Liberalism has often been reproached for this purely external and materialistic
attitude toward what is earthly and transitory. The life of man, it is said, does not consist in eating and drinking. There are higher and more important needs than food and drink, shelter and clothing. Even the greatest earthly riches cannot give man happiness; they leave his inner self, his soul, unsatisfied and empty. The most serious error of liberalism has been that it has had nothing to offer man’s deeper and nobler aspirations. 

But the critics who speak in this vein show only that they have a very imperfect and materialistic conception of these higher and nobler needs. Social policy, with the means that are at its disposal, can make men rich or poor, but it can never succeed in making them happy or in satisfying their inmost yearnings. Here all external expedients fail. All that social policy can do is to remove the outer causes of pain and suffering; it can further a system that feeds the hungry, clothes the naked, and houses the homeless. Happiness and contentment do not depend on food, clothing, and shelter, but, above all, on what a man cherishes within himself It is not from a disdain of spiritual goods that liberalism concerns itself exclusively with man’s material well-being, but from a conviction that what is highest and deepest in man cannot be touched by any outward regulation. It seeks to produce
only outer well-being because it knows that inner, spiritual riches cannot come to man from without, but only from within his own heart. It does not aim at creating anything but the outward preconditions for the development of the inner life. And there can be no doubt that the relatively prosperous individual of the twentieth century can more readily satisfy his spiritual needs than, say, the individual of the tenth century, who was given no respite from anxiety over the problem of eking out barely enough for survival or from the dangers that threatened him from his enemies.

-Ludwig Mises, Liberalism.


The decision of voting

Nowadays, economy is handled by professional economists, and not by politicians. Former are largely responsible for failure or success of economic policies and not latter. That’s why, to me, voting a political party with economic development in mind is idiotic. Voting decision should be made based on other factors and the main factor that I consider during voting is:

What will be the state of law and order and whether there will be peace among communities?
Venom and animosity in Hindus and Muslims towards each other has pleateaud during BJP’s regime. That’s a sufficient reason to vote them out.
P.S.- Polticians ignorant of economics sometimes do meddle in economic affairs just as Pradhan-sevak did with his demonetization. People were royally effed by the farman, including those who shamelessly justify it. I vividly remember. Their moans of pleaure now were moans of pain back then.

Few Comments on Indian Constitution and Kakistocracy

People thumping their chests on having faith in Indian constitution and democracy has always troubled and puzzled me. It shows how effectively, meaningless slogans can be handed down to people to parrot, which aren’t backed by anything but propaganda.

Let’s first ask ourselves, what is Indian constitution? Its an unreadable document in legalese whose length is about 50 times that of US Constitution. It’s a document which more than 99.999% of Indians haven’t read. (I did elementary math and found that 0.001% of 121 crore turns out to be 12100) Compared to that, the U.S. constitution is concise and is readable which a large percentage of Americans have definitely read.

Coming to democracy. The idea behind democracy was that informed voters will choose people by whom they wish to be governed. But are/were Indians informed voters?

When constitution came into being, 30% of Indians were not even literate, leave aside being educated. The voting patterns of our elections has not been worthy of admiration either. Our country being a feudal society still votes largely on caste and religious lines which is the reason why most of the legislators are not qualified administrators or experts in any domain, but are often rogues and rascals whose only talent lies in managing vote calculus. This is most evident in the state assemblies even after 70 years of Independence. It will be, therefore, apt to call India a Kakistocracy, governance by the least competent and principled, instead of democracy.
H L Mencken had said that democracy is a belief that people know what they want and deserve to get it good and hard. Indians are getting it good and hard and yet they seem to relish their dogmatic slumber. A pathetic and lamentable state of affairs indeed.

An Austrian criticism of S Gurumurthy and his comments on Economics

S Gurumurthy and his opinions on economics are widely shared by BJP supporters and are increasingly gaining wide acceptance among general public. Experts in economics think his opinions are not worthy of response. I do not share this view myself, and I think its job of an economist to make basic knowledge of economics accessible to general public and rebutt with all seriousness fallacies relating to economics which have caused much trouble over and over again. As Dr. Atanu Dey had remarked, elementary economics should become a part of everyone’s basic cognitive toolkit. It will help avoid much misery.

Before I begin, I must mention that it’s characteristic of the followers of S Gurumurthy, Subramanian Swamy and Rajiv Malhotra(These three individuals come in the form of what is called in economics as complimentary goods) that they think these three are doing national work of great importance and those not believing them are not merely in error but in sin. Almost all of their followers are their literal bhakts who think that these men are great intellectual giants to whom everyone must pay attention. Nothing can be far from truth.

Coming to criticism of Gurumurthy’s ideas. Having been a fan of Gurumurthy myself in the past, I had watched his entire lecture series at IIT Bombay.


Gurumurthy’s first complain is about theories of macroeconomics, especially that of Keynes(Though it doesn’t occur to him that his complain is against Keynes, whom he greatly admires), particularly his prescription of spending more. When he criticizes this, he thinks he has woken economics profession from it’s “dogmatic slumbers.” But Keynesian opinion is just one of the many strands of economic thought. There are other schools who had argued and have been arguing till this day against this very prescription of Keynes before Gurumurthy was even born. To give an illustration, this was criticized by French economist Frédéric Bastiat in his 1850 essay “Ce qu’on voit et ce qu’on ne voit pas” (“That Which We See and That Which We Do Not See “). Sir Leslie Stephen had remarked in late 1800s that the test of a good economist is that he doesn’t believe in a singular relationship between aggregate demand and level of employment. Austrian school of economics has argued against macroeconomics as a discipline with a rigor that Gurumurthy can only aspire to achieve.

His second obsession is with Max Weber’s thesis of Calvinistic sources of capitalism. Because Capitalism has Calvinistic sources — argues Gurumurthy — economic system of India should be something which has Hindu sources. Thus, he argues for a Desi Economics. Here is Nobel Prize winner in Economics, F.A. Hayek, talking with another Nobel Laureate in Economics, James Buchanan. Watch from 20 minutes and 8 second mark.

Hayek explicitly mentions that Weber was completely wrong in his thesis of Calvinistic sources of Capitalism.
Gurumurthy doesn’t understand that economics is a value neutral science[See introductory part of “Human Action” by Ludwig von Mises.] It takes as given that people have values, whatever those may be. And it arrives at conclusions which aren’t affected by the value system of people. Take for instance Ricardo’s law of comparitive advantage. It doesn’t matter whatever creed one may belong to, the law works inspite of that. Gurumurthy takes advantage of the part of economics profession who claim that economic theories are inductively arrived at through empirical testing — a methodology which has serious drawbacks in economics — and he uses empirical data, many a times wrongly, to make theories which go against mainstream macroeconomics opinion.

His third obsession is that since Indian economy doesn’t have much of a formal sector therefore stock market is not a barometer for assessing Indian economy’s health. A clichéd observation for which Gurumurthy pats on his back N number of times.

His fourth obsession is methodological individualism, which he misunderstands. Methodological individualism advocates the view that individuals have values, not such wholes as family or society or nations — an idea which is not incompatible with the existence of families and societies. That’s the way economic analysis proceeds. Gurumurthy thinks methodological individualism means destruction of family as an institution, which is absurd. Economics is a science of how to employ means to fulfill one’s goals, whatever they may be. It has no obsession with one’s goals. If anything, the only goal of economics is to create a system which leaves maximum space for everyone to pursue their own goals.

His latest obsession is printing additional currency to finance government expenditure. He argues that since US has printed so many dollars to finance it’s investment, why shouldn’t we too? It doesn’t occur to him that dollar is both, an international currency, as well as domestic currency of US. Printing additional dollars can be used to buy imported goods and impact of inflation can in this sense be overcomed. But can printing additional rupees ever be used to buy imported goods? It puts pressures on the domestic production capability leading to inflation.

Furthermore, prices are abstract signals which convey information as to what to produce, in what quantity, how, for whom and in what time. Such information is distorted by additional influx of money. It changes the relationship between costs and prices and sends out wrong signals. Government projects aren’t backed by any real market demand. As a consequence of distortion, laborer gets shifted from production of goods it was preciously employed in- backed by real demand- to sectors where demand of his labor is contingent upon repeated influx of money from government. This later leads to great unemployment. Influx of additional currency also changes the capital structure in the economy. Thus, the result is wrong goods being produced, in wrong quantity, in wrong time and for wrong persons, a phenomenon which Austrian economists have called as ‘malinvestments.’ This explanation is a priori valid and no amount of external evidence can refute it. The result flows from deducing propositions from apodictic axioms, a method followed in deducing Ricardo’s law.
(See Ludwig Mises’ Human Action and his Theory of Money And Credit.)

It was precisely due to the ills of monetary expansion as stated above that Nobel Laureate economist F. A. Hayek argued for denationalisation of money.( See ”Denationalization Of Money: The Argument Refined” by F. A. Hayek.)

Gurumurthy is royally ignorant of all this literature and yet he has opinions on economics.
Murray Rothbard had remarked:
“It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

In a similar spirit, Mark Pattison had remarked, “A man who does not know what has been thought by those who have gone before him is sure to set an undue value upon his own ideas.”
This holds true for the trio I mentioned in the beginning of my post.
It’s time that they begin to pay heed to these wise dictums.

P.S.- Gurumurthy mentions in his speeches that India has around 6,68,000 villages and towns and only 12,500 police stations and then goes on to claim that India has one of the lowest rates of crime in the world. It doesn’t occur to him as to how crime will even get recorded if there’s such serious lack of police force? However, it’s interesting to note that India is in order inspite of such lack of police force.

Inferences to what is not experienced

You may say. . .for example, that you see your friend, Mr. Jones, walking along the street; but this is to go far beyond what you have any right to say. You see a succession of colored patches, traversing a stationary background. These patches, by means of a Pavlov conditioned reflex, bring into your mind the word “Jones,” and you say you see Jones; but other people, looking out of their windows from different angles, will see something different, owing to the laws of perspectives: therefore, if they are all seeing Jones, there must be as many different Jones as there are spectators, and if there is only one true Jones, the sight of him is not vouchsafed to anybody.

If we assume for a moment the truth of the account which physics gives, we shall explain what “seeing Jones” in some such terms as the following. Little packets of light, called “light quanta,” shoot out from the sun, and some of these reach a region where there are atoms of a certain kind, composing Jones’s face, and hands, and clothes. These atoms do not themselves exist, but are merely compendious way of alluding to possible occurrences. Some of the light quanta, when they reach Jones’s atoms upset their internal economy. This causes him to become sunburnt, and to manufacture vitamin D. Others are reflected and those that are reflected, some enter your eye. They there cause a complicated disturbance of the rods and cones, which, in turn, sends a current along the optic nerve. When this current reaches the brain, it produces an event. The event which it produces is that which you call “seeing Jones.” As is evident from this account, the connection of “seeing Jones” with Jones is a remote, roundabout causal connection. Jones himself, meanwhile, remains wrapped in mystery. He may be thinking about the dinner, or about how his investments have gone to pieces, or about that umbrella he lost; these thoughts are Jones, but these are not what you see. To say that you see Jones is no more correct than it would be, if a ball bounced off a wall in your garden and hit you, to say that the wall had hit you. Indeed, the two are closely analogous.
We do not, therefore, ever see what we think we see.

From Bertrand Russell’s book, The Scientific Outlook.

Prologue to Bertrand Russell’s Autobiography

What I Have Lived For
Three passions, simple but overwhelmingly strong, have governed my life: the longing for love, the search for knowledge, and unbearable pity for the suffering of mankind. These passions, like great winds, have blown me hither and thither, in a wayward course, over a great ocean of anguish, reaching to the very verge of despair.
I have sought love, first, because it brings ecstasy – ecstasy so great that I would often have sacrificed all the rest of life for a few hours of this joy. I have sought it, next, because it relieves loneliness–that terrible loneliness in which one shivering consciousness looks over the rim of the world into the cold unfathomable lifeless abyss. I have sought it finally, because in the union of love I have seen, in a mystic miniature, the prefiguring vision of the heaven that saints and poets have imagined. This is what I sought, and though it might seem too good for human life, this is what–at last–I have found.
With equal passion I have sought knowledge. I have wished to understand the hearts of men. I have wished to know why the stars shine. And I have tried to apprehend the Pythagorean power by which number holds sway above the flux. A little of this, but not much, I have achieved.
Love and knowledge, so far as they were possible, led upward toward the heavens. But always pity brought me back to earth. Echoes of cries of pain reverberate in my heart. Children in famine, victims tortured by oppressors, helpless old people a burden to their sons, and the whole world of loneliness, poverty, and pain make a mockery of what human life should be. I long to alleviate this evil, but I cannot, and I too suffer.
This has been my life. I have found it worth living, and would gladly live it again if the chance were offered me.

Mises on Socialism

The champions of socialism call themselves progressives, but they recommend a system which is characterized by rigid observance of routine and by a resistance to every kind of improvement. They call themselves liberals, but they are intent upon abolishing liberty. They call themselves democrats, but they yearn for dictatorship. They call themselves revolutionaries, but they want to make the government omnipotent. They promise the blessings of the Garden of Eden, but they plan to transform the world into a gigantic post office. Every man but one a subordinate clerk in a bureau.What an alluring utopia! What a noble cause to fight!

-Ludwig von Mises, Bureaucracy

Nikola Tesla on Solitude

From childhood I was compelled to concentrate attention upon myself. This caused me much suffering, but to my present view, it was a blessing in disguise for it has taught me to appreciate the inestimable value of introspection in the preservation of life, as well as a means of achievement. The pressure of occupation and the incessant stream of impressions pouring into our consciousness through all the gateways of knowledge make modern existence hazardous in many ways. Most persons are so absorbed in the contemplation of the outside world that they are wholly oblivious to what is passing on within themselves. The premature death of millions is primarily traceable to this cause. Even among those who exercise care, it is a common mistake to avoid imaginary, and ignore the real dangers. And what is true of an individual also applies, more or less, to a people as a whole.

Quotable Mises

“All that good government can do to improve the material well-being of the masses is to establish and to preserve and institutional setting in which there are no obstacles to the progressive accumulation of new capital and its utilization for the improvement of technical methods of production.”
-Ludwig von Mises, Planning for Freedom

Quotable Mises

What counts is not data, but the mind that deals with them.The data that Galileo, Newton, Ricardo, Menger, and Freud made use of for their great discoveries lay at the disposal of every one of their contemporaries and of untold previous generations.Galileo was certainly not the first to observe the swinging motion of the chandelier in the cathedral at Pisa.
-Ludwig von Mises, Epistemological Problems of Economics