Some Fundamental Issues of Governance

Market Matrix – 26 Feb 01 – Some Fundamental Issues of Governance

By Krishna Khandelwal 

The following is my musing self recorded on the 26 Feb 01 and is being reproduced for the readers here and since this raises and deals with some fundamental issues that plague the modern-day governance, it has relevance today:-

‘We as a nation have reached the crossroads of deciding the future course whether to go fast forward or go slowly but surely on a path leading to stable, healthy, educated and emotionally & materially satisfied society. Who has not seen the pitfalls in fast growth patterns where the growth towards higher production and higher consumption brings about the strife and discord of such level as to lead to world wars as final flash point and continuous simmering in otherwise calm waters.

The childishness is visible when finance ministers after finance minister talk of achievements and failures on the growth front in terms of percentages. The critics too take to the same terminology while disagreeing or criticizing. The ‘right of center policies’ has started finding favors with even the proclaimed leftists. This is something that should agitate the minds of affluent classes more than the disadvantaged classes as the ultimate result of too much tilt will eventually lead not only towards discomfiture of less privileged but also of the advantaged few. The less privileged will have to forego some of the essential consumption and on the other hand, the few better off will have to live in fear of violent outbursts putting their lives and comforts in jeopardy.

Does it not occur to the policymakers that the organized sector workers get better pays than they would have otherwise been paid in absence of protective laws? Does it not in effect means that they (workers in the organized sector) stand to consume more of those essential commodities and services which the workers outside the organized network also require to consume for their healthy existence? While the shortages are the norm in a developing but poor nation, is it not improper to affect the consumption pattern in favor of some and against some who are by no means lesser sons of God? So, as the first step, even from the point of view of votaries of free trade and free enterprise, is it not important to do away with protective laws at industrial and governmental levels? In earlier times in our own country when the organized sector was quite small in proportion to the disorganized sector hence, its higher consumption was not affecting the masses in general. The same thing is now affecting a smaller (then in earlier times) section of disorganized manual workers more severely by the undeservedly entitled larger (then in earlier times) section of the organized working class.

Secondly, there is so much noise in favor of and against the subsidies by the govt. and its financing sources. Here the subsidies are justified at least on one count i.e. one of the factors of production, that is land, belongs to living beings in proportion to their prowess but in effect, the social development led to such a stage where the man-made laws gave the right of land use and ownership unjustifiably to some classes and individuals. While it may not be practical to entirely do away with the present system of inherited rights and acquired rights, at least one thing may surely be done that is to obtain the resources required for funding the desired subsidies only through taxing the landholding in rural and urban areas in proportion to the value of the land. This will ensure at least some semblance in the inherited right of all by being sons of God and inherited rights of some by being heirs of ordinary mortals. The right thing would convert the value (that is monetary value at present) of the inherited landholding in nominal loan from the government yielding a nominal interest payable by the possessor to the government. This value may be revised every ten years and the right of possessor may remain transferable. At the time of death of the possessor, the loan would extinguish automatically and the new heirs may at their sole discretion step in the shoes of the original possessor. This kind of exercise would make the land use most efficient, a must for the society’s well being particularly in case of an asset, which is not increasing in quantity.

Thirdly, the controlled interest rate regimes have been responsible for the unintended transfer of incomes in the hands of savers and users of capital. This is one single thing responsible for upsetting the well-laid plans of an entrepreneur and also of upsetting the stability of income of such families who have started to depending only on the past savings and returns on it. Many times the govts themselves are unable to control or effectively manipulate it for desired goals. This confusion is further compounded due to the deficit financing practices of the governments. leading to unnatural inflation and deflation courses. The world over a class solely engaging itself in speculative activities has emerged and some of the sharpest brains are busy in this field doing nothing worthwhile but upsetting nations and societies. Reversion to standard or development of some other type of monetary system is the need of the hour.’

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