SWADESHI – self-sufficiency/protectionist policy – will it lead to prosperity and happiness?

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SWADESHI – self-sufficiency/protectionist policy

– will it lead to prosperity and happiness?

by Maj P. Tuhinikar Choudary (Retd) (Mob: +91 98480 47477)

Chairman – Institute for Democratic & Economic Affairz (IDEAz)

www.ideaz4india.com

Summary:

Swadeshi is a concept that calls for Protectionism and leads to making do with less and with lesser quality. Whilst trading what you make best for what others make best allows for better products and also saves your TIME to do what else you desire to do after doing what you need to do that leads to happiness. It is trade and specialization that people have always preferred and that is what has led to the development of civilization. However in today’s Global markets, level playing fields must be ensured.

Quotations for consideration:

  • “This division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which forces and intends that general opulence to which it gives occasion. It is a necessary, though very slow and gradual, consequence of a certain propensity in human nature which has in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.” – Adam Smith.
  • “Open markets are the only realistic hope of pulling billions of people in developing countries out of abject poverty, while sustaining prosperity in the industrialized world.”- Kofi Annan
  • “No foreign policy tool is more cost effective than an intelligently negotiated trade agreement” – Ian Bremmer
  • “On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?” –Matt Ridley.
  • “Happiness arises from being able to meet one’s needs at a desired level and still have TIME to chose other activities to undertake.”- Matt Ridley

Key concepts:

  • Proper understanding leads to right action, resulting in Health, Prosperity and Happiness.
  • No person or community or country has all the time, resources and skills to make each thing they need for themselves, better than can be done by anyone else. Therefore to enjoy the best of what is available it is necessary to trade what one makes best in exchange for what others make best.
  • Even unilateral openness to Trade is better than Protectionism.
  • The true measure of prosperity is the TIME you have saved and which is now available to you, to do what you desire to do after doing what you need to do.

…to enjoy the best of what is available it is necessary to trade what one makes best in exchange for what others make best.

 

 

Key Metrics:

Understanding: THE WORLD THEN and NOW

World Population:

About 10, 000 years ago                – less than 10 Million

About 1800                                         – about 1.0 Billion

Today                                                    – about 7.2 Billion

By about 2050 – Projected to be stable at about 9.0 Billion

India Population:

About 1900                         – about 200 Million

Today                                    – about 1.30 Billion

Per Capita GDP (in 1990 US $)

World:

For most of the last 2000 years  – US$ 300/-

By about 1800 AD                             – US$ 600/-

Today                                                    – over US$ 6000/-

India:

Upto about 1800 with 25% of world GDP –            say about US$ 750/-

Today with 5.5% of world GDP   –                              about US$ 1527/-

Swadeshi in Trade Polices is a call for Protectionism. A declaration of inability to innovate and face competition.  A call arising out of the mistaken belief that life was great in the past when it is thought that every village was self-sufficient and people lived in perfect harmony with Nature and with their neighbours. A lack of understanding that, as you will never have enough time or resources or skills to make everything you need for yourself, even if you are prepared to make do with less than the best, you will be compelled to choose what to do without and live a life lacking in most of what are today seen as necessities.

To believe that living in such constrained circumstances is the road to happiness is wrong. To keep pointing out that the ‘Father’ of our Nation, Mahatma Gandhi, lived such a life and to quote him endlessly on the prosperity to be attained out of the self sufficiency of a village is also wrong. All that Gandhiji really pressed for was for the power of local decision making to be given to the Gram Sabha.

  1. D. Birlawas supposed to have said that ‘to keep Mahatma Gandhiliving his seemingly simple life cost tens of thousands of unseen rupees!’ Clearly the Mahatma lived an austere life, but it was others who spent the time and money to allow him to live like that and accord him the Time to lead the Country to freedom. The Mahatma was a great soul with such compassion and understanding that brought the Nation together to follow him – but his view of economics was more idealistic than realistic.

The obvious corollary to such a belief in self sufficiency is that though exports are deemed good, imports are deemed bad. Though how one expects to have one, without the other, is difficult to understand. For if the Country you seek to export to, cannot sell to you what it makes, then obviously they will not have your currency to use to buy from you what you seek to sell to them. So a NO imports regime is effectively a NO exports regime too.

So a NO imports regime is effectively a NO exports regime too.

In fact, such beliefs in self sufficiency are very fallacious and all positions derived there from are erroneous. What is self sufficiency and how small is the unit of measure? Is it a Country, a State, a District, a Tehsil, a Village, a family or only an individual? Are we to meet all our needs only with what we each can make or grow for ourselves? Is such an option really geared to best meet our needs with the best of choices? Comparison between the North and South Koreas, or the erstwhile East and West Germanys or the other erstwhile Communist Bloc Countries with other market economy countries, clearly show the advantages of an open market based economy. We need to think global; trade what we do best for what others across the world do best, so that we can all get the best of the possible.

An understanding of history and a grasp of how it would have been in pre history tells us that trade and specialization were evident and effective even in ‘Stone Age’ times and even earlier and ofcourse even more so in the years from then to now.

“If prosperity is exchange and specialization – more like the multiplication of labour than the division of labour – then when and how did that habit begin.” – Matt Ridley.

As Matt Ridley writes in ‘The Rational Optimist’ – The 5000 year old ‘Iceman’ ‘Otzi’, found in the Italian Alps some years ago was wearing clothing and was equipped with weapons and tools which very obviously could not all have been made by him, as the raw materials for many of them came from disparate sources long distances away from each other. Actually evidence of long distance trading of the right type of stone for weapons and knives, of shells, of red ochre and other pigments for decoration and body painting, was wide spread even from tens of thousands of years before the time of the ‘Iceman’.

Today we note that – There is no known human tribe, however isolated, that does not trade.

There is no known human tribe, however isolated, that does not trade.

It is curious that in all the apes it is the females who go out from their own group into other groups for mating (in monkeys it is the male who leaves). Thus it is the females who retain more trusting relationships with their erstwhile groups and thus are more inclined to make the first overtures to others. Trust starts with relatives and only then gets extended to strangers. Hence in many cultures it was the women who traded, who were taught to calculate and account from an early age. Men were more involved in raids, wars, explorations or long trade journeys. It is so in many cultures even today (Indonesia, Philippines, Malaysia and many others).

Trust starts with relatives and only then gets extended to strangers.

We today, tend to take the benefits of specialization for granted. Consider if we were required to make for ourselves even what we today see as simple everyday things, (sewing needles, nails, safety razors, injections syringes, window glass and so on, let alone more complicated and technologically advanced products). Could we even dream of matching the standards and specifications set by the manufacturers of such products who specialize in making them and offering them to trade?

It is through Trade and, the specialization that it encourages, that civilization developed. Ancient India became prosperous only through trade with the Greeks, the Romans, the Middle eastern countries, the South-east Asian countries and even with China amongst others. Even the recent past, from just before the Industrial Age till today, clearly demonstrates the benefits of Trade and specialization and also the benefits of encouraging immigration of Talent. The larger and more diverse the trading community, the greater the benefits and prosperity that trade brings. Today global reach encourages us to trade globally and encourage immigration of skilled and talented people from across the globe.

The larger and more diverse the trading community, the greater the benefits and prosperity.

It is the cumulative accretion of knowledge and skills by specialist producers that allows each of us to consume more and more different things by each producing fewer and fewer, ever newer and better things to exchange for the other things we desire.

Ofcourse to cater against risk of monoculture and the collapse of what you are dependent on others for; it is also necessary to encourage some local niche production even of items or crops that you could otherwise better source elsewhere. Such local production capacity allows for access to greater variety of items and also to the capacity to be scaled up as necessary to better sustain themselves during times of severe break down in the usual sources of supply. Therefore spread the risk, keep some niche sources of supply domestic and other wide spread across the region or even the globe. But such local production, even of items better produced / sourced from elsewhere, cannot be made a substitute for all imports without the loss of the advantages of specialization and Trade.

To jump to the conclusion that allowing the import of goods will automatically destroy the local industry is also wrong. Actually the reality is that if others can produce goods at so much lesser cost that even with the additional transportation costs etc, they are cheaper than the locally produced goods, speaks poorly of our producers. These few incompetent producers seek to be allowed to protect their profits by compelling the consumers to pay more for their goods, by calling for protectionism and thus denying the consumer access to cheaper, and perhaps even better quality goods. The amount that the many more consumers would each save on their purchases, if they were allowed to get their goods from whom ever supplied them at the lowest cost, if totalled would far outweigh the loss to the few producers unable to complete. Such incompetent producers would have to either measure up or quit or take up producing other goods where they can demonstrate an advantage and compete.

To jump to the conclusion that allowing the import of goods will automatically destroy the local industry is also wrong.

Ofcourse, if however the inability to compete is because of subsidies given to the producers in other countries, or lower rates of interest offered to them, or because of other more conducive policies for business, then the answer lies not in calls for protectionism but in calls to also change our policies and practices to allow our producers to compete on a level playing field. (See-“Interse Valuation of Currency & monetizing a portion of even private gold holdings.”)

“By exchanging, humans discovered ‘the benefits of the divisions of labour’, the specialization of efforts and talents for mutual gain… specialization encouraged innovation. The saved time and prosperity is simply Time saved, which is proportional to the division of labour. The more human beings divided as consumers and specialized as producers, and the more they exchanged, the better off they have been.” – Matt Ridley

Now how does one get a greater opportunity to realize what one is best at and be able to arbitrage that capability to get to best meet one’s needs as above? Trade what you are ‘Best’ at, in exchange for what others are ‘Best’ at, so that all you have is of the ‘Best’. You also need to be able to meet your needs as above, with the least amount of time spent, so that you have more Time available to choose to spend doing other activities that add to your happiness. Trading allows you such an opportunity.

Let us now consider what development, wealth / prosperity and happiness, truly mean and from what or how does each of them arise.

Understanding Happiness:

Happiness in life comes from being able to acquire and provide for oneself and one’s family such level of security and comfort as one deems satisfying – each settling for his choice of level – and of being able to share with them a relationship of mutual support and joy and of being able to do for one’s Community/Country what one can in a manner as to get a sense of personal satisfaction from the recognition of one’s peers, of one’s achievements and service.

As necessities and luxuries get cheaper, and people are accorded greater choice, they do get happier. But happiness is more than just this. Being rich enough to afford greater choice alone does not make one happier. Social and political liberties are also effective happiness generators. Big gains come from living in a Society that frees you to make choices about your life style, – where to live, whom to marry, how many children to have, how to express your sexuality and so on – an increase in free choice allows you to enjoy life more and be more happy.

“The more individualized the Nation, the more citizens enjoy their life.” – Ruut Veenhoven.

As necessities and luxuries get cheaper, and people are accorded greater choice, they do get happier.

Obviously being required to work from the ‘Can see’ of pre-dawn to the ‘Can’t see’ of night fall, just to meet survival/subsistence needs is not a life conducive to much prosperity or happiness. For much of human history, the lives of people were mostly full of hardship and pain, relieved by few very short intermissions when happiness or joy was to be grasped and enjoyed. What little prosperity there was, was usually the lot of only those few who could compel or induce others to contribute to them of their time and labour and of the produce thereof.

To get an idea of the many comforts we take for granted today even when compared to just 225 years ago and to recognize what is really important for happiness. Let us just compare the cost or benefits of such important things.

Measure of Poverty and Financial security:

As long as innovation is encouraged, economic progress will continue.

A high standard of living is ensured when there is diverse consumption from many micro sources that do their best in simplifying production, specializing in what each does best.

A high standard of living is ensured when there is diverse consumption from many micro sources that do their best in simplifying production, specializing in what each does best.

Matt Ridley notes that in 2005 an average consumer in U.K. would have spent this share of his income after tax / levy on the following and compares that to that of a farmer in UK in 1790’s.

 

Items Average consumer in 2005 A Farmer in 1790s
Housing / Roof overhead 20% 6%
Cars, planes, trains & other transport 18%
House hold stuff, electricity/fuel, water, phones, furniture, appliances etc 16% 5% – mainly heating
Food, drink & restaurants 14% 75%
Health care 6%
Movies, music, all entertainments 5%
Clothing of all kinds including bedding 4% 10%
Education 2%
Soaps, haircuts, cosmetics, etc 1% 4% including lighting (lamps/candles)
Insurance, pension contributions including savings etc 11%
Reading 0.3%
Miscellaneous 2.7%

You are poor when you cannot afford to sell your time and services for sufficient price to buy the services you need, and rich to extent you can afford to buy, not just the services you need but also, those other services you desire.

You are poor when you cannot afford to sell your time and services for sufficient price to buy the services you need, and rich to extent you can afford to buy, not just the services you need but also, those other services you desire.

Do not confuse self sufficiency with contentment. Self sufficiency is poverty, accepting lower quality or a lesser quantity of goods and services than you need or desire, as you cannot make for yourself or trade for all that you need. Contentment is richness, as one does not seek or desire anything more than what one already possesses or can procure.

The regression into more primitive technologies of isolated populations that do not, or could not, trade can best be seen in the Tasmanian (also the Andaman) natives isolated from the mainland. They soon lost the more intricate tool making and other complex skills as they did not have a dense enough population and did not or could not trade and exchange ideas and skills.

Herb Guntis notes that societies that use markets extensively develop a culture of co-operation, fairness and respect for the individual arising out of the recognition that their enlightened self interest lies in peacefully seeking cooperation. While societies with the least experience of dealing with outsiders become more hardhearted, ungenerous, narrow minded and war like.

Understanding Poverty:

Yes, it is true that matters are not good for many people facing difficulties in many parts of the world today – but assuming the worst will not make things better. Let change, innovation and growth elsewhere encourage potential compassion where needed.

Matt Ridley also notes that – “The precautionary principle – ‘Better safe than sorry’ – condemns itself: in a sorry world there is no safety to be found in standing still.”

“Some of the billions still live in misery and dearth. Some are worse off than they were just a few months or years before. But the vast majority of people are much better fed, much better entertained, much better protected against disease and much more likely to live to old age than their ancestors have ever been.”

“Even allowing for the hundreds of millions who still live in abject poverty, disease and want, this generation of human beings has access to more calories, watts, lumen-hours, square feet, mega hertz, light-years, nanometers, bushels per acre, miles per gallon, food miles, air miles and ofcourse dollars, than any that went before.”

They are people today who, living with the benefits of the present, look through rose tinted glasses at an unreal past and claims that life was better then, with greater simplicity, tranquility, sociality and specialty. They close their eyes to reality – since 1800 the population of the world has grown more than 7 times, yet the average life expectancy has more than doubled and real income has risen more than 9 times. Averages conceal a lot, but it is difficult to find many places not better off today than they were even just 50 years ago.

Despite the doubling of the world’s population in the last 50 years, the actual members of people living in poverty (on less than the 1985 US$ 1/day) has dropped by more than half to less than 18 percent and is expected to keep reducing rapidly.

The U.N. estimates that poverty was reduced more in the last 50 years than in the previous 500 years. Life expectancy has been increasing steadily at the rate of a quarter of a year for the past 200 years (industrial age). People are not only living longer lives but also in better health as they spend a shorter time dying. IQ, however it may measured, is also increasing, due to better nutrition and greater stimulation from an increasing diversity of childhood experiences.

Yes, the rich have got richer, but the poor have done even better. The poor in the developing world grew their consumption twice as fast as the world as a whole between (1980 and 2000).

Yes, the rich have got richer, but the poor have done even better. The poor in the developing world grew their consumption twice as fast as the world as a whole between (1980 and 2000).

The Chinese are 10 times as rich, one third as fecund and 28 years longer lived than they were only 50 years ago.

Even Nigerians are twice as rich, 25 percent less fecund and 9 years longer lived than in 1955.

Today even the lowly sales clerk or village assistant has a better quality of life and a greater choice of goods than even most of the Kings and Emperors of old as unlike the Royals who had to maintain the family of the craftsmen or servitors for the whole time, the clerk only needs to pay for the fraction of the time necessary.

Measure of Prosperity – the currency that really counts – Time:

All of us begin each day with an equal balance of 86, 400 seconds of Time. This account depletes steadily and inexorably whatever you may do till it is replenished again the next day and so for all the days of your life.

The one thing in life that one cannot get any more of is Time. So anything that allows one to meet one’s basic needs and do one’s essential tasks in a shorter time is the only way that in effect can add to one’s useful time. Time to do more of what one wants to do, to share with family, to do work for the common good and so get recognition and regard. So please see what you strive to do from the perspective of how much additional time it frees for you to enable you to exercise your free choice of what to do in it. Such free choice is a critical element of Happiness.

The one thing in life that one cannot get any more of is Time. So anything that allows one to meet one’s basic needs and do one’s essential tasks in a shorter time is the only way that in effect can add to one’s useful time.

Value of Time:

Time is the key! The Time measure of a thing’s worth, is the hours of work it takes to acquire it. If you have to acquire it entirely by doing all the work yourself, it usually takes a lot longer than if you can get it ready made from other people who make it more efficiently in exchange for what you can make more efficiently. As things become cheaper people use more of it. The average Briton, as Matt Ridley notes, today consumes 40, 000 times as much artificial light as he did in 1750’s. He also consumes 50 times as much power and 250 times as much transport (measured in passenger miles travelled). Free Time comes from exchange and specialization and the resulting division of labour. Self sufficiency is clearly not the route to prosperity, even if at all possible.

Free Time comes from exchange and specialization and the resulting division of labour.

This is what prosperity is: the increase in the amount of goods and services you can earn with the same amount of work and the Time you gain for yourself by working more efficiently.

Ridley worked out that –

‘Today a journey from Paris to Bordeaux costs equivalent to about a day’s wages and is fifty times faster and more comfortable than in a stage coach in mid 1800s which would have cost the equivalent of a clerk’s monthly wages. A half gallon of milk cost the average American 10 minutes of work in 1970, but only 7 mins in 1997. A 3 min phone call from New York to Los Angeles costs 90 hours of work at the average wage in 1910, today it costs less than 2 mins. A Kwh of electricity costs an hour of work in 1900 and only 5min’s today. In the 1950’s it took 30 mins to earn the price of a Mc Donald’s cheese burger today it is 3mins. Healthcare and education are amongst the few things that cost more in terms of hours worked today than they did in 1950s – but in these fields what it meant then and what it means today are not really comparable.’

People usually got to be rich (millionaires/billionaires) by making things cheaper and better. Ofcourse, when they did so, their competitors, unable to match their efficiencies, cried foul and sought government intervention to prevent the drop in prices. Even when falling consumer prices is what enriches people, allows them more choice in what they want to buy and more time to use it as they deem fit. (This deflation leading to enrichment does not hold good for asset prices, which can ruin them, that is because they are using inflated asset prices to get them the additional where withal to purchase even more non productive and non essential items or assets).

People usually got to be rich (millionaires/billionaires) by making things cheaper and better.

Like transportation, housing too has got even cheaper and more affordable. It is true that where as it took 16 weeks work to earn the price of 100 sq. ft. of housing in 1956, it now takes only 14 weeks and the housing is much better in facilities and quality. It would have come down much faster but for the Governments that prevent this by using planning or zoning laws to restrict supply and by using the tax system to encourage mortgage borrowing and finally doing all that they can to prevent prices from falling after a bubble. To remedy this, governments have to encourage/incentivize the building of more affordable housing, allow vertical growth, or subsidize mortgage lending to the poor to allow them to afford a home. Free housing not only does not encourage dignity or prosperity, but develops in the citizens an attitude of unending demands for entitlements of so many other things and hence should never be offered.

“Never misallocate borrowed or essential resources to unproductive ends, to asset price inflation or, to war, corruption, luxury or theft.” – Matt Ridley.

If somebody somewhere takes out a mortgage which he will pay in 30 years time to invest in a business that invents a gadget that saves his customers time, then that money brought forward from the future, will enrich both him and his customers to the point where the loan can be repaid to posterity. That is growth. If on the other hand, somebody takes out a loan just to support his luxury life style, or to speculate on asset markets by buying a second home etc, then posterity will be the loser.

Urbanization makes poor people richer. The density and infrastructure of cities allows for greater interaction and exchange of ideas and information that makes people more productive and more able to afford to buy what they need and allows them greater choice of what they may spend their time on doing.

Such opportunity is what makes the rural poor choose to move even into slums in urban areas.

Today in the USA one percent works in Agriculture, 24 percent in Industry and 75 percent in Services and Entertainment. All Countries will, sooner rather than later, tend to similar distribution and such distribution leads to greater urbanization and if due care is not taken to deal with such urbanization it would lead to collapse of cities being throttled by slums. (See “Urbanization” and “Smaller States – How Small? – How Many? – Why not Bigger?”)

Understanding the Value of Energy:

To decry the use of Fossil Fuels or nuclear energy (See ‘Pricing and Taxation policy – fuels and other enablers’), is also again being selectively short-sighted. Let us again draw from Matt Ridley’s statistics to better explain this point. Humans have four basic needs – food, clothing, shelter and fuel/energy. However it is the availability and lower cost of energy and improved industrialization/automation that enables greater production of food, clothing and shelter and hence made them markedly cheaper over the past two centuries. This allows for more disposable income to spend on other things and luxuries.

Humans have four basic needs – food, clothing, shelter and fuel/energy… greater production…made them markedly cheaper over the past two centuries.

The Value of Artificial light:

Artificial light lies on the border between necessity and luxury. In monetary terms, the same amount of artificial lighting cost 20,000 times as much in England in the year 1300 as it does today. In labour terms the change is even more dramatic and the improvement even more recent.

Ask how much artificial light you can earn with an hour of work at the average wage.

1750 BC (sesame oil lamp)           –              24 lumen hours

1800 AD (tallow candle)                                –              186 lumen hours

1880 AD (kerosene lamp)             –              4,400 lumen hours

1950 AD (incandescent bulb)      –              5, 31, 000 lumen hours

Today (compact fluorescent)     –              8.40 Million lumen hours

TIME as a measure of Cost:

Put another way, an hour of work today earns you 300 days worth of reading light, while in 1800 you would have got only 10 mins or, if comparing the effort of work involved to earn an hour of reading light, say that of an 18watt compact fluorescent bulb.

Today    – an hour of light with fluorescent bulb less than half a second working wages.

1950       – an hour of light with incandescent bulb             –              8 seconds.

1880’s   – an hour of light with kerosene lantern                               –              15 mins

1800’s   – an hour of light with a tallow candle                    –              6 hours

1750       – an hour of light with a sesame oil lamp              –              50 hours or more

From six hours in 1800’s to half a second today – a 43,200 fold improvement for an hour’s lighting: that is how much better of you are than your ancestors were then. This uses the currency that really counts – your TIME! Also these numbers do not include the convenience, the lack of smoke, smell and flicker and its lesser fire hazard. In future LEDs promise even greater efficiency and portability.

This gives you the choice to spend less time working for light and thus have more time to do other things for yourself or others – this is economic progress. Similar progress is also evident in the work time required to procure other necessities.

In 1908, an average American had to work 4700 hours to earn enough to buy a Model – T Ford car. In 2008 wages for 1365 hours work was sufficient to buy a typical modern and better car.

TIME is the ultimate KEY measure of a things worth!

Raw materials and energy can also be reduced to an equivalent value of Time. To efficiently and effectively make use of time you need a source of energy, not only to provide you artificial light to increase your working hours, but also to provide you the means to multiply your physical output. Raw materials too can be costed in terms of the energy required to extract and process them into useful products and then again costed into an equivalent value of time saved and made available to you.

Understanding Pollution and Environmental Degradation:

To hold that such progress has only been at the cost of environmental degradation leading to more people being exposed to greater pollution and suffering greatly from such effects, is again being selectively short sighted.

People forget the pollution from cooking on wood or dung burning house-hold fireplaces and tend to exaggerate the effect of carbon pollution from non-renewable energy sources. Yes it is true that excessive use of petroleum based fertilizers and chemical pesticides and weedicides has led to damaging run-off into the water bodies even as it allowed for the green revolution to feed the growing population. But this is again something that we are recognizing and hopefully will do something about before it is too late. (See – ‘Ecological Catastrophe’).

In many places, especially in Europe and America, there is today much lower pollution than a century ago, once greater awareness led to radical innovation and greater efficiencies. It is estimated that once the per capita income level is over 1990’s US $ 4000/- the people will begin to insist to better environment conditions. So the aim should be to work so as to, as rapidly as possible, get people to such a level even if for a while this needs us to use more polluting energy sources, such as coal. Ofcourse, all efforts should be made to develop technologies even during this time, to keep the pollution levels as low as realistically practical.

Surveys constantly reveal that individuals tend to be personally optimistic yet socially pessimistic. There seems to be a vested interest in pessimism, because doomsayers and scare stories get a wider hearing.

Surveys constantly reveal that individuals tend to be personally optimistic yet socially pessimistic. There seems to be a vested interest in pessimism, because doomsayers and scare stories get a wider hearing.

Regulation:

Markets in goods and services for immediate consumption such as for – haircuts, pav-bajjis and samosas – work so well that is hard to develop them so that they fail to deliver efficiency and innovation; while markets in assets are so automatically prone to bubbles and crashes that it is hard to design them so they work at all. Speculation, herd exuberance, irrational optimism, rent seeking and the temptation of fraud, drive asset markets to over shoot and plunge – which is why they need careful regulation. Markets in goods and services need less regulation than markets in assets. Ofcourse markets for goods, especially unpackaged, where the customer deals directly with the supplier needs even less outside regulation, as here the customer himself acts as the regulator by directly exercising his choice to purchase or not. For other goods and services where the customer is one or more steps away from the producer and has no choice but to trust or rely on, in the stated quality of the product or in the adequacy of the qualifications of the service provider, proper Government regulation and certification is essential

Conclusion:

A country as large and as populated as India, has a sizeable domestic market and a diversity of talent and skills and if provided a level playing field when competing with larger Global Companies can well hold its own and even compete abroad.

JAI HIND!

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