Economics Of The Dark Ages

Every evening, when dusk merges into twilight and smog shrouds the city, Black Cat commandos throw a tight security ring around a decrepit hangar located in an obscure corner of Delhi Airport. Unbeknownst to trivial mortals, the hangar contains Indias greatest technological secret: a time machine. Soon, white Ambassadors arrive, with their lights off and the engines cut. People get out and quickly enter the time machine, which is ready for take-off. Then they are off for the night to 10th century Europe a continent of superstitions, avaricious hopes, bubonic plague, religious wars, leeches and blood letting. Here, these men learn economics of the dark ages. Early morning they return, to preach what they have learnt.

 

Leading this pack is Master Ibrahim of civil aviation fame. Usually, he is followed by Master Harkishen Singh Surjeet. Often-times, there is Master Lal Kishen Advani, who sits next to Master Sitaram Kesri. Of late, there is also one Master Prakash Singh Badal. When the time machine is short of fuel, these gentlemen choose an equally good substitute. They fly off to Kabul to take lessons from the Taliban. What do they learn?

Lesson no 1: Competition is a bad thing In the dark ages, the merchants guilds believed that competition is a bad thing. Master Ibrahim understood this in a trice. After the very first lesson in dark ages economics, he decided to put a spanner in the Tata-SIA 60-40 joint venture.

His arguments consist of five easy steps. First, Indian Airlines is doing a marvelous job by ferrying our citizens to all points of the sub-continent. Why should this great nationalist endeavour face competition? Second, why should a company that specialises in civil aviation be a joint venture partner for a civil aviation project? This is an utterly ridiculous proposition posited by silly chaps like Adam Smith and David Ricardo. If automobile manufacturers made cars, turbine manufacturers built turbines, and bankers went into banking, then how could one nurture human resource development through cross-fertilisation? Therefore, those who run airlines cannot be partners to start airline companies in India. They can either enter through the subterfuge of a holding company or, better still, get into mass manufacture of cycle rickshaws.

Third, which country in the world allows foreigners to have equity in their domestic airlines? In fact, over a dozen do. But, facts are mere illusions and must be always ignored. Fourth, if the venture is to be allowed at all, it cannot start with more than half a dozen planes. Very clever. In one fell swoop, Master Ibrahim ensures that there will be no competition worth the name, because nobody who wishes to invest in such a deep pocket, high risk industry will do so with six planes. In all this, Master Ibrahim has the support of Masters Surjeet and Advani. For the fifth, and final, step in Master Ibrahims argument, we must turn to the geographical wisdom of the dark ages.

Lesson no 2: The earth is flat Ergo, Singapore consists of a huge land mass. Master Ibrahim makes a telling point that would have made the pre-Copernicans proud. He asks, with grim intent: Will Singapore allow us to enter their domestic airline business? Singapore, as we all know, consists of a huge land mass of the size of India. And, Mr Goh is doggedly protecting this vast airspace from any foreign competition. This makes Masters Surjeet and Advani uncomfortable. But, they are willing to turn a blind eye to geography for the greater unity of economics.

Lesson no 3: Competition is a very bad thing According to dark age economics, never allow competition to impinge upon State monopolies. Therefore, the insurance sector should never be opened up to any form of competition. Its a different matter that nobody is talking of privatisation. All that is being asked for is to allow private players to enter the market with sufficient capital adequacy and abundant safeguards.

According to Master Surjeet, this is not on. Today, the horrid competitors may create new markets. Tomorrow, they will muscle into the territory of the public sector. And, then what will happen to the thousands of overpaid and under-performing employees who live off the fruits of mandatory insurance covers? We need to protect them. As far as consumers go, If they cant eat bread, let them starve.

Lesson no 4: Prices dont matter Let the oil pool deficit widen. But, dont raise the price of petroleum products, especially the price of LPG which is consumed by the middle class. It is a different matter that the energy cost of LPG to a consumer is cheaper than the cost of using firewood; and that we are obscenely subsidising the middle class at the expense of those who live under the poverty line. But, raising oil prices is anti-people. So, we should either cut the tax rate or, better still, borrow to bridge the gap. On this, Masters Surjeet, Kesri and Advani are in unison.

Lesson no 5: There is something called a free lunch, and it means free electricity for wealthy farmers dark age economics has ensured that there is no consensus among chief ministers to levy even 50 paise per unit of power consumed. Worse still, it has led to Master Badal announcing free power for agriculture within 48 hours of winning an election. Does it matter that free power means no power at all? Or that it raises the huge losses of SEBs? Or that it crates greater scarcity which, in turn, facilitates more rampant stealing of power? These are silly, anti-people tenets of neo-classical economics that deserve contempt. Master Advani concurs, and why not? After all, Master Badal is his electoral ally.

Lesson no 6: Poor countries should have government-owned luxury hotels In dark age economics, the poorer a country, the greater should be the spread of government activity. Therefore, woe-betide those misbegotten ones who speak of splitting ITDC and the Hotel Corporation of India into saleable assets, selling them to the highest bidders, and using the proceeds to reduce public debt and finance social sector programmes. Hotels are signs of hospitality and who should show greatest hospitality but the kings. Therefore, government hotels are essential; they must be fostered; and come what may, government must own at least 26 per cent equity so that it can veto any special resolution moved by the wicked private sector, whose only aim is to destroy the system from within.

Lesson no 7: India is a fertile soil for dark ages economics This is the most important lesson. How else can we explain the constant re-invention of shibboleths that have been long discarded by our competitors? Indeed, Master Ibrahim has apparently ordered a new time machine with more seats. It is his avowed objective to take with him some new passengers. High up on the list are Master Chidambaram and Master Maran, who do not know the wonders of dark age economics and are, therefore, constantly saying all the wrong things. Once they see the beauty of the subject, they too will give up their modernistic clap-trap and join Master Ibrahim and his ilk in proudly taking India to the 10 the century. Hallelujah to that!