Re: RE: Minimum wages, competition and 200 years of success.

["BDP India" <bdp.india@mailexcite.com>]

I am not sure if at this juncture, we should debate the issues of more theoretical
nature. I am also not sure that government should only work only on the basis of
economic issues. In terms of minimum wage, even the most capitalistic country has
a minimum wage. We can all argue to the both sides of the issues but why not take
a policy from a country where it has been followed for fifty years and has relatively
been successful at the implementation level. For the manifesto purpose I propose
that we agree to the idea of a minimum wage. Exact number can be proposed when the
government has measures to implement it. We can debate on this issue as long as we
want, but at the end of the day what is important is a legislation for every business
to produce audited tax returns, a real method for employers to produce records of
payrolls and other measures to audit a businessto even think of a minimum wage policy.
Issues I propose for discussions should be where the common man is affected the most;


Privatization of Banking Industry. What steps a virtual party should take to legislate
this? What are the negatives and positives of deregulating the Banking industry in
India?

How to privatize transportation industry and still controll the quality of such an
important part of average citizen's day-to-day life?

Infrastructure development: Is the only way we will be able to build better roads
and bridges is by borrowing money from NRI's and world bank? Why can't we promote
tourism and put the money in the infrastructure development? How do we promote tourism?
I am sure opening that industry will bring multinational corporations to funnel money
in hotel development. Any other suggestions to raise money for such development.
A country like Czech Republic brings in $4b a year in tourism. 

Why can't we privatise DOT and VSNL? Can someone talk about the impact of such a
move. With such massive needs of better telecommunications in India, I am sure we
can produce more jobs than people employed today in the telecom sector. 

What steps do we need to clean up our cities? What level of government should be
reformed. I am sure a central government is not going to define policies to clean
up a village in Andhra pradesh or Hyderabad. 

What needs to be done to promote traffic laws? 

Does all the IAS officers in this group think that the present systems/ procedures
to select the police officers is good enought for government to rely on them to mantain
law and order in the country?

I would like to see discussion on the issues which make a difference on people's
life today. We can talk all about urbanization and minumum wage control in an academic
setting, but I am not sure if this is leading to a discussion of issues needed in
a manifesto which can give us a chance of governance? I apologize if I sound harsh
in my critique.

Thanks,

Utkarsh

A little more on minimum wages, competition, and the role of govt.
>--------------------------------------------------------------------
>
>This is in reponse to Kush's contribution:
>
>	History reveals how the monied or the
>> "industrialist" class have behaved ever since the industrial
>> revolution.  We will have plenty of opportunity to put forward very
>> many other instances, other than Mr. Ford paying higer wages to
>> produce his model T--examples abound of blatant exploitation, inhuman
>> treatment and pure greed.
>
>a) 	Before one can make the poor rich, one must have money. Money,
>	unfortunately, can only be created by the production of goods
>	and services. Workers are usually semi-literate, semi-skilled
>	and even unskilled folk who cannot produce wealth on their own
>	no matter what you give them. You and I (at least I) are workers.
>	We cannot produce wealth no matter what. The process of
>	production of wealth requires special guts and special kind
>	of a brain. That of a entrepreneur and industrialist. 
>
>	Please do not rebel against industrialists. 
>
>	Your and mine existence in this country called USA 
>	is being supported ONLY by the work of people like Edison,
>	Ford, Bill Gates, and others. Cut out industry in this country
>	and it becomes poor. The moment it becomes poor, people will
>	start blaming all their ills to "brown" immigrants and others,	
>	and all of us will get kicked out, back to the streets of India.
>
>b)	If anyone can call an average US worker today
>	as being "exploited" then he/she must consider the case
>	of slaves (even India had them), feudal exploitation of virtually
>	landless workers (and their families), and the killing of 
>	millions of innocent workers in USSR, China, Vietnam, North
>	Korea, and other places. The average US worker lives a much
>	higher quality of life than our Cabinet Secretary in India,
>	than our Supreme Court Chief Justice, and even comes close to
>	the lifestyle of a clerk in the Delhi Development Authority.
>
>c)	There is nothing in the world called a free lunch. Therefore 
>	workers have to produce more than what they get paid for. That is 
>	the fundamental law of business. The person who creates a plant
>	or factory takes immense risk. He/ she borrows huge amounts of
>	money, spends enormous time and effort bringing the raw materials
>	together, then arranges to sell his goods, then gets his industry
>	passed by all kinds of inspectors, then keeps his accounts,
>	then pays the taxes, and then at the end of it he could 
>	have the fate of Compaq, which sold $5 billion worth of goods
>	in the last three months and made a profit of only $14 million.
>	The businessman could often have done much better by simply
>	putting his money in the bank and going to sleep. As I mentioned
>	above, you and I (at least I) are mere ordinary workers. We don't
>	have the guts to set up an industry. Then why do we criticize
>	the industrialist? Please, please, first of all look around you.
>	Almost all the wealth in the USA and in the West has been 
>	created by industrialists. 
>
>> Mr. Sabhlok I do not know where you come up with this competitive
>> market thing.  Yes, in theory there is such a thing as a competitive
>> market.  In practice, however, a competitive market cannot exist or
>> function optimally without the assistance of a neutral party which in
>> most cases happens to be the government.  In other words, without good
>> government, it is impossible to have a truly "competitive" market.
>> But Mr. Sabhlok's assertions seem to be based on the premise that
>> laisez faire is alive and thriving in America. The fact is that laisez
>> faire failed miserably in the 1920s followed by the great depression. 
>> "Free enterprise" in that sense is dead.
>> The lessons that Americans quickly learned were that economic activity
>> left on its own fails to produce optimum competitive markets, the one
>> Mr. Sabhlok keeps harping about.  
>
>	Please forgive me, but if you were to rank the following nations, 
>	which ones would you call as being closest to free market economy
>	and perfectly competitive economy?
>
>	   USSR China	N. Korea  S.Korea Singapore  USA Japan
>	
>	Which of these has succeed in showing outstanding results
>	in the past 100 years? 
>
>	If you remember, in the "Preamble" to the Manifesto, I had
>	stated clearly that pure capitalism is not perfect. I have 
>	nowhere stated that you do not need to check monopoly power,
>	or that oligopolies are an ideal solution to the growth problem.
>
>	I thought we were intersted in developing an ideal society
>	and economy for India. Do we want a 1.7% per capita growth
>	of income for 30 years since 1960, or do we want 7% growth
>	that India should have achieved and can easily achieve?
>
>	We want to be like Japan, S.Korea, Singapore, USA, and even
>	our arch-enemy, England. Not like our blood brother, USSR.
>
>> To overlook the role of government in the success of America (which
>> Mr. Sabhlok lauds) is to overlook the reality of the market place and
>> the real world.
>
>	If you would be more specific, we could talk. For example,
>	village roads, highways, donation of property to private
>	university efforts, and more. These are things called
>	public goods. I have neither discussed these things here,
>	nor do I deny the role of govt. in these things. I
>	thought we were trying to artificially strangle the 
>	concept of a market system by imposing minium wages. That's
>	what I dispute, very seriously. 
>
>	I have much material on the justifiable role of govt. in 
>	my book whose preliminary version is on the web. I do
>	not want to bring in too many points from that here. But 
>	I will definitely propose some points, now that you mention it.
>
>	 Socialism in India is
>> a facade and a fraud because as a controller the government fails to
>> create conditions for competition.  In fact, under the famous
>> licensing system, the Government of India (GOI) sold monopolies to the
>> avaricious seths and lalas, who willingly bought into the system.  For
>> the politicians and the bureaucrats selling of licenses provided a
>> means to hoard illegal wealth, and for the monopolists their
>> monopolies proved a goldmine.  The results for India, however, were
>> disastrous.  Indian businesses never had the incentive to improve
>> quality or productivity (worker wages and working conditions therefore
>> could not improve).  When the Soviet Empire fell, the Indian
>> government, to save face and an impending bankruptcy, quickly invented
>> another label called "liberalization". I have never been fooled by the
>> sheningans of liberalization.  Deep down there is no change in the
>> culture and modus operandi of the GOI.  The politicians have run out
>> of monopolies, so now they have started selling whatever they can to
>> whoever they can, as long as they and the bureaucrats involved can get
>> a cut in the deal.  Is this "liberalization?"  The control mentality
>> persists as does corruption.
>
>	Precisely my own thinking, and points, Kush. Why do we 
>	seem to be disagreeing somewhere, then? 
>
>	You want competition? I want competition.
>	You want to control monopoly? I want to control monopoly.
>	You want good government? I want good government.
>	You want real liberalization? I want real liberalization.
>
>	What is it you want, then, that I don't want? 
>
>> A corrupt government has no desire to (1) produce a competitive
>> market, and (2) money that should go to improve the quality of life
>> for all, is pocketed by the few in the system.  That is why problems
>> of infrastructure, public health, education, environment persist
>> because government is simply not doing what it ought to.
>> Therefore, the premise that private effort alone can solve all
>> problems afflicting India is false.
>
>	Whoa!! What was that?
>	You see the problems as arising from a corrupt government?
>
>	And so you want more government? 
>
>	Again, the points you raised, viz., infrastructure,
>	public health, environment, etc., are the ones where
>	I fully agree that govt. has a role. But I was only 
>	rebelling against minimum wages, not against
>	government itself!
>
>	The key point I have been making (and you seem to agree),
>	is that corruption starts from socialistic
>	policies, and that we can only cure it by minimizing
>	(not eliminating) government. 
>
>	Minimizing government means transferring a lot of work	
>	back to the people (also known in political jargon as 
>	the private sector). Let the people set up their
>	own universities (i.e., privatize education) like they
>	did in the USA. The Ivy league is mostly private. All
>	without government funds. The industry (including 
>	defence industry) here is run by the people. Science is 
>	supported by ... guess whom? Government!
>
>	So, we want to let government fund basic research (since
>	industry will never do that), run primary and secondary
>	education, and do things which it should. But return
>	everything else (including the manufacture of clothes)
>	back to the people. That is called providing good
>	government, not imposing minimum wage laws (Am I persistent!).
>
>> Can India have good government? Is it possible to reform a culture of
>> bribery? Absolutely.  How can that be done will, hopefully, be
>> discussed as we go on.  
>
>	We don't have to worry about corruption.
>	Indians are not genetically born with corrupt genes.
>	
>	Believe me, there are even IAS officers and others who
>	are completely free of corruption (Ripley might not
>	believe it, so bad is the image of IAS officers!). I offer
>	you a case in point by "flaunting" my poverty to you.
>
>	But the fact remains that I have seen all around me, tons
>	and tons of corruption. All arising from great power given
>	over our people (economy) by our foolish legislators who	
>	went and legislated on things they had no business to do,
>	such as nationalizing our banks, textile industries, etc.,
>	etc. Why should an IAS officer produce silk cloth? Are 
>	we cloth merchants? But unfortunately, that is what many
>	IAS officers in Assam do! And others in India go about
>	producing virtually everything you can think of. What!?
>	Are we so smart (IAS officers) that with our B.Sc. degrees
>	(that is what is required to enter this job), we can
>	outperform highly skilled private sector engineers and
>	managers?
>
>	The moment you remove socialism, you would have 
>	** almost entirely **, and instantaneously,  eliminated
>	corruption.
>
>Thanks for your contribution. I hope we now agree on more things than we
>seemed to agree at the beginning, and that we can proceed by specifying
>more of the specific tasks that need to be done. The nitty gritty of
>getting rid of socialism and controls over the people.
>
>The debate over minimum wages was fought vigourously to defend a
>principle, of non-interference in the market unless absolutely necessary.
>
>Economics defends intervention in monopolies, and even in oligopolies.
>Not in the case of the wage market. Not in the case of banks by
>nationalizing them. Not in the case of cloth industry by giving it to
>English literature graduates (IAS officers) to run.
>
>The West has gone through the debates we are having on this list, about a
>hundred and fifty years ago. They then adopted the staunch principle of
>supporting competition and free markets. Modification, in minor ways, here
>and there, of the free market principle is not the same as throwing out
>the market economy. 
>
>Did I not offer the compromise earlier? Have a **very low** minimum wage
>if you think you cannot persuade people against it?  I am willing to
>negotiate and compromise with people and move ahead. 
>
>The principle of non-interference in markets has been defended, and
>largely won (I think!). The principle of promoting liberalization and
>competition in a real sense has been established. The principle of
>returning nationalized businesses to the people has been established. The
>principle of establishing large numbers of private universities (with no
>limits on fees) has been established. Many other things were established
>in the previous weeks, based on Utkarsh's points.
>
>We are now fully ready, I think, to move ahead.
>
>Sanjeev
>
>
>
>



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