Solving the Shortage of Grains

To understand this, let us take the case of an unexpected flood or drought in an Indian region (say Bihar, or Andhra Pradesh). Because of drought, the production of wheat will be reduced (let us say it reduces by 1/12th of the average wheat production in an year). Obviously, because of the shortage in production, the price of wheat is expected to rise after say, 6 months. The enterprisers looking for making higher profits will speculate this expected price rise and will start storing the wheat at the current lower prices to save it to make higher profits in future by selling the stored wheat at higher prices.
Their speculative storing of wheat will result in a raise of current price of wheat, as there will be lesser wheat available to be sold to consumers, and the enlarged quantity of wheat for future will reduce the future prices of the wheat.
Because of current higher prices, the consumers will also start accommodating themselves to the shortage of wheat by reducing the consumption of wheat and checking the wastage. This thriftiness on behalf of consumers will allow them to sustain the time of absolute scarcity of wheat and that will further reduce the expected future price of wheat. Thus, at one hand, speculators will increase the current prices of wheat by storing it for future sales at higher prices, on the other hand, the increased available quantity of wheat for future and the thriftiness of consumers at present will reduce the expected prices of wheat in future. As a result, the maximum possible increase in price of wheat at the period of most scarcity will also be not very much more than the current price of wheat plus the storing and preserving charges of the wheat by speculators.
In absence of speculators, as most of governments illegalizes speculation for price control, the consumers will never realize the actual shortage of wheat because there will be no sign of scarcity by means of price rise and will continue consuming wheat as normal. On the other hand, although the stored wheat will satisfy the demand of consumers for first 11 months, there will be no wheat left for the next 12th month of year as the total wheat produced is already less by 1/12th of the average required for an year. Such a situation will not only make people suffer starvation but will also fail to reduce wastage when it could have been. In addition, it will provide further chances of bureaucratic governmental corruption.
The profit motive will also alleviate the situation of famine and scarcity by means of another natural force of free market that tends to equalize the price of a commodity at all places. At a time when Andhra Pradesh or Bihar is suffering famine and food shortage, the dealers at other parts (say Uttar Pradesh, Punjab or Tamil Nadu) will seek higher profit rates by selling their stored wheat to the consumers in Bihar or Andhra Pradesh. This will result in a slight increase in price of wheat at the local markets while the increase quantity of wheat available for Bihar or Andhra Pradesh consumers will reduce the unexpected rise in price of wheat at markets there. Thus, the shortage of wheat at a region will be spread to whole India and hence will reduce its effect to minimal, all will share the increase in price of wheat, and that will reduce any extra burden on the consumers of famine suffering area to negligible.
The speculators cannot store the wheat for more than a period of 12 months as by that time, the new crop of wheat will arrive in the market and that will reduce the price of wheat to normal.

Issue of Oil Shortage because of Corrupt Oil Barons

The same principles of free market will also tackle any unwanted situation in the market of crude oil and petroleum or any storable commodity.
In the previous post, while discussing the Market Anarchy , one of my friends raised the issue of Oil Barons, asking what will happen to free market if the Arab Oil Barons tries to control the market because of their influence on oil production.
Let us assume that all Oil Barons of Arab makes a union and tries to control the free market by imposing an artificial scarcity of crude oil (although this is impossible because reducing supply of oil will reduce all income of those oil barons as they have no other means of profitable production).
The speculators of free market will certainly foresee the future shortage of oil and will maintain their oil storage to make higher profits. That will obviously increase the current prices of available oil and hence will introduce the thriftiness in consumers, making them more able to sustain the period of oil shortage. Consequently, it will reduce the chances of unexpected increase in price of oil at extreme periods too.
On the other hand, Indian free market will also tend to increase its oil production to make higher profits. In addition, profit motive will tend the oil producers of other nations (like USA or Russia etc) to sell their oil to the Indian market. That will obviously tend to spread the scarcity of oil through out the world and hence will assuage the problems of Indian market. Hence, although the economy of India and actually whole world, will suffer a comparable loss but that would not be of any considerable degrees. On the other hand, Oil Barons depend only on oil production, their loss at not selling the oil will be huge and directly pointed towards them, and that will break their union.
Conclusion: A free market inadvertently safeguards itself against any sort of scarcity of any commodity by means of the profit motivated market forces. As speculators guard the market and hence the well-being of consumers as true and honest soldiers (as their vested profits and interests are strictly attached with the consumers), the free market necessarily remains free of any discrepancy in the prices of any commodity.
Even the administrators of mixed economy have realizes the power of forces of free market that is why Indian government issued allowance of speculations over wheat few months ago. Certainly, it is a positive step towards the Free Market.

Cycle of profit motivated Innovations

To make profits above average and hence to be successful businessmen, entrepreneurs need to foresee changes in consumers demand before their competitors, to provide new improved products in the market ahead of their competitors or to cut the cost of production before their competitors may do that. Eventually, every innovation becomes general and the other producers and businessmen also either adapt the innovation or improve it further. Thus, the profits of the first businessman who introduced the invention decrease again. The only way for him and others to make higher profits again is to introduce further innovative improvements in the production and quality of products to satisfy the consumers demand at further lower prices. Thus, for any firm to continue making above average profits, it must frequently outrun its competitors and must act as an agent of continuous economic progress.
The competition for making higher profits increases the total production of market many folds and decreases the poverty of masses. A firm that brings upon an innovation in production increases its production, sales revenues and profits at the expense of the other producers who are not yet able to increase their production. Consumers shift to the products of that firm because it has better or equally good product to provide them at considerably lesser prices. The innovator hence makes outrageously high profits while other producers’ lower profits or outright losses compels them either to renovate and improve their production or to duplicate the innovation brought upon by the first producer. In a free-market, innovations hence, are not only necessary to make higher profits, rather they are necessary to make any profit at all, if no innovation and improvement, one may loose his business, profit and consumers totally. As the innovation becomes general, the total production of market increases manifolds, increased supply of products decreases the selling prices, and hence reduces poverty to great extent. Furthermore, generalization of innovation and decreased selling prices reduces the profit of producers and hence compel them to modernize, improve and invent further to bring more satisfaction for the consumers. The result obviously comes out to be in favor of consumers that may gain the better products at lesser prices and this is reduction of poverty. Thus, free market provides the profit impetus to innovate, improve production, and hence reduce poverty of masses. In addition, a special profit of innovation tends to disappear as the innovation become general and every other producer adopts them. In order to maintain higher profits, every producer who want to keep maintaining higher profits to longer periods need to repeatedly innovate and improve the production and hence bring down the poverty in masses.
In absence of freedom as the government regulates the market and bar down the profits, this impetus for innovation and invention decreases substantially and the consumers suffer poverty.

Government regulation is unable to provide impetus for economic progress

In a free market, the production and business is open to everyone. Even a penniless individual newcomer may start his new venture and bring upon innovative techniques of production to make profits. Those who have innovative ideas but lacks investment to implement can offer partnership to others who may invest in their ventures. A free market capitalist society provides enormous resources of investment for the new innovative ideas and that is absolutely impossible in a government regulated mixed socialist economy. In a free-market, where an innovative individual (though he has no money) need only to convince some of the financiers to invest in his innovative ideas, easily gets a chance to progress. In addition, the financiers keep looking and encouraging the innovators for making higher profits as that is necessary for them.
On the other hand, in a socialized government regulated market, the innovator need to convince everyone, a majority or at least a significant minority of his fellow citizens in order to implement his innovation. Even if he succeeds anyhow to convince the majority (most of whom have no idea of production process and innovation), he may not be able to get necessary finance because of government licensing system. Furthermore, while in a free-market he can have any preferable and most profitable agreement of partnership with the few financiers, in case of regulated market, he has no way to bargain for his individual profits as government confiscates his profits for the cause of the majority.
Thus, the government regulated system is such that no new innovator actually feels it profitable to devote his hardship and intellect to actually innovate, as he may never be able to make any high profits. In addition, even if some young innovator tries to bring upon innovation and improved changes, he may never succeed because of the bureaucracy, license raj, and political corruption. In such scenario, only a few already established corporatists that enjoys the government support may succeed in bringing upon any innovation an hence the common man always fails to make any fortune on behalf of his inventive innovation. Furthermore, as such system discourages any innovative improvement, the businessmen of such mixed economy regulated market not only suffers lack of increase in production, they are forced to adapt the already introduced innovation in other freer markets.

India lacks Innovation because Government actually hampers any impetus for innovation

The Socialized Medicines

The idea behind socialized medicines is the forced economic equality of citizens, i.e. no matter you have earned money, you cannot have any better medical treatment than the lazy person who never thought of earning and saving for his medical security. Thus, the socialization of medicines is not only the abolition of causality of individual efforts and his earnings; it is abolition of the cost in spending of income.
As visits to doctor are free to individuals while the taxpayers collectively pays for them in socialized system, each individual realizes the benefit of his visit to the doctor, while millions of taxpayers pays for the visit. Obviously it is an insignificant amount, thus every individual is encouraged to take advantage of the system without considering the wastage. As a result, the number of visits to doctor increases abruptly. The absence of cost to the individual patient results in an enormous increase in the medical tests, hospitalization and surgeries performed, most of which remains unnecessary and that adds to the cost of system furthermore, also the system requires a huge bureaucracy to administer it and that further increases corruption and the cost to the collective. The result of the system is simply to raise the fees of doctors and medical facilities and to create scarcity of hospital beds and doctor’s time. The redundant medical tests and surgeries performed often delays the meeting of genuine needs of the patients and many a times, it becomes impossible for the patient to actually get the required treatment.
To solve out these problems, government thoroughly bureaucratize the medical field by controlling the doctors’ wages and price control of medicines, government also restricts doctors from practicing freely. Ultimately, the profession of doctor and medicines becomes unattractive and unprofitable and the talented individuals prefer not to opt for it. That further creates scarcity of efficient doctors. As government has no rational way to determine the necessary treatment in any individual case, the doctors starts denying the necessary treatment for the people, thus increases corruption.

Socialized System against Advancement of Technology

My Healthcare My Choice

Increase in Bureaucratic Corruption

As the Free Health Care System results in enormously increased demand of services and scarcity of doctors, medical facilities, hospital beds and resources, the medical sector becomes the free zone for political and bureaucratic corruption. As politicians and government official realizes that government cannot satisfy the demand of citizens, they start taking advantages of the situation through bribery, frauds and corruption. In order to contain the spending on collective medical care of whole populace and to increase the profits of the corrupt politicians, bureaucrats and government officials’ including doctors, government begins denying and prohibiting necessary medical procedures too to the common person. Not only the medical advancement is reduced and opposed by government, it also starts denying medical services to those citizens whom the government considers as only marginally valuable to the nation, such as infants or aged. As aged and infants does not pay any additional tax to the government budget, while their necessary demands of medical are high, they suffer neglect. On the other hand, government keep increasing taxes on the taxpayer citizens on the name of trying to provide necessary treatments for the poor, old and infants. Thus, the same socialized medical system that begins with an aim to provide funds for medical care of poor, infants and aged, turns out to be a sacrificial citadel for them.
To believe that there can be something like “free lunch” is a great mistake. If government promises for free lunch, no one should be surprised to find out that it increases malnutrition and starvation. He may find himself on short rations of government in order to have fund for those whom the government considers more valuable than him on social and political priority. Thus, such socialized free-health care, or free-education for all, or free-lunch, food, water for the poor and underprivileged often proves to be phoney, corrupt and inefficient. Yet, government keep propagandizing such issues and programs just in order to keep its hold on political power and vote bank of the masses. Ultimately, all this increases extreme corruption in the system, and poverty and scarcity of resources and services for the masses. In order to reduce and ultimately remove the problem of corruption in India, Indians need to realize the irrationality of collectivism and to abolish it instead of abolishing the causation and cost of individual earning and living.
Huge number of such socialized programs including Universal Medical Care, Education for All, food for al, minimum wage rates and employment for all run by government in India are the actual cause of extreme corruption that we Indian suffers.
The POTUS Barack Obama and his Democrat comrades are also trying to push such forced economic equality on US citizens by means of luring the citizens and propagandizing such socialized programmes of Universal Health Care, Public education for all and many other such programmes. Obviously, their motive is to gain political mileage and promising vote bank to maintain their ruling power. Yet, the American citizens should realize the irrationality of such collective systems and prefer not to be the victim.

Uniformity of Profit

Naturally, every body works to gain profits, everybody lives to sustain and comfort his life, profit is the only motive for a free individual to put up his endeavours in production and prosperity. Yet, the laws of natural anarchy also ride profits and that is the Uniformity of Profit principle. The principle suggests the natural tendency of a free-society towards establishing a uniform rate of profit on capital invested in all the different branches of production, be it steel production, grains production, oil industry, the shoe business or whatever. Profit, obviously is the difference between the sales revenues and cost of production.

The reason for such tendency of natural uniformity is the profit seeking nature of the free-individual. Investors prefer to earn higher rates of profits on their investment rather than the lower rates. That is natural, rational behaviour of man to seek maximum possible profits. Thus, other things being equal, wherever the rates of profits are higher, investors tends to invest their additional wealth, and wherever the profits are lower, they tend to withdraw their previously invested capital from those production sectors. The additional investment that thus reaches to any high profits providing production sector tends to reduce the rate of profits in that sector.

The natural, rational behaviour of man is to seek maximum possible profits

Benefits of Natural Anarchy

In a free-society, as the profit rates tend to be uniform, every sector gains enough investors. As every investor is driven by his profit seeking nature, he remains alert about consumers demand and that reduces the chances of malinvestment and hence over-production or under-production. The natural anarchy thus provides a balance between the production of all the essential products for our life and progress. Anarchy not only prevents but also remedies the mistakes of over-production or under-production if committed. If at the threshold of a high profit-rates providing sector, investors commits mistake of over-investment, it tends to over-production that decreases the rates of profit and hence further investment reduces resulting in lesser production and hence providing the necessary cure to the mistake.
Because of individual freedom and uniformity of rates of profit, each sector not only gains enough investors, it also gains enough human resources in form of workers, specialists, managers, entrepreneurs and inventors and that leads to over-all increase in rate of production leading to reduce poverty and scarcity at all fronts.

Free Society brings the environment of natural freedom for each individual being free to use his talents and endeavour to pursue happiness by earning it honestly and freely

Ills of Interventionism and Central Planning

The government by means of central planning or interventionism often dislocates the harmony of free-market and hence breaks the chain of progress bringing chaos to the society. In presence of government interventions in forms of subsidies, taxation, prohibitions, licensing etc, the profit motive looses its essence, and instead of learning and leading the way of natural profit seeking tendency, investors are forced to invest based on government’s dictatorial interventions. This dependence reduces the investors’ incentive to invest and hence causes lack of investment. In absence of profit motive, neither the government, nor the investors by themselves get any chance to check the threshold of investment and production and that causes loss by means of malinvestment resulting in over-production in some sectors and under-production in different. Also, by means of subsidies, stimulus packages and forced production, government creates bubbles of boom that tends to burst ultimately causing malinvestment that results in loss of production, lack of investment, depression, scarcity, wastage of resources, corruption and unemployment. As the government interventions destroy the division of labour, society suffers lack of freedom, extreme differences between classes, casteism, discriminations and overall underproduction that bring in problems of poverty.
Conclusion: In a free-society, market follows the laws of natural anarchy and that provides freedom, progress, prosperity and increase in the productivity and profits of the free-individuals tending to solve out the social ills if present along with preventing and curing the economical mistakes by means of profit motive that works as a thermostat or the invisible hand to guide the society towards cumulative production and provide the individuals means to pursue their happiness honestly and freely. Government interventions prove to be fatal, destroying the profit motive that is the only possible means of checking the malinvestment, over-production and under-production. This results in economic chaos, making the birth bed for various social-ills by destroying the division of labour.

Cause of Depletion of Indian Forests

Often it is said that increasing population is the main reason for forest depletion, yet it is a false idea. The major reason for the loss of Indian forests is the government.
Despite the fact that forests are the basic natural resources for the economical activity, Indian government since from the start, keeps full control over the Indian forests without providing any private initiative and free market incentives to preserve forests and solve out the problem of scarcity.
During the 19th century, the British government confiscated most of the Indian forests to rob them for their imperial needs. After independence, Indian government took the robber’s position and stated Indian forests as public property under the conservations of government. In 1952, some well-intentioned politicians recognized the importance of forests and declared the new forest policy aiming at maintaining 1/3rd of India’s land area under forests. Yet, just like all other governmental interventions , this initiative also proved to be futile and results came against the intentions of preserving the forests. Until 1976, the forest resource was seen as a source of earning money for the state and therefore little was spent in protecting it or looking after it and then Indian forests became a playground for political briberies, corruption and mismanagement of Indian forest ministry and department. At one hand, the government has the mighty resource in its hand to extract the wealth from it without proper procedures for recognizing the prices in accordance with profit or loss, on the other hand, government applies confiscatory taxes on citizens for maintaining the forests. Result comes out to be wastage of resources, burden on citizens and further depletion of forests.

Why Government cannot preserve Indian Forests?

Government systems are simply redundant and incapable of protecting Indian forests because such system of forest conservation lacks the incentive to preserve the forests while cutting trees down definitely provides the short term profits. Corruption in the aim of government authorities to preserve the forests is obvious as no individual has any means to feel the direct responsibility to conserve them. As nobody own any property rights on forests, nobody cares for them, on the other hand, people keep using the forests to fulfil their needs. Common person uses forest wood as basic fuel and cattle grounds while the executives often uses them for commercial wood and coal and none ever think of maintaining the equilibrium between usage and production of forests. Furthermore, a person cannot use his owned land for commercial forestation because he is not free to make profits from commercial forestation. The government authorities fail in protecting and preserving the forest because of lack of labour, security techniques while negligence, bribery, and corruption remains the basic ill of all such public resource ministries and departments.

Necessity of Privatization of Forest Resources

Trees are nothing but long-term crops and forests are similar to farmlands of those long-term crops. The forests necessarily need human endeavour for their proper growth and conservation. As human endeavor is necessary for protection and growth of forests, they are not free resources rather they are economic commodities and means of production, that is, forests are wealth and hence need to be subject of private property rights. Privatizing the forests will reduce the unbridled felling of trees because the private owners will have the responsibility to safeguard their property. The private owners will safeguard their forests with utmost sincerity and honesty because the protection and preservation of their forests will be profitable to them.
A farmer safeguards his farmland and crop because his crops are the basic means of his earnings and well-being, similarly, the private owners will have proper incentives to maintain the equilibrium of forests. At one hand, they will use the forests for commercial benefits, while they will have to maintain the growth of new trees to keep up and increase their personal earnings and profits. Entrepreneurs will not only look to provide enough derivatives from their owned forests to the market, they will have to innovate ways to increase the productivity and proper care for the maintenance of the forests.
As forests are not only scarce resources, they are scarce products of human endeavour too, the demand of forest and forest derivatives will naturally increase the supply and that will necessarily mean the increase in area and density of forest land. More and more people will become interested in forestation and attaining profits and the competitive market of forestation and forest conservation will provide ample opportunities of improvement in technique of forest protection and growth and security. Entrepreneur will look forward to convert the available wastelands to profitable forests by planting commercial trees, shrubs and herbs. As market forces will recognize and establish the importance of various trees and products of forests, the various species of trees will be preserved according to the degrees of profitability in their growth and protection and that will provide a completely planned, progressive and profitable system to conserve trees and forests.

Will Partial Privatization Help?

Partial privatization is the process of government to apply private enterprises for protecting and growing forests on contract basis while the authority essentially remains in government hand. Such government interventions often prove out to be futile because of the short term of contracted property rights. If the private contractor of a forest knows that he may earn the benefits of the forest only for a limited time period (say five years) he will certainly look to decrease the amount of spending in growing and preserving the trees and forests, rather he will look forward to attain maximum profits of the existing trees and forests by exploiting them irrationally. It will be no different from the complete authority of government over forests while it will increase the possibilities of corruption and negligence in maintenance of forests.
Conclusion: The incapability of government control over forests to conserve them is beyond any doubts, partial privatization of forests will also fail to provide better results. The only way to conserve trees and forests is to let the private initiative and free market introduce the incentives of profits in forest management and growth of trees. Privatization of forests will not only reduce the cutting of trees for their rational usage, it will provide incentives for planting further trees and new forests. Property rights on forests will increase the endeavours of individuals in preserving and growing the forest land.

Burden on Consumers

In an economic system as long as only certain means of productions are controlled by the government or municipalities, the nature of market economy determining economic activities remains unchanged. The Government owned sectors and ventures must fit into the market mechanism of market economics while buying raw material, equipments, labour, and as sellers of goods and services. They are subject to laws of market, as they need to attempt for profits, at least to avoid losses. When government intervenes to eliminate this dependence on market by covering the losses of such enterprises with subsidies or bailouts out of public funds the losses shifts to somewhere else and subsidies are raised by collecting confiscatory taxes. However, the burden of the taxes affects the citizens, not the government collecting the tax.
In a free market, where the market laws either purges out the failed enterprises incurring losses and replace them with other enterprisers to provide better products and services, or force those enterprises to improve their working, production and management, the problem solves out by itself as the malinvestment in enterprises incurring losses gets a reality check. Yet, because of government interventions in mixed economy, such check is impossible as the government keeps promoting the failure by punishing the citizens, burdening them with superfluous taxes and wasting thus collected wealth in failed or meant to be failed enterprises and services in the form of bailouts and subsidies. In absence of check, these enterprises, instead of improving and curing themselves, keep fomenting further and causes further burden. The government interventions at one hand, supports malinvestment in the failed or mismanaged enterprises, on the other hand, government punishes the profitable private enterprises by further cutting out their profits by means of corporate taxes. As the profits of private enterprises reduces, their rate of progress and production also decreases, causing retardation in progress of citizens.

Poverty and Unemployment

Free Market, The only way to reduce poverty is to increase the productivity of individuals.

Price Control and decrease in productivity

Poverty-Government interventions reduces production and causes further poverty

The Only Possible Solution

Irrespective of their supposedly good intentions, interventionists through their planning of mixed economy results in chaos and exact opposite results to their interventions. The middle path between the good (capitalism) and bad (socialism) proves to be an ugly vice (mixed economy). There is no alternative to totalitarianism than liberty, there is no possible profitable planning for freedom and common welfare than to let the market system work freely, There is no other means to attain full employment, rising real wage rates and an always improving standard of living of the common man than private initiative and free market.

Life is Consciousness of Desires

Intellect

So what is that, which helps a man to decide which of his desires is to be sacrificed and which desire he should fulfil? One may say his intellect helps him decide which desire is more important, so does the intellect of a man masters his life.
Intellect of a man is his tool to estimate and understand the relative importance of various desires of his present and the future. As intellect is his only tool, it cannot be his master, rather it is his slave on whose loyalty, the success of his life resides. How his intellect does helps him find which desire is more urgent and needs his attention more and which desire he may sacrifice?
He uses his intellect to be aware or conscious of the varying degrees of urgencies of his desires. If a man does not have desires, he cannot have intellect too, because he will not have any need or purpose of intellect, even if he has some intellect he will never improve it nor will use it. He thinks to solve problems he faces in fulfilling his desires, if he has no desire, he has no problem and hence he does not need to think.

Desires, Man remains enmeshed between the struggles of various desires, and he tilts towards that desire which is most necessary

“I”

Now one may say, desires are not the master; rather he himself is the master, or the master is I or me, or myself. How can one define “I”? What is “I”?
“I” actually represents totality; it represents a person’s body, intellect, mind, memory, imaginations and his desires in total at a given moment as a single unit. Without his body, he cannot define “I” he cannot remove his mind while defining “I” too and so on. When one say, “I” am running, he mean that his legs are running, carrying the rest of his body, his brain, intellect and memory with them, when he says, “I” am thinking, he means his intellect is thinking, his eyes are not thinking, his ears doesn’t think and so on. Similarly, when one say, “I” decide to do this now, what he means to say is, the urgency of that desire to be fulfilled is maximum at that moment relating to other of his desires. He decided that by experiencing the varying intensities of the desires he is aware of, his desires rules his decision, he uses his intellect as a tool to understand the order of the desires and then he acts in accordance with his desires to fulfil them. So, saying “I” rule myself is equivalent to saying his desires masters him.
Desires can be good, can be bad, a man can have desire to help others, a man can have desire for welfare of his family, or his locality, or his city, his country or whole mankind, he can have desire for love, prestige and self-respect, in all cases, it is his own desire to achieve which, he uses his intellect, thinks and acts, and hence in any case, he depends on his self, his desires, he remains selfish, his own desire becomes his motivating force.

Will and Will Power

Sometimes, people create a mystical illusion of spirituality by stating that to overcome your desires is the way for emancipation, or freedom. They further suggest that one may overcome his desires by the virtue of his “will” or “will-power”.
So what is will or will-power?
Actually, “will” is the synonym of the desires itself. What people ignore is the fact that to overcome one’s desires itself is a basic desire of his and that is his will.
What is the difference between an animal and a rational being? All animals follow their impulses, so do the rational being, yet there is a difference. An animal does not have the rational ability to be conscious of the varying degrees of his desires, he lacks the tool to signify the various desires and dignify the most important or rational one. On the other hand, a rational being have that tool to perfect his sense or conscious of the varying degrees of his impulses or desires. A savage is slave to his immediate impulses, he will not save for old age, and he will not think for better life (or improved conscious of desires and varying degrees), he has no tool to do so. While a rational being has that tool, so he thinks and relates, he experiences which desire is most important, or rational, and properly makes a plan to achieve it.
What happens when the intellect of a man fails to signify the rational degrees of his desires? In such situations, he often commits mistakes of varying degrees, and is vulnerable to undesired complications, because he has to pay the price of each of his desire. His life becomes a chaos.
Nearly all of his desires follows the same trend, he has to pay for a desire by sacrificing some of his other desires. For his desire of emancipation, heaven, spiritual pleasure, knowing the omnipotent etc, he sacrifices his other materialistic desires. That is, will, or will power indicates the exact desire, which that particular man has decided to be strongest for himself at a given moment with the help of his intellect, hence, will is synonymous of desire, and will-power is synonymous of the power of the desire, which masters the man at that moment.

Freedom

Freedom-A Man’s most Urgent Desire

He came to my house very early in the morning and said, “Madam, “koi Jugaad lagaao”; help me in finding a way out. I asked, for what?

He said, Madam, I wish to work at famine relief programme, do something and transfer me for that job, I will be extremely thankful for you, you know how difficult it is to lead a good life with this clerical job, we middle class people keep struggling for every materialistic opportunity, if I get a chance to work at famine relief programme, I will also grab some rubies from the treasure.

I said, but Mr. Viththal, you have no record of any sort of missionary work and social services, if anyhow I try to get you employed at famine relief programme, even than what good you will do there? We need actual good workers there in the famine hit areas, people are suffering extreme scarcity of water, food and fodder, children are starving to death and cattle are at the verge of end, there should be a proper way and efficient workers to provide them all possible sort of relief.

Mr Viththal said, “Madam, you are wrong about my abilities, I have already worked for many self-service-associations. I know how extreme famine situations are and I know what I can do for the people suffering out there. You are possibly not aware of the fact that all those who are employed at famine relief programme are already making gold out of sand, and in my case, you are asking for a character and capability certificate. Please tell me clearly, what help I may get from you regarding my job transfer to famine relief programme.

I said, it is not very difficult, I have direct connection with famine relief ministry and famine relief minister is my good pal. Whenever I will refer you, you will get a transfer letter to famine relief programme. However, are you ready to share the famine?

He said, “Ohh madam, why are you making it complicated, I won’t be the only one to enjoy the butter. Even ants will get the remnants of cheese and you will surely get your lioness share, but how could you manage this double standard? Just moments ago, you were sceptical about my character and capabilities and now you are asking for your share?

I said, Mr. Viththal, honesty does not suit in such situations; famine is to be taken as defence deals. People are starving in huge numbers, no matter how much you provide them, it will not be sufficient and they will suffer. Its similar to the work of a coal broker, no matter you do nothing, your hands will be stained black, people will complain and blame you for their sufferings and it has no solution, no one can satisfy their demands. That is why Mr. Minister is employing only those workers for the famine relief programme who are efficient in making best use of the situations, make fortunes of the swindle, that is why the workers already employed in relief programme are gathering riches, and are providing the asked share for Mr. Minister. As for me, why should I loose my chance of making a share when I know it’s a huge scam which will never be questioned.

Mr. Viththal said, yes madam, you are right, I agree for everything, I will provide you your share and will serve Mr. Minister too, but please transfer me to work at famine relief programme. It is high time, if anyhow it rained, then both of us will suffer, as the issue of famine will loose its shine. So let us pray for staying the famine so that we can keep distributing reliefs in famine.

I said, Ok Mr. Viththal, come to my house again at evening and then we will visit Mr. Minister’s Bungalow together, you should be employed at famine relief programme as soon as possible so that the relief distribution may be properly channelized and we can gather the possible benefits.

After intensive talks with Mr. Viththal about the famine relief programme, I started planning for the evening to take Viththal Bhai to Mr. Minister’s house. I knew it would be hugely beneficial for all three of us.

Collectivism- Collective systems naturally inculcate dishonesty, corruption and wastage

In the book Time Will Run Back, Henry Hazlitt explained this fundamental problem of collective systems properly through a discussion between the protagonist and his ally, here is an excerpt — 

“What you are saying, Adams, is that we are all more generous collectively than we are individually. Or rather, that we are all willing to be more generous with other people’s money than we are with our own. Or still rather, that our vicarious generosity, our pseudo-generosity, is greater than our real generosity; and that therefore we should force somebody else to contribute to the support of the needy through taxes, confiscation, or what not. What you are saying, and what Marx was saying, is that those who have not created the wealth should seize it from those who have created it.”

 I suggest every one to read the book Time Will Run Back at least once, as it helps one in understanding the fundamental philosophical and economical issues in best possible way.

Was paper so acceptable?

To start off, lets ask ourselves some questions. Why did the vendor accept a 50 rupees note from me, in exchange for a kilo of sugar? The obvious answer many people give is, money(paper money to be precise) is a commonly accepted medium of exchange in today’s economies.

But lets board the time plank, to regress back in time. How did the first issuer of paper money(lets say he was Mr. Spaulding) ascertain any monetary value(like 10 rupees, 100 rupees etc.) to the paper money that he made?

Did he print just arbitrary numbers on the green papers that he printed? If so, what made our predecessors to accept paper pieces with arbitrary numbers(we will later see they weren’t really arbitrary numbers printed on the green paper bits) printed on them in exchange for real goods and services?

Lets trust the intellect of our ancestors for a moment(and for lack of real evidence to support that Mr. Spaulding actually got his way through with the trick), to assume that the first men who started using money did not exchange real, valuable goods and services for mere paper pieces printed with numbers.

Evolution of Commodity money

The first money(ies) used by mankind were real commodities, and not paper pieces, which had specific use value attached to them. To get the crux of the idea, lets take a seemingly simple economy of three people.

Lets say Jon has a couple of apples, Jim a couple of oranges and Jame has an ounce of gold. All three guys don’t actually make it to the place of transaction at the same time. Lets say Jon and James meet each other, with their goods(apples and an ounce of gold) in hand. But now, it turns out to that James wants apples(from Jon), but Jon isn’t actually interested in the ounce of gold James has.

Now this sounds like a trade exchange between Jon and James ain’t gonna happen, no?

Surprisingly, the exchange does happen with James exchanging an ounce of gold for apples from Jon. What possibly made Jon to accept the ounce of gold from James in exchange for the apples although he had no real personal use to satisfy with the ounce of gold? The answer is, although Jon does not value the ounce of gold for the personal use-value that it could provide him with, it does help him as a ‘marketable’ medium of exchange. Jon accepts an ounce of gold from James only because he believes that it can be exchanged with Jim for the oranges.

In short, gold is accepted as a common medium of exchange because it is easily marketable, or in other words, it can be exchanged readily for real goods and services. The principle is quite the same even in complex economies; people trade with a common media of exchange because it is easily marketable(that is everybody accepts it in exchange for real goods and services).

What is money?

We can, by now, actually figure out a few crucial points.

1) Money is just another commodity, but readily marketable than other commodities for certain reasons.

2) Money was a product of the free market, with people engaging in voluntary trading. There is no evidence of people accepting paper money as a valuable common medium of exchange which they could trade for real goods and services.

The bastardized history of paper currency

While this sounds to be a sound case for the evolution of commodity money(like gold, silver, sugar etc.), it does not satisfactorily answer the evolution of paper money. Rightly so, paper money has had a kind of bastardized birth history to it.

What made(or tricked) men of the past to accept paper pieces(of no real worth) as money?

The answer lies partially in the fact that paper money was introduced as a veiled representative of real commodity money. That is, paper money initially only served as a money instrument(representing money) backed by real commodity money(most often gold and silver).

The warehouses in which men deposited commodity money were the first to introduce paper money. Capitalizing on the trust that the depositors thrust on the money instruments of these warehouses, these warehouses started to create fake money instruments which were not backed by real commodity money. But the trust that the customers of the warehouses had on these warehouses prevented them from asking for redeeming their money instruments for the real commodity money that backed them. This made it easy for these warehouses(predecessors of banks) to expand credit, and increase the supply of money.

Imagining today’s paper money as the remnants of these warehouse receipts, which were not backed by real commodity money helps us deal with our initial question of the value of money; that is about how Spaulding actually managed to print numbers to green papers he printed. All that he could have done was printing warehouse receipts which bore claims to definite weights of the commodity money which supposedly backed the receipt. This is further confirmed by the fact that today’s monetary units like the dollars, francs, pounds etc. were units of weight measurement of commodities like gold and silver of the previous centuries.

Conclusion

Paper money can have a fixed face value only when looked at as a measure of unit weight of commodity money backing the paper money. and not if it were to denote it’s purchasing power.

The fixed face value of paper money can only represent claims to real commodity money backing it. But, whether, warehouses(or today’s banks) can actually in real redeem commodity money for today’s paper money is another question to explore.

Most Indians are unsatisfied with the state of things. They long for a radical change. Some of them are conceited enough to think that they can change things for good if they rise to positions of power. Though some are slightly aware of the inherent systemic problem, their understanding is not deep enough. They fail to realize the complex level of understanding of social sciences it takes to bring about a change.They step into action instead of trying to bring about a radical change in the mindset of people through intellectual means.Recently I came across the manifesto of such a political party, Jago . What makes this political party different is that it pays lip service to the free market economy. They vaguely understand the importance of a high level of economic freedom, but are unable to understand the inherent contradictions in their views. Let us analyze their political positions in some detail.

1. People would be granted individual freedom over and above a social minimum-which means: basic survival needs such as food, clothing, shelter, education, healthcare and security needs will be met by the Government.
   None of these basic services grow in the nature, or are absorbed from the atmosphere. They are produced by individuals. If some people are to be provided with these facilities, who is to produce them? What if people who produce them are not willing to share their produce? Will they be purged? Inflating the rights of man can’t be done without an outright infringement of their fundamental rights. Often people talk of the right to a free education or health care, for instance, without giving a moments thought to its cost. When some sane person opposes their Utopian dreams, he is casted off as a person who doesn’t care for the poor. It should be noted here that these services are demanded as people should have the freedom to pursue their self interest. Nothing is said of the self interest of their innocent victims. The fact that it is not in ones rational self interest to gain the unearned too, is evaded. So much for their belief that the free market economy is ethically superior. The “basic minimum” can’t be provided without mulcting the tax payer, and hampering capital accumulation. It is capital accumulation which makes high wages and a high living standard possible. The welfare state is totally incompatible with the free market economy. One can’t choose both. Both are mutually exclusive possibilities. They have made their choice. There is no other.

2. Soviet Russia made impressive initial progress.
   This is a distortion of facts. It concedes too much. The majority of people were starving themselves to death even in the initial phase. If even enemies of collectivism are duped by such propaganda, we can’t blame the communists for spreading them.

3. A Government is necessary for maintenance of law & order, enforcement of contracts, justice, defense, currency.
   All these services could be provided by the market, and in a much efficient manner. Apart from the inherent immorality of taxing people and monopolizing these sectors, it should be said that  Government is an  inefficient organization. As law, defense , police and currency are presently provided by the Government, most people have problems imagining how this could be done by the market. However our living standards shouldn’t be dragged down to the level of imagination of such retards. It is an elementary fact of economics that monopolies are bad for the consumer. It applies to defense , law and police too. Government control of money and credit , as we all know, had led to continuous debasement of money. Arbitrary credit expansion in not possible under a free, full reserve banking system based on Gold Standard.

4. Reservations would be replaced with free and mandatory school education.
   One interesting thing about most opponents of reservations is that they propose quality primary education as the solution. They are too dull to realize that free primary education is as, or more harmful than reservations. Both infringes personal freedom. There should be no such free gifts. Mandatory school education is abduction. Children of parents willing to homeschool their children, shouldn’t be dragged to Schools which are similar to prisons. Subsidization of education would only prevent most children from acquiring the education they would have acquired, if left alone.

5. There would be only one syllabus for all schools and only one all India level examination conducted by only one board at class 12.
   Potential dictators want to decide what is good for the society, and ram it down their throats. The education scene can’t be improved by forcing everyone into the same mold. There is great variation in the skills and interests of various children. A common syllabus decreed by the Government does injustice to all sorts of children. They should be free to pursue their interests. Only competition among various modes of education for Objective truth would improve the state of education.

6. All infiltrators coming from Bangladesh and other countries are to be identified & punished.
   No one with the slightest understanding of the concept of liberty would support this. Government doesn’t rightfully own all the land of a country, hence and shouldn’t have the right to have a say in these issues.

7. Capital punishment for major crimes.
   Capital punishment is barbaric. One can’t be absolutely certain that a person has committed a crime in many cases. So, it makes little sense to take their lives off. Moroever, history proves that such severe punishment doesn’t prevent the likelihood of crimes.

8. All voters will get Rs. 800/- per month
   No comment is necessary on such stupid schemes.

9. Low tax rate would mean better compliance, more revenue and less corruption.
   It seems this conclusion is based on the fallacious “Laffer curve”. 1) It is not at all evident why Government revenues should be maximised. 2) There is no guarantee that a reduction in the tax rate would increase the revenue. It depends on the scale of reduction and several other factors.

10. The function of the government would be to see that no deforestation takes place.
    As long as there is demand for wood, people will grow trees. It is a profitable business. If a particular owner stops producing them, there is an opportunity to make profits and others will. Every good that is in demand will be provided by the market. If no one produces wood, someone can easily make profits by producing it. There will always be people willing to wait for years if it is necessary. There is no shortage of people to engage in such activities. Who is more likely to preserve a land and grow trees-A bureaucrat who has no incentive to preserve a land, and has to exploit the land as much as possible during his time, or a private owner who has every incentive to preserve the land, and grow trees as his revenues from the land depends on the preservation of that land?
    People are more likely to preserve trees when it is profitable to do so. In Europe, where private ownership of forests is far more common (Unlike in the US) less people complain of destruction of timber resources.

11. Population growth should be controlled.
    Population doesn’t impede development. New York City is highly populated. But a lot of wealth is being generated there. Japan is thickly populated. It is a very rich country.Holland, Monaco, Britain and Liechtenstein are thickly populated.Europe is a thickly populated continent, next only to asia, whereas African countries are heavily underpopulated. Hong Kong has a higher density of population, yet it is much wealthier than India and China.  Most people point out the large population of India and China, for instance, as a cause of underdevelopment.That’s plain nonsense. It is the lack of economic freedom, not population which makes countries poor.

12. Ban on child-labor will be strictly enforced.
    Banning child labor would only throw some many children and poor families into poverty and starvation. Children join the labor force only when it is an economic necessity. A ban on child labor doesn’t change the fact that these children badly need those jobs. Such children , in the words of Ludwig Von Mises, would “infest the country as vagabonds, beggars, tramps, robbers and prostitutes.”

By now, it should be evident that the goals of Jago party has nothing to do with Individual freedom. Libertarians should think twice before supporting such inconsistent defenders of Individual freedom. It would only harm our cause of pure liberty.

Why Participation of Indian citizens in elections is reducing?

In a democracy if a majority of voting population ranging from several hundreds to several hundred millions (depending on level of election –Municipal, state, or national) vote against an existing policy, the policy will likely be changed, replaced or aborted. That does not mean that electorate controls government. As far as an individual citizen is concerned, he has no control over the democratic majority government. For example, in the government controlled retirement savings account and pension policies, if an individual wishes to use his earned savings to pay for the home he want to buy, he must wait until tens of millions of other citizens agrees to join with him to bring about a change in policy to make it possible. He would have to wait for very basic decisions to be made, if a set of parents in a village decide to have a school in their village where their children may get elementary education instead of going to another village 10 miles away, they may be forced to wait until whole majority voters of the city municipality under which the village comes, may decide to make an elementary school in that village. An Individual cannot decide to speculate and accumulate stocks of commodities to ascertain future profits, he cannot decide what prices he can demand from the consumers for his own products, he cannot decide to free a certain sector of production of varied levies and taxes (and subsidies) until he may not gain the approval of big chunk of voters.
If a set of intelligent voters want to restrict government monopoly over printing of fiat currency , they will have to wait until whole populace of the country realizes the basic flaw in fiat currency. An individual by his own cannot decide what wages he may give to a worker, he cannot decide whom he should consider poor or whom he should provide voluntary charity or benevolent help as all relief funds are controlled by the majority rule government and so on. Since an individual electorate have no significant control over government bribery, corruption and frauds are common illnesses of democracies.
As people are realizing the fact that government control under democracy means collectivization of power and hence is a violation of Individual liberty and freedom of choice, that majority government robs the citizens of their power of self-governance and self-responsibility, they voluntarily become uninterested in political elections as they know that their mere voting is in no way capable of bringing about any progressive change.

Destruction of Individual Causal Role in Democracy

Democracy destroys the causal role of an individual. Instead of being the cause of his own success, well-being, and development, he becomes dependent on the majority rule, as until the majority will not agree with him, he cannot act upon his decisions and choices. The destruction of Individual causal role in his life signifies the violation of Individual freedom.
Individual freedom and his right of self-governance are the basic requirement for a definite progressive and developed system of division of labour . Thus, democracy robs and reduces the power of an individual to be the cause of varied economic achievements, success or failure.

Incompatibility of Democracy with Division of Labour causing Poverty

Violation of individual freedom by democratic majorities is as evil as the violations of individual freedom imposed by a tyrant dictator.

Cure of the Problem

Since the fall of Soviet Union, India is gradually turning from collectivism towards principles of self-ownership, individualism and division of labour, and hence the standards of living is improving, of Indian society are also improving. As the Indian government is adopting disinvestment procedure and providing freedom for market and individuals, the proficiency of labour is increasing. The progress itself is a validating example of the fact that government interventions in market cause poverty, reduction in production and impoverishment of citizens while individual freedom, and property rights of means of production brings progress, prosperity and bettering living standards of citizens. Thus, the cure is definitely freedom of citizens establishing a free society in India, that is Limited government system, where the only purpose of government remains to safeguard individual freedom, property rights, restrict initiation of force and to provide justice, and peace by providing a democratic system controlling police and law bodies, strictly maintaining the principles of non-initiation of aggression, self-ownership and property rights, and all means of production including roads, railways, natural resources etc be privatized.
Private security and arbitrary third party justice system would further reduce the role of government only to provide security against external dangers in form of national defence, it would be further move towards anarchocapitalism establishing individual right of self governance and self-responsibility.
It is a basic fact that government monopoly in any form including limited government system represents partial slavery to some order and incurs poverty and destruction of wealth and means of production, for progress and betterment of citizens, freedom lovers advocates Anarchocapitalism rather than government limiting individual freedom.

In the case mentioned above, If I am a customer of Reliance Defense Company, and you are a customer of Tata Defense company, our dispute would first be set for arbitration in the court of the plaintiff (I)-which means: a court of, or patronized by Reliance Defense company. If the defendant (You) is found innocent, the matter has come to an end. If you are found guilty, then the arbitration would run in the Court of Tata Defense Company. If that court too finds you guilty, you would be punished. If it finds you innocent, the arbitration would move to an appeals court. The decision of the appeals court would be respected. If a person (defendant) refuses arbitration, the arbitration would be held in the court of the plaintiff, and the decision would be binding. So, a person who didn’t commit a crime will not refuse arbitration in normal cases. If he disagrees with the decision, he can take the case to his court, or a mutually consented appeals court. It is rational to assume that if the defendant and the plaintiff are customers of different Defense Companies, these Companies together might decide the court in which the arbitration would run. The courts would try to be as honest and objective as possible, as their profits depend on the number of cases they receive for arbitration. People won’t deal with dishonest Insurance companies, or their customers, as no sane person would want to be taken advantage of. So, a dishonest Insurance company would soon find it deserted by almost all its customers. An Insurance company which patronizes poor courts too would be soon deserted by its customers.

Wouldn’t Defense Companies battle?

Battles could be ruled out for two reasons.
1) Wars are costly and would result in high Insurance premiums. Most customers would desert Insurance Companies with high premiums.
2) People won’t deal with the customers of warring defense agencies as they would lose in any case. As of it, the customers of the warring agency would be forced to patronize another Insurance company, if they want to get into contracts with other people.
A court too should be honest if they want more cases handed over to them. What if a rich person bribes the court of Insurance company? If that is the case, most people won’t use those courts and Insurance companies. Nothing like that happens in the case of Government courts. People are forced to use them, even if they don’t trust them.

Fraud under Anarchy

Fraud would be kept at minimum as Defense Companies would lose their profits if they don’t. If a defense company engages in fraud, most of its customers would desert it, as people won’t deal with the customers of such a defense company, as they don’t have a legal recourse in case of crimes.

Poor under Anarchy

It is often argued that poor will be defenseless under Anarcho-Capitalism. However, the argument completely lacks sense-For several reasons.

1 ) It is very unlikely-nearly impossible that there would be extreme poverty as of now under anarchy.

2 ) Under the present system, a rich person can easily bribe a bureaucrat or a judge and get his things done as bureaucrats and judges are not risking their own funds. A private judge is risking his own funds and profits, and he would lose his income or profits if he isn’t honest or objective. It is very unlikely that bribery is going to work.

3 ) Customers would desert courts which have a poor reputation.

4 ) Insurance companies selling defense wouldn’t patronize corrupt courts as, if they do, their customers would patronize another Insurance company. Such a court would be soon out of business. Nothing like this happens under statism.

5 ) One might argue that public courts can work with proper regulation. It will inevitably founder upon these questions-Who regulates the regulators? What is the incentive? How does such a system make profit and loss calculations? Without profit-loss calculations, how does one know whether job is being performed well or not?

6 ) As Roderick Long has pointed out, “any court that got the reputation of discriminating in favor of millionaires against poor people would also presumably have the reputation of discriminating for billionaires against millionaires. So, the millionaires would not want to deal with it all of the time.”

7 ) Under anarchy, the media won’t have to spend most of its space on politics. They would divert more of their energy to exposing corrupt institutions and extraordinary achievements of men. People won’t deal with customers of dishonest defense companies, and these customers will be forced to move to another Defense company.

8 ) A rich person who commits a crime would suffer from boycott by his clients and customers when insurance companies reject him. Such a boycott affects the rich more than the poor.

9 ) Even if a poor person can’t afford to file a case, he can sell that claim, or part of that claim to a rich person. Such a system existed in Iceland. That would make sure that eventually, all sorts of criminals are punished. One can’t commit a crime against a poor person and go unpunished. If someone murders a poor person, the person who has homesteaded the estate of that poor person can file a case and get compensation.

Do Anarchists assume a change in human nature?

No change in human nature is assumed here. We, libertarians don’t take a rosy view of human nature. We see human nature rightly, and admit all its flaws. Three things have to be pointed out
1) If you believe human nature is flawed, you have to admit that the politicians and bureaucrats chosen by these flawed creatures too would be of that sort, and there would be no excuse for state action.
2) A change in human nature is not necessary for libertarian anarchy to work.
3) People with power lust are more likely to rise to the top under statism. The state attracts all kinds of rascals.

What libertarian anarchy does is that it leads to a system in which criminal acts are hard to perform. It also punishes those who resort to such acts in a just manner. Under the present system, a judge has no financial incentive to be honest and objective. He has only a moral incentive. Under anarchy, he would have both financial and moral incentive. Ask yourself which system will deal with criminals better.

Why Anarchy?

Almost every major problem mankind faces can be traced back to the state. The state drags innocent people into war. Involuntary unemployment results when a minimum wage law is passed and labor union coercion is sanctioned. Price controls result in shortages. Protectionism leads to poverty and wars. High prices and poor quality products result when Government monopolizes certain industries. Taxation prevents capital accumulation. Credit expansion leads to inflations and bubbles. Some estimates say that there were nearly 262 million deaths caused by the Government in the twentieth century. In the light of all this, I see no reason for a person who loves humanity to support the state. It should be obvious that in any sector, monopoly is bad. How do statists get around this fact? In any monopoly, there is an incentive problem. There is no incentive to provide better service at a low cost. It is not just that. There is no way to know whether the service is provided in the best possible manner in the absence of competition.

Isn’t voluntary taxation better?

Voluntary taxation is a contradiction in terms. Taxation implies that money is collected at the muzzle of a gun. How could it be voluntary? Lets forget the definitions for a moment. Voluntary taxation is defined by minarchists as, people are not coerced to pay their taxes. People are free to pay their taxes. But this sheer aspect doesn’t make the taxation voluntary. If an area milkman forces every other milkman to stop selling milk in your neighborhood, and then says ‘you are free to buy milk from him, by your own volition’, is that really voluntary, or are you forced to buy milk from him because he has eliminated all the possible options using force. Lets say you say ‘I want to raise my own cow and make my own milk’, to which the milkman forces you to do it. Although he is allowing you to pay him voluntarily, he is forcing you to seek anybody else’s services thereby making it involuntary taxation. The problem with minarchy isn’t just that state collects its revenues using coercion. State prevents anyone from competing with it.

Why do minarchists make an exception for defense, law and police? Some minarchists believe in the Non Aggression Principle. Why don’t they apply it to the case of Security? How monstrous is it to forcefully extort money from a person maintaining the pretense of protecting him? It could be argued that these are public goods and can’t be provided privately. But, this argument was refuted several times. In the past, most of the roads and lighthouses (Public goods theorists usually point out the case of light house. Ronald Coase has pointed out the fallacy. Light house owners charge people for using the harbor) were privately owned. By 1800 there were over 60 private road companies in the United States and by 1830 they had built over 400 private “turnpikes” (highways). Out of 46 Lighthouses in England in 1820, 34 were privately owned. There was privately produced law in the ancient Ireland and medieval Iceland, for instance. And several thinkers have envisioned how libertarian anarchy would work- and it sounds perfect.

Why do I want to impose anarchy on people against it?

Some argue if people don’t want Anarcho-Capitalism, imposing it over them would be violating their freedom. If you tell a thief to not rob from your house, will you be imposing your views on him? If someone takes your money by force, gives you stale food, forbidding you from buying food from anyone else, is that right or wrong? If you tell that person to not do it, will you be imposing your views on him? Will you be violating his freedom? That precisely is what Government does. It forcefully takes money, gives poor quality defense, and forbid us from buying the service from private organizations.

Is human nature consistent with anarchy?

State is a relatively new institution. Mankind has lived hundreds of thousands of years without a state. If so, is it true that human nature is not inclined to live under a state? How come we are living under a state then? Slavery and serfdom existed for a long time. Doesn’t that mean slavery is consonant with human nature? If so, how men got out of it? Obviously, when people realized the advantages of co-operation, people shifted to the present system. When people realize the advantages of anarchy, they would move into such a system. No change in human nature is required. Blaming human nature for being flawed doesn’t make any sense. People are mostly corrupt under the present system as people respond to incentives. Under statism, men have every incentive to be corrupt. To say that anarchy won’t work as human nature is flawed is tantamount to saying that capitalism won’t work as most people are poor. A person who makes such an argument fails to understand that it is precisely the lack of Capitalism which made the people poor.

Minarchy isn’t sustainable

There is no empirical or theoretical evidence to prove that a constitutionally limited government is sustainable. Government power has increased steadily in countries like United States and Britain. Tax experts like Irwin Schiff has pointed out that according to the law and constitution of United States, taxation is illegal. He is in jail now, and his book “Federal Mafia” is banned. That’s not an aberration, but the result of a limited Government. I admit that Anarcho-Capitalism was not the dominant form of social organization for the large part of human existence. But so wasn’t democracy or a limited Government. These are recent developments. The limited Government in United States broke down after 8 decades as of a civil war-But it took 1000 years for the near Anarcho-capitalistic system to break down in Celtic Ireland, and 290 years in Iceland. Who do minarchists support democracy and a limited Government then, when it is obvious that anarchy is far more workable?

How can one support Anarcho-Capitalism when it was never practiced anywhere?

It is true that pure Anarcho-Capitalism was never put into practice anywhere. However, that can’t be an argument against anarchy. A person who invents an electric bulb doesn’t have to prove that there were electric bulbs in the past. A new invention, innovation or theory is something which crushes all existing conceptions. It is unprecedented. I think this should be obvious and it makes no sense to argue against it.

Empirical Evidence for Anarcho Capitalism

Anarcho capitalism was not practiced in most parts of the world for most of the human history. However, there were societies which were really close to Anarcho-Capitalism. There was the law merchant in the past, as Bruce Benson has pointed out. Such a system has worked in Iceland, Celtic Ireland, American old west, British colonies in North America, Rhode Island, Albemarle, and Pennsylvania. There is a lot of historical evidence to prove that these societies worked really well and had sophisticated legal codes. Crime rates were strikingly low. In Celtic Ireland, it lasted for nearly thousand years. It was a civilized, advanced society as there was no Government administered justice. Even when these societies collapsed, it was not due to extreme anarchy, but due to contradictions in the anarchistic structure. Iceland is a classic example, where chieftains were granted more power, and religious issues led to a civil war.

Further Empirical Evidence: Present day Somalia

Somalian kid selling Khat

Egalitarianism against Causality

Causality is the very base of success or failure thus, in a free society; economic equality emerges as the outcome of different individuals performing different degrees of economic causation. Opposition and abolition of economic inequality thus, is obviously against all connections between an individual’s hard work and the result of his efforts, it is abolition of causality in incurring of income by the individual.
In a group of ten people determined to share equally all the income earned by them if one of the person works harder or innovates a way to increase total earning by X amount, his increase in personal earning will merely be 1-tenth of X. If the group consists of 100 people, his increase will be 1-hundreth of X, and if the group is as big as 1 billion, his total increase in earning will be 1 billionth of X. Obviously, it would be such an insignificant amount that he would never get any incentive of all his hard work. It is also to be noted that in such egalitarian society, no significant connection can exist between what an individual produce and what he or any other particular individual receives. That is, even though the total amount of group would be increased by X amount, the overall increase in each individual’s income would be insignificant. Thus, egalitarianism destroys ability of many individuals to achieve progress and development that are of any significance to anyone.

Egalitarianism against Progress

Any compulsion on an individual to improve his own family’s life only insofar as he improves the life and standard of everyone else in the society or country make all of the society or country impoverished. Egalitarianism would certainly provide incentives to not to do any work or improvement as after doing all hard work, an individual will get a meagre increase of 1 billionth in his personal income, if he won’t do any work, his meagre reduction in personal income would be 1 billionth, again an insignificant figure. Thus, increasing one’s production would not be of any significant benefit for anyone and decreasing the work would not be of any significant loss to anyone. Hence, everyone would have an incentive to do nothing.
Equality of income obviously is against freedom as it is “forced labour” because it eliminates the earning of increment in income as an incentive. If people are to work without the incentives of profits, the only way to make them work is using force. Other than income or profits, there are positive incentives for work, such as the enjoyment of the work itself. Yet, as a matter of fact, most of the jobs are such where the incentive of enjoyment of doing work is closely related with the incentive of income. No one makes bricks, sweeps streets, clears drainage system, makes shoes, mines coal or even work as a CEO of a company for the enjoyment of work without considering the significance of income. Even in artistic works like painting, singing or writing, the pleasure of doing work only would not be sufficient to induce amount and quality of work that can be induced in free-society providing income incentives for doing work.

Egalitarianism against Innovations and entrepreneurship

Free society or equal society, these women are always going to be there, its just in a free society they earn much more.

Egalitarianism resulting in Forced Economic Inequality

Often as the failure of bringing egalitarian ideal in practice, socialist regimes results in bringing forced economic inequalities within the society, which is obviously inimical to progress and economic production. Such inequalities results in because of governmental actions such as taxation, subsidies, licensing system, special privileges, quotas and reservations etc. Government’s establishment of such inequalities results in depriving the producers of a significant part of their incentives to work and produce, furthermore, actions like quotas, reservations and licensing system obviously violates the freedom of individuals to produce, hence reduces the production significantly bringing in poverty and chaos. Other governmental acts like corporate taxes etc. appropriates the income of producers and thereby decreases their capacity to invest in production and developments. Such arbitrary economic inequality produced thus deprives the producers of possibility to produce anything by means of monopolistic restrictions against their entry in various streams of production. On the other hand, by giving special privileges, licenses, quotas and reservations to others, government rewards non-producers or less-efficient producers. All of this results in economic chaos. Same things happen in feudalistic systems. The forced economic inequality based on government coercion results in economic destruction.

Free Economic Inequality versus Forced Economic Inequality

Economic inequality based on freedom of individuals to exploit their own intelligence and talent is significantly less visible than the economic inequality that results because of forced planning or government coercion. This is because of the fact that economic inequality based on economic freedom serves to raise the standard of living of all, As a result, in a free society, even the poorest individuals enjoys and consumes substantially increasing quantity of wealth. On the other hand, in feudalistic or socialist regimes, as the very basic power of production and development is reduced to significant degrees, the width of economic inequality becomes too much visible with the poorest suffering starvations and penury while the officials, bureaucrats and politicians enjoying material wealth.
Before 1991, when India accepted the path of liberalization, Indian society was suffering with extreme forced economic inequalities where the standard of living of common man was substantially low graded. With the induction of liberalization movement, not only the production and development of Indian society increased, but also the standard of living of common man also improved significantly. This exactly was the result of loosening the force economic inequality trends and letting the inequalities develop freely, which obviously are less visible.
In further freer societies such as United States, an economic inequality that is based on economic freedom and capitalism are further less visible. The fact is greater freedom results in greater prosperity of whole society and less extreme width of economic inequalities.

Division of Labour and Benefits of Talent

A division of labour system provides enough space and incentive for the individuals occupied in different sets of knowledge of specialization and sub-specializations to devote all their human intellect and efforts to not only use the current knowledge but also to discover, invent and innovate new ways and knowledge to increase production. Division of labour enables a society to use the benefits of geniuses to the maximum extent, while it provides maximum incentive for the genius to use his intellect in development, innovations and entrepreneurship. In a collectivist society, this is not possible, as the genius in such societies, along with other common individuals, must devote most of his time in attaining self-sufficiency first. In India, some decades ago and even at present, division of labour is not definitely present; most of the young students devote their time to achieve degrees from governmental education system in order to gain some or any sort of job in government or private service sector. Hardly anyone devotes his intellect and abilities to any set of specialization of knowledge based on his interest and abilities. Hardly anyone think of devoting his time in research works and furthering knowledge, hence, Indian society lacks innovators. That doesn’t mean that Indian society is or was incompetent of innovations and inventions in present or past, the lack of it only represents the partial slavery imposed by the collectivist system and socialist government under which, the genius amongst the collective is wasted upon. Even if some genius struggle such situation and still manages to radiate his intellect, he never gains the full essence of his own efforts and hence is lost due to the lack of incentives.

Division of labour increases the efficiency of learning process in connection with production by making education and communication and all activities concerned with transmission, storage and development of knowledge into specializations.

Division of labour and consistency with freedom

Private ownership of the means of wealth production is the fundamental pre-condition of the pursuit of self-interest. Division of labour essentially depends on private ownership of means of production, which is based on the nature of gains of free division of labour. The most important ones are the multiplication and transmission of knowledge and benefits of the talented. The rational idea of private property ownership comes out from the fact that individuals possess unique independent minds, which permits and necessitates them to have separate independent knowledge and to make independent judgements, decision, and act on them with his separate independent calibre. In a free society every individual gains from the fact that other people possess knowledge that he does not and an intelligence separate and often much greater than his own. To maintain maximum benefits, it is necessary that others be able to acquire and apply their knowledge in production on their own initiative with perfect decision making freedom, without having his approval, orders, permissions or license, as he would be certainly unable to give in any rational way as he necessary lacks the knowledge and intelligence that would be required to make such decisions. To act, work and produce, people must possess material means of actions and production, In order for them to act independently from one another, they must possess wealth independently from one another that is there must be private property, including private ownership of natural resources and other means of production. Private property rights are essential condition for proficient production, prosperity and more importantly individual freedom as it provides maximum space for efficient usage of resources in virtue of producing wealth hence eradicating poverty of masses.

Private property rights are essential condition for proficient production, prosperity and more importantly individual freedom as it provides maximum space for efficient usage of resources in virtue of producing wealth hence eradicating poverty of masses.

“So long as men desire to live together, no man may initiate — do you hear me? No man may start — the use of physical force against others.”

Freedom is based on Non-Initiation of Aggression axiom that no man or group of men may aggress against a person or the property of any person. A human body is the natural border of the individual thus; using the body of another without his or her consent is aggression against him and hence is impermissible. This definitely confirms the idea of property rights in one’s body, that is, each person is the owner of his body; he has the right to control his body, to decide whether or not he consumes alcohol or narcotics, use his body for prostitution, joins an army, becomes a farmer, decide to be a mother or to abort a child and so on. One should understand that wealth is not necessarily property possessing market value, for example, various legal rights and licenses provided by government, like liquor license, patents, stocks, bonds, copyrights etc, do possess market value and are property, but they are not wealth, rather they restricts the production of wealth. Similarly, in a society allowing human slavery, the number of slaves does indicate property, but slaves are not wealth. Such property, which is not wealth, indeed destroys the wealth; slavery in any form thus, destroys the wealth, as it provides no incentive for production.
Thus, human are property but they are not wealth; also, human labour is the most essential requirement for production of wealth. Hence, for unrestricted production of wealth and hence prosperity, it is a necessary condition that all individuals remain free owning themselves, because only than they will gain the full incentives of their expenditure of intellect and labour in the production of wealth and material prosperity.
The societies that do not consider man free enough to have complete property rights on his body restricts his freedom to use and decide for his body by means of partial slavery. Such societies do maintain that each person has some “limited rights” to his own body, yet not complete rights. Society or government acting as such society’s agent- has some right in a citizen’s body too, in other words, the government owns the citizen in some way and the citizen is partially a slave to the government. This partial slavery is implicit in government laws prohibiting individual freedoms like censors and bans, state prohibitions or illegalization and state actions like taxation, conscription, fines, interest rates and price control etc confirms the nature of partial slavery imposed by the government on common citizens.

As in India, individuals are partial slaves to the government and there are no specific property rights for the individuals.

It should be clear that freedom strictly means economic freedom along with political and religious freedom, because without economic freedom, freedom neither can be defined nor it can be explained.

The system of such society, where the man is free to govern himself cannot interfere in the life and realms of neither an individual’s life nor it can dictate the rule and terms for the possible mutual agreements and dealings. Such a system represents a free market society where each and every man is free to govern himself and is free to use all his potential and talent to live, work hard and earn and pursue his happiness.
It should be clear that freedom strictly means economic freedom along with political and religious freedom, because without economic freedom, freedom neither can be defined nor it can be explained. Thus, in a free society that provides sovereignty for every individual and a harmonious atmosphere for having mutually beneficial contracts, any individual or a group of individuals representing the government will not have any sort of interference in the economic sector, that is, the government will not interfere in education, agriculture, health-care, public services, industries and other productive activities, the government will not control the money supply and create the business cycles of booms and busts. Government would not enforce quotas and reservations, provide taxes and subsidies, rather it would be left free for the market ruled by the individuals and their mutually beneficial agreements because that is their right, right to govern themselves and decide for themselves freely.

Hijab in itself is not oppression, but the suppression of the right to wear a Hijab is.

Such a society would be free from the “irrational self-interest” as it would be thoroughly dependent on the rational sense of self-interest with complete freedom for all individuals to pursue their “rational self-interests” freely that is their won’t be any governmental interference in the market to provide special privileges, quotas, reservations based on religion, caste or sex, there won’t be any government subsidies, price supports, tariffs, licensing laws, exclusive government franchises, labor-union privileges, immigration quotas and the like.
Freedom is a natural right, as the responsibility to be self-dependent is natural. Self-dependence means one will not be demanding anything from anyone else or even the government, rather he would be working to earn for it and as he would earn it, it would be his right to enjoy his earning.

Licensing system, state governed education system, state governed currency system and state backed paper-currency, reservation and quota policies, health-care policies, subsidies, price-control, tariffs and like all comes as the physical force against the individual as all such acts are strictly the acts of fraud. In a free system, an individual would have complete security from such governmental frauds.
In the current system, the representatives of the majority decides for the individual, and individual remains a slave for the majority law, paying for it and obeying it, this is not freedom.
We, the children of our ancestors who fought for the independence considering the right to self-govern as every individual’s birthright, actually have forgotten the real sense of freedom that is why we consider ourselves free and accepts the current form of government to rule over us. We never got that right to rule ourselves to decide for our own hard-work and its consequences, rather our ruler and the system of ruling changed and we remained under the slavery of government, interfering in the market and our lives as it wished. We did get the right to choose our ruler to govern us as in form of democracy and political freedom, but we never got the right to govern ourselves, that is, we never got the freedom for which our ancestors were fighting.
It is the time for us to be responsible, to assert that we as individuals are capable of responsibility and freedom, of fidelity and endurance and courage, that we not only can distinguish good and evil but we can individually choose good from evil as it would necessarily be in our interest, that we strictly do not need government to rule us, to tell us what we are capable of and what we are not. It is the time for us to resist the control of government over the individual and call for the sovereignty of the individual and his inalienable natural right to govern himself to pursue his self-interest and happiness.

“Can we say just because she has a low IQ, anybody can decide for her and against her specific wish to have an abortion, which has the medical complications and problems for all times to come for her health? In my view it would have been a judicial rape.”

I do not think many would disagree with Tanu Bedi and I totally agree with her.
The medical reports says that the child would be healthy and delivery would be normal, while if aborted, Lakshmi may face medical complications. Also what would be her mental and emotional condition when she will face the death of her child despite of her wish to keep the child alive?
On the other hand, last year when a mother was demanding her right to abort her child on the basis of the medical reports that her child won’t be physically and mentally fit and it will be difficult for the child to survive more than two years after birth was forced to give birth to that child, and to keep looking for the pains and coming up death of her newly born child.
So in one case, when the government had authority to allow the woman to abort or not to abort the child, government forced her to give birth and exclaimed that abortion is immoral. While in this case, government is looking for a rescue in the arbitrary IQ rank and want Lakshmi to abort her child (the child is due in December) which was conceived because of a government employee raping her, In my view, that would be a judicial rape.
In my view, whether to give birth to a child or not, is entirely a mother’s decision and her responsibility. No moral, social, religious or government binding can restrict her right to have that choice and here, but the government lawyers want Lakshmi to abort the child on a newly found obligation - the restriction of IQ.

I was thinking about this the other day, about why is every major personality in Hollywood so leftist? Why is it that people who make a fortune on the Market just are so hypocritical and promote taking money from other people on the threat of violence? This was the conclusion I arrived upon that if you are a neutral individual in Hollywood there is no way you can turn out to be pro-Free Market.

Imagine if you are a rising Hollywood star. You made your first million. You rose from dire poverty/dire mediocrity, and you get a taste of wealth. You spend a lot of money, do things what you always thought you wanted to do. Maybe at this point you love the Market, or maybe not. Overall you just thank god for giving returns on all the (relative) poverty you faced over the years. Then you make millions more, and then millions more. Soon you are one of the most appreciated actors of Hollywood. You live in the limelight, and you never see anything bad.

You ponder over your life, and realize that you make all this money merely by showing up your face(or writing a story, or directing a simple movie) for a few hours on a screen. You don’t have to worry about doing anything wrong in your performance because it can always be covered up by a retake. You do good things or you do bad things you only get fame. If your sex tape gets leaked out, people don’t dump you and stop watching your movies rather they just come to your movie in an even greater numbers. You realize this and then you look at someone who is not that lucky to have happened to be born with that talent or that face. You do not consider that you could have actually worked this hard to achieve this success. The only thing which makes sense to you is that you are just too lucky than others. And this is how you see ever other hard working self-made billionaire entrepreneur. You believe that you must do something to help the unfortunate people out.

Hollywood people just happen to be the lucky people who have the face or the talent to provide us with that entertainment. Most of that earnings relies on the Govt-granted monopoly over information. Irrespective of what happens you will never find a leftist Hollywood star opposing MPAA or copyright, because they always know the effort involved behind making the movie. They just cannot ignore it.

Their whole world is basically made up of people who are the lucky people and those who are the unlucky people. Capitalism for them is just a system to reward the lucky people. They stand for all sorts of coercive redistribution of wealth and creation of big government laws not because they believe that some people have more wealth than others, rather some people have more luck than others. If a Hollywood star supports higher taxes, it is because he does not see the labor of wealth generation the entrepreneurs do. They just entertain people, so they believe businesses do not serve any utility to the people.

Similarly a lot of these things happen with the super rich billionaires, for example George Soros, Warren Buffett and Bill Gates. Bill Gates recently made a call for creation of a “Creative Capitalism” or “Compassionate Capitalism”, and it was a big blow to all the non-billionaire capitalists out there and it angered everyone considering he built his capital based on Capitalism. If now suddenly he wants creative capitalism or compassionate capitalism then he should start with making all Microsoft technologies open source.

The hollywood elites earn so much wealth that they now think they are just much more luckier than other people. It is true to a lot of extent, but then the problem is that they perceive every other hard working entrepreneur as much of a lucky individual as they are. There was one exception in Hollywood and that was Ronald Reagan who stood for lower taxes for rich people, because he himself never was super rich. He just was rich, before he could enjoy that super richdom he got enlisted in the US army and then he joined Politics.

Neerav Said:
You seem to be very strongly jaundiced against the government and India’s system of government controlled economy(finding it unethical to work for the government!!). So be it!
Me being a callow in the field of capitalistic economy or the open economy, can u please answer some of questions in order to enlighten me about “the only panacea to India’s problems-open market”? Please I insist!

It is called the ‘Free Market’, which means market operations without any interference from the government. That includes no regulations, no taxes, no subsidies, and no distortion of the market in any way or form.

1). Where were these business bazigars when over 100,000 farmers in India committed suicide in last one year?
(one cannot question IAS because they cannot decide whether to give a subsidy to farmers at all! they can only survey and ‘suggest’ how much to be given) and why did my philanthropic business friends exacerbated the wounds of these farmers by selling the agricultural products at such higher prices!
Even for dying these farmers had to use the pesticide the government is selling for free!
On the other hand there was a market crash on the Dalal street? The then finance minister had to jet to Mumbai to console the many businessmen who had just lost crores of ‘notional’ money. Since the fortune of a farmer has lesser zeroes, so their lives also became less important!

First of all I would want to point out that the reader has completely misunderstood my post about the uselessness of IAS officers. The reader thinks that IAS Officers are these Angels descended from heaven and they have been taught by the other Angels as their teachers in the IAS academy. These Indian Angel Services Officers perform social services, create hospitals for poor from their money, distribute clothes among poor people, and give anti-depression medicines to poor farmers to prevent them from committing suicide. Then the reader compares their benevolence with the lack of benevolence of businessmen in India. Even if the reader does know what IAS officers do he is comparing what IAS officers do not do with what the business man should have been doing according to him.

If 100,000 farmers died in India last year, how is it responsibility of the businessmen. What were the IAS officers doing? If its anybody’s responsibility other than the farmers themselves then its the responsibility of the IAS officers as they are the part of the government. Why didn’t the IAS officers spend millions of their Rupees to save these farmers? Clearly the reader expects the ‘business bazigars’ to spend that money from their pocket.

Anyways the reason why I did not really bother to answer the question is because of the questions being heavily loaded with rhetoric. What we need is private property rights on agricultural land. Farmers cannot easily sell their land to someone who could be better in producing wheat over a land of 10,000 acres. Just like we do not have a million cell phone companies in market, somehow we believe a million farms to produce food for so many people. All these rhetorics are raised by P Sainath and we have already responded to P Sainath here.

Famers die in Vidharbha

2) Wasn’t it the profit motive that actually RUNS the open economy was also the reason behind the cases like Bofors case or the cheap spare parts of MIG case(which killed many of our soldiers who unlike u and me go to war & try to keep us safe by working with the government)? If politicians were caught during the Tehelka case-who bribed them. THE OWNERS OF THE OPEN ECONOMY’!

Does free market create Mafia or the government creates Mafia?

Profit motive runs the free market. Government is not Free Market. Government tries to do things which are anti-free market like taking the monopoly on justice and defense system. When government has a monopoly over something, like providing defense to a large land mass like India, they will have the power to choose any private entrepreneur for supplying them with commodities, then the corruption is bound to happen. It is not the fault of the Bofors gun manufacturers that your politicians are corrupt. They are corrupt because you gave them all the power of monopoly. The Bofors salesman is still doing his honest job when he offers the politician a bribe.

If you really want the solution of corruption in defense sector I suggest privatization of defense sector.

3) Somebody blamed the IAS for the license raj. I agree with that person completely. But who is responsible for the Mafia raj?
let me answer this one!- it’s those business barons who want to control your open economy.

The government is responsible for Mafia Raj. IAS officers do not make decisions I understand that, but they are the enforcement arm of the Indian Government. His answer is clearly wrong because he doesn’t understand why Mafia exists. Mafia exists because there is a profit opportunity in the economy which was created by the government by banning the good people from making use of that profit opportunity.

Currently the good people of Reliance, Airtel and Tata are providing people with cell phone services, but if tomorrow the government bans cell phones from India, then that will give birth to a Mafia Raj in telecom industry. Since police with their weapons is chasing peaceful people who perform their business with peace, only the evil people with guns who could retaliate the police are left. Suddenly Chota Rajan will find it quite profitable to run the telecom companies, since people want telecom services, they will be willing to pay high amount of money to him, and these increased profits will allow the mafia people to bribe the politicians to safeguard them. The reason why we had Veerappan because the Sandlewood forest weren’t owned by any individual. Since police hunted down any individual who tried to do business in sandlewood, only the evil man with the gun was left to do the same. I hate to suggest you more articles but I spent a lot of time researching this one.

Prohibition Always kills more people than non-prohibition

4)What is wrong with United Nations that its surveys are saying that in the developed countries (i mean open economies like US and UK), the barrier is constantly increasing between the rich and the poor,that is, the rich (owners of the open economy) become richer and the poor become poorer.

Its a very misrepresented fact. Let me ask the reader this, if in one country almost everyone has a salary of Rs 1,000 per month and in another country 90% of the people have a salary of Rs 50,000 per month and 10% have a salary of Rs 10,00,000 per month, in which country people are better off? In the first country almost everybody has the same salary, there is no major difference between the rich and the poor, where as in the second country the rich is 20 times richer than the poor individual.

The truth is that the difference between the rich and the poor is as useless fact as the fact that in your school the class topper has 50 times more marks than the class loser. If in a class everybody got marks between 50-60%, is this classroom better than a class where the range is 5–95%? The fact is that some people work harder, and better than others. In the Capitalist economics the better workers keep on climbing up to managing more and more resources(unlike in an IAS exam where the more butts you kiss the more you progress), and they become more and more rich.

Take for example in America Warren Buffett manages billions of dollars worth of resources, there is no way an IAS exam could rightly identify his talent. There is no IAS officer who could do his job better than him. When you look at Warren Buffet you just see an investor, what we see is what he really is, he is a Capitalist planner who plans resources from his own money. He plans resources, his companies order glasses from one country, water from another country, mixes them and sells carbonated drinks all over the world.

If the reader want to be like Warren Buffet instead of some bureaucrat and if you really want to save some lives from those poor farmers who committed suicide then try to get into commodity futures. Help Poor farmers, speculate on grain Futures.

5) What is the motive behind the kidney scams and our poachers? isn’t it just profit?

Again, all the problems the reader is blaming on the profit motive are actually problems created by the government. The government has banned a market in organs. So only the evil people are left to serve such a huge demand. They serve it by performing these illegal activities. If he wants the kidney robberies to stop then allow free trading of human organs. Those who want to buy the organs will then legitimately buy it from the person who willingly want to sell it. Please read the Prohibition article I posted.

He is blaming the profit motive as if it is something really evil. Remember something if we do not have profit we will not be able to survive. This is the exact reason why none of the socialist countries seem to be diong any good. This is the reason why Soviet Union had such a massive scarcity of every commodity. Why don’t we all eat in gold utensils? Because the economic calculation tells us that Gold could be better used somewhere else than to a less economical(or profitable) use such as having dinner.

One of the strongest arguments used by the Intellectual Property(IP) supporters is that patents promote innovation, and the strong counterargument by the IP opponents is, that patents stifle innovation, and that once patents are removed we will have more innovation, considering the fees which will not be spent on securing patents and hiring patent attorneys. The reason why I used the term ‘strong’ and ‘strongest’ because both the sides acknowledge that there is some weight on the argument of the other side. The question is, overall do patents promote innovation or will removal of patents promote innovation? To analyze the arguments, we need to perform small though experiments.

Society with very strict IP Rights

Against Intellectual Monopoly - $27

To exaggerate the observation, we need to consider a radically different society. Lets presume a society(say on the planet Mars) where every intellectual property is tangible like real property. For example, if you discovered a specific way to cover your body with a cloth(say you made a Shirt) then the only way I can also wrap myself with a cloth in that way is by taking your permission, otherwise it will be stealing, because then you will not be able to wear shirt the same way. If I discover a new term say ‘liberty’ then anyone who wants to use that term, must take my permission(usually granted for a specific fee) or else you will devoid me from using that term and it will be just like the theft of real property.

In this society every time a couple gets married, in addition to gifting them various physical products like a coffee maker or a toaster, people gift licenses to various recipes, as making a recipe without the prior permission of its creator will be theft. To write a book on the various topics, the publisher has to clear every possible term for its license. If you want to use the term ‘liberty’ and its definition is ‘the condition in which an individual has a right to act according to his or her own will’, then either need to get license from the creator of the term liberty(which would be the current descendents of John Stuart Mill), or you need to coin your own term which should be different from ‘liberty’ but convey the same meaning, like ‘liberty22’ which defines as ‘the condition in which an individual has a right to act according to his will without infringing on the rights of less than 5 million people’. Now presuming that your lawyers are able to defend this term as different from ‘liberty’, it basically conveys the same intention to the readers as the term ‘liberty’.

You will realize that in this society, there are a million different food recipes, a million different languages, billions of terms and words in languages, millions of different clothing items. As you can see this society would have much more ‘innovation’ than our current society, after all we only have a few 100 recipes in any cuisine, only a few hundred thousand words in any language, and if someone coins a term, it is used for so many things.

The truth is, that we can all see that although this society will have a very wide variety of innovation, it will suffer from two things, first the poor people will be devoid of so many things, the poor people will not be able to build efficient houses, because they cannot buy the licenses, they cannot eat variety of dishes, the poor kids will have to arrange for a lot more money because the education will be so costly. Secondly, although this society will have a lot more ‘variety’, we can see that it will lack the advanced technologies. For example, there will be 200 different types of semiconductor devices, but instead of having a million devices created out of one semiconductor device(like transistors) we will have only a few hundred different types of electronic devices. We will have hundreds of different words for describing ‘gravity’, but very little number of people who actually understand advanced concepts because they are using their brain cells to store 100 different terms for gravity, rather than 100 advanced usages of gravitational force.

Society with no IP Rights

100 million Creative Commons photos on Flickr

Lets presume a society with no concepts of intellectual property, in fact there are no property rights at all as everything is intangible like information. If you have a loaf of bread then to give it to me all you need to do is show it to me, and I will close my eyes, wish it and I will get my own loaf of bread. If I like your lawn mower then all I have to do is close my eyes, wish it and I will be able to conjure it to me.

Its obvious that there will be a loss less starvation in this society, all we will have to do is conjure food for the poor people and they will be able to eat. If you need an computer or a television you just have to wish for it and you will get it. The only thing scarce in this society will be the time, that is you just have to do the work of choose what you wanna wish for and then you move on to enjoying that product.

What will happen to the innovation in this society? Its obvious that there is no incentive to do so many variety of things. There are no factories to mass produce a product, this means that the only job people do is either consuming the products, or invent new products out of their own need to do something different. The houses will all look the same, except for the rich people who would still wanna spend some money to have their houses look different(which will be immediately copied all over by poor people if they are given an access to their houses).Every product in the society will basically be the same except they will be personalized by each individual according to their own taste.

The development of technology in this society will be quite straightforward. There will be rarely two kinds of alternate technologies, for example if a cell phone is developed then all the other cell phones will be only personalized forms of this cell phone, until a stage is reached when personalization of personalization pass through hands of a geek who tweaks it to an iPhone, and so on. The biggest force behind the innovation in such a society will be a human need for variation. People want variations in their lives. Every technology in this society will be achieved through humans who voluntarily want to give their labor into developing something new, when they know they are not acquiring monopoly on the usage of that technology or property. An iPhone-like phone in this world may or may not be developed, we don’t know. But we do know that if it is developed no single company has to spend millions of dollars in developing it. The question ‘who will spend millions of dollars to develop a product without patents’ will never arise. There are no products in this world, there are no corporations producing these products, because they don’t really have to.

Vertical vs Horizontal Innovation

There is clearly some reduction of innovation and some increase in innovation in both a society with patents and without patents, but none of sides(the pro– and anti– IP people) seem to realize this. There are no clear definition of what kinds of innovations are promoted by patents and what kinds of innovations are not. So lets define these two innovations, Vertical Innovation, and Horizontal Innovation.

Vertical Innovation is when a new product is innovated based on merely a small amount of added new technology, for example adding the facility of watching videos on an MP3 player, or adding a new metal on an alloy best suited for making railway tracks which now reduces its ability to expand and contract in heat and in cold, or creating an AIDS vaccination by using the results, effects, and formulas of 10 different immunity vaccines.

Horizontal Innovation is when a new product is developed which provides same functionality as a previously existing product but it tries to achieve that in a different manner. For example a new motorcycle is developed which uses fluids load-balancing(just making it up) for more stability because a motorcycle is already developed and it is patented, or a new type of Fan is developed which is embedded in a box because the regular fan is already developed and patented.

Patents only promote Horizontal Innovation, and allow very slow vertical innovation, on the other hand a non-patent society promotes vertical innovation and allows very slow horizontal innovation. Is either of them better than the other? Well the truth is, although you could make an equally strong case for the need of horizontal innovation(or even a mixture of both by promoting a limited patent system), you cannot argue about the fact that a non-IP rights society allows its products to be reached by more and more people. If horizontal vs vertical innovation was the only point of debate then there is literally no reason to choose one over the other, but the truth is, we live in the world of scarcity. We have property rights in tangible things only because if I create a loaf of bread, only one person can consume it, so its necessary to exclude others from consuming that loaf and give its ownership to its creator, but if that loaf of bread could be copied and distributed among millions of people and thereby satisfying the hunger of all those men, then forcing exclusion of other individuals from consuming it is just inhumane.

Its true that if you put your labor into an idea then you should be allowed to consume the fruits of it, but the only reason why you put that much labor into that idea(or innovation or discovery) is because you were excluded from using someone else’s labor. Intellectual Property is a classic solution created by the problem itself, just like everything else in the world done by the government.