All entries for Wednesday 03 August 2005

August 03, 2005

Law Unto Himself

The Telegraph, 03.08.05

The greatest danger with Ashok Mitra’s articles is their sweeping generalizations. Mitra, for instance, argues that it is impossible for the state to employ every single unemployed in a capital-intensive industry. True. But why does he assume that all industries in a market economy are capital intensive? And why should the state alone take the responsibility for generating employment? Mitra’s arguments about class structure and investment are moribund. The flourishing high-tech industries in India are not the result of investments on the part of the state. It is the free market which has led to India’s IT-revolution. Companies in Bangalore provide for their own basic necessities — from roads all the way down to power generation. And yet they have done well. On the contrary, the industries which are “sick”, and employ the so-called non-elite, are the ones where the government has poured in millions of the taxpayer’s money. Mitra fails to account for this fundamental anomaly. He even seems to have failed to comprehend the “trickle down effect”. High-end industries cannot but generate a multiplier effect. Common sense says that the increase in the income of even a few will result in greater spending and greater economic activity down the line. Mitra would do well to remember the words of Churchill — in capitalism, there is unequal distribution of abundance, in socialism, there is an equal distribution of poverty.

August 2005

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