May
3
George Bush_Crawford
The growth of a nation cannot be on the grounds of other’s degradation. We don’t progress on each other’s depression.
So, what causes inflation?
Michael Pollan once discussed about the problem of corn in America, he explicitly discussed how “irrational” are the Subsidizing policies of America regarding corn and other food stuffs. He discusses that although these subsidies are assumed to make things cheaper, but in reality, it happens just opposite.
Last week, Condoleezza Rice also said that noticeable enhancement in the diets of people in China and India and consequential export caps among the reasons for the skyrocketing prices of grain worldwide. Yet, she recognized that that biofuels may be a contributory factor. George W Bush clearly ignored it.
Further he concluded that “America is by far the most generous nation when it comes to helping the hungry”.
Obviously, generosity is a virtue. But, is irrational generosity a virtue? I wonder what the Objectivists of Ayn Rand Institute will say about it, or what the libertarians and supporters of Laissez-faire system from Ludwig Von Mises Institute and Austrian Economist will suggest about it. I wonder a nation of Individuals like Ayn rand, Mises, Friedman, now have a president who comments such ridiculous excuses.
I simply am not able to clearly analyze about the inflation in America, but one thing which I am sure of is, inflation or any sort of depression in an economy never occurs because some other economy starts developing.
I agree that Indian economy is blooming, and Indian middle class is also developing fast with a reach for better living standards now. Yet, to state that the incremental status of an Indian middle class life is becoming a cause of inflation in other parts of world is simply ridiculous and it cannot be a reason for inflation, though it can surely be an escaping excuse for Mr. American President. If America is facing inflation, then surely they must find out the mistakes in their own economic system.
Ludwig Von Mises
The agro-business of America is highly subsidized. By subsidizing any commodity in a market, what actually government do is, it dictates the producers what to produce, irrespective of their choice, subsidizing a market simply denotes the belief that we are brothers and we are responsible for each other. That is, collectivism. It is simply not Capitalism, it is socialism/communism. It is simply not laissez-faire system, it is statism completely held by totalitarian government.
Ayn Rand once stated that Government “help” to business is just as disastrous as government persecution… the only way a government can be of service to national prosperity is by keeping its hands off.
Subsidies basically are impossible without taxation. Mostly, people agree that taxation is loot, and yes it is true that taxation is loot, but then how can subsidies be right? Subsidies are as wrong as taxation, and they can create havoc alone. Subsidies, actually are a luring force by which government promotes a particular commodity while ignores the others, and that can never be right.
George Bush also forgot to mention the hiking oil prices as a reason for the inflation whole round the world and he spends trillion of trillion dollars on war, the money which actually belongs to American taxpayers.
Improvement is everybody’s natural right. To improve our human development index and nutritional standards Indians will surely do all endeavors. So, obviously American government will have to change their economical strategies, and will have to be more rational (free). It is true that for various reason, (including Global Warming)
Americans are cutting down a lot on food and concentrating on the development of Biofuels and other alternative fuels. So, obviously this cannot be neglected as a major reason for inflation in grain prices in America (which Mr. American President denied).
Milton Freidman
The first condition for the establishment of perpetual peace is the general adoption of the principles of laissez-faire capitalism.
America is surely not following them, rather is becoming more and more state government controlled nation.
Even India is suffering from same problems. Inflation rates in India are at record high. Irrespective of middle class growth, food prices in India are so high, that consumption is automatically not very large.
India is much more constricted economy that American economy. Here, the grip of taxation and subsidies and licenses is more excruciating than in American economy. Yet, Indians are gradually realizing the importance of free-trading and economy and since last 15 years, India is significantly liberalizing its economic sectors which are the reason of improvement in human development index. With time, Indian economy will be more and more liberalized, stable and self-sustained.
Even Indian politicians excuse such funny things causing inflation. One of the ruling party leader at center commented last month, that since the people of north India and south India are changing their habitual food tastes, and South Indians are starting consume more wheat, while north Indians are consuming more rice, hence the costs of rice and wheat is increasing.
Ayn Rand
These politicians must understand that ultimately, Laissez-Faire system will have to be accepted, and government will have to pull its hands out of the economic sector. The static system of Taxation and Subsidies must be removed and individuals should be allowed to have property rights.
Politics must be free and away from religion and economics and education.
But right now, the politicians play the cards of religion,
economics and education openly.
I hope things will improve and we will reach to a state where we as Individuals may call ourselves as “civilized”.
Related Post: The story of Money; what causes Inflation.
The Price of Rice, What caused it to go so high?
And here is what Mises Institute
has to say about it…
A similar situation occurred in Zimbabwe in the early 2000s. Indian economist Amartya Sen won a Nobel Prize for demonstrating that most famines are caused not by lack of food but by governments’ ill-advised intrusions into the functioning of markets.
With regard to China, then: if there were as much of a new demand for food in China as Krugman claims — given a constant amount of money in the economy, there would necessarily be a corresponding reduction in the demand and prices of other goods. Therefore, the Chinese may well be consuming more food, but this increased consumption would not responsible for (absolute) higher prices or shortages.
As for Krugman’s last argument, that farmland usable for food is now being used for the growing of biofuel feedstock instead, this is a question mark. In a free market, if there were a shortage of food and if the necessarily associated high prices of food gave that market signal, land used for any other item — biofuel feedstock, car lots, movie theatres, houses, or whatever — would be converted to use for farming.
Read it Here
Individual rights are not subject to a public vote; a majority has no right to vote away the rights of a minority; the political function of rights is precisely to protect minorities from oppression by majorities (and the smallest minority on earth is the individual).
Ayn Rand
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6 Responses to “A collectivist’s excuse: George W. Bush claims growing India is reason for inflation.”
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Arun Kumar Says:
May 3rd, 2008 at 10:47 pmreally really good post n well timed too…jus saw Bush’s comments in CNN n came to net to read about it…n u have already analysed the situation..
im a medicine student…n i dunno a lot about capitalism…But i Do Know that this comment from Bush..
“when you (Indians) start getting wealth, you start demanding better nutrition and better food. And so demand is high, and that causes the price to go up,” said Bush joining his top diplomat Condoleezza Rice in suggesting India’s role in the world food crisis.
is really really pathtic excuse…
personally i feel BUSH sucks…
n condolezza rice said….
“Now, some of that is not so much declining production as apparently improvement in the diets of people, for instance, in China and India, and then pressures to keep food inside the country.”
God…when i get my hands on her neck…
c’mon woman…stop givin interviews n do something useful for ur nation..jus becos US is wealthy n powerful…you cant just eat money…
n stop sayin that india’s development hampers yours..
n onceagain great post…
Alok Says:
May 3rd, 2008 at 11:48 pmWell, one of the primary principles in Economics that I learnt in an introductory course is that of Causality.
America must remember that it is because of their wrong reasoning at the time of the Great Depression that they faced such problems and caused markets all over the world to crash. And here they are making arbitrary conclusions yet again.
This is a recession and as you said, a major cause might be the war efforts that America has been up to since the turn of the century. Quite similar to the 1939 situation.
And they call themselves generous. Laughable.
Of course, I’m speculating too.
Even if their claim is the correct reason, what can they do? They have to face it. If they instruct to withdraw financial support, Industrial growth here will continue to boom. The amount of people that we have here will keep it going , I think. But yes, it will definitely cause a short term problem here, since our markets have been riding on their waves. Let’s see what the future has in store…
Tshhar Mangal Says:
May 4th, 2008 at 3:01 amVery true
Great post
zorba Says:
May 4th, 2008 at 2:19 pmI don’t know how can people who have commented be so closed to the realities as most of seems not to heard or read the statemnt made by bush personally ,rather flown away by media emotional drama.
I have seen the video where Mr. bush was saying about indian middle class growth affecting the inflation in world food market and if u ask any economist he will agree with what Mr. bush have said(with conditions attached) .
I feel most of us are not well aware of economocis,economics work with static model of explanation and if u fit the spech of mr. bush in to it ,one can not say it violates the spirit.
Secondly , he is not an economist but a politician who was explaining things to people in simple manner and just there he left out the essential factors which he must have talked about(like that of oil price rise,supply side constraint,etc) ,had it been a speech to a different crowd other then lay men(though i doubt he will ever get that crowd) .
I think we should put ourselves in to his shoes and imagine if we would have talked of oil price rise, etc when speaking to audience for crowd knows the simplicity and punchness ,they don’t come to hear the essay u have made on the food prices.
They just want to hear their leader (however foolish he or she may be) .
And as it is said that if u really wants to finish something ,finish the very pattern of thinking which is resulting in to outcome of that very thing and thus it will be wise to change the mindset which goes for simplified version of things and to work for creating the awareness for same i.e, reality is not that simple,there are many causes working at a same time then blaming a person to deliver what his targeted audience wanted.
love
unpretentious_diva Says:
May 4th, 2008 at 3:08 pmeven if Indians are consuming more, were indians the main exporters of grains to america?
The Hypocrisy of Bush is being attacked, that instead of talking reason, he is talking non-sense.
Instead of accepting his wrong methods and increased taxation and subsidies, he is blaming other nations.
what he actually was stressing was protectionism, and that was just an indication. Now american government can surely start restricting trades along the lines of protectionism.
Scientists who run three of the world’s leading international agricultural research labs say the worldwide surge in food prices is a predictable result of the neglect of agricultural research over the past two decades.
Another major contributing factor is the developed world’s subsidies for biofuels (becos of Global warming Hype and Gulf War, Iran Iraq war). Experts warns that unless there is an immediate moratorium on biofuels made using food such as maize and oilseeds, the situation will only worsen.
So by merely having one third of the world population, India and China are responsible for global starvation is what many writers stand to tell the world. But they also forget that these countries are the biggest producers of these items. Without any subsidy or help, farmers in India and China toil hard and feed the world, not the other way round.
But it is in the interest of the politicians of countries like the US to make people believe that India starves the world. And that is what hypocrisy is. They says India/China, eat less, feed US. The thing is, instead of suggesting India and China to starve its people, the world better need to change its wrong attitude regarding biofuels, global warming and wars.
Sid Says:
May 13th, 2008 at 1:03 pmjust 1 day after bush’s comment TOI gave da actual details of da consumption of food by various countries, and it clearly showed dat its US which is consumin da max. amount of food. And da next day cames bush’s rescue statements. so i wonder India and china are really nt liked by many developed nations, i read dis in RD also