Jan
15
Speculation is rife that the government is considering a package of up to Rs 2,000 crore to bailout the crisis-ridden Satyam Computer but no confirmation could be obtained. Bailout for Satyam :The Economic Times1
So there are inklings of Rs 2000 crore bailout package for Satyam now.
Since Mr. Raju accepted he was maneuvering the balance sheets, and the plan to buyout Maytas property and Maytas infra was just a way to show-off the cash in dealing which never existed, many Indian bloggers are complaining the fiasco as the failure of capitalism. ( Here is pdf file of Raju’s resignation letter2 ) Many people are even blaming that capitalism increases corruption, and hence there should be checks and regulations on capitalism.
Let me clear out this confusion, India is not a capitalist state and Satyam Inc as all other corporate works completely under Indian Government Corporate laws. That is, Satyam is already a well-regulated company. So if there is scam in a government regulated corporate system, it is failure of regulated corporatism mixed economy system rather than failure of capitalism and free-market.
Now, it would be Utopian to even to expect all speaking truths and living honestly. To ire is humane. Every human science seeks for perfection, which is the cause of evolution, yet perfection is not achievable.
Thus, frauds can occur in complete government control systems, or in government regulated mixed economy systems or in free-market capitalist system too.
Yet, there is a difference between the three systems, and the difference is in the process of justice.
In a totalitarian government system, a person commits fraud, and whole society suffers without a proper way of questioning. All the governmental politician scandals come under this category. We never saw any justice in such cases. That is why sovereign Individual is preferred over sovereign state.
India adopted mixed economy along with liberalization process in 1992, even mixed economy, regulated corporatism is not scandal free and the recent Satyam fraud is the live example.
Now, the governmental regulations again are trying to make whole nation suffer as a collective for the crimes of Mr Raju. It is extreme collectivism. By bailing out Satyam, government is just pushing the tax-payers of India to accept the responsibility of Satyam chairperson’s crime and corruption. How logical it is to punish innocent citizens of India for the cause of corruption by a corporate?
Now when we all know that Satyam was never making those huge profits which its balance-sheets were show-casing, why should we be forced to invest in a drowning corporate without even taken a voluntary consent for doing so?
The scandal is, now government will inject money in Satyam corporate to save it, while Mr Raju failed to save the plummeting prices of Satyam shares. Isn’t it a mixed game plan of Government and corporate to befool and loot Indian citizens? Obviously, such malinvestment and non-productive activities are the cause of recession. Trying to keep such inflation causing false activities will mean strengthening recession and increasing its time period to loom around.
We all know that Bail Out are a fraud of their own, now bailing out Satyam will be much bigger fraud.
The Mixed Fraud plan of Mixed economy regulated corporatism.
Under free-market capitalism though, such frauds were impossible.
To bailout Satyam Inc and hence punish the Indian taxpayers for the fraud of Satyam is Injustice.
The proper justice is to follow free-market capitalism.
There should be no bail-out for Satyam Inc. Let the Satyam Inc and other property of Mr. Raju be bankrupted and the money collected thus should be used to payback the bank loans and money of shareholders being embezzled in the process of Satyam Fraud. The new buyers of Satyam will take care of the workers of Satyam, and even if some workers loose their jobs, it would be much better than punishing whole India for the crime of one corporate by bailing it out.
As it is highly improbable that Indian government will support free-market process and will support bailout because it provides enough space to further embezzle tax-payers money.
Thus, again Satyam fiasco is taking the shape of crime of government interventionism, collectivism forcing the crime of some to all other individuals.
In a free-market capitalism, such Injustice is impossible. Capitalism provides the freedom of Individual from the group and other individuals, allowing him to make Individual Voluntary Associations. Thus, in a free-market system, although other private companies may buy Satyam under bankruptcy and hence payback the money embezzled by shareholders and banks, yet it avoids the wrongdoings of Satyam chairperson to be the cause of suffering of all other Indians, which government is now trying to do with its plan of bailout.
Yet, people say, Freedom is vice.
Update: NEW DELHI: Satyam’s senior management executive Ram Mynampati has informed the government that the troubled IT firm would need Rs 150 crore to
meet insurance liabilities of its US employees.
“We have received a mail or two from Mynampati. ” Economic Affairs Secretary Ashok Chawla told reporters here. 3
Update: there are inklings of involvement of politicians and government officials in Satyam fraud. However, the ET article says, Satyam Fraud could net politicians too4 Mixed economy, government regulated system often suffers such Oligarchic attitudes.
Update: NRI business leader Gopichand Hinduja has said scandals such as the one in Satyam Computer will continue to haunt developed and developing countries, although this particular scam may have happened because the IT firm’s founder Ramalinga Raju managed to outsmart the Government regulators.5
- Bailout for Satyam,The Economic Times of India [↩]
- pdf file of Raju’s , resignation letter [↩]
- Mynampati asks for help, Economic Times [↩]
- Satyam Fraud,could net politicians too. [↩]
- Yahoo News, Gopichand Hinduja says Ramlinga Raju was more Genius than government regulators [↩]
14 Responses to “Satyam Scandal: The Mixed Economy Scam!”
Leave a Reply
Suprit M Says:
January 15th, 2009 at 12:21 pmYes, satyam computers should be bailed out..
Satyam computers has got an international name and has been performing very well for the last few years with good clients and this credit must go to the employees.The Satyam scam was created by the Rajus for their selfish motives for their sister companies Mytas with the help of politicians who were the main beneficiaries of various projects running into thirty thousand crores.Somewhere something misfired and Satyam is the victim of the wicked game played by Ramalinga Raju and family who had given birth to Satyam.The people who gave birth have killed mercilessly.The ultimate victims are the employees and the clients and share holders.Let the central govt give loan to Satyam and allow it to run normally and get more clients to pay back the govt loan and simultaneously the assets of the board members,chairman and others involved in the scam must be seized and auctioned to pay for Satyam.This is only the solution to give bread and butter to the thousands of staff of Satyam and to continue
Regards
Suprit M
Chirag Says:
January 15th, 2009 at 12:24 pmIf that bastard agreed that we was manipulating the tables because there was not other explanation, was there, and now we’ll give him more money???? WTF? We are poor nation right, deficit and all that, can’t we pay those deficits or some loan we have from WB. Can’t we improve some road, come on.
Though If ‘we’ want to have a silver lining, 50, 000+ people won’t loose jobs. That said does this means now Ragu will have a clean sheet? Shouldn’t he be stonned or jailed.
Vinisha Says:
January 15th, 2009 at 1:28 pmI think this post is a little over the top. Firstly, Satyam is not asking for a bailout package. Secondly, the government has just turned down the idea of a bailout package for Satyam.
Now I am not going around saying the AP Government does not have vested interests in protecting Raju with the news all rife with SEBI saying their investigation has come to a halt. I am a supporter of Capitalism and of a free market economy theory because it serves the adage “Survival of the fittest”. The only hitch is – India has millions below poverty line. If you let a free market economy run free, well, that’s going to be a very ugly soup. May be in the future, but for the present day, mixed economy works okay.
Unpretentious Diva Says:
January 15th, 2009 at 1:51 pmThere’s no news about government turning down idea of satyam bailout.
And it is not about AP government, the inklings are coming from “central government”.
About poverty line, I already explained what is poverty line and how welfare government causes all poverty here.
Recently, Uttar Pradesh government changed the definition of BPL (below poverty line) people. the new version will automatically decrease number of poors in UP without doing “anything”.
There is No Objective definition of poor.
Unpretentious Diva Says:
January 15th, 2009 at 1:53 pmWhy do not you sell your home to save International fame of Satyam?
Why do you want to waste my money for it? And why the heck government forcibly loot me through taxes to waste my money like that?
Unpretentious Diva Says:
January 15th, 2009 at 2:06 pmVinisha,
here’s recent report.
Myanampati says Satyam urgently needs Rs150 crore from government.
Economic times
Check the linked” economic times and you may understand the game plan.
About Mixed economy, it is loot and slavery, and well, you may feel it is good many people feel so. Slavery is such a fashion these days.
Dsylexic Says:
January 15th, 2009 at 2:43 pmheh@mixed economy works oK. ofcourse it does -what other system can consistently keep millions below the poverty line. those who claim to speak for free markets and capitalism have NO clue about free markets. they seem to think that the US is an example of free markets. what a pity. our media and universities are culpable for this colossal misrepresentation
Destination Infinity Says:
January 15th, 2009 at 11:14 pmI do accept your argument that there should not be any bail out by the Government for Satyam. The AP Govt, is clearly in trouble for its open association with the promotors of this company. But I cannot accept the view that when the mixed economy is replaced by the free market ones, there is automatic justice because the market corrects itself. In fact in a free market, there will be more pressure on companies to continue growing and chances are that more people will get involved in such practices to spruce up the balance sheets in order to get a better investment and higher stock prices presicely because there is no fear of Govt. interventionism.
Destination Infinity
Unpretentious Diva Says:
January 15th, 2009 at 11:22 pmSorry, Destination Infinity you are wrong.
In a free market with no government interventionism, each and every company will be stressed out to be most honest. The reason would be the Market demand of honesty.
What you are ignoring is simple market Rule.
Demand decides supply.
But due to interventionism, the demand of market is licensed. Once a company gets a license, it gets above the market competition. Not any second person can get license, hence there’s little or no competition.
Why will a person invest his money in any forged case? every person is selfish dear. And that is his strength of existence. To remain in profits, a corporate in free market will have to take good care of each and everybody’s selfish motive and that confirms Honesty.
In government interventionism, it is impossible.
bribe the official, bureaucrat and politician and you get tender passed, license permited and all sorts of things. it is a well proven and established fact that regulations gives birth to corruption. Although i know people will ignore it.
By the way why do not make a list of all scams since last five years?
You will find the percentage of scams frauds and cheating in government system is 99.99, for 0.01% of market cheating you are demanding more government regulation, what do you really demanding dear? 100% corruption?
Because 99.99% corruption is because of government and in government. And you want the same government to take care of corruption?
lol its funny idea isn’t it?
“Government is Disease, masquerading as a cure of itself”
Destination Infinity Says:
January 16th, 2009 at 2:04 pmGovt. is not an alien, it is formed for the people BY the people. I am really surprized as to how the same people can become so good once the Mixed Economy is replaced by Free market system! Anyways, if such a thing happens, I will also be happy
Destination Infinity
GP Says:
January 16th, 2009 at 2:04 pm@Unpretentious
Ill give example – if there is no licensing – wht cud happen.
– There will be numerous bogus companies which will promise ppl of providing very good returns than any other company in current market on their investments
and ppl will invest in them ( reason : why shudn’t I invest in that company if they are giving me good retruns.) and then suddenly one fine day
founder and president of company along with his/her associated suddenly shuddown the company and run away with all deposists of public.
and same ppl will now look for govt. assistance to nab the fraudsters to get their money back.
Now in this scenario – u might say those fools paid for their mistakes and they shud have thouroughly checked the profiles of company and then shud have decided whether to invest or not
but let me tell u – there will be lot of such fools you will see in our country and to protect their interests we have something called govt., law and order where
they can log their complaints and demand justice.
In your world of “free markets economy” where there won’t be any govt. no rules and regulatory body controlling the functioning of such companies where everything is privatised
I think – there will be more corruption, monopoly as cut throat competition to win the customers even drive themselves so crazy that they won’t hesitate to even hire private mercinaries (which u wud call – private agencies providing – defence services)
to even murder their opponents to eliminate the threats of opposition. .. why??? coz no govt., no rules , no regulations, no law and order to obey and those whoem I can’t easily buy with my money, I simply eliminate them to throw out of competition.
just like Midieval era ..don’t u think so?
In present scenario – Atleast u have centralised authority who make sure that licensing will be given to only those companies
which are following certain norms and won’t cheat ppl (Now I agree there might be few incidences where these norms are not strictly followed due to some corrupt officials but that doesn’t mean that complete system is failure?)
its like saying – Everybody shud buy a Ferrari if their scooter’s tyre is punctured. ..I mean why shud anyone not just try to fix the damn tyre instead of replacing the whole scooter with car?
Unpretentious Diva Says:
January 16th, 2009 at 2:26 pmThere is no need to be surprised.
In a free market, every individual gets freedom to chose and decide for his profit.
In a government controled market, Government Monopoly works. which disallows Individuals to think for their profits, while licensing others to promote their profits. Government means special God like powers to some in order to rule everybody else. That is, freedom for some and slavery to all others.
more than that, democratic government may take care of majority, individual the smallest minority is deemed to be exploited, and that is the cause of all corruption.
atul rajpoot Says:
February 4th, 2009 at 2:46 pmdear all
all the content discussed above are would be our center of concern and hope we would learn with our past and will ofcource come out of this .
regards
Unpretentious Diva Says:
February 4th, 2009 at 3:06 pmYes we hope for the best, and we are determined to create the best, but ofcourse, WITHOUT GOVERNMENT, WITHOUT STATE INTERVENTIONS.