Around two years ago, in some small village in Northern India, a 6 year old child, named Prince, fell into an open empty borewell. As the borewell wasn't very deep, he survived the fall with minor injuries, but safe at the bottom. This event would have gone unnoticed and uncared for had it not been for a news-starved and a low-on-trp television channel. The rescue effort to get the kid out of the borewell was aired live on the channel for the whole day.
As the day progressed, and the rescue was getting delayed due to various reasons, the live-program on television got more and more viewership and in a matter of hours became a national sensation. This might have been left out as a small abberation or an example of the effect of mass communications in public life and closed the chapter. But that is not to be so. Seeing such popularity for the show, a few politicians showed up at the scene of rescue, and bashed up the poor police for their lack of sensitivity to the issue and delaying the rescue. The icing of the cake came when a local MLA declared that the kid would get Rs.1 lakh in compensation and free education till school.
This is exactly the misfortune of our governmental policies. An MLA gives Rs.1 lakh (that is not his) to a kid for falling into a borewell. For what is government compensating the kid? What if other kids take the example and start jumping into borewells. Do we compensate every one of them? Who's money was the MLA donating anyway? Do we suppose that an MLA can exhibit his sensitivity to such issues at the expense of tax-payers. This is not very different from the Kings we had a few centuries ago, where if the King was pleased he could graciously give any amount to anybody. The only difference here is a politician would give any amount to anybody,
as long as feels that the public is pleased with it, or he should manipulate the public to get pleased at his donations. That is the rule of the game, and a very dangerous one at that. A lot of government policies are just that. They are aimed at pleasing the public at large.
Milton Fredman, the nobel prize winning economist, once said, Our policies should be measured not by intentions but by the results they achieve.
10 July 2008
Money, Government and Tax
First, let me begin with a few definitions.
Money - is the value somebody is willing to pay for a product/service.
This means, if you create a product, you create money. If you enhance a product, you enhance the value and hence create money. If you work for a company, you enhance its capability to produce, hence you create money. The amount of money is not a fixed value within a country (or world, city, family). It increases if you produce and falls if you dont.
Government - is a system formed my people to make and enforce laws that ensure our social interactions remain peaceful and just.
Tax - is money collected by Government from its citizens for its expense.
The following definitions are intentionally very simplistic to allow for later interpretations.
Money - is the value somebody is willing to pay for a product/service.
This means, if you create a product, you create money. If you enhance a product, you enhance the value and hence create money. If you work for a company, you enhance its capability to produce, hence you create money. The amount of money is not a fixed value within a country (or world, city, family). It increases if you produce and falls if you dont.
Government - is a system formed my people to make and enforce laws that ensure our social interactions remain peaceful and just.
Tax - is money collected by Government from its citizens for its expense.
The following definitions are intentionally very simplistic to allow for later interpretations.
Its all about Money, Honey
“Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it” - Ronald Regan.
Coming from a seasoned politican, this quote is amazingly honest. Funny as it may seem, it is also the hard truth. For almost 60 years, Indian government has been actively working for social and economic equality and bridging the divide. Thousands of Crores of public money has been spent on public administration and social welfare schemes of which I too am a beneficiary and am also a contributor to the funds.
Even after such magnanamous effort by the Government, the results often leave a lot to be desired. Why do so many well-intentioned plans fail to impress? Are we funding the wrong cause?
The following are a series of blogs is an attempt to understand of our economy.
. Money, Government and Tax
. Group appeasement vs Individual (Rajas of Free India)
. Pro-Poor vs Poverty
. Hijack of Basic ameneties
. Transport
. Energy
. Cost and Subsidy
. Price Rise, Demand and Housing
. Movies..Freedom...Govt.Control
. Rich-Poor gap and Power struggle
Coming from a seasoned politican, this quote is amazingly honest. Funny as it may seem, it is also the hard truth. For almost 60 years, Indian government has been actively working for social and economic equality and bridging the divide. Thousands of Crores of public money has been spent on public administration and social welfare schemes of which I too am a beneficiary and am also a contributor to the funds.
Even after such magnanamous effort by the Government, the results often leave a lot to be desired. Why do so many well-intentioned plans fail to impress? Are we funding the wrong cause?
The following are a series of blogs is an attempt to understand of our economy.
. Money, Government and Tax
. Group appeasement vs Individual (Rajas of Free India)
. Pro-Poor vs Poverty
. Hijack of Basic ameneties
. Transport
. Energy
. Cost and Subsidy
. Price Rise, Demand and Housing
. Movies..Freedom...Govt.Control
. Rich-Poor gap and Power struggle
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