Re: Re: [nukkad] Explanation of Selective Posting(ref sai)

[Sai (Indian Rediff) <>]

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Nukkadites,

Having bored you with the two options for banishment of
Casteism in India, I posted the following on another
group - IndiaWin. Many nukkadites are also members there. 

Sai

Although the options I listed were just two, viz., those
of dictatorship versus democracy - with all else being
ceteris paribus (a famous dictum in economics meaning
all other things being the same), I do feel, that there
is a third option. Unfortunately there is a lot of faith
that will have to be used in order to expect it to work
- if it does work at all.

That option is that of Reaganomics - also known as
supply-side economics. Unfortunately it is capitalism at
its near extreme. It is a very deep change that will be
required in the Indian polity, economy and society in
general.

It is my belief that greed is centric to human
existence. Anyone who denies this will be decimated by
it. Karl Marx is the perfect example. Although Marx
wasn't disproved in his lifetime, he was eventually
disproved.

Any system that is built with the assumption that there
will be even ONE human being who will be able to resist
temptation is doomed to failure. The failure is simply a
matter of time. Whether a dictator (benevolent or
otherwise), monarch or oligarch - failure is simply a
matter of time.

The only solution, IMHO, is to build a system that makes
greed CENTRIC to its existence. Take care - I do not
mean that it should PROMOTE greed. Nor should it condone
greed. Nor should it forgive greed. Instead it should
cultivate it. The American system is a god example of
greed being cultivated. However converting from the
Indian secular socialism to the American system is not
going to be easy. As I have outlined in my blue print,
the biggest obstacle, even more than the politicians, to
this conversion are the ones who have the most to lose -
the bureaucrats. Dismantling this is central to
promoting the growth of capitalism in India.

Obviously we must avoid the dangers of crony-capitalism
that was at the centre of the erstwhile Asian Tigers,
viz., Thailand, Malaysia, S. Korea etc. (Before I get
drawn into an argument about whether it was crony
capitalism in ALL of the Asian Tiger economies or not -
let me just say that I am attempting to simply and paint
with a single brush here. My focus is India - not a
complete analysis of the world).

In overly simplistic terms, I would outline the process
as follows:

   1. Reduce the size of the bureaucracy by a
predetermined number every year. In order to avoid
shocks to the economy, let this be done purely at the
rate of attrition. That way people will not complain
that the government 'fired' them. There will be no loss
of faith in the government. Time required to reduce the
size of the Central bureaucracy by 90% with a 5%
attrition rate would be around 45 years. Not quick
enough for some. But definitely humane enough.
   2. Promote growth of capital investments. Maybe a tax
holiday for a period of 25 years would not be
unthinkable. Given the increase in employment, I would
guess that the increase in income tax (from the
previously unemployed/unemployable) would more than
compensate. More maths needs to go into this to come up
with a good formula.
   3. Capital for the above is an obvious question mark.
The steps being taken by the RBI and the Central
Government Fin. Min. along with other agencies such as
SEBI etc. need to be speeded up to allow for majority
FDI in most (if not all) areas. There is absolutely no
justification for protection of any industry - including
the defense industry.
   4. Capital in the form of 'Swiss bank accounts' can
also be tapped. How to do this is debatable. But a once
in a lifetime amnesty is not unthinkable. Bring your
money back, employ it in capital intensive industries -
and we will not bother about the source of that money
(How do we prevent the Dawood Ibrahims of India from
bringing back their ill gotten wealth? This questions
needs to be pondered so that tainted money is not mixed
with money that has simply eluded the taxman).
   5. Labour policies will need to be liberalised so
that industries can hire and lay-off at will. Labour
unions are breaking the back of industrial India. And
they are also ensuring that the nationalised banks in
India do not proceed towards more efficient frontiers.
How can ICICI Bank be so manage a balance sheet bottom
line of USD 8.4 billion with just 1344 employees while
its big brother SBI manages about USD 71 billion with
about 209462 employees? Now, don't get me wrong here but
ICICI Bank appears to be worth about USD 6.25 million
per employee while SBI appears to be worth about 339,000
per employee. That is almost a factor of 20. (Figures
were taken from Yahoo Market guide (finance.yahoo.com,
search for IBN and dig around) for IBN and from
rediff.com for SBI. SBI figures were taken in Rupees and
converted to USD using an exchange rate of 48.91). The
standard argument trotted out by SBI'ers is that being
semi-nationalised; it is forced to cater to the SC/ST
and other government programmes. Do I need to say more
about the need for non-interference of the government in
such matters?
   6. The government should also not interfere in the
choice of industries that the investors wish to invest
into. The only time that the government has proved that
it is a good investor is when it invests in industries
that cannot fail - viz., BPCL, HPCL, ONGC - the VERY
industries that could do better if they were left alone.
This non-interference coupled with the liberalised
labour policies outlined in 5 will ensure the quick
birth and death of industries that were never meant to be.
   7. A government funded (via some kind of income tax
supplement, but initially funded by the GoI which then
withdraws from the funding gradually over a period of
10-20 years - but it remains the funder of last resort)
and sponsored Unemployment Insurance scheme that will
ensure that labourers fired will not be left to their
own fate needs to be instituted. Of course, the current
scheme in the US, 26 weeks of unemployment after which
you are on your own, is splendid. Maybe in the case of
India it can be increased to 1 year - and after a window
of about 25 years, it should be sunsetted (to coin a
verb) to 26 weeks. The permanent support nets of Europe
are too liberal for a society that wishes to promote
capitalism. Nor will China's government sponsored cradle
to grave approach help. Drastic times (and societies)
call for drastic measures.
   8. Education - in terms of technical education, not
literacy, is something that the government could
provide. However, I am hesitant to allow the government
into this because their heavy handedness will ensure
that we will have a ton of people who can write programs
- but no one available to test them (to give an IT based
example). (Before you jump out of your *ahem* swivel
chairs and start pounding the keyboards - please - this
is NOT a literal example, just a figurative one).

I think once the above steps are implemented, we would
have unleashed the core engines of growth in India. Once
this happens, these new industries will employ people.
As industries realise that there is a dearth of
qualified people, new industries TRAINING such people
will crop up. Witness the mushrooming of the computer
training institutes all over India.

I am sure that by now everyone must be wondering what
such a long article on economics is doing in a place
meant for discussing Social Issues.

The answer is simple. Once a person has been given a
different yardstick by which to measure his/her success
- and believe me, money is easily the best yardstick
there is - society will bend backwards to celebrate its
new heroes. How many of us know the caste of Ambani? I
don't. And frankly - nobody cares.

I think this will provide India with the carrot AND the
stick by which too banish the scourge of Casteism forever.

The will to do allof this should be there. And the
willingness to do it should be there. Indians worldwide
have shown the willingness. The political will needs to
be brought in. That, in a nutshell, in an extremely
simplistic way, will provide us with a way forward.

Sai

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