Das Kapitalism

In a recent article on Capitalim and Socialism titled Transition From Armchair Idealism, Siddharth thrashes down America and of course offers oodles of praises on socialism. This posting actually went onto become the most read article with 28 comments, the highest I have seen. I wrote a comment too and later, especially after reading the rest of the comments, decided to write a piece myself. There were two ideas presented in that piece, America is bad and socialism is good. I'll write about America a little later. Now about socialism versus capitalism.

Here I go.

Myth: The free market capitalism is evil and here rich get richer and poor get poorer.
Me: Capitalism is not all milk and honey. But what is the alternate we have? Socialism? Communism? Me choosing the free-market economy is very much like people in Tamilnadu voting for the better of the two evils. While saying this, I don't claim capitalism to be so evil. This is the best and most natural economic system we can think of. The derivatives such as blended-economy and welfare-driven capitalism are trash and meant only for politicians. Communism is evil and primitive. The result is evident with USSR and the Berlin wall collapse. And some of the horrendous stories we read from there.

Myth: The left in India are actually bringing a social balance and check to the society.
Me: As elsewhere, Communism is one of the dangerous things happened to India, next only to J&K terrorism. In our own backyard, West Bengal, the most intelligent society in India is in a pathetic state economically. Bengal would have continued to be a guiding light to rest of India had it not embraced communism. I still can't believe that in a state where Tagore, Mohan Roy, Vivekananda and Ray and countless other geniuses lived, the per-capita income is half of the rest of India (leave Bihar out). And today, you'll see more malayalees in Dubai than you do in Cochin. Communism has actually succeeded in driving out hoards of people from their own state to other 'promised lands'. People shudder at the thought of setting up their business units in Bengal and Kerala. We all joke about malayalees running tea-shops everywhere and there's even a joke about Neil Armstrong, upon landing the moon, finding a tea shop there. But the reality is not all that funny. I have travelled to Kerala and seen the situation myself. If this the balance that the left are bringing in, well, I prefer to remain unbalanced.

Myth: Thanks to the Left that the petrol price is under control and various other pro-rich schemes being taking off.
Me: Yeah, thanks to them that the petrol price is under control. And PF interest rate is being kept in check. And various public sectors are not being disinvested.

Well, what is the result? The world petrol prices have gone up, and we are still selling the petrol in controlled rates. Which means the government is actually 'paying' more money from its exchequer. So whose money is it anyway? The taxpayers. Please remember that you and I are actually paying the additional 'hike' money but didn't know it. Not just the salaried knowledge(!) workers. Every individual who buys vegetables to soaps to TV.

The government pays 9.5% interest on PF. They want to reduce it and they can't because left would object. And today anyone with elementary economics knowledge will know that if someone were to earn 9.5% interest, the lending should be on more than 9.5%. In today's dwindling interest rates, the government certainly can't lend money for more than 9.5%. So how do they pay you 9.5%? The government subsidises your interest! Where does that money come from? Your tax of course. interestingly, the Left actually wants to hike the PF percentage to 12!

And the PSUs that are prevented from being disinvested are also being run on your money because most of them run under loss for years and for even those making profits, the profit margins are far less than they actually should be.

The result! The money set aside for developmental and infra-structure projects are being routed for subsidising these things. Recently I read that the BP and IOC, the petroleum giants are pulling out their oil exploration initiatives because they don't have funds for R&D anymore. Their cash reserves are being re-routed to make up for the loss due to world oil price hike.

So that's the result of heeding to left. Our own Fortune 100 companies lose their cash reserves. The growth and self-sustenance plans of these companies are put on hold resulting in long-term loss. And very soon our tax money will go in subsidising them so that they can subsidise our petrol! Your and my money which is supposed to be used for better infra-structure is being ciphoned off so that you can appreciate the left next time you go to a petrol bunk. Did any one ask why your fringe-benefit tax went away? Did anyone ask why the inflation went up post UPA government? Did anyone ask why no money has been allocated for half of the infrastructure projects announced in the budget?

You have the answer.