Minimum Support Prices and Inflation

Each party publishes a laundry list of big dreams it is trying to sell to the voters. Nevertheless, these manifestos are not just meaningless but also show the intellectual bankruptcy of our political parties.

Politicians are knowledge-proof. When it comes to basic principles of economics more so. I think it is less because of politicians lack intelligence but more so because the people themselves are not educated enough to understand basics of economics.

One of the good example is of minimum-support price for agricultural produce and inflation control. Both of them are contradictory but find a place side by side in BJP’s manifesto. A lot of people who have concern for farmer tend to support this “minimum support price” system which in reality helps absolutely no one including the farmer himself. This is not very hard to see. United States started giving minimum support prices to wheat during great depressions and as a results had to buy and burn few million tons of wheat while people on streets starved.

Prices is a good way through which market regulates itself. Suppliers tend to supply more at higher prices and less at lower prices. On the other hand, buyers tend to buy more at lower prices and less at higher prices. These two forces collide to reach an equilibrium. This equilibrium is extremely important simply because it ensures that resources flow to the institution who uses them most efficiently. Efficiency also means prosperity on the contrary inefficient use of resources means poverty. When government interferes with the prices determined by demand and supply it causes inefficiency and more of poverty, government than does more price controls to tackle these inefficiencies leading to more poverty.

The problem with minimum support price

When government decides to give minimum support price to an agricultural produce it means

1. If no one buys farmer’s produce at price > X government will buy it at price X.

In cases where no one is willing to buy this stuff at price X farmers rush to the government and government ends up buying large amount of food grains. Farmers might get a relatively good price here, but everyone else who depends on wheat is a real loser. This means bread bakery will not get any wheat unless it shells out X or more for the wheat. Which they will have to recover by increasing the prices of the bread. Once the prices of the wheat go up every poor person who eats bread either has to shell more money or eat less bread. This results into starvation and inflation. The market price of wheat is less than X also means that there are already very few buyers at price X and since government puts a floor on the price, the buyers even reduce further.

This can even be a disaster as it is already happening in India. For example North Indian plains grow ample of wheat. South India even though does not produce wheat consumes good amount of wheat. There is a strong incentive for the farmers in north to sell their wheat in south or any other place where it is expensive enough. Thus even though south does not produce wheat it continues to flow to the south simply because people in south are paying more.

If government decides to give a support price of X which is same or higher than what people in south are paying. Farmers in north India would simply sell all their wheat to government in north India. People in south India are then at the mercy of government to transport that wheat. In most cases government can not do so and it simply rots in the government godowns in India. Here is a real picture of a government godown.

This means that poor people in south India suffer even though there is enough wheat out there to feed them. The solution to the problem is not that government should transport that grains to South quickly. It wont, simply because there is 0 incentive for any one to do that. The solution is that simply stop buying grains for farmers in North and let them figure out where it is to be sold.

There are secondary effects of this as well. Wheat is also used in polymer industry. If the government sets a ceiling price it may also mean that the polymer industry too ends up buying wheat at higher price leading to lower output and losing an competitive edge in international market and as a results loses a potentially larger market for the future (and higher prices for farmers in future).

If the wheat is cheap it may happen that smart entrepreneur may setup a polymer factory to make use of this advantage. Evidence shows that in such cases the prices of the commodity see much higher levels than what it could have seen with government imposed price floor.

But is farmer helped?

But people would argue that the poor farmer is helped and will not commit suicide. (There are more people poorer than poorest of farmer but they do not commit suicide at higher rate, poverty to farming is probably special.)  The reality is opposite. Every penny that the farmer earns is taken away by others in the form of inflation. Of course government can subsidies everything to the poor farmer including food itself and put the financial burden on other tax payers. But it also means imposing a penalty on everyone who is not a farmer which also means a less competitive manufacturing sector, less competitive service sector lower profitability, lower salary for everyone else. Disgruntled businesses shut down or chose another country. It seems it is cheaper for Indian Refrigerator makers to ship all the raw material to Brazil, make parts there, assemble it in South Africa and sell it in India than manufacturing it in India itself.

The hard reality

Farmers in India have got insulated from the reality because of these government policies. But this is only temporary. For example India grows some of the very high water intensive crops such as rice. This is because of MSP as well as subsidized water supply. In the absence of MSP or water supply the farmers would have got forced to switch to a more water efficient crop or use water more efficiently. But it does not happen and out water tables go down at an alarming rate.

The land itself can be used for alternative uses. For example in Goa you can either run a paddy field or build a resort on it. Building a resort, a pub or even a holiday home is a very good alternative use of land in Goa. People in Sawantwadi do not have the luxury of thee alternative uses but Goans do simply because land in Goa is limited but Goa is a famous tourist destination. If government gives support price to agricultural produce, farmers might tend to keep their farm land into agriculture thus driving the land prices high and higher prices of flats, hotels and so on. Eventually, this additional cost would have to get recovered other services that Goans and tourists use daily.

All this trouble is created by actually wasting government money on inviting this trouble. I am pretty sure that for each additional 0.1% of goan land that gets NA (Non agricultural status) the prices of homes, hotels etc. go down by a little.

Unfortunately Goans are less likely to see. For a common man it is easier to blame a Delhite buying holiday homes in India and demanding some phony special status to the state where this sort of things would be banned. It is likely that in such case with unavailability of investment there will be actually less supply of homes than before with higher prices than now.

 

 

 

Vote Wisely

This is probably the first election where votes will be influenced not just by the parties, media and leaders but also by the behavior of the supporters of those leaders. In general I have a very high tolerance for abuse and nonsense on social media but even for me the proverbial shit has hit the roof and I have chosen to withdraw from all public discussions on politics.

Politics and religion are two things where everything has an opinion and a hard one at that. There is no agreement as to what kind of competence is required to talk on these matters and everyone continue to thumb in the tub. I have never stood for any election in my life neither I have ever tried to rally people for any cause what so ever. That is simply not my forte. I am more of a lone ranger. For politics I mostly rely on few smart political observers and Dr. Arun Shourie is one of them.

I think India is into deep trouble. Our troubles were not so visible purely because India managed to grow at a decent pace in last 20 years which created jobs and opportunities for many people if not all. Someone like me had a fair shot at pulling myself out of poverty purely through education. Unfortunately as the GDP growth goes down, the number of job opportunities decline. GDP as a measure of overall economic activity in the country tells us many things and affects almost all of us. Economist Atanu Dey has a short piece on GDP.

In last 10 years the Congress government not only wrecked the economy but also introduced several new phrases and cliches out of nowhere. The first was “inclusive growth” which itself suggested that growth is somehow not “inclusive” by default. I guess the Congress and it’s voodoo economists were probably suggesting that somehow the growth numbers were helping only few people. This assumption is mostly false. Prof. Bhagavati and Prof. Panagariya has punctured this assumption really well in their recent book. The 8% growth not just helped the rich but it also helped the OBCs and SC/STs as well.

Obviously, well off people will have better access to education and health and hence will grow faster than others but this is only natural. The Congress’ assumption that the growth is by default not inclusive is not just false but somehow tries to give a wrong impression to people that “pro-growth” policies will not help them and some kind of government intervention is required to help the poor. Congress government has used this argument to come up with one disaster after another in the form of MNREGS, Food Security, Right to Education and now have proposed Right to Health, Right to Housing and many more rights.

The uneducated masses buy into these kind of schemes because the overall understanding of how economics works is not so good among the masses. Even if we assume that the implementation of these schemes will be flawless, what people forget is that for any product and service that costs money to make/offer, someone has to foot the bill. As the government’s intervention goes higher and higher the government spending will have to go up. This will eventually come out of our pockets in the form of tax or inflation. In both these cases the people who are earning above tax limits will have less incentives to do business and make more money. This will further increase the people living off government’s dole. This is a spiral that will take us back into 70s poverty.

Congress’s party voodoo economics and overall propaganda about state of economy has given people a false sense about what are the possible solutions. Indian society is positively predisposed towards giving up their freedoms and letting government control everything to bring some kind of utopian society into existence. So far even horrible laws such as Right to Education have been passed without any opposition from any quarter of the society. Thinks are so bad that Supreme Court has to get itself involved into the matters related to nursery education in Delhi.

Instead of blaming the role that government has been playing in our lives people seem to blame the government’s ability to enforce this labyrinth of regulations. The corruption is perceived as the main evil. But this is not the case. The real cause of corruption is the the role that government plays in our lives. Government dictates how schools will function, how many students will be admitted, how much sq. foot should be the area per teacher and per student. When schools can not meet these standards they try to bribe their way out or try to cut corners. The schools and government officials are then termed as corrupt. But the real problem is that it is not government’s business to regulate education. What kind of conditions should student be in must be left to the parents and school management and schools should be allowed to make profits out of education. Interestingly all evidence worldwide has shown that the private schools funded by the parents are better at educating students on almost all parameters. Not just for rich students but this model has been very effective in educating poor children as well. James Tooley’s book “The Beautiful Tree” goes to great lengths in studying this phenomenon in India, China, Kenya and Bangladesh.

Unfortunately our society has meekly accepted that government must control education, energy, water, agriculture, sex and almost everything else. Where there are too many government controls only two people thrive. The people in government and those who can bribe them well. Everyone else suffers.

I think the key issue in upcoming election has to be growth. I do not understand the complexities of this metric but if the growth is not high enough to give employment to a well educated college graduate, it only means trouble.

I do not think any political party has outlined a clear agenda for achieving this high growth. We were told that BJP is pro-growth but the party had decided not to release it’s vision document. Narendra Modi too has not outlined any liberal pro-growth agenda in his speeches and instead stuck to empty rhetoric.

Aam Adami Party’s stand on all the issues is greatly confusing. People like Yogendra Yadav or Medha Patkar are not really pro-growth people. These people might be clean and well intentioned but not good for the country. There is no point in having a non-corrupt government that follows the same policies of current government. For example if Mr. Clean Kejriwal continues to enforce Right to Education Act on schools it will not help the education sector at all. His aides such as Manish Siodia made it clear that he will not allow profiteering by schools. When AAP takes such stand on most of the issues Kejriwal’s claim that he will work on simplifying ease of business etc. are pretty much meaningless.

Narendra Modi’s overall track record on this account seems a bit better than everyone else. I think the biggest achievement by Mr. Modi is that he has steered the public discourse away from emotional and idiotic issues such as secularism to more of a result oriented metrics. For example now no one cares if Congress party is Gandhiji’s party and if Sonia Gandhi is related to Gandhi or not. Somehow everyone talks about malnourishment in Gujarat and roads in Maharashtra. Even if we assume that most of Gujarat model is hype event than this is a healthy trend which is furthered fueled by media. Every chief minister is getting busy to get high rating from this agency or that.

If Modi comes to power the question will the party actually show the courage to implement the right policies such as scrapping welfare schemes, privatization of PSU, deregulating government and allowing FDI in most of the sectors including defense. I dont think the answer is clear YES but there is a hope. For which I feel people should vote.

The pain of developing for Windows Phones

I am a bit troubled to see the sad and pathetic decline of Windows brand. After using Macbook for a year there is no way I will revert back to Windows laptops any more except for Gaming.

I purchased a Windows laptop 6 months back. The Lenovo laptop came pre-installed with 27 crapware which quickly made the Windows 7 operating system unusable. After spending hours together trying to uninstall all the toolbars, some battery management software and what not, I gave up and installed Ubuntu on it. Surprisingly the Ubuntu was at least 3x faster on the same hardware. Windows was so painful that even that brand new laptop took around 8 minutes to boot up and become responsive.

Many people started requesting me to port one of my popular Android app to Windows. A lot of people in India who trusted brand Nokia ended up buying Windows phones. To help these people I thought I would buy a Nokia Lumia phone and start developing for it.

After the purchase I quickly realized this.

1. Development is not possible unless your have a Windows machine.

2. Not just any version of Windows but only Windows 8 is required.

3. Windows 8 but 64bit version. 32 bit version is not useful for development.

4. Then you need to download Visual Studio Express. You cant really use Eclipse or something else of your choice.

Not to mention I had to shell out a lot of money to buy a Windows Laptop with licensed version of Windows 8 and a trial version of Visual Studio. (If I am not wrong, there is a free version called Express also but probably is not really good enough for full fledged development).

My troubles had only began. Even if you buy all this you can not start development because you need to do something called “developer unlock” on the phone. Yes, you have paid for the phone but you cant use it the way you want. You need to pay $20 or something to register with Microsoft and then develop.

The Visual Studio was another pain. For example, It was not possible for me copy paste a folder structure in my “Solution” but if I drag drop it worked fine. I never managed to run the phone emulator on the machine. But it worked relatively painlessly on my device.

My Android App relied heavily on WebView and used jQuery Mobile. When I tried porting this for Windows, I finally banged my head on the monster that Microsoft created called “Internet Explorer”. My jQuery Mobile app that worked on Firefox, Chrome, Opera and every other browser would simply not work in IE and hence will not work on Windows Phone either. No error, nothing. There was no debugging of any kind possible for this problem. I am not sure the point for called IE a Internet Browser if it can not support any basic internet operation such as hyperlinks.

I persisted, and made numerous changes to get rid of jQuery Mobile and stick to rather 1990s HTML only and IE worked.

I packaged the app and tried installing it in Windows App store. It probably uses something called Silverlight which hangs my browser for few minutes. The App store forced me to upload screenshots in specific resolution only. For English (International) and English (US) I had to enter title description and screenshots separately.

I have submitted the App and will wait to see if that gets approved.

No one uses Windows Phones. Even in past people did not use Windows phones. It is beyond me why Microsoft would be so unwelcoming for developers who are spending so much to try to build an App.

Die Microsoft Die.

कुछ तो है तुझसे राबता

Even though I have some nasty things to say about Bollywood movies, actors, stories and acting department, Lyrics , Music and Singing seem to be three department where we Indians are second to none. (Yours truly has not experience or training in these subjects).

Here is a song from the otherwise pathetic movie Agent Vinod.  The third stanza which is sung by Arijit is especially good.

Another low for Parrikar’s government

Manohar Parrikar is looking more and more helpless these days. I am pretty sure all these compromises are going to cost him a big deal.

Parrikar said that no permissions were ever granted to Olacabs to run a taxi service in the state and that in future too  players from outside Goa would not be allowed to run such a business at the cost of local taxi operators, for whom this is the only source of livelihood.

This should be read as the tax mafia blackmailed Parrikar to introduce a monopoly of local tax operators and denied Goans and tourists an option for potentially cheaper and better service. By doing this sort of nonsense we can almost be sure that Goans will not see a service like Meru or Cool-cabs in near future. The solution apparently bring in some sort of “regulated prices”. As if we haven’t learned any lessons that fair regulation only leads to serious problems.

Impressive Marathi Movie

I am really impressed by the kind of Love stories marathi movie industry is coming up with. I have a thing for teenage romances any ways. Ketaki Mategaonkar is a true rose in dessert.

 

 

Wendy’s The Hindus

This news report says that Penguin has agreed to take the book back from publication and destroy all existing copies of the book “The Hindus: An alternative history” from India. The book is still available on Kindle at least in United States.

I have three things to say.

1. The Book is BAD

The book is surely very bad in quality but I will not assign motives to Wendy Doniger. She probably tried to make sense of Hindu texts based on the tools she had. She swallowed the common lies without questioning them and that is where her book actually sucked. For example she claims that BJP, RSS and VHP collectively represent “Hindu Right” and “Hindu Fundamentalists” who are trying to tell an alternate history of Hindus. She makes a sweeping remark that all these people have hatred for Muslims and other religions. Then she cites Golwalkar claiming him “intolerant”.  The she tells an incident about how someone threw an egg at her during a talk and related that person with Hindu right and hence RSS/BJP.

Is BJP telling an alternative history ?

Most of these claim are demonstrably false. Firstly, BJP RSS are not capable of telling any alternate history. Both BJP and RSS have never come up with any quality material on Indian history. Even during the height of Ram Mandir debate RSS was helpless and was helped by independent scholars such as Dr. Koenraad Elst or Sita Ram Goel to put up an argument.

Is BJP/RSS responsible for hatred towards other religions ?

It is undeniable truth that Hindus in general are suspicious of muslims and vice versa. The question is whether this is the doing to BJP and RSS. The reality is that ill will between both these religions goes back hundreds of years. It is not invented by RSS or BJP. On the contrary BJP and RSS have given Hindus a political voice and hence actually reduced the possibility of more serious conflicts in the form of street violence.

Take example of Goa. When RSS man Manohar Parrikar became CM for the first time, issue of Anjadiv Island started making news. This island once had temple of my Kuldevi Aryadurga which was destroyed by Portuguese Missionaries to build a Church. Navy was taking over the island then and VHP had planned some demonstrations. Mr. Parrikar successfully intervened and ensured that demonstrations do not happen. He used his credibility ensure that matters do not escalate. Similarly few months back Mr. Parrikar gave special status to Church run English medium schools. Either cases are good examples how both BJP instead of pushing hate politics is actually mitigating Hindu backlash and anger through legitimate means. For example if Congress party had taken the decision to give special status to Church runs schools it would have been seen as minority appeasement and people would have taken to streets, now it is being looked at as an inevitable political compromise.

Golwalkar’s We the nationhood.

Golwalkar’s book is cited by each an every leftist and anti-hindu scholar as example of how Golwalkar and by extension RSS views Muslims. The reality is opposite. Golwalkar wrote that book when he was young and long before any kind of association with RSS. AS hew grew up his opinions changed and he took the book back citing so before joining RSS. If you read his “Bunch of thoughts” you will realize that his opinions and outlook towards most of the issues is totally changed with time. We may even infer that his association with RSS brought this change over time.

Is BJP and RSS Fundamentalist ?

I think is the most open lie. Fundamentalists are those who stick to basics of the religions, insist that religion be interpreted in the literal form and forced onto people. BJP and RSS are exact opposite of this. Both these organizations have brought in several reforms in the Hindu society often finding themselves on the wrong end of religion. RSS’s work against caste discrimination is “reformative” and not “fundamentalists”. Both these organizations are not religious in nature at all with absolutely no roots into any kind of theology or religious supremacy.

Wendy Claims that Ashoka was the first person to teach tolerance to Hindus. Second was Akbar.

This is another lie that people like Amrtya Sen have been peddling. The reality was exact opposite. Ashoka was the first King in Indian history to have a “state religion” (Buddhism) and hence he had to be the first one to put down a framework to engage other religions. Before that no King ever forced any kind of religion onto anyone nor bothered to elevate any specific faith to the level of state religion. It was only during Ashoka’s time people realized that a state can give more power to a particular cult.

Other mistakes in the book.

Wendy often uses the word caste in very broad sense. She has not acknowledged the fact that caste is a fairly modern concept in Hinduism. She claims that elitist Brahmin used Sanskrit as their language where as women and other castes(!) used Prakrit. Thus Brahmins were the only ones to interpret things for others and since Sanskrit was the only window we have to our past, we are essentially looking at the past from the eyes of those elitist Brahmins.
Well, one could also argue that Sanskrit was the most convenient way people to pass on their ideas through oral tradition and hence whoever had ideas took the trouble of learning Sanskrit. She herself acknowledges this later in her books saying the opinions of Brahmins about various subjects varies very widely.

2. Freedom of Speech and Wendy’ Book.

I am sad that Penguin is taking the book back. This is not a good news for aspiring Indian authors on controversial subjects. I wish Penguin had refused to take the book back and instead had continues the fight in court but then sometimes it is not worth their money to put up such a fight.

But this is not a violation of “Free Speech” as various media divas are claiming. I would have termed it intolerance or violation of freedom of speech if people would have taken to streets, or used political pressure to ban the book against the wishes of the publisher. Here the publisher has willingly agreed to take the book back. Wendy is now free to publish it via someone or simply give way the book for free on internet. Her freedom of speech does not include the right to get published. A lot of authors such as Dr. Arun Shourie, Sita Ram Goel, Ram Swarup etc. resorted to starting their own publishing company because others would not publish their books owing to government pressure or the leftist bullying. If you are going to write about controversial subjects you have to be ready for such things.

Act of throwing an egg on Wendy was intolerance. Approaching Penguin to take the book back is a civilized approach. Media Bimbos can sulk as much as they want.

3. Right wing Argument examined

Rajiv Malhotra who was behind getting this book unpublished recently published “Indra’s net”. This book can be considered as a reply to Wendy, Darylmpal and others who have been writing about Hinduism. There was no need for him to go after this specific book in this fashion.

The right wing’s stand that we can not question Gandhiji, Sita or other real or mythical people is simply wrong. In many cases she was not as wrong as the right wing would claim. For example she claimed that Sita blamed Laxamana for having a thing for her. This is a true claim based on the available sources of Ramayana.

“Because of me you wish Rama to be completely destroyed, and only because of your cupidity for me you are not following up on Raghava. It is definite. [3-45-6b, 7a] [Aranya kanda]

The irony is that almost every claim that the plaintiff has made in court as “false propaganda” by Wendy is demonstrably true to my knowledge. See the list:
- Gandhiji use to sleep naked with young girls  : √
- Swamy Vivekananda asked people to eat beef √ ( In reality Vivekananda falsely claimed that people during Vedic period consumed beef)
- Queen Laxmibayi was loyal to British.  x  (There does not seem to be any evidence to this claim. But yes, had the British agreed to declare her adopted son legitimate, she could have possibly changed her mind. These are matters of power and we can not always look at them from spectacles of jingoism.)
- Hindus to do not follow any basic doctrine/book. √ This is both true and something we should be very proud of. I am not sure why the plaintiff are offended by this.
- Sita claims that Laxamana had a thing for her. √ [Proof above]

Wendy’s otherwise mediocre books will not get more publicity and support.

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