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November 2004

Carnival of the Vanities

The 114th edition of the Carnival of the Vanities is up at Interested-Participant.

I will be hosting the 115th edition of the Carnival of the Vanities here next week (Dec. 1st). Please send your nomination by email (ashish_hanwadikar-at-yahoo-dot-com) with subject as "COTV 115". You can also leave your nominations in the comments for this post.

Submission should be received by mid-night of Nov. 30th. Please include post title, post url (permalink preferred), blog title and url, author's name, a brief summary and trackback url (if you want a trackback ping). Only post permalink is mandatory for the nomination. You can nominate your own or someone else's posts. I will also appreciate a link to the COTV post when it is up. I encourage nominations from new blogs.

So, let your nominations begin flowing. And yes, Happy thanksgiving to all!

India needs tax reform

Via EconLog, Amar Bhide points out:
India's financial difficulties stem from a badly designed and administered tax system. Rates and rules for personal and corporate income taxes appear reasonable by international standards. Nonetheless, India's government collects income taxes amounting to only about 3.7% of GDP, about half that in South Korea and the other Asian tigers.

I think Indian Govt. subsidies things like higher education unnecessarily. If a special tax is levied on those who choose public (tax-funded) higher education then it will reduce the burden on Govt. a lot. Similarly, agricultural income needs to be taxed. This, along with simplification of indirect taxes and investment in tax collection will be required to increase tax collection.

Let's face it: India's is an open economy

VIJAY KELKAR, in a very fine article, titled Globalisation involves us all, asserts that India is already an open economy and we should behave like one:
In India, such conversations often begin with protests that India is a closed economy, and hence globalisation does not matter so much to us. This is an obsolete notion, given the dramatic changes which have taken place particularly in the last decade. The money that moves in and out of India — both current and capital account — now adds up to roughly Rs 20 lakh crore a year. This works out to roughly 60 per cent of GDP. To characterise this as insignificant is wrong. We must wake up to the realisation that we are now a highly open economy, and consequently need to start behaving like one.

A global comparison is instructive. The latest comparable data is for 2001. It shows that while international trade was 31 per cent of GDP in India, it was 29 per cent in the US and 24 per cent in Japan. India continued to lag China, which was at 53 per cent. In 2004, the current account alone works out to 40 per cent of GDP. So it is striking to see that India’s trade integration now well exceeds that of supposedly globalised countries like the US and Japan. If globalisation matters for them, it matters more for us.

The figures were indeed revealing to me!

Are Indians instinctively socialists?

The Examined Life: Why are we instinctively socialist?:
Sruthijith has a post asking why Indians are so instinctively socialist. He blames it on the fact that our universities and our academic institutions are seeped in leftist ideology.

I do not agree with him on that. Soviet propaganda wasn't notably successful in the Soviet Union. When Russians saw that their lives were a sorry mess and completely at variance with what their books told them, the books, the ideology in them and the leaders who deceived them with this ideology became objects of ridicule. What is surprising at first glance is that such a thing did not happen in India. For this, as usual, I blame Nehru.

I am with Ravikiran on that Nehru was responsible for socialism in India. Opposition to imperialism (and by association capitalism) is not the same thing as love of socialism. However, the main reason why socialism established itself in India is lack of urbanization and the social liberalism that it brings.

During Independence struggle and after achieving Independence Indians opposed capitalism. And I don't blame Indian people for being opposed to capitalism at all as they had seen what the capitalism looked like in the form of East India company. To Indians capitalism was not about economic freedom and minimal government but represented ruthless exploitation. Even today many people (incorrectly) identify capitalism with exploitation.

It is too much to ask of people of India to make the distinction between imperialism and capitalism immediately after Independence.

I think Indian people hated capitalism more than they loved socialism. I bet majority did not even knew what socialism was all about. In fact, with so much casteism, and religious conservatism I doubt if lot of Indians even bought the concept of social equality at all.

So, how come socialism took root in India?

There is no doubt that intellectuals in our country and elsewhere were hooked on to socialism. Even today, after having witnessed the disaster that is socialism, academicians still favor socialism over economic liberalism. Also, I doubt if our politicians have enough incentive to support economic and political liberty. In fact, they have tremendous incentive to centralize economic and political power in their hands and exploit it. Many industralists also have vested interest to supress competition. Some industralists may support freeing of controls in certain industries but only because they are newcomers to that industry. At the same time they will support controls (quotas, import restrictions and so on) in the industries where they are already established.

That leaves only unorganized freedom minded individuals and religious conservatives to fight against strong nexus of industrialists, politicians and intellectuals.

After looking at the some of countries where capitalism flourished (US, and UK especially) I think that only organized group that is capable of opposing socialism (or what in reality becomes crony capitalism) is religion. There is very good chances that socialism invariably includes social liberalism. Liberation of the underclass (so-called civil rights), opposition to traditions (including marriage), support for abortion rights, support for alternate lifestyle (gay marriage), atheism and so on means that sooner or later socialists will annoy religious conservatives. That's why two dominant parties in US, Democrats and Republicans, are split along the lines of social liberal with economic wise conservative vs socially conservative and economic wise liberal. Continuous struggle between these groups means they restrict each other's power and also provide opening for politicians who are at the center (e.g. Bill Clinton who inspite of being a Democrat enacted welfare reforms and also instituted don't-ask-don't-tell policy at the Military).

Majority of Indians are still socially conservative as most of them reside in rural areas. Socialist politicians in India did not press on with social reforms with much vigor. Probably, the urban and cosmopolitan voter base that is required is missing in India. Even in West Bengal there was no attempt by the Communists to enact any major social reforms.

Only when Indira Gandhi population control policies affected rural India did we see any serious grass-roots opposition to her Emergency. Till then her Garibi Hatao campaign was pretty popular.

This lack of major threat to social conservatism in India from socialism prevented religious groups from getting organized politically. It took many years before BJP/RSS could have any major political impact. Had Congress not given the BJP any opening by playing with Muslim vote bank BJP would have remained a minority party.

Thus I think that socialism in India came and remained there by default. In fact, even during the days of Nehruvian socialism India had fundamental right to property in the Constitution. For mostly rural India property rights have zero meaning in the absence of law and order infrastructure involving courts, police stations and so on. Lack of urbanization (which is mostly fuelled by Industrialization) meant that there was not enough tension between socially liberal urban India and socially conservative rural India. If there is no assault on your conservative principles and property rights do not even matter why would somebody oppose socialism (if one could even understand the term).

Nehruvian socialism also meant huge investment in public sector. That means easy jobs for educated (public schools) young people. Thus intellectuals had one more reason to support socialism. Free education (not bad quality for free) and easy jobs for their kids. My father (and many uncles) got offer of job even before (or as soon as) he completed his graduation. He studied at a huge campus of a public university. Why would anybody oppose such a public largesse?

Only when India got into economic trouble (because of Balance of Payment crisis, huge fiscal deficits and public debt) that people realized that the party has finally ended. Also, the next generation had trouble finding jobs as little was left of private sector and public sector had become uncapable. I think this situation and pictures of progress made by western societies turned the younger generation away from statism.

Thus, in conclusion India was hampered by lack of urbanization and consequently lack of strong religious opposition to socialism. Just like Nehru believed in political freedom (freedom of speech, religion, assembly, etc.) had he believed in economic freedom I very much doubt if leftists intellectuals could have opposed him very effectively. To do so they would have to "convince" the people that property rights inherently lead to inequality. And that property rights are important feature of capitalism. Without a socially liberal urban base in a predominantly socially conservative rural country that would have been impossible.

Waterless dishwasher wins top design award

Waterless dishwasher wins top design award:
According to the Sydney Morning Herald, the trio won a world-wide design competition held by electronic appliance giant Electrolux that asked students to design a product consumers might need in the year 2015.

The Rockpool dishwasher, designed by Douglas Nash, Oystein Lie and Ross Nicholls, beat back competition from products developed by students from Brazil, China, Czech Republic, Portugal, Slovakia, Sweden, United Kingdom and the United States.

The judging panel was impressed with the environmental qualities that the waterless, chemical-free dishwasher could provide consumers in the future.

More I hear this kind of exciting tech news, more the present and past looks boring!