need of a person is fulfilled as a resulting effect of fulfilment of other’s want. That is, wants and needs are interlinked in a free market.

Shiksha India CII

“Support Shiksha, lead a child to the path of education, Buy large packs of Tide, Ariel, Pantene, H&S, Rejoice, Vicks VapoRub, Whisper, Gillette Mach 3 Turbo, or Pampers, & lead a child to the path of education.”

The advertisement simply suggests that the more you consume, the more poor kids get proper education.

Consider another example, a person’s child is badly sick, he is trying to get her to a doctor. The urgent clinic is open until late night; the neighboring drug store is also open. The desperate father goes out; get the proper medicine and gets in, to save his daughter. There is nothing phony demand in this entire act of saving a child’s life.
However, the urgent clinic can remain open late because its office is situated in a dense mall with low rents and higher access. The medicine store is open late night because cosmetic store, bakery, bear bar, sports shop, a swimming pool, a hotel facilitating late night parties and discotheque also share the area where the medicine store is situated. All of these stores are selling superfluous things. They pay rent too. The owner of the mall would not have made that place if those less desperate needs were not to be sold there. That is, the want of leisure and pleasure of other people became the reason for the prompt and urgent health-care of that child. Some of the Indian cities are experiencing development, socialists call it redundant, Indian villages does not have such superfluous stores, they do not have proper schools and hospitals too.

The demand of public for the non-essential wants became the background of hospital facilities for the needful.
The same is the case of luxury goods such as mobile phone. Mobiles were meant to be available for the rich alone. It was not an essential demand it was a luxury good. Only the rich could use them. The innovators created cheaper versions; the capitalists increased the production and made it affordable even by the middle class and lower middle class person, now even the poorest of Indians is likely to have his mobile phone.

Quality of life improved even for the poorest person. He is more resourceful now and able to earn more.
Some people believe that quality of life does not matter, for them; equality of life is better idea. The question for such people is, why not the poorest should get easy access to vast grocery stores, medical stores, better food, technology, and other not-so-essential luxuries? Consumerism helps the facilities, better services, and technological comfort to reach to the poorest strata of society. Consumerism actually reduces poverty. In addition, the better quality of life provided by consumerism has its own importance. It is natural right of the people to have freedom to choose and buy market products, as they want. Free market provides this freedom to the consumer, the people. Free market keeps providing better technology and products at cheaper rates, and this ability of free market is driven by the motive of consumerism.

Better quality of life has improved the average life of people too. The average life of women and men in 1900 were 48 and 46 years respectively. Now, the average life of women and men consumers is 80 and 77 years respectively. Obviously, consumerism is serving consumers. Infancy death rates dropped hugely because consumerism brought better medical help and vaccines. Death toll due to epidemics reduced to great extent. Overall consumerism is serving humanity to lead human for better, more comfortable and more satisfactory quality of life.

Conclusion:
Either those who oppose and criticize consumerism are misled or they have some evil motives against the developing humanity.
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Failure of Government

Often government is considered as obligatory for the working of a society, yet, the more perfect and free a society is, the less it needs a government to govern it. A free society obviously governs itself and provides enough free domains for each individual the right to self govern. All the specific laws of any society or country are basically the very natural laws based on the rational mutual self-interests of the individuals involved. All the laws of trades and commerce with respect to intercourse of individuals or different groups of individuals are based on laws of mutual and reciprocal self-interest. Individuals or groups of free individuals are tend to follow such natural laws of peace and prosperity not because of fear of any formal government, but because of the inherent mutual benefits and profits they are seeking for.
It is quite obvious that if a society is left free, and each individual of that society is provided complete freedom to pursue his progress and happiness, there seldom will be a need of any governing authority. Yet how often is the case where various operations of government destroy the natural peace and mutually beneficial state of free society?
If one look back at the riots and tumults that happened in India at various times, he will find out that government did not want any of those riots, but the government itself was the generating cause. Instead of consolidating the society, government divided it; it deprived the society of its natural cohesion and engendered discontent and disorder. That is, the government itself became the cause of chaos. The riots of 1948 were not because of any misgivings between Hindus or Muslims, both of them were living peacefully in India since hundreds of years, those riots occurred because of governmental want of divide and rule. The bloody conflict of Kashmir is not because of some Islamic group of militants, it is because of the want of two governments to control a peace of land and rule over the people living there. The militants of Punjab demanding for Khalistan were not inspired for any better cause of Sikh community, rather they were looking for making another coercive government, the 1984 riots against Sikh’s again were not because of any sect of society, but they happened because of the impulsiveness of government. The emergency period and all the killings in that period again were because of the government. The opening of Babri Mosque gate was obviously a political step of the government that infuriated the society and became the cause of Hindu-Muslim riots, Babri mosque was demolished because of aspirations of government, and whole society suffered the consequential riots and killings. The burning of Godhra train was again a consequence of the division that the government and the aspirants of government created and that became the cause to further Gujarat violence.
Overall, there seldom occurs a riot or act of violence within the free individuals of a free society, but whenever a self-imposed government intends to interfere within the society; it becomes the cause of riots, tumults, destruction and violence.
The various acts of government, tax-impositions, caste reservations, reservations based on religion etc ultimately divides the society and creates an environment of dissatisfaction an frustration that ultimately leads to violence in various forms and to avoid that, government again tend to divide the society further and deprive it of the natural strength and mutually beneficial state a free and self-governed society may achieve. The recent case of Telangana struggle is also nothing but an example of governmental act going sour, and the very infamous Mumbai riots against the people of UP and Bihar are also nothing but the ill-effects of governmental ill-policies and the war-mongering character of the political aspirants.
What good a farmer ploughing his land will find in leaving his peaceful pursuit of prosperity and happiness and going for a war against a farmer of other religion, state or country ploughing his own land? Why will a manufacturer of a certain religion, caste, state or country wager a war against the manufacturer of another religion, caste, state or country? Does any such war, riot or struggle adds up any acre of land for that farmer, does it increases the productive capacity of the manufacturer, does such wars and tumults and bloodshed increases the venturing probabilities of any entrepreneur or enterprise? No, it adds nothing for any common man, it do no good for any common folk, rather, all such wars, riots, strikes and tumults deprives them of their peaceful pursuit of happiness, their basic right of freedom and security. Though this reasoning is good for a society or a nation and its people to avoid and hate wars, and try to maintain love an peace to pursue their progress, yet it is not so for the government. A society earns nothing from divisions, wars, strikes, tumults and riots, yet a government earns a lot. War is the game of government and the nation and public are the pawns.
In spite of all these depressing and destructive acts of government, the individuals keep striving for their progress, for their living. No matter how high inflation may go, the poor man seeks out a way to feed his children. It is obviously a wonderful attribute of the society that in spite of being ruined and ruled by the government keeps providing enough aid for the individual constituent to survive the harshness and inhumanity of the government.

Society in every state is a blessing, but government, even in its best state, is but a necessary evil, in its worst state, an intolerable one. Thomas Paine

The society considers income inequality as a curse upon itself. In a general argument between a ‘Capitalist’ and a ‘Socialist’, or a ‘Liberal’ and a ‘Conservative’, generally the Socialist/Liberal individual accuses free market or Capitalism of creating economic inequality in the society. A general example given is of US society where top 1% of the people own 40% of the wealth in US(or a variation of the statistics). This makes the people who stand for free market and capitalism generally go on a defensive by either attacking the statistics, or by comparing the worst person in a ‘seemingly’ capitalist society like United States being better than most average or well rich individuals in a seemingly socialist or an equal society like North Korea and Cuba.

My point here is not to argue whether the statistics is correct or not or to argue whether poor people in United States are better than poor people in Cuba, but to see whether ‘inequality’ is a negative attribute of a society on its own.

Society with an all knowing Superman

Imagine a society where there is one human being which knows each and everything. Consider him as knowledgable as God. He knows how much exactly its going to rain or snow, how much wheat is going to be produced, how much metal is there in a gold mine, and when its going to become uneconomical to dig more gold. He knows everything, if you ask him what is the best job you could do, he could even tell you that. He has all these information of the time till he dies. In a free market society this man will end up owning everything in the world. There will be no investors in the stock market but only him, he could plan the resources in such a way that it gives him maximum profit. He pulls out capital from a oil company exactly when the oil extraction will not be economical anymore and invests in alternate energy. He shorts the shares of the companies the moment its CEO tries to be dishonest or to cook the books. He bursts the bubbles and lifts up the recessions by investing in such time. Overall he owns everything in the world. Everybody works for him now.

The question which comes now ‘Is this a terrible society to live in?’, or ‘Is there something wrong with this society?’. Initial reactions would be, ‘Of course, this is a horrible society to live in, one employer and he owns everything. You can never become rich in this society. He will be consuming everything.’. But give it a little bit more thought. What this guy has managed to do is eliminate the risk from the society. There is no risk. When you start a business, you see a demand and you see a supply, and you hope to match the supply and demand and hope to undertake the leftover of that operation. In this society, all demands which can be met by supplies are already been met by this guy.

People of city A want a train to the city B, but they don’t really wanna pay enough money which facilitates the operations of a train, so they use buses instead. The day people of city A get enough fed up and decide that they would be willing to pay enough money for a ticket of this train, this Superman sends his men who start to build a railway line between city A and city B. Sure Warren Buffett, Bill Gates, and all the successful Stock market Investors and businessmen would not wanna live in this economy, but common people like you and me are much better off in this city than we are in our current situations.

Imagine there are no shortages of wheat and rice, because this Superman who has the insight of demand/supply fluctuations always buys/sells the wheat and rice in such a way that maximum people are able to buy maximum amount of rice all the time. Imagine there is no stock market crash which proceeded 9/11 because this guy has already smoothed it out. Imagine no real estate bubble because when people overvalued the houses, this guy shorted them.

Is this society better?

You see the reason why the people of this society would be so much better than our current society because there is no risk in this society. Sure someone might say that you can never dream of starting a business and becoming a billionaire, well don’t forget this is a hypothetical society where we are presuming this superman knows everything. We dream over the possibilities. We don’t dream that we will go to school tomorrow, because we are pretty sure we are going to school tommorrow like every day(though we may dream of NOT going to school tommorrow for the possibility of a rain storm or something). Imagine it to be like this, on a roulette table, some people win and some people lose. If you told everyone the outcome of the game, the people who lose will never play the game, and the people who will win, now have nothing left to win from. Roulette is a zero sum game and real life is not, but in our example, if you play knowing that you will lose, you still lose and nothing changes(lets say you decide to run an airplane service from City A to B whereas they don’t really wanna pay that much, so now you lose all your money by investing in it). If you are correct on your entrepreneurship decision, and you wanna run a railway line from City A to B, you will be either beaten to it by the super investor and your train will run in a loss, or if you are really lucky you may beat the super investor to it.

Even if he lived in a socialist society, you will have to make him the central planner, performing the same functions as he did in a free market economy.

The point is that although this society may not be as thrilling to live in as our current society, it will have a lot less poverty. Except for that superman guy everybody else would be more or less equally rich.

Society with real life men

In our society there is no such human being who knows each and everything about the economy. Nobody can really be that accurate, so that situation is highly unrealistic. But it tells us something, it tells us that inequality of wealth isn’t really a objectively bad or good thing. Sure if in North Korea if Kim Jong-Il is the richest man and his family owns everything and everybody else is terribly poor then that sure is a bad kind fo inequality, but for economies with private ownership of means of production(countries with stock market), if the stock investors are the richest people then that isn’t neccessarily bad thing. It would be a bad thing if they made all their money through government coercion, like being a politician’s relative who knows which property will be picked up for Olympics stadiusm etc etc.

Conclusion

Inequality figures on their own are completely useless piece of infromation. They don’t convey any information. Someone supporting equality, or someone being egalitarian as in someone desiring an equal society does not say anything about them. Although whether someone supports use of violence(like supporting welfare and income redistribution schemes) or just social movement for voluntary charity is a completely different issue. Most economists in America support income redistribution and welfare programs. General trend was that the more elite institution they were affiliated from the more they supported redistribution. In an earlier article I explained why Hollywood is so leftist, probably the similar mentality affects the economists.

“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 control causes shortage and hence excruciating conditions for the most poor men of society. He might be thinking of the ill-effects of socialized medicines, 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

Abolish Minimum wage, Abolish Youth Wage

Were the Indian politicians fool enough to be unaware of vicious nature of Minimum Wage, or were they following the footsteps of British dictators to Divide and Rule and exploit the poor Indian?

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 Inflation . 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

Gold Currency

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.

India lacks Innovation because Government actually hampers any impetus for innovation

The Socialized Medicines

The idea behind socialized medicines is the forced economic equality 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

My Healthcare My Choice

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.
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 al, 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.

Uniformity of Profit

Naturally, every body works to gain profits, everybody lives to sustain and comfort his life, profit is the only motive for a free individual to put up his endeavours in production and prosperity. Yet, the laws of natural anarchy also ride profits and that is the Uniformity of Profit principle. The principle suggests the natural tendency of a free-society towards establishing a uniform rate of profit on capital invested in all the different branches of production, be it steel production, grains production, oil industry, the shoe business or whatever. Profit, obviously is the difference between the sales revenues and cost of production.

The reason for such tendency of natural uniformity is the profit seeking nature of the free-individual. Investors prefer to earn higher rates of profits on their investment rather than the lower rates. That is natural, rational behaviour of man to seek maximum possible profits. Thus, other things being equal, wherever the rates of profits are higher, investors tends to invest their additional wealth, and wherever the profits are lower, they tend to withdraw their previously invested capital from those production sectors. The additional investment that thus reaches to any high profits providing production sector tends to reduce the rate of profits in that sector.

The natural, rational behaviour of man is to seek maximum possible profits

Benefits of Natural Anarchy

In a free-society, as the profit rates tend to be uniform, every sector gains enough investors. As every investor is driven by his profit seeking nature, he remains alert about consumers demand and that reduces the chances of malinvestment and hence over-production or under-production. The natural anarchy thus provides a balance between the production of all the essential products for our life and progress. Anarchy not only prevents but also remedies the mistakes of over-production or under-production if committed. If at the threshold of a high profit-rates providing sector, investors commits mistake of over-investment, it tends to over-production that decreases the rates of profit and hence further investment reduces resulting in lesser production and hence providing the necessary cure to the mistake.
Because of individual freedom and uniformity of rates of profit, each sector not only gains enough investors, it also gains enough human resources in form of workers, specialists, managers, entrepreneurs and inventors and that leads to over-all increase in rate of production leading to reduce poverty and scarcity at all fronts.

Free Society brings the environment of natural freedom for each individual being free to use his talents and endeavour to pursue happiness by earning it honestly and freely

Ills of Interventionism and Central Planning

The government by means of central planning or interventionism often dislocates the harmony of free-market and hence breaks the chain of progress bringing chaos to the society. In presence of government interventions in forms of subsidies, taxation, prohibitions, licensing etc, the profit motive looses its essence, and instead of learning and leading the way of natural profit seeking tendency, investors are forced to invest based on government’s dictatorial interventions. This dependence reduces the investors’ incentive to invest and hence causes lack of investment. In absence of profit motive, neither the government, nor the investors by themselves get any chance to check the threshold of investment and production and that causes loss by means of malinvestment resulting in over-production in some sectors and under-production in different. Also, by means of subsidies, stimulus packages and forced production, government creates bubbles of boom that tends to burst ultimately causing malinvestment that results in loss of production, lack of investment, depression, scarcity, wastage of resources, corruption and unemployment. As the government interventions destroy the division of labour, society suffers lack of freedom, extreme differences between classes, casteism, discriminations and overall underproduction that bring in problems of poverty.
Conclusion: In a free-society, market follows the laws of natural anarchy and that provides freedom, progress, prosperity and increase in the productivity and profits of the free-individuals tending to solve out the social ills if present along with preventing and curing the economical mistakes by means of profit motive that works as a thermostat or the invisible hand to guide the society towards cumulative production and provide the individuals means to pursue their happiness honestly and freely. Government interventions prove to be fatal, destroying the profit motive that is the only possible means of checking the malinvestment, over-production and under-production. This results in economic chaos, making the birth bed for various social-ills by destroying the division of labour.

Burden on Consumers

In an economic system as long as only certain means of productions are controlled by the government or municipalities, the nature of market economy determining economic activities remains unchanged. The Government owned sectors and ventures must fit into the market mechanism of market economics while buying raw material, equipments, labour, and as sellers of goods and services. They are subject to laws of market, as they need to attempt for profits, at least to avoid losses. When government intervenes to eliminate this dependence on market by covering the losses of such enterprises with subsidies or bailouts out of public funds the losses shifts to somewhere else and subsidies are raised by collecting confiscatory taxes. However, the burden of the taxes affects the citizens, not the government collecting the tax.
In a free market, where the market laws either purges out the failed enterprises incurring losses and replace them with other enterprisers to provide better products and services, or force those enterprises to improve their working, production and management, the problem solves out by itself as the malinvestment in enterprises incurring losses gets a reality check. Yet, because of government interventions in mixed economy, such check is impossible as the government keeps promoting the failure by punishing the citizens, burdening them with superfluous taxes and wasting thus collected wealth in failed or meant to be failed enterprises and services in the form of bailouts and subsidies. In absence of check, these enterprises, instead of improving and curing themselves, keep fomenting further and causes further burden. The government interventions at one hand, supports malinvestment in the failed or mismanaged enterprises, on the other hand, government punishes the profitable private enterprises by further cutting out their profits by means of corporate taxes. As the profits of private enterprises reduces, their rate of progress and production also decreases, causing retardation in progress of citizens.

Poverty and Unemployment

Free Market, The only way to reduce poverty is to increase the productivity of individuals.

Price Control and decrease in productivity

Poverty-Government interventions reduces production and causes further poverty

The Only Possible Solution

Irrespective of their supposedly good intentions, interventionists through their planning of mixed economy results in chaos and exact opposite results to their interventions. The middle path between the good (capitalism) and bad (socialism) proves to be an ugly vice (mixed economy). There is no alternative to totalitarianism than liberty, there is no possible profitable planning for freedom and common welfare than to let the market system work freely, There is no other means to attain full employment, rising real wage rates and an always improving standard of living of the common man than private initiative and free market.

Life is Consciousness of Desires

Intellect

So what is that, which helps a man to decide which of his desires is to be sacrificed and which desire he should fulfil? One may say his intellect helps him decide which desire is more important, so does the intellect of a man masters his life.
Intellect of a man is his tool to estimate and understand the relative importance of various desires of his present and the future. As intellect is his only tool, it cannot be his master, rather it is his slave on whose loyalty, the success of his life resides. How his intellect does helps him find which desire is more urgent and needs his attention more and which desire he may sacrifice?
He uses his intellect to be aware or conscious of the varying degrees of urgencies of his desires. If a man does not have desires, he cannot have intellect too, because he will not have any need or purpose of intellect, even if he has some intellect he will never improve it nor will use it. He thinks to solve problems he faces in fulfilling his desires, if he has no desire, he has no problem and hence he does not need to think.

Desires, Man remains enmeshed between the struggles of various desires, and he tilts towards that desire which is most necessary

“I”

Now one may say, desires are not the master; rather he himself is the master, or the master is I or me, or myself. How can one define “I”? What is “I”?
“I” actually represents totality; it represents a person’s body, intellect, mind, memory, imaginations and his desires in total at a given moment as a single unit. Without his body, he cannot define “I” he cannot remove his mind while defining “I” too and so on. When one say, “I” am running, he mean that his legs are running, carrying the rest of his body, his brain, intellect and memory with them, when he says, “I” am thinking, he means his intellect is thinking, his eyes are not thinking, his ears doesn’t think and so on. Similarly, when one say, “I” decide to do this now, what he means to say is, the urgency of that desire to be fulfilled is maximum at that moment relating to other of his desires. He decided that by experiencing the varying intensities of the desires he is aware of, his desires rules his decision, he uses his intellect as a tool to understand the order of the desires and then he acts in accordance with his desires to fulfil them. So, saying “I” rule myself is equivalent to saying his desires masters him.
Desires can be good, can be bad, a man can have desire to help others, a man can have desire for welfare of his family, or his locality, or his city, his country or whole mankind, he can have desire for love, prestige and self-respect, in all cases, it is his own desire to achieve which, he uses his intellect, thinks and acts, and hence in any case, he depends on his self, his desires, he remains selfish, his own desire becomes his motivating force.

Will and Will Power

Sometimes, people create a mystical illusion of spirituality by stating that to overcome your desires is the way for emancipation, or freedom. They further suggest that one may overcome his desires by the virtue of his “will” or “will-power”.
So what is will or will-power?
Actually, “will” is the synonym of the desires itself. What people ignore is the fact that to overcome one’s desires itself is a basic desire of his and that is his will.
What is the difference between an animal and a rational being? All animals follow their impulses, so do the rational being, yet there is a difference. An animal does not have the rational ability to be conscious of the varying degrees of his desires, he lacks the tool to signify the various desires and dignify the most important or rational one. On the other hand, a rational being have that tool to perfect his sense or conscious of the varying degrees of his impulses or desires. A savage is slave to his immediate impulses, he will not save for old age, and he will not think for better life (or improved conscious of desires and varying degrees), he has no tool to do so. While a rational being has that tool, so he thinks and relates, he experiences which desire is most important, or rational, and properly makes a plan to achieve it.
What happens when the intellect of a man fails to signify the rational degrees of his desires? In such situations, he often commits mistakes of varying degrees, and is vulnerable to undesired complications, because he has to pay the price of each of his desire. His life becomes a chaos.
Nearly all of his desires follows the same trend, he has to pay for a desire by sacrificing some of his other desires. For his desire of emancipation, heaven, spiritual pleasure, knowing the omnipotent etc, he sacrifices his other materialistic desires. That is, will, or will power indicates the exact desire, which that particular man has decided to be strongest for himself at a given moment with the help of his intellect, hence, will is synonymous of desire, and will-power is synonymous of the power of the desire, which masters the man at that moment.

Freedom

Freedom-A Man’s most Urgent Desire

It should be clear that freedom strictly means economic freedom along with political and religious freedom, because without economic freedom, freedom neither can be defined nor it can be explained.

The system of such society, where the man is free to govern himself cannot interfere in the life and realms of neither an individual’s life nor it can dictate the rule and terms for the possible mutual agreements and dealings. Such a system represents a free market society where each and every man is free to govern himself and is free to use all his potential and talent to live, work hard and earn and pursue his happiness.
It should be clear that freedom strictly means economic freedom along with political and religious freedom, because without economic freedom, freedom neither can be defined nor it can be explained. Thus, in a free society that provides sovereignty for every individual and a harmonious atmosphere for having mutually beneficial contracts, any individual or a group of individuals representing the government will not have any sort of interference in the economic sector, that is, the government will not interfere in education, agriculture, health-care, public services, industries and other productive activities, the government will not control the money supply and create the business cycles of booms and busts. Government would not enforce quotas and reservations, provide taxes and subsidies, rather it would be left free for the market ruled by the individuals and their mutually beneficial agreements because that is their right, right to govern themselves and decide for themselves freely.

Hijab in itself is not oppression, but the suppression of the right to wear a Hijab is.

Such a society would be free from the “irrational self-interest” as it would be thoroughly dependent on the rational sense of self-interest with complete freedom for all individuals to pursue their “rational self-interests” freely that is their won’t be any governmental interference in the market to provide special privileges, quotas, reservations based on religion, caste or sex, there won’t be any government subsidies, price supports, tariffs, licensing laws, exclusive government franchises, labor-union privileges, immigration quotas and the like.
Freedom is a natural right, as the responsibility to be self-dependent is natural. Self-dependence means one will not be demanding anything from anyone else or even the government, rather he would be working to earn for it and as he would earn it, it would be his right to enjoy his earning.

Licensing system, state governed education system, state governed currency system and state backed paper-currency, reservation and quota policies, health-care policies, subsidies, price-control, tariffs and like all comes as the physical force against the individual as all such acts are strictly the acts of fraud. In a free system, an individual would have complete security from such governmental frauds.
In the current system, the representatives of the majority decides for the individual, and individual remains a slave for the majority law, paying for it and obeying it, this is not freedom.
We, the children of our ancestors who fought for the independence considering the right to self-govern as every individual’s birthright, actually have forgotten the real sense of freedom that is why we consider ourselves free and accepts the current form of government to rule over us. We never got that right to rule ourselves to decide for our own hard-work and its consequences, rather our ruler and the system of ruling changed and we remained under the slavery of government, interfering in the market and our lives as it wished. We did get the right to choose our ruler to govern us as in form of democracy and political freedom, but we never got the right to govern ourselves, that is, we never got the freedom for which our ancestors were fighting.
It is the time for us to be responsible, to assert that we as individuals are capable of responsibility and freedom, of fidelity and endurance and courage, that we not only can distinguish good and evil but we can individually choose good from evil as it would necessarily be in our interest, that we strictly do not need government to rule us, to tell us what we are capable of and what we are not. It is the time for us to resist the control of government over the individual and call for the sovereignty of the individual and his inalienable natural right to govern himself to pursue his self-interest and happiness.

I was thinking about this the other day, about why is every major personality in Hollywood so leftist? Why is it that people who make a fortune on the Market just are so hypocritical and promote taking money from other people on the threat of violence? This was the conclusion I arrived upon that if you are a neutral individual in Hollywood there is no way you can turn out to be pro-Free Market.

Imagine if you are a rising Hollywood star. You made your first million. You rose from dire poverty/dire mediocrity, and you get a taste of wealth. You spend a lot of money, do things what you always thought you wanted to do. Maybe at this point you love the Market, or maybe not. Overall you just thank god for giving returns on all the (relative) poverty you faced over the years. Then you make millions more, and then millions more. Soon you are one of the most appreciated actors of Hollywood. You live in the limelight, and you never see anything bad.

You ponder over your life, and realize that you make all this money merely by showing up your face(or writing a story, or directing a simple movie) for a few hours on a screen. You don’t have to worry about doing anything wrong in your performance because it can always be covered up by a retake. You do good things or you do bad things you only get fame. If your sex tape gets leaked out, people don’t dump you and stop watching your movies rather they just come to your movie in an even greater numbers. You realize this and then you look at someone who is not that lucky to have happened to be born with that talent or that face. You do not consider that you could have actually worked this hard to achieve this success. The only thing which makes sense to you is that you are just too lucky than others. And this is how you see ever other hard working self-made billionaire entrepreneur. You believe that you must do something to help the unfortunate people out.

Hollywood people just happen to be the lucky people who have the face or the talent to provide us with that entertainment. Most of that earnings relies on the Govt-granted monopoly over information. Irrespective of what happens you will never find a leftist Hollywood star opposing MPAA or copyright, because they always know the effort involved behind making the movie. They just cannot ignore it.

Their whole world is basically made up of people who are the lucky people and those who are the unlucky people. Capitalism for them is just a system to reward the lucky people. They stand for all sorts of coercive redistribution of wealth and creation of big government laws not because they believe that some people have more wealth than others, rather some people have more luck than others. If a Hollywood star supports higher taxes, it is because he does not see the labor of wealth generation the entrepreneurs do. They just entertain people, so they believe businesses do not serve any utility to the people.

Similarly a lot of these things happen with the super rich billionaires, for example George Soros, Warren Buffett and Bill Gates. Bill Gates recently made a call for creation of a “Creative Capitalism” or “Compassionate Capitalism”, and it was a big blow to all the non-billionaire capitalists out there and it angered everyone considering he built his capital based on Capitalism. If now suddenly he wants creative capitalism or compassionate capitalism then he should start with making all Microsoft technologies open source.

The hollywood elites earn so much wealth that they now think they are just much more luckier than other people. It is true to a lot of extent, but then the problem is that they perceive every other hard working entrepreneur as much of a lucky individual as they are. There was one exception in Hollywood and that was Ronald Reagan who stood for lower taxes for rich people, because he himself never was super rich. He just was rich, before he could enjoy that super richdom he got enlisted in the US army and then he joined Politics.

One of the strongest arguments used by the Intellectual Property(IP) supporters is that patents promote innovation, and the strong counterargument by the IP opponents is, that patents stifle innovation, and that once patents are removed we will have more innovation, considering the fees which will not be spent on securing patents and hiring patent attorneys. The reason why I used the term ‘strong’ and ‘strongest’ because both the sides acknowledge that there is some weight on the argument of the other side. The question is, overall do patents promote innovation or will removal of patents promote innovation? To analyze the arguments, we need to perform small though experiments.

Society with very strict IP Rights

Against Intellectual Monopoly - $27

To exaggerate the observation, we need to consider a radically different society. Lets presume a society(say on the planet Mars) where every intellectual property is tangible like real property. For example, if you discovered a specific way to cover your body with a cloth(say you made a Shirt) then the only way I can also wrap myself with a cloth in that way is by taking your permission, otherwise it will be stealing, because then you will not be able to wear shirt the same way. If I discover a new term say ‘liberty’ then anyone who wants to use that term, must take my permission(usually granted for a specific fee) or else you will devoid me from using that term and it will be just like the theft of real property.

In this society every time a couple gets married, in addition to gifting them various physical products like a coffee maker or a toaster, people gift licenses to various recipes, as making a recipe without the prior permission of its creator will be theft. To write a book on the various topics, the publisher has to clear every possible term for its license. If you want to use the term ‘liberty’ and its definition is ‘the condition in which an individual has a right to act according to his or her own will’, then either need to get license from the creator of the term liberty(which would be the current descendents of John Stuart Mill), or you need to coin your own term which should be different from ‘liberty’ but convey the same meaning, like ‘liberty22’ which defines as ‘the condition in which an individual has a right to act according to his will without infringing on the rights of less than 5 million people’. Now presuming that your lawyers are able to defend this term as different from ‘liberty’, it basically conveys the same intention to the readers as the term ‘liberty’.

You will realize that in this society, there are a million different food recipes, a million different languages, billions of terms and words in languages, millions of different clothing items. As you can see this society would have much more ‘innovation’ than our current society, after all we only have a few 100 recipes in any cuisine, only a few hundred thousand words in any language, and if someone coins a term, it is used for so many things.

The truth is, that we can all see that although this society will have a very wide variety of innovation, it will suffer from two things, first the poor people will be devoid of so many things, the poor people will not be able to build efficient houses, because they cannot buy the licenses, they cannot eat variety of dishes, the poor kids will have to arrange for a lot more money because the education will be so costly. Secondly, although this society will have a lot more ‘variety’, we can see that it will lack the advanced technologies. For example, there will be 200 different types of semiconductor devices, but instead of having a million devices created out of one semiconductor device(like transistors) we will have only a few hundred different types of electronic devices. We will have hundreds of different words for describing ‘gravity’, but very little number of people who actually understand advanced concepts because they are using their brain cells to store 100 different terms for gravity, rather than 100 advanced usages of gravitational force.

Society with no IP Rights

100 million Creative Commons photos on Flickr

Lets presume a society with no concepts of intellectual property, in fact there are no property rights at all as everything is intangible like information. If you have a loaf of bread then to give it to me all you need to do is show it to me, and I will close my eyes, wish it and I will get my own loaf of bread. If I like your lawn mower then all I have to do is close my eyes, wish it and I will be able to conjure it to me.

Its obvious that there will be a loss less starvation in this society, all we will have to do is conjure food for the poor people and they will be able to eat. If you need an computer or a television you just have to wish for it and you will get it. The only thing scarce in this society will be the time, that is you just have to do the work of choose what you wanna wish for and then you move on to enjoying that product.

What will happen to the innovation in this society? Its obvious that there is no incentive to do so many variety of things. There are no factories to mass produce a product, this means that the only job people do is either consuming the products, or invent new products out of their own need to do something different. The houses will all look the same, except for the rich people who would still wanna spend some money to have their houses look different(which will be immediately copied all over by poor people if they are given an access to their houses).Every product in the society will basically be the same except they will be personalized by each individual according to their own taste.

The development of technology in this society will be quite straightforward. There will be rarely two kinds of alternate technologies, for example if a cell phone is developed then all the other cell phones will be only personalized forms of this cell phone, until a stage is reached when personalization of personalization pass through hands of a geek who tweaks it to an iPhone, and so on. The biggest force behind the innovation in such a society will be a human need for variation. People want variations in their lives. Every technology in this society will be achieved through humans who voluntarily want to give their labor into developing something new, when they know they are not acquiring monopoly on the usage of that technology or property. An iPhone-like phone in this world may or may not be developed, we don’t know. But we do know that if it is developed no single company has to spend millions of dollars in developing it. The question ‘who will spend millions of dollars to develop a product without patents’ will never arise. There are no products in this world, there are no corporations producing these products, because they don’t really have to.

Vertical vs Horizontal Innovation

There is clearly some reduction of innovation and some increase in innovation in both a society with patents and without patents, but none of sides(the pro– and anti– IP people) seem to realize this. There are no clear definition of what kinds of innovations are promoted by patents and what kinds of innovations are not. So lets define these two innovations, Vertical Innovation, and Horizontal Innovation.

Vertical Innovation is when a new product is innovated based on merely a small amount of added new technology, for example adding the facility of watching videos on an MP3 player, or adding a new metal on an alloy best suited for making railway tracks which now reduces its ability to expand and contract in heat and in cold, or creating an AIDS vaccination by using the results, effects, and formulas of 10 different immunity vaccines.

Horizontal Innovation is when a new product is developed which provides same functionality as a previously existing product but it tries to achieve that in a different manner. For example a new motorcycle is developed which uses fluids load-balancing(just making it up) for more stability because a motorcycle is already developed and it is patented, or a new type of Fan is developed which is embedded in a box because the regular fan is already developed and patented.

Patents only promote Horizontal Innovation, and allow very slow vertical innovation, on the other hand a non-patent society promotes vertical innovation and allows very slow horizontal innovation. Is either of them better than the other? Well the truth is, although you could make an equally strong case for the need of horizontal innovation(or even a mixture of both by promoting a limited patent system), you cannot argue about the fact that a non-IP rights society allows its products to be reached by more and more people. If horizontal vs vertical innovation was the only point of debate then there is literally no reason to choose one over the other, but the truth is, we live in the world of scarcity. We have property rights in tangible things only because if I create a loaf of bread, only one person can consume it, so its necessary to exclude others from consuming that loaf and give its ownership to its creator, but if that loaf of bread could be copied and distributed among millions of people and thereby satisfying the hunger of all those men, then forcing exclusion of other individuals from consuming it is just inhumane.

Its true that if you put your labor into an idea then you should be allowed to consume the fruits of it, but the only reason why you put that much labor into that idea(or innovation or discovery) is because you were excluded from using someone else’s labor. Intellectual Property is a classic solution created by the problem itself, just like everything else in the world done by the government.

American experiment with Prohibition
In 1919 after public demand, the constitution of United States was modified to ban the sale, manufacture, and transportation of alcohol for consumption as 18th Amendment. Women groups such as Women’s Christian Temperance Union, had been pivotal in bringing about national Prohibition in the United States of America, believing it would protect families, women and children from the effects of abuse of alcohol.

The proponents of Prohibition had believed that banning alcoholic beverages would reduce or even eliminate many social problems, particularly drunkenness, crime, mental illness, and poverty, and would eventually lead to reductions in taxes. Until 1920s the Mafia groups were only limited to illegal gambling and thievery but after the prohibition there was a massive scope of profits in the black market. So the organized crime rose in America.

The situation became so bad that the lawmakers repealed the 18th Amendment in 1933 by 21st Amendment which made alcohol and liquor legal in US again.
Organized crime lost almost all its profit of the black market when alcohol was made legal in 1933.

J D Rockafeller(American businessman) wrote at the end of the prohibition era:

When Prohibition was introduced, I hoped that it would be widely supported by public opinion and the day would soon come when the evil effects of alcohol would be recognized. I have slowly and reluctantly come to believe that this has not been the result. Instead, drinking has generally increased; the speakeasy has replaced the saloon; a vast army of lawbreakers has appeared; many of our best citizens have openly ignored Prohibition; respect for the law has been greatly lessened; and crime has increased to a level never seen before.

As it turns out that people get more drunk, and the mafia becomes more stronger. This experiment of banning a perfectly legitimate commodity fails pretty much everywhere.

1950s-80s Gold and Import restrictions in India

Bombay had the biggest underworld in India, because that’s where the import of the prohibited items came to from the rest of the world. Dawood Ibrahim, Haji Mastan, Chota Rajan, Chota Shakeel, they all were smugglers(illegal importers) in the starting. Then police started hunting them and they started acquiring more and more weapons, powers and became more and more brutal.

Mumbai underworld mostly imported gold, western watches, weapons, drugs and electronic items. The huge profit margins created by the cheap gold prices outside India, and artificially increased prices in India, helped them hire the whole Police department for themselves. They kept politicians in their pocket. Now since import restrictions are gone, the underworld has been decimated, and the police inspectors take false credit for encount killing the underworld. The truth is, if the smuggling business was still profitable(that is India was still not liberalized) then these same cops would have been on don’s salaries.

Coal Mafia of Bihar

Although not exactly an example of a commodity trading ban, it explains how govt creates lawlessness by facilitating only the lawless people do trades of some commodities. Bihar the most mineral richest state of India(by Bihar I mean current Bihar+Jharkhand), and it has India’s largest coal, but you cannot mine coal freely, you cannot own the coal mines, and all the coal mines must be owned by the government. The government then contracts it out to the various private organizations. Since there is no individual claiming the ownership of the mines, this results in private individuals and government officials digging coal and selling it in black market. Govt orders their police officers to hunt down the peaceful businessmen who would have provided the coal in a more peaceful and consistent manner to the market, soon there are only organized criminals left in the business of coal mining. Because of the manipulation of market there is a huge arbitrage opportunity, and these Coal mafia organizations acquire power to own the police and the state government.

From Wikipedia page on Coal Mafia :

The state-owned coal mines of Bihar (now Jharkhand after the division of Bihar state) were among the first areas in India to see the emergence of a sophisticated mafia, beginning with the mining town of Dhanbad. It is alleged that the coal industry’s trade union leadership forms the upper echelon of this particular arrangement, and employs caste allegiances to maintain its power. Pilferage and sale of coal on the black market, inflated or fictitious supply expenses, falsified worker contracts and the expropriation and leasing-out of government land have allegedly become routine. A parallel economy has also developed with a significant fraction of the local population employed by the mafia in manually transporting the stolen coal for long distances over unpaved roads to illegal mafia warehouses and points of sale.

This is a clear reason behind the failure of a mineral rich state such as Bihar.

Sandalwood smuggler Veerappan

Again we repeat the same story as in Bihar coal mines. Only the govt wants the rights to be able to cut the Sandalwood forests for its Sandalwood(which has a huge price in International Market). There is no private property rights over the sandalwood forests of Kerala, Karnataka and Tamil Naud. Because no individual owns these forests, and there being a huge profit margin for anyone who wants to cut them and sell them in the International Market, many independent illegal sandalwood smugglers and wildlife poachers sprung up. Soon the government had them arrested or killed for such activities. This lead to the rise of the most brutal bandit of those jungles, Veerappan. Veerappan earned $22 million dollars from sandalwood and $2 million from killing some 200 elephants for their ivory. He killed around 180 men in his lifetime.

Although Veerappan was very much liked among the local people, the situation could have been worse. Had these forests owned by private individuals, and if there were no restrictions on the trading of Sandalwood, Ivory and other animal products the forests wouldn’t have eroded that fast, and Veerappan would not have been born.

Drug prohibition in United States

Currently in USA there is a massive demand of drugs, but the govt puts severe restrictions on it. This demand has to be fulfilled from somewhere. Initially local drug dealers tried to fulfil the demand, but Drug Enforcement Agency(DEA) agents with their M16s and sophesticated technology hung the drug dealers, but irrespective of how much money they spend on fighting it, it just increases the profit margins of some of the most lawless people.
There is a brutal war going in Mexico right now.
Mexican drug cartels which supply drugs to United States and Canada, these people have assault rifles, military-style semiautomatic rifles, hand grenades, and a variety of other military weapons.

This is what you give birth to when you try to restrict peaceful transactions like trading drugs, gold, watches, sandalwood.
The point I am trying to make here is, that Indian govt achieves great advantage when it keeps all the power in its hands, and blames the corruption of its components on the individuals placed on those positions.
You can keep on replacing the Train Conductors for next 1000 years but you still will not be able to have honest train conductors as long as they have the power of monopoly and free market’s competitive forces cannot touch them.
On the other hand, you eliminate the monopoly of Dept of Telecom(DoT) and you suddenly have honest linemen who refuse to accept bribes(I have tried bribing BSNL employees them they didn’t take it).

The solution for liquor deaths is not stricter punishment for those who are caught in the trade(as the Chief Minister of Gujarat Narendra Modi has suggested), but to remove all the restrictions on consensual acts between adults. There isn’t a single commodity in the the market which should be banned from trading or restricted in any way. The usual response to this suggestion is “Should we follow every policy based on the fear of the growth of Mafia?”, the answer of this is Mafia is organized criminals, they are essentially businessmen who grow based on the profits they acquired by peforming the transactions the government tries to prohibit everyone from doing. If that profit goes away, the mafia becomes weak. If that profit increases(because the government prevents more and more people from doing it thereby increaseing the profits by killing off the supply), Mafia becomes stronger and stronger.

There is no possible way to prohibit something by the use of force. The only way by which something can be prohibited successfully is to convince people to give things up voluntarily. The best example of that kind of prohibition is non-usage of beef in India and pork products in Islamic countries.

Those who do not wanna watch it, its an investigative report on Chennai private colleges where Taliban-style rules were enforced on the students. There is so much segregation among guys and girls in those colleges that Americans are going to be reminded of the Jim Crow laws era when blacks and whites were made to attend school separately.

This did not come to me as news, I had friends from those universities who told me about these things years ago. I went to a much more liberal private college so all those things came as a big shock to me. I was told that if a guy was found talking to a girl, he was fined(not always through money, but through social service etc etc).

Contrary to the natural reaction(which would be appalling at the horror of these policies), my topic is different. Considering the fact that all the colleges covered were Deemed Universities(they don’t receive any funding from the government, but only have accreditation from the government regarding their course work), that is they are private colleges, it begs the question, would free market serve Taliban and enforce Talibani rules if its participants demanded things that way? Would salons refuse to cut beards? Would private roads refuse to allow cars with female drivers in them? Would a private pond owner refuse to allow Buddhists to drink water from their pond?

The answer to all these questions is a shocking YES. The truth is, for all theoretical purposes, it is clearly possible that the Market would serve those things. There can be salons which refuse to shave men, private roads where women are not allowed to drive, and ponds which do not serve Buddhists, blacks, or the lower caste people. Just like in Chennai Deemed universities do not allow their boys and girls to mix socially.

But to understand why it is so, we must first ask the question, are any of these an act of aggression against anybody’s private property rights? Second question is, if it is not an act of aggression against private property rights of any individual, is it any kind of moral violation of an individual’s right to equality(if not right against his liberty). The answer to the first question is clear, when a salon refuses to employ its employees and its property to be used in a manner they don’t deem fit, when a private road does not deem fit to allow a certain type of individuals to use their property, when a pond owner does not allow the people of a certain religion, race or caste to use his property, none of these actions are a violation of anybody’s private property rights. In fact the whole point of “property” is to restrict non-owners from using the object against the wishes of the owner.

If I can prevent you from entering my house without actually violating your rights in any manner, how come by not allowing you(a black guy) in my saloon a violation of your rights of any kind.

Colleges have full rights to fail such a student or kick him out from the college for violation of their rules, but it cannot physically harm the students.

In addition to that, the college cannot beat the students, or physically punish the student in any form for any kind of non-aggressive violation, because the body of the student is his property, irrespective of where it is located. Colleges have full rights to fail such a student or kick him out from the college for violation of their rules.

Second question which I asked earlier whether it is some sort of moralistic violation of an individual’s right to equality, well the answer is, that there is no such thing as universal “right to equality”. I might be a barber who promises right to equality to all my customers, but that does not mean everybody must be obliged to do the same in a free society. A white supremacist should be equally free to serve only white customers.

In a liberal(and free) society there will be standardized label adopted by the companies, claiming to be “equal treatment business establishment”(that is they serve all customers equally), and liberal minded customers would flock to businesses bearing such labels. Just like there will be “Whites Only” labeled restaurants who would shoot in their foot by not serving all the non-white customers, and white liberal customers.

What is the Market’s nature against such discriminatory institutions?

Market forces clearly work against the discriminatory institutions. The road owner refusing to allow women to drive through his road is directing all that traffic to other road owners. Since private roads will operate on subscription basis, families with women drivers will have even their male drivers using the non-discriminatory road networks, clearly damaging the male-drivers only road owner.

Similarly a college institution which pops into Chennai which puts no such Talibani restrictions on their students will attract all sorts of liberal students. The conservative schools must find other ways to actually attract the market. For example in America private catholic schools are more desirable even among the non-Catholics because of their performances. Also if you are a liberal, there is no more liberal school than the public schools in America. So all the Market demand for a Liberal school is crunched in by the public schools, therefore most of the good private schools in America are run by conservative Catholics.

Conclusion

If a newspaper editor refuses to publish your opinions, it is not a violation of your constitutional “freedom of speech” or “first amendment” rights. There is no right to equality on private property, because guaranteeing a right to equality means violating the right to liberty. Only one of these can be upheld at a time.

The market serves its participants. If there are enough number of irrational individuals who wanna follow their own irrational way of life, the market will serve them without prejudice. It may be an issue of rationality vs irrationality, but it is not an issue of Libertarianism.

About the above mentioned Chennai colleges, they will have more to worry about in the coming years when they will realize that Gay and Lesbian rights movement get huge support from their colleges.

“It is enough to mention the commercial crises that by their periodical return put the existence of the entire bourgeois society on its trial, each time more threateningly. In these crises, a great part not only of the existing products, but also of the previously created productive forces, are periodically destroyed. In these crises, there breaks out an epidemic that, in all earlier epochs, would have seemed an absurdity — the epidemic of over-production.”

So according to Marx and Engels, capitalist economies suffer from an inherent trait of periodic depressions. They go on to explain further:

“Because there is too much civilisation, too much means of subsistence, too much industry, too much commerce. The productive forces at the disposal of society no longer tend to further the development of the conditions of bourgeois property”

According to them, the root cause of a depression is too much prosperity. For better understanding of this subject, I would also like to cite the Marxian crises theory, which revolves around the concept of the falling tendency of the profits in capitalist economies. Marxist writers often use this in various ways to put forward their theory of Imperialism. However, I would restrain myself from explaining that here.

The basic premise of the overproduction doctrine is that a capitalist economy, as it gets more and more efficient with labor-saving machines introduced for the production of goods, moves towards a state of increased efficiency which leads to overproduction and that overproduction causes losses. Therefore the core reason behind the losses are overproduction and increased efficiency. Because of overproduction, there are no more profits in the economy, and hence the economy goes into a deep depression. So, it is the lack of profits which causes depression.

In order to debunk this Marxist proposition, we need to understand what causes profits to exist in the market. I will explain how profits never cease to exist in a non-stationary economy where consumers’ preferences and production conditions change so often. I will start of by quoting Austrian economist Ludwig Von Mises from his famous work ‘Human Action’:

“Profit is not related to or dependent on the amount of capital employed by the entrepreneur. Capital does not “beget” profit. Profit and loss are entirely determined by the success or failure of the entrepreneur to adjust production to the demand of the consumers. There is nothing “normal” in profits and there can never be an “equilibrium” with regard to them. Profit and loss are, on the contrary, always a phenomenon of a deviation from “normalcy,” of changes unforeseen by the majority, and of a “disequilibrium.”

What Mises says here is that the origin of profits (and losses) is due to the “disequilibrium” phenomenon. So how does this “disequilibrium” phenomenon actually express itself like in a real economy?

Suppose that a market is dumped with millions of tonnes of potatoes much more than the consumer’s desire to purchase. This causes the market gets cleared only when the prices decrease to a large extent. This might lead to immense losses to the farmers, but can these losses caused by the overproduction in one sector of the economy cause a recession? The answer is no.

Lets go further and ask, does this overproduction in any way lower the average rate of profit in the economy. Again no, it doesn’t. The partial overproduction in a particular sector of the economy leads to partial underproduction in some other sector of the economy. Like in our example, the overproduction of potatoes means that the equipments and labor that were used in growing potatoes could have been used better in some other sector of the economy.

National Socialist and the Socialist

This is what Mises calls a “disequilibrium” phenomenon. The market always moves in a direction to minimize this disequilibrium, but almost never reaches equilibrium because of various factors like the change in consumers’ preferences, natural causes etc.

Having explained the basic misconception, I would also like to deal with such speculations which contemplate the possibility of an overproduction in every sector of the economy. People argue overproduction everywhere could lead to losses everywhere completely wiping out profits from the economy. But there is no need to worry, the market has answers again. An overall overproduction everywhere in the economy still doesn’t set the “disequilibrium” that exists between the preferred quantities of various goods into equilibrium. Here one needs to understand that people’s needs are humongous and can never be satisfied. The market can only try to provide the proportionate quantities of various commodities according to the consumers’ preferences. Profits (and losses) are nothing but the signals that guide producers to adopt to the consumers’ preferences, and they never would cease to exist.

Being a Socialist up till a few months ago, I spent countless hours figuring a way out to enable a central planner to somehow manage to order the exact amount of production required to satisfy the maximum demand for the maximum people, and I did reach onto some complicated unrealistic solutions, but nothing beats the simplicity and realism of the Free Markets.

A caller in a recent Free Talk Live show claimed that a roommate system which most people follow is a very good example of a Socialist society(and egalitarianism) in work. Although there are huge scalability problems with this example, I would not go into a critique of this system and instead suggest an alternate system, a more Capitalist roommate system. Feel free to absorb, use improve upon it. You won’t find it on any other site.

Problem:

The existing “Socialist” (maybe egalitarian would be a better term) roommate system is insufficient to meet the demand of modern individualist people. There are numerous issues among roommates on whom should be doing the job, people don’t perform well, everybody complains about the other one not doing their duties properly. The whole house/room suffers from the “tragedy of the commons” where because a property is deemed to be owned by everyone, gets overused and undercared compared it how it would have been if it had one single owner.

More problems come in when there are tasks which nobody wants to do and they don’t need to that frequently like cleaning toilets, or taking trash out.

Although compared to that a marital household, or an atomic family household is quite successful, but the main reason is that usually there is only one person who earns and everybody knows only he has to earn. The bread-earner of the family is the only person who is expected to earn. He does not get offended or dissents if the other member does not do his part, moreover the bread earner of a family is also the leader of the family, he has the authority. These things cannot be applied to a voluntary association of two individuals who just wanna live together.

Solution:

The Capitalist room sharing system would start out with equal share of the rent among all the roommates. So if the rent of the room is $1000 and there are 4 room mates then they start out by owing $250. Now take all the tasks which are shared among the roommates, like cleaning the toilets, taking the trash out, even cooking, buying groceries etc etc, and hold auctions of those tasks. That is, the roommates bid on these tasks on whom will be doing for how much money.

For example lets take the task of keeping the toilets clean. Nobody wants to do this task. The bidding will start from say $50. Now does anybody want to do this job for $50 a month? If yes then they will bid for that price. Now if roommate A is willing to do that job for $50 a month and nobody else is willing then roommate A wins the bid. Now lets say if roommate B thinks that he might be willing to clean the toilets for less than $50, say $40 then he can bid that amount. If now A thinks that he might be willing to do that same job for $30 per month and that he needs it more than B, then he might bid that amount and might end up being the winner. That means now every month roommate A will get $30(essentially he will pay $30 less from his monthly share), and other roommates will pay a total of $30 to A(that means B, C and D will pay $260 per month).

If say no roommate is willing to do a task for $50 a month, then the bidding is automatically increased to $55, $60 and so on, until some room mate is incentivized enough to do that job.

Similarly this approach will be adopted with any task which requires allocation of labor to it. For example vacuuming the whole house can be considered as a task. Eventually it could happen that the room mates end up paying the same amount of money as they were to in a complete egalitarian distribution, but the difference would be that in this case they all would be doing the task they like to do the most.

This system gives a more relaxed classy room mate an opportunity to do less work by simply paying more rent, and a room mate with more financial needs an opportunity to reduce his expenses.

This solution is actually very open-ended, you can make it into anything as long as there is no compulsion of “everybody must pay equal rent and everybody must do equal job”. For example you can have a weekly or per-task auction. You can have task sharing for example a friend of yours find that your room mates are paying too much to have the snow cleared off the drive-way so he might agree to do that job for less.

The jobs which can be subjectively judged by the quality or nature, like cooking can have a choice of the room mates. For example if one guy is a really good cook, and he can cook most variety of stuff then the room mates might vote for him to do most of the cooking over a cheaper less dexterous cook room mate.

If you find a problem or an issue with the above suggestion do write down in the comments section. If have a better more Capitalist solution then again feel free to write down we will cover it in an update and credit it to you.

Is Deflation good or Harmful?

Today’s Economic Times has the screaming article Indian Economy staring at deflation. Is it good news ? in its front page that claims that, deflation is a threat, which must be tackled with.
The most common belief about deflation is that falling prices constitute deflation and thus must be feared and, if possible, prevented.
As Economic Times explains the belief

“If deflation lasts for some time, as seems possible, it would be a new experience for India. Japan went through a decade-long deflation in the 1990s, termed as the “lost decade” for that country. At present, most major economies are witnessing disinflation — a lowering of the inflation rate — and some have also seen deflation kicking in. Japan and China have already reported negative inflation rates in the latest data and there are signs that the US, too, could be heading the same way.
While a fall in prices may sound like good news to most laymen, economists see this as an ominous sign of a collapse in demand in the economy. ”

While ET demonstrated, deflation as falling prices, deflation is not falling prices but a decrease in the quantity of money or the measure of spending in the economic system.
Deflation actually is fall in demand. Falling prices are an outcome of deflation, not the deflation itself.
If prices fall even though demand remain steady or may increase, than it is prosperity and profit for the consumer and the producer both, and that happens in a free market with enough options of competitions between producers.
On the other hand, if demand decreases, (that is, deflation occurs) the prices falls as a result of decrease in demand.
Deflation is obviously harmful, yet the falling price is not harmful, in fact, falling prices is the actual and only possible cure for the deflation.
Falling prices are that cure to the economy, which is suffering from deflation that makes it possible for the economy to recover from the situation of deflation and start enjoying the economic progress again.
Let me explain this again. Deflation is decrease in Demand, or decrease in willingness to spend, it is a dangerous situation as it causes unemployment and chaos, the solution is Falling prices, that is, the falling prices indicates that the economy is at the path of recovery from deflation, how is it possible?
Let us consider that before any deflation Mr. Ramesh used to go once a week to buy flour from the shop, he could afford to spend Rs20 for the flour per week, at a price of Rs2 per Kg, he used to buy 10 Kgs of flour. Suddenly the economy suffers deflation and victimizes Mr Ramesh too. Now he is not willing to spend Rs20 for flour and at most, he can spend only Rs10.
If the prices will not fall, Mr Ramesh will be able to buy only 5 Kgs of flour, while his weekly need is of 10 kgs, that is, he will suffer a loss of 5 Kgs of flour, and He may starve. On the other hand, if prices fall from Rs 2 per Kg of flour to Rs 1 per Kg of flour, Mr. Ramesh will be able to buy 10 Kgs of flour for a week at his affordable spending of Rs10.
If one look for the situation properly, they will understand that deflation was Mr. Ramesh’s lack of will to spend Rs 20 to buy 10 Kgs of flour, his demand for flour was forcibly reduced, but as the prices fell down, he again bought 10 Kgs of flour, that is, his demand reached the proper need and that is the cure of deflation.
What is Mr Ramesh deny buying a commodity even at reduced prices, will it help economy?
Let us say Mr Ramesh used to buy 2 Litres of milk every day before deflation at a price of Rs8 per Kg, that is, he was ready to spend Rs16 per day for milk before deflation. Due to deflation, that is, due to lack of money, he reduced his demand to 1 litre per day as he wished to spend only Rs 8 for milk per day. To counter the deflation, the prices of milk fell down to Rs 4 per litre, that is, now he can buy 2 litres of milk for Rs 8. Yet, if Mr Ramesh decide not to buy extra milk, which will save his Rs4 from the amount he decided to spend on milk. Obviously, he will be able to spend that extra Rs 4 on some other commodity, say he will buy a packet of Biscuit Parle G. Overall; the fall in prices will help in reducing and eventually completely curing the effect of deflation.
Thus, although deflation is a sickness to an economy and hence it is harmful, yet the falling prices is the only possible solution for deflation and the current scenario in India where the deflation will soon signify its consequences in form of falling prices, the things will better by themselves.

What is the cause of Deflation; can government intervention solve the situation?

India is facing liquidity crunch since last November. Finance ministry and RBI issued three stimulus packages to solve out the credit crisis, yet it provided no betterment in situation, the bail out of economy in form of economic stimulus absolutely failed. It was obvious as any governmental intervention can never help any market, it may cause havoc though. We explained it here and we discussed why economic stimulus is nothing but robbery of common citizen.
The liquidity crunch in India is because of the bad assets of the government and private banks and the lost money in failed credits. Government and the centralized bank RBI control the repo rates, credit and lending policies in India. In order to increase GDP and profits, government and RBI always try to stimulate government and private banks to lend credit as easily as possible, and that often causes bad assets.
Some times, for the cause of making greater profits, the private banks also make risky adventures and fails miserably, and that all causes credit crunch. As the money in market decreases, the demand starts decreasing and hence the deflation.
The reason for such failure is the obvious monopoly of the government and RBI over currency supply in market, and the flaw in the system is because of the Fiat Currency system. The fiat currency often forces high inflationary rates, which may reach the hyperinflation rates and the forced bad risk dealings in the environment of economic bubbles often leads to a situation causing deflation.
Thus, initially, the fiat currency system, government monopoly and interventionism in market and bad decisions based on fake profits due to economic bubbles causes the cycles of Inflation, hyperinflation and deflation.
As demonstrated earlier, the falling prices cure this sickness of the regulated mixed economies.
The falling prices not only cures the problem of deflation, it also cures the mystery of economic bubbles and provides a clear picture of actual market growth by eliminating almost all the non-productive and non-profitable activities in the market.
As the enforced policies of regulatory government and institutions like RBI causes the cycles of inflation, hyperinflation and deflation in a market by misleadingly regulating the supply of currency in market, we cannot expect further supply of currency by government to solve out the liquidity crisis. That is the reason why the economic stimulus plans of various countries including USA, India and China are actually providing no results.

Will the government interference in form of economic stimulus change the situation?

Government talk of providing economic stimulus to counter the falling prices.
As falling prices are, the solution to deflation, by trying to avoid falling of prices, governments actually increases the tenure of economic crisis. It happens because the stimulus leads people to postpone buying even in situations where they have ability to buy, the consumer prefer to wait for falling of prices. On the other hand, the falling prices stimulate the consumer to buy the commodities.
Thus, whatever interventionism a government adopts to provide economic stimulus, further increases the mess in the economy.
Also, considering the fact that Indian government suffers one of the highest fiscal deficits everyday, we know that Indian government does not have potential to provide any economic stimulus, yet the government already have provided three economic stimulus of amount Rs2000 crores each, and now, the upcoming elections will further cause Rs10,000 crore of spending.
When government is already going in fiscal deficit, how will the government manage these extreme spending?
Government have three ways to support these already provided stimulus packages, the election expenses and further Rs30,000 crores of stimulus government have promised by any of the following ways
1. Higher government taxes
2. More government borrowing
3. More, freshly printed Reserve Bank notes.
Any of these moves will further deteriorate the economy by giving birth to a new cycle of economic boom and burst.
Taxation is a failed measure of revenue projection that is why Indian government always remains in fiscal deficit. Besides, higher tax rates discourage people from saving and investing, especially when such taxes target the rich.
Increasing taxes on middle or poor class makes no sense, and increased tax on rich deprives the economy of the funds necessary to grow production, income, and employment.
Thus, the first option is failure by default.
Indian government already have asked for economic help from World Bank and IMF, thus we can expect that Indian government may take further loans and debts. We know that foreign aids never helps an economy, we discussed how foreign aid actually harms a nation’s economy.
The government monopoly over the currency is the ill-power, by which government can create money from thin air any time, but printing more currency does not help any body, it causes further extreme problems though which we discussed here.
Thus, no matter what way government adopts to fight against the falling prices, the way will lead to further deterioration, not only that, countering the falling prices itself means strengthening the deflation.
We have already seen how economic stimulus proved a big failure in USA, Indian government should take lesson from the failure of Obama stimulus packages and should keep away from market, adopting the policy of free market, no interventionism.

‘I’—am the witness. Witness of countless creatures passing by….
By the hazel spread of this sun, ’I’ exist.
Perpetual! In this perpetual light…
My broad, sturdy branches — -complement my being.
I look up to the sky and it resounds—sky is your limit!
Every shred of my structure—a life giver.
Passing days—they are calm and I like spending time with them,
I can see — -“see through” things.
I laugh…
Under the same sturdy branches, I witness virtually all gamuts of emotions — -Broken hearts, meeting hearts, success’, failures, vows, maturing thoughts.
All blossoming and withering right under me. I smirk at it, I laugh and then suddenly I am drawn towards myself—and I am happy again!
Myriads of “colours” pass by me without even noticing me; except a ‘few’…
And to those ‘few’ I know, I give courage…
Courage—to face a lifetime.
Those ‘few’ who stop by to notice me are my epitomes. My alter egos….
I smile again, looking at them; those eyes, those beautiful, pristine eyes watching me and they give me — -sheer pleasure.
Pleasure of watching them. The same pleasure which they derive, watching me…
We don’t talk but we understand a lot.
A reverence we pay to each other…..
I look back at myself and here again I am reaffirmed that Life holds new opportunities in the form of those ‘few’ and that Life goes on and that Life sees ‘Colours’,”Colours” don’t see life..
‘I’ — - am the world, ‘I’-am life,’I’-am complete.
I am I, the Individual.

The reason for me to share this incident is, due to unnecessary regulations, government policies, people are deprived of quality porn. The porn movies that are shown in theaters are nothing compared to what we get now in this Internet age. Though I am no good at economics, I can see the difference between porn available on the “unregulated, free” Internet and those in the “regulated, government authorized” theaters (I no longer visit them). So in an unregulated market, it is likely that we get access to quality things (not just porn). So at least, lets save (Link to a Network Neutrality site) Internet from being regulated, now and in future, thought the threat is not imminent in India.

Its kind of funny, asking to regulate the Internet to prevent it from being regulated.

What is Network Neutrality?

Network Neutrality is the government legislation under which an ISP will be forced to treat every bit equal that means they won’t be able to prioritized or deprioritize data depending upon the source or destination of the data.
Take for example if a doctor in India is performing surgery in Africa’s remote hospital with a robotic arm, the ISPs will be prohibited by law to prioritize that data over lets say my iTunes songs download, or youtube viewers. If you do not understand the gravity of the situation, understand this simple thing, right now Internet surgeries are not feasible because of the unreliability of the network lag. If a doctor uses right arm to lift umbilical cord of a baby and uses the left arm to cut it(for an illustrative example) and the packets for cutting operation receive before the packets of right arm operation then the arm would end up damaging the baby or the mother.

If Internet was a private road system, then Network Neutrality would be like expecting the private road owners to give same speed lanes to everyone. IF an ambulance or businessmen wanna travel even by paying more, they must not allowed to do so. How is that a Libertarian point of view? Isn’t discrimination of anything a core of private property. When I bring my 10 KG of apples to a market, I discriminate against all those people who are unable to pay high price and I sell them to the highest bidder. How about “save the freedom of the apple market” and bring a legislation called “Apple Price Neutrality”, where the apple seller will be forced to treat every apple buyer equally and he must sell it to them at whatever price he sells it to anyone else. In simple words its nothing but price control in disguise.

Is Network Neutrality desirable?

No! Network Neutrality is not desirable just like a road neutrality is not desirable, we want different lanes for different speeds. We want the data which makes more money, and does more business to be prioritize over the data which does pleasure. It will be different than what Internet is right now, but it will be much more efficient.
For example, the Stock Market quotes and transaction should be prioritize over all the other data, right after the other real time critical data. Ebay bidding process should be prioritized over free blogs. Real Time web business meetings should be prioritized over youtube videos. There is no desirability in having all the data delivered equally to everyone.
People just don’t get it because Google, Microsoft and Yahoo supports it and people like those companies and the free services they provide.

If all these things confuse you just remember whose property rights are we talking about here? Definitely the ISP and Telecom company’s property rights in a violation here.

Can ISPs and Telecom companies block websites?

Yes they can, they can block access or slow down access to say GMail to promote a local email provider who pays them more than GMail. If you understand Free Market you will understand that a “level playing field” is a myth perpetrated by Neoclassical economists. Nobody needs to level the playing field for all the players, the people with more investment and a better business model must be able to get better services to reach more people in a better more efficient manner for the maximum efficiency of the market.
When an apple seller sells his apples to the highest bidder, he achieves maximum money to grow more apples and serve the next highest bidder. Similarly when ISPs will be able to charge more money to the people who need faster and more critical Internet they will be having more money to serve the other people who cannot pay that much.
The only people who would be in a disadvantage are companies like Google, Microsoft and Yahoo. The youtube vidoes come to you at the same speed as your email, your stock quotes, your Internet video and voice chat, your blogs, your P2P music and movies.

The most realistic scenario is that no ISP can make money or stay in market by arbitrarily blocking websites they don’t deem fit. Sure a Church Affiliated ISP will be blocking all the immoral websites but then you are free not to take their services.
The only reason why an ISP would block or slow down a service intentionally if they get PAID to do so. Who would pay an ISP to slow down GMail? A competitive mail provider. The competition would be in the service providers, not in unique content. For example, Cato.org is not going to have Mises.org blocked. Even New York Times cannot pay to have New York Post blocked(even if they do it would be more like competition among the two on who outbids whom, so it would be a totally futile and unproductive exercise).

Why is everyone supporting Network Neutrality (Legislation)?

Mosts people who are supporting Network Neutrality don’t realize the truth, congrats to the brilliant work team google is doing to run this campaign. The usage of the words such as “Freedom”, “Save the Internet, Save the World”, and other stuff which stirs emotion among people, turns almost all the bloggers into pro-Net Neutrality supporters. They wanna keep Internet free from Telecom companies but in fine print its the government who has to take control of the Internet in order to keep Internet free from Telecom companies. Its kind of ironic.
If someone asks me the question “Do you wanna keep the Internet free from any kind of Censorship?” My answer would be yes, and then they say “Well then support net neutrality, the telecom companies are going to censor us”.
The non-Libertarians who think that they are doing the pro-Liberty thing get confused when their life long Libertarian friends don’t support them at this issue. Seriously what Libertarian wants to support Government intervention for anything. Its the same thing as, Equality before Liberty, or Liberty before Equality.

The problem is nobody will tell me that to keep the Internet free from Censorship we will have to invite the Government to do the job. Its the irony of most democracies. To save the society from violence, thugs and robbers we have to give all the power to commit violence, theft and robbery to one organization.

I call you to raise the awareness about the truth of Network Neutrality, I don’t mind people chose to support it even after that, but at least don’t allow people to support it without even knowing what the real issue is. Please feel free to drop the link of his article on the blogs who get the issue of net neutrality wrong.