Hello,
I have the magic wand! (Part II)
written on 7.10.15
This is Part II of a
series of articles on the present state of our economy and related topics
I feel like laughing at
the innocence (or is it ignorance) of some of the so called experts, but end up
crying looking at the results of their action. The ruling elite often say they
don’t have the magic wand to solve this problem or that, be it inflation,
farmers’ suicide or insurgency. I guess I have the magic wand.
Bullish market Vs
Inflation
There has been a steady
decline in the industrial output in the past few months making our faces droop
reading the statistics. But did anyone notice that there has not been much of complaint
or noise about inflation during the same period? Inflation rate has come down
significantly, not as a result of some serious action taken by the government
to shield the people from high inflation, but due very much to the drop in
industrial output. I have been observing this phenomenon for the past few
decades, particularly since the introduction of LPG [Liberalization,
Privatization, Globalization,] regime in 1991. Whenever the market is
burgeoning the common man is crestfallen and when the market slumps the common
man has a sigh of relief.
The economy of numbers
has taught us to believe that when production goes up, prices will come down
and vice versa. Does the aforesaid fact contradict this dictum? The theory of
economy of numbers applies only to essential commodities and ‘can’t live
without goods’. Does it not mean we are producing non essential goods [should
we call them bads] and shoving them down the throat of consumers by overzealous
marketing – publicities, creation of artificial market – leading to inflation
shooting up when production goes up. In other words, we are producing and
feeding the market a lot of junks.
In 1991 when, the then
PM – Narasimha Rao – introduced the LPG, on seeing the banners announcing this
as ‘shackles broken’, I commented ‘With this all small scale industries in
India will be closed in 3 years, all medium scale industries will shut shop in
4 years and all large scale ones will call it quits in 5 years. Only MNCs will
survive and thrive and what will they be producing – Lipsticks and nail
polishes?’ Needless to say the prophecy has come true to the letter ‘e’. Indian
industry has died a silent death. Just a walk through any industrial estate way
back in 1993 – 94 within 2 years of introduction of LPG revealed this. Tens of
thousands of small industries have closed down, thousands of medium ones have
shut shops giving place to car show rooms/service centers and copying [Xerox
etc] shops [non productive activities] and hundreds of large ones have
transferred hands to MNCs.
What are the MNCs
producing? Hundreds of varieties and brands of soaps, deodorants, hair dyes,
mascara etc. etc. Do we really need a few hundred varieties/brands of soaps to
choose from? Is there a market for all these brands? At the best, there will be
only shifting of loyalties in a constant/frozen market. In the mad rush to sell
their brand of cosmetics the manufacturers go for over kill and try to brain
wash the consumers adding to the cost even more. Typical example is a tooth
paste brand claiming there is salt in it. Do we really need to add salt in
tooth paste after consuming so much of it with food. One brand claims their
soap contains 24 additives/ingredients while another says their soap contains
pure soap. The effort to create brand image – for not only cosmetics, but for
every consumer product – inflates the prices artificially.
Not just making profit,
maximizing profit is the tharaka mantra of market economics. You should sell
your products at their inherent value. By advertising and packaging you try to
enhance its apparent value and push the product down the throat of the consumer
by creating artificial demand. This decease of advertising has reached such a
crescendo now that we are wasting a substantial portion of every day
hearing/viewing the same advts repeating a thousand times ad-nauseam in the TVs.
Does this enhance its value in any way? And who will ultimately pay for all the
publicities? The consumer off course! This is inflation of prices unduly. Apart
from inflation the bombardment by the advertisers leads to people going crazy –
neurotic.
What about cell phones?
The radiation from cell phones rendering them virtually a microwave oven,
baking not only the tissues of the users but those of the non users, animals
and even plants the world over – several fold more dangerously than passive
smoking – is threatening to usher in a catastrophe – millions dyeing of cancers
in the near future and annihilation of humanity, animal species and plants not
too far in the future – is one thing. Even the very idea of the cell phone as a
portable phone has been overrun by the additional features running to almost as
many as the number of phones in use. I bought a simple cell in 2003. It is
working still – in 2015. But the advertisements woo us to buy a new cell every
year if not every few months. The higher cost due to features other than what a
cell is meant for and the huge quantity of sale/replacement pushes prices up
enormously. Same is the case with cars and two wheelers, TVs, pizzas, colas and
what not.
Gandhiji prescribed ‘Do
not try to meet your wants. The target will keep on receding. Reduce your
wants. Learn to live with less. That is the tharaka mantra for happiness’. Yes
that is the tharaka mantra for inflation too. We should restrict/ban the
production of unwanted goods [bads] and regulate the production of essential
goods. Restrict advertisements and other forms of publicities. Regulate TV
channels. You definitely don’t need a thousand channels running 24 x 7. Just a handful,
say 2 or 3 national channels, 2 or 3 local ones and may be 2 or 3 international
ones will be the healthy limit. Do not allow advertisements for more than say 5
mins in an hour. Do not allow repeat of an advt for a specific product or a
trailer for a program within an hour and strict no to false/bogus claims etc –
plots claimed to be located at 5 minutes distance, actually are 15 kms away,
even helicopter cannot reach in 5 mins – are the step in the right direction.
The greed inherent in
the system, call it ‘market economics’ if you don’t like the old world term
‘capitalism’, leads to all the above problems resulting in inflation. Our
forefathers envisaged building a republic on the lines of socialistic
economics. ‘To wipe out every tear from every eye’ was the guiding principle of
Nehruvian economics – now infamous ‘Democratic Socialism’. ‘Wider distribution
of wealth’ was the route and they succeeded to a substantial extent till around
the early eighties. But the neo economists have ruined all that with their myopic
vision. Market economy breads greed, fans greed and piles up wealth in the
hands of few at the cost of others. ‘Socialism has failed in Russia and China’
is the excuse given by the neo economists. It is the manner in which socialism
was tried in these countries that has failed. Not socialism per se. In fact
even that has not failed but only their leaders like Gorbachev, getting lured
by the US, betrayed the people by abdicating their duty to safeguard the
interest of their people. It is no different in India. PVN and MMS have done a
Gorbachev here. After getting elected on the then policies of the Congress in
1991, they betrayed the people of India and jumped on to Capitalism in the name
of reforms. They had no mandate to change the basic economic policy established
over the previous 44 years or about 70 years actually. They were promptly shown
the doors at the earliest opportunity by the electorate in 1996. In fact
Manmohanomics was voted out not once but twice. In 2004 elections also the BJP
– NDA was routed for the same reason as Yashwanth Sinha’s Sinhanomics and
Jaswanth Singh’s Singanomics were no different from Manmohanomics. But the
UPA/Congress hijacked the verdict by anointing the author of the suicide of
over 400,000 farmers, closure of thousands of Indian industries, sacking of
millions of employees and workers, and the stagflation [staggering inflation]
to the post of Prime Minister. Public sector was sick – the main problem was
the loot and interference by politicians. But instead of curing the patient of
the decease, they have tried to kill it. It is another story that they are not
yet dead as the foundation laid by Nehru, for ‘The temples of modern India’ are
so strong that the tremors have not been able to shake them up.
As for the FDI they do
not come to India to lift the people of India out of poverty line, create job
opportunities, develop infrastructure or create wealth for us, (in short,
redeem India) but to siphon away our wealth to their homes. India is not
lacking in capital. Instead of mobilizing the capital available locally (which
was the case until 1991), trying to attract the FDI is like locking our money
in the locker and borrowing from multans at debt trap rates of interest. In the
pre reforms days, people were encouraged to spend only on essentials and save
the surplus in banks, which was then invested in building infrastructure and in
setting up industries etc. Now they are being wooed to buy all sorts of gadgets
– essential or otherwise – borrowing money from foreign banks. Even for laying
road and maintain (which is one of the basic functions of any government) we
have to pay user charges now in addition to all the taxes and duties paid. Even
water which was available for free at public fountains at railway stations and
bus stands have vanished and we have to pay for the E coli water filled in
sachets and bottles. They mine our water, add pesticides and E coli and sell it
back to us at exorbitant rates.
24 years of LPG regime
has undone all that were done in the 44 years of independence prior to that.
The ‘Haves’ have become ‘have mores and have every things’ and the ‘have nots’
have become ‘have nothings’ and one more species has been added to the list of
endangered – the ‘farmer’.
The farmer toiling in
the field does not even get back the cost of cultivating the crop. Procurement
items like paddy, wheat and sugarcane are procured at an MSP much lesser than
the cost of cultivating and the other crops such as vegetables/ perishables are
procured by private vendors at a price often less than the cost of even
plucking the fruit. We will deal with this in more detail in a separate
article. But what we find here is that the poor farmer is subsidizing the non
farming public to the tune of some 80% of the value of the farm produce. This
explains the suicide by farmers. And the numbers – more than 400,000 farmers
have committed suicide since the introduction of LPG. It is genocide and not
just suicide.
‘Hail
Manmohanomics’!!!!!!!!!!!!!!!!!!!!.
On the part of the
common man/consumers, what can we do? Take a vow not to buy any product being
advertised too much. Buy only essentials, say one simple cell phone and retain
it for its life time. For a camera or computer or any other requirement, use
the specific gadget and not cell phone. Use minimum cosmetics. Let us look
natural. No branded cloth, goggles, shoes etc. I leave the rest to your own
imagination.
The story goes on (This
is not the end).
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