Comment on crimes in India

One must understand that dictums like ‘One must respect women,’ ‘One must not murder,’ ‘One must not rape or harass women’ are categorical in nature. Meaning, one must adhere to them irrespective of the expected utility gained from doing acts like murder, rape et cetera. Now, people adhere to categorical rules if they’ve been trained to subdue impulses which drive them to do those acts. Or if they inhere those temperaments from culture. We should therefore invest in that instead of encouraging a utilitarian and indulgent culture.

All that sloganeering can do is bring defame, and disrepute to those who commit those acts. In other words, it tries to make those acts more costly than the expected utility. But cost itself is subjective. People may not care about what we think is ‘cost’ of those acts. Also, using legislative law to make such acts costly is ineffective in a country like India where there are 6,68,000 villages and towns and only 12,800 police stations.

Thus, customary law assumes importance. Customary law in India is closely linked to categorical morality. Thus the only effective solution which is practical is to popularize the techniques of control over oneself, like yoga. This will help in conquering bodily impulses which interfere with adherence to categorical rules.

Note that customary law is successful in a society which is NOT individualistic. But feminists are doing disservice by constantly arguing for an individualistic society where customs don’t matter. They don’t argue for better customs but that customs should be made irrelevant!

A pious fraud

All adarshavadi arguments in politics are mere farce.
Mohan Bhagawat has recently said that there should be open dialogue and discussion on reservations. Just that. Dialogue and discussion.
And the entire opposition, unanimously, not only said that there can be no scope of discussion on reservations but even threatened grave consequences if even a discussion happens on it.
Where is the democratic spirit now?

A pious fraud!

Clarifications in Defense of Free Market

Before reading this article, one is advised to carefully read the article on the blog of Miranda titled “Is the Invisible Hand Trembling?” by Mita Chaturvedi. The purpose of what follows is to explode the fallacies stated therein and also to clear some common confusions which generally prevail in discourse relating to market.

 

1.) Free Market

The article begins by asking the question “What does the term free-market mean to most of us?” and does not offer a single definition of it in the entire piece. We are only told that it’s “next-to-impossible to spot a free market outside a textbook,” which, frankly, leaves the reader scratching his/her head.

The term free market means a situation or a framework within which:

  • People are free to exchange commodities, and within which
  • they can own, control and operate private property..

Period. It’s silly to utter that free markets aren’t real or that they don’t exist in the real world. What doesn’t exists in the real world is perfect competition, not free markets.

 

2.) Incorrect Understanding of Adam Smith

The article then continues the tradition of misinterpreting Adam Smith. In doing this, it uses the most clichéd case of the invisible hand.

To the surprise of many, the term invisible hand appears only once in Wealth of Nations. But as most have not read Smith’s Wealth of Nations they don’t know the context in which Smith used the term. Smith believed that due to “Home Country Bias,” a producer, out of his interest, will prefer to employ his capital domestically. And in doing this, he will be led by an invisible hand to benefit the home country which was no part of his intention.[See pg. 456 of An Inquiry Into the Nature and Causes of Wealth of Nations, Glasgow edition.]

The invisible hand doesn’t mean a blanket rule that the market “will sort things out” as the author claims. Smith only meant in a metaphorical sense, that it “frequently happens that when an individual pursues his self-interest instead of intending to do public good, his actions lead, in many cases, as if by an invisible hand, to serve interests of society “more effectually than when he intends to promote it. I have never known much good done by those who affected to trade for the public good.[See pg. 456 of An Inquiry Into the Nature and Causes of Wealth of Nations, Glasgow edition.]

 

The author also sets herself to the task of seeing how practical is this belief for a typical market. The word belief meaning the belief in invisible hand to sort things out. Smith, unlike neoclassical economics, didn’t aim at creating an abstract model with arbitrary assumptions to predict the market process. Instead, he took the problem of un-designed order of the market, which he aimed to explain through the causal chain. Asking whether Smith’s invisible hand is practical is a hallmark of total confusion.

 

3.) Equilibrium Analysis

We are told then told that Demand and Supply– [are]the very foundation stones of economics. Why? Because it is primarily Demand and Supply that sets equilibrium prices and quantities in a market.

Equilibrium analysis is important in Neo-Classical tradition of economics and therefore demand and supply, which help in equilibrium analysis, are foundation stones of neoclassical economics. Not of the Austrian School of economics for example.

Then follows a logical confusion:
Despite being called the most efficient way to set market equilibrium conditions, an economy may not wish to completely rely on the market settings of Demand and Supply to set equilibrium conditions for several reasons.

Now market equilibrium conditions can be brought about by market only. If non-market methods are used to arrive at equilibrium, then the equilibrium is not a market equilibrium. These errors can be avoided by not using the prefix market with equilibrium.

It is also argued that equilibrium wages are set where labour demand is equal to labour supply. Equilibrium wages are not set, they emerge out of separate actions of individuals in an abstract model.

 

4.) A Misunderstanding of Prices

The author uses an abstract model inspired by neo-classical economics with unrealistic assumptions and without empirical evidence to arrive at her conclusion to understand the real world. Let us come out of the equilibrium analysis and see-through a priori reasoning why price control fails.

As argued by Austrian Nobel Laureate Economist Friedrich August von Hayek, prices are information signals that condense widely dispersed decentralized knowledge of facts (which are time and situation-specific) and individual preferences. This knowledge, being decentralized, dispersed and subjective by its very nature cannot be amassed by any single individual or entity, and so the task of setting price by the government, a price which reflects the underlying conditions of the market, is practically impossible. Moreover, an information signal which condenses knowledge cannot be corrected. It reflects underlying conditions and state of affairs. In a free market, if the price of a commodity is high, its an information signal indicating a scarcity of that commodity. It is luring the existing producers to produce more, inviting new producers to produce the commodity, and telling the consumers to economize. Fixing the price below the market price makes the commodity more scarce instead of ensuring more availability of commodity at an affordable price. This is not quantum mechanics. Understanding this simple fact doesn’t require the silly game of equilibrium analysis or using the concept of deadweight loss for that matter.

 

Closing Remarks

There’s a common misconception about free-market economics, answering which I will end this piece. Analysis of the free market doesn’t furnish the conclusion that the free market creates a land of Cockaigne. It merely demonstrates what happens in a market. It may be fair or unfair. Just or unjust. Pleasing or appalling. What those who advocate free markets merely argue is that an attempt to intervene in the market, to make outcomes fair, just, or pleasing, will end up, more often than not, creating a worse situation than what market offers.

The critics of free-market should keep this in mind instead of creating a straw man of the market whose invisible hand automatically sort things out.

 

 

 

 

If it is only possible to argue against the socialist programme that it endangers the particular interests of one part of humanity, one has really affirmed Socialism. If one complains that the system of economic and social organization which is based on private property in the means of production does not sufficiently consider the interests of the community, that it serves only the purposes of single strata, and that it limits productivity; and if therefore one demands with the supporters of the various ‘social-political’ and ‘social-reform’ movements, state interference in all fields of economic life, then one has fundamentally accepted the principle of the socialist programme. Or again, if one can only argue against Socialism that the imperfections of human nature make its realization impossible, or that it is inexpedient under existing economic conditions to proceed at once to socialization, then one merely confesses that one has capitulated to socialist ideas. The nationalist, too, affirms Socialism, and objects only to its Internationalism. He wishes to combine Socialism with the ideas of Imperialism and the struggle against foreign nations. He is a national, not an international socialist; but he, also, approves of the essential principles of Socialism.

-Ludwig Von Mises, Socialism

On Moral Philosophy

What is the use of moral philosophy?A man may know what is right and still fail to do it.He may know that an action is wrong and still lack the strength of will to refrain.I can only offer for ethical theory the defense offered by John Stuart Mill in his ‘Autobiography’ for the usefulness of his ‘System Of Logic’, that “whatever may be the practical value of a true philosophy of these matters, it is hardly possible to exaggerate the mischiefs of a false one.”

-Henry Hazlitt in introduction to his book “Foundations Of Morality”

What is the use of moral philosophy?A man may know what is right and still fail to do it.He may know that an action is wrong and still lack the strength of will to refrain.I can only offer for ethical theory the defense offered by John Stuart Mill in his ‘Autobiography’ for the usefulness of his ‘System Of Logic’, that “whatever may be the practical value of a true philosophy of these matters, it is hardly possible to exaggerate the mischiefs of a false one.”

-Henry Hazlitt in introduction to his book “Foundations Of Morality”

An extract from Shankara Bhashya on Bhagavad Gita

The real nature of the Self as expounded here[Chapter 2, verse 11-30] in by the Lord is called Sankhya and intellectual conviction of the truth produced by a study of that section, that the Self is no doer, owing to the absence in Him of such changes as birth — forms the Sankhya standpoint (Sankhya buddhi); and the enlightened who hold this view are called Sankhyas. Yoga consists in the performance — before the rise of the foregoing conviction of works as a means to moksha, requiring a knowledge of virtue and sin and presupposing that the Self is distinct from the body and is the doer and the enjoyer. Such conviction forms the Yoga standpoint (Yoga-buddhi), and the peformers of works who bold this view are Yogins. Accordingly, two distinct standpoints are referred to by the Lord in Chapter 2 verse 39. Of these, He will assign to the Sankhyas the Jnana yoga, or devotion to knowledge, based upon the Sankhya standpoint; and so also He will assign to the Yogins the path of Karma-yoga, or devotion to works, based upon the Yoga standpoint. Thus with reference to the Sankhya and the Yoga standpoints two distinct paths have been shown by the Lord, seeing the impossibility of Jnana and Karma being conjoined in one and the same person simultaneously, the one being based upon the idea of non agency and unity, and the other on the idea of agency and multiplicity.

Translation by Alladi Mahadev Sastri.

Answers to objections to my letter to I&B minister

Some are misinterpreting that the letter that I mailed to I&B minister is aiming to stop communal incidents, which it is not. It aims to create a more informed reader or listener of news, a value which is admirable in itself in a democracy.
Some fear that its not a good idea to have mandatory requirement for the media as it might follow more restriction.
My answer to it is that this is not an arbitrary approach but a principled approach. Whenever any restriction facilitates a more informed opinion on the part of public, such restriction is desirable and justified.
Morever, in the absence of any such restriction, we do not have situation of no control. But a situation of control by vested interests, which is not bad per se, but is bad when it’s aiming at and successfully executing manufactured public opinion.
Some argue as to what prohibits anyone to come up with an outlandish proposal under the guise of more informed public opinion?
For that, judiciary must have the power to test whether a restriction will really lead to a more informed public opinion. If it does not, then judiciary should have the power to strike it down.

A short letter to I&B minister

Correcting selective information narratives

 

Honorable Minister,

Consider the fact that media houses, which are often touted as the fourth pillar of democracy are essentially disseminating news selectively as per their interest. For instance, some try to create the paranoia of Hindu terrorism through selective reporting. Others try to create competing narratives. Readers don’t get to decide their narratives, but money gets to decide it. Its an instance of a market failure.
Add to that media houses aren’t merely isolated private organizations, but organizations whose actions directly impact larger public and the framework which governs formation of opinion of public.
I think a case can be made to make it mandatory for all media publications to publish on a weekly basis, category wise, total number of communal incidents so that their narratives can be exploded?
It doesn’t add to the cost, enables consumers to form informed choice, and is in a way similar to mandatory requirement for food industry to enlist ingredients on their product.
It will be a great step in the direction of informed choice. Those opposing the move will be in a situation of catch-22.
I hope you will consider the suggestion.
Respectful regards,
Keshav.

Implicit assumptions continued

If we take the case wherein we have the option of saving either 2 lives or 5 lives, then under the utilitarian ethic, the obvious answer will be to choose 5 lives.
However, here’s the interesting point. The application of utilitarianism itself assumes certain parameters which doesn’t come from utilitarianism.
The above answer assumes that each life has equal value. But this certainly didn’t come from utilitarianism. Its purely an arbitrary constructed parameter because it is not factually correct. Value is use specific and person specific. And is therefore different for different uses and different for different persons.