India’s Prosperity is Made in India

prosperity2 I am not a fan of the Modi government’s “Make in India” advertising drive. My view is certainly unpopular. I think that advertising cannot (and must not) replace real changes in policies that could make India attractive to domestic and foreign manufacturers. As it happens, the prevailing sentiment, even among many domestic manufacturers, is that India is really a very hard place to make things. Which partly explains why so much of what’s consumed in India is made in China. So trying to woo foreign manufacturers through advertising slogans is pointless.

I wrote this piece for the July edition of India Currents. Here it is, for the record. Continue reading

Planning Works but not Always

Walter E Williams “Wealth comes from successful individual efforts to please one’s fellow man … that’s what competition is all about: “outpleasing” your competitors to win over the consumers.”
— Walter E Williams.

Part II.

I ended the previous bit of this essay with these questions: First, why is it that central planning appears to work in familial situations and in firms but not in economies? Second, does planning really work for firms and corporations? Finally, if it is indeed true that centralized planning does not work at the economy level, why do petty despots (like Nehru) go for it despite the ruin it causes?

I will address the first two questions here and the third question in the next part.

Let’s see why planning works in families. The parents are emotionally motivated to do what’s best for the family and are best placed to plan for the family simply because they care. They know the preferences of family members, know the means available, the tradeoffs involved, and so on. The information and computing power required to get to an approximate solution to meet the objectives are well within their cognitive capacity. Though not trivial, planning for a family is a manageable task.
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Happy 4th of July

alt="We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."

“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.–That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, –That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.”
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Speaking of Freedom of Speech

In my view, freedom of speech is a non-negotiable right that free people have. It is a natural right, not a right that is artificially conjured. Human dignity is lost when the right to express what you think is restricted. I regret the fact that Indians don’t have genuine freedom of speech. Here’s a piece I wrote for the June issue of India Currents. Excerpt:

Publishing anything that the government is likely to take serious offense to is akin to publishing an invitation to officialdom to please come and shut down the business on some pretext or the other; and also to audit the accounts; and to get an income tax raid done on your home immediately; and file a few cases against your business which the courts will take decades to settle.

For the record, I reproduce the full piece below.
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My assessment of Modi government

I have been a long-time supporter of Shri Narendra Modi. But I am seriously disappointed at his performance as prime minister. Certainly he has done better than his predecessor, Sonia Maino. But she’s an Italian who really did not care for India. Doing better than Sonia Maino is no achievement. I expected better than this from Modi. I think Modi’s greatest achievement so far has been political. He disarmed the Maino mafia. But I fear that there are Maino moles in the Modi management team.

Anyway, here’s a piece I wrote for the New Indian Express where I claim that India is still on the same old policy path. It was published on June 14th. I reproduce the piece here, for the record. Continue reading

Planning is Ubiquitous and Uniquely Human

friedrich-august-von-hayeks-quotes-6

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.

Friedrich August von Hayek.

Part I.

Conscious deliberate planning is a uniquely human activity. Non-human life forms don’t have the cognitive capacity to plan. But we do it all the time. It involves at a minimum some evaluation of the present conditions, a set of reasonably well-defined and reasonably stable preferences over present and future states of being, and an understanding of the various available means to achieve some selected or desired future state. Continue reading