But imagine a hypothetical scenario where farmers in Vietnam are able to produce better qualitily rice and wheat, in higher quantities and export it to India at a price cheaper than the local suppliers can give at. If GOI moves to block this import then the local buyers are going to suffer due to higher prices. Furthermore the skills of local farmers won't grow, thanks to the absence of competition. This is certainly not good. A country should allow it's people to compete with other people in skills though it protects it's people from unfair trade conditions. In other words a country should distinguish between a fair compertition (of skills) and an unfair competition (of prices) while applying socialism. I am going to save the rest of my babble for Part3.
Sunday, August 23, 2009
Globalization Vs. Socialism - Part2
True, the first few instances of a state attempting to implement socialism ended up in disasters. Yeah I am talking about the erstwhile U.S.S.R and the "Rather Something republic of China". They both set off to implement the "dictatorship of the proletariat" but were only partially successful - they could only implement upto the "dictatorship" part! But elsewhere when implemented within the confines of a democratic system, with the state continuously tweaking it's socialist principles based on realities of the day, it did pay off. In India, the state owned railways system, subsidized for the poor, ran at loss for several decades, the loss compensated by tax money from people who could pay taxes. In general state owned public transportation system helped poor Indians a lot (by taxing rich Indians). Another good example would be the ban on exports of essential commodities, that the GOI enforces once in a while. This is about Govt. protecting poor people from unfair market dynamics. When the supply of essential commodities doesn't meet the combined demands of internal/external markets, there will be a tendency among suppliers to court external markets. This is when external markets are willing to pay a premium to get those commodities while poor locals can't compete with them. After all the essential commodities like rice and lentil weren't produced just by man-hours put in by farmers. They also used up some of nation's resources such as water and soil, all of which belong to the citizens. So it makes sense to give poor Indians the first chance to buy these essential commodities.
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2 comments:
Dinesh, I have much to disagree with you in this post.
"tweaking socialist principles based on realities of the day"? - Are you talking about free tv or free clothing distribution to the people?
Can you imagine how much order backlog is there for every train in India? You cannot book tickets on any train within a month during festival times like Diwali. People have to plan several months in advance to travel by train. Poor people cannot even afford the tickets. Bus tickets are cheaper than train tickets generally. Our railways use arcane systems that cannot support high frequency of trains between destinations. Even now there are only 3 or 4 trains daily between Chennai and Madurai. Atleast every hour there is a bus going between these destinations.
And what about the daily scheduled power cuts? Everyone there has a cell phone. But not steady supply of power. Why? Yeah socialism works!
On the export related blurb, I think your analysis is incomplete. Trade restriction is not the only way to protect native industry(including agri). Preventing competition is like arguing for the quota system. Govts. can give subsidies to weak industries rather than restricting foreign goods from entering the market. If the better breed of rice doesn't enter into Indian market, besides depriving the Indian consumer from accessing the best of the world, you are preventing the native industry to settle for mediocrity. It is a delicate balance to work with the foreign countries and exchange technology know-how and also products so we benefit long term by building our industry and also encourage foreign businesses to come forward to transfer the knowledge and profit by selling to our population.
They are laying extra rail lines and converting the existing ones to electric - including those between Chennai and Madurai - according to my uncle, who is the cheif controller of Southern Railways, Madurai division. The problem with people is that they tend to see the merits of socialism only when things start going wrong. Remember the sudden spike in world oil prices last summer? Within a span of a month it went from $2.5 all the way to $6 in New Jersey. If oil wasn't state owned in India, private transportation buses would have all hiked their prices accordingly. If there wasn't a state owned railways where the prices are stable, the poor (wo)man wouldn't have a transportation means. There the state owned oil came to help - petrol prices went up by a mere 4% compared to more than 50% here. Even if oil wasn't state owned railways would have come to help! Crystal clear?
Another example - Private transportation will use petrol based vehicles until the price of running them goes higher than the price of running an electric vehicle. Until then they will keep polluting the atmosphere, even if it takes another 100 years. But the govt. is already making railway lines electric. Combine that with the rapid establishment of numerous Nuclear power plants to which our Sriram Anna can give a testimony, you can see the obvious benefits in terms of reducing pollution. Govt. does this because they care about the environment and the people. Private transportation wouldn't because they care only about making money.
Now let me counter your argument, or rather frustration, about the state owned power sector. In a country like India where a small group of people is very rich and a large group is very poor, making power private will be a disaster. The rich can party all night with blaring sound systems, because they don't worry about how much electricity they consume, because they can pay any price for it. Automatically the price of electricity will go up due to this artificially increased demand. What happens to the poor farmer who needs electricity to water his plants? Party all night or the poor farmer's livelihood? Do you think the private electricity suppliers would care?
However when this rich-poor disparity becomes much smaller, I bet my backside that the Govt. will open up power sector to the private - this is what I meant by "tweaking socialist principles based on the realities of the day". This is exactly what govt. did with telephones - they just waited until the time was right - until the market became buyer dictated.
Simply speaking, when chips are down socialism will make a lot of sense. Believing that something as fickle and uncertain as the supply-demand ratio and competition will somehow make the lives of the mass better is naive. Capitalism works very well, only until it doesn't.
Regarding the export related analysis, you will have to read my article again, for I am arguing exactly what you are arguing for!
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