Friday, 27 December 2013

India and Keynesianism

Sad to say that the apparently vibrant economy of India leans towards Keynesian analysis. Below is one commentator from the India times on what the government should be doing.

Now, when we study macroeconomics, we are immediately taught to enter G and T into our equations (Government spending and Taxation). Fair enough, but like the real G&T it quickly goes to people's heads - they think that G>T actually creates economic wealth (rather than debts - and India's is currently 49.92% of its GDP.) They think that by intervening in the economy, wealth is created rather than distributed.

We must not forget that India was a highly socialist economy with a rigid feudal past (caste system). That culture remains but its entrepreneurs will do well to support free market economics (proper free market economics not its state directed abominations) and to support free market institutions to educate the growing middle classes that wealth is not to be found in bowing to the state but in freeing people from the state.

Keynesianism is feudal in its philosophy and destructive in its effects. Time to reject it and let the people create the wealth that they are more than capable of doing by themselves.

A. Measure social sector outcomes 

1. Articulate "Promise 2019": When companies formulate strategy, they clearly articulate a nearterm 3-5-year vision with clearly defined deliverables, not vague, long-term plans. So should the new government. We need to see a "Promise 2019", with metrics to measure performance versus promise (eg MW of generation capacity added, km of national highways constructed, etc). The government should then publish regular and tr .. 

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