Thursday, April 26, 2007

Lessons in Economics, the Indian way!

I am awed by the enlightment self-styled old school southpaw “economists” (atleast that’s what they pretend to be) are bestowing upon the people of the country. Last I heard a certain editor wanted us to get back to a growth rate that has been described ad nauseum as “Hindu”. Maybe he thought it would get him more free publicity for the paper he is employed with. I have been thoroughly educated over the past few months by listening to them and reading about them. So I think its about time I spread the knowledge in my own humble way.

Lesson 1: Stock market is bad. More importantly videshi investment is bad. This is so true. I mean asymmetry in the capital markets is vital to the success of any economy. The cornerstone of any healthy economy is its vibrant family run enterprise. Patriarch sets up business, puts his finger in every pie. SBU 1 makes losses and SBU 2 makes profit so what does patriarch do. Takes money out of the cash reserves of SBU 2 and put it into SBU 1. Who cares about the hard working people of SBU 2 who feel screwed out of it. Vibrant stock markets would have probably had shareholders crying foul and responding by plummeting the stock of both units but that’s a horrible horrible thing. I mean company as an independent legal entity. Blasphemy Blasphemy!!! Company is the personal bitch of the patriarch of the family run business. Company coffers are his personal funds. He can do whatever he wants to do with. I used to believe that FII is a good thing because no matter how “Hot” the money is called it never really goes away. I thought India is a growing economy and funds from developed ergo slow growth countries have to inevitably flow towards India. All that FIIs will do is portfolio adjustments which will lead to corrections and realignment in the stock market which is healthy. Such a fool I have been!

Lesson 2: Huge taxes are good. High interest rates are good. I lived in the illusion in which some economist obviously had too many magic mushrooms and drew the IS-LM curve which showed that interest rate rises lead to a fall in investment and therefore slowdown in the economy. Another really stoned economist dude (Man these Keynesians know how to live it up!!) dreamed up this idea that low taxes leads to high disposable incomes which leads to higher investment and consumption which causes growth in industry which then employs more and more people and eventually leads to a virtuous cycle that eradicates poverty. Looks like the only circles he could see were smoke rings he blew! I mean who needs to provide easy loans to entrepreneurs, housing loans to the middle class etc etc. What we need to do is to squeeze this upwardly mobile educated productive middle and upper middle class by high taxes and high interest rates to help the poor. The money obtained from high taxes will be spent on building infrastructure ( where the truly poor babu, contractors et al will benefit from all the money leaking out of the system through a hundred pores), education ( where we pay the really poor teachers good money from tax funds so that they can develop political clout and muscle their way into not showing up in school and not teaching, bookish knowledge sucks balls)

Lesson 3: Government intervention in agriculture in terms of dictating price and market mechanisms is the right way. These damn Walmarts will only come in develop their cold storage chains all over the countryside and buy all the perishables straight out of the farms. Then no farmer will throw his vegetables on the streets because he cannot afford to carry them to the marketplace as the price he gets out of them is lesser than the transportation costs. This will deprive the soil of useful manure of rotting fruits and vegetables ultimately ruining the Indian agriculture system. Videshi Retail hatao.. agriculture bachao!!
Lets all go back to the Indira Gandhi days of garibi hatao. Her solution was simple. Tax the earning bracket so much that they all become miserably poor. After all when everyones equally poor in India we will have eradicated inequality completely!!


Blogger LostLittleGirl said...

True...Couldn't agree more.I think as is the FM is trying mighty hard to make these 'upper middle' class, who have really taken a lot of years and effort not to fall on the other brink of the line; eventually lose out on their investment...these people just sit around thinking of newer ways to get people rid of their honest money.
Whereas determing the actual utilisation of this money is a real tall order, because that solely depends on which corporates are fuelling this man's ego currently.

1:38 PM  
Anonymous Anonymous said...

hello my darling... i see you are back to money talks! ha ha! missed you!! well.. you know i couldnt care less... maybe when i actually have some money i may start acting a little more concerned.

11:12 PM  
Blogger Electric Shaman said...

Hmm.. the future of a country, its me a mammon worshipper or whatever you may please but dont you think calling this post "money talk" is trivializing it a littttlee bit.

12:04 AM  
Anonymous Charis said...

Interesting to know.

4:21 PM  

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