A Libertarian Critique

A couple of years back, a call from a friend, M, woke me up. 

“Thoo ninna!” (literal translation – some spit! on you; effective translation – you bugger!)

“Yaako? What happened?” I thought he was having a bout of depression, due to not running a marathon in the last 24 hours.

“Firstu, aa caller tune thegiyo. I get pissed off whenever I hear it. You buggers have again raised the interest rates”.  

I happened to work at a bank that time, who as a part of their employee benefits program, had benevolently provided all the mobile phones with their ad jingle as a caller tune.  The bank had also, not so benevolently and arbitrarily it seemed, had raised interest rates across all loan products. 

I tried sympathizing with him, but it was as futile and phoney an effort as McCain’s campaign was. I was secretly sizing up my increased year-end bonus. (Sorry maga!) 

You see, at that time, I had not jumped on to the bandwagon of over-leveraged yuppies. I had no loans and I didn’t really understand the true impact of a 0.5% fluctuation in interest rates ( yes, I worked in a bank that time )

Times have changed, Lady-Luck decided to take a hike and common-sense deserted me. Before I had realized it, I was as hardcore a consumerist as a Republican stooge and had every kind of loan in my portfolio. As the loan rates steadily increased, I kept postponing the repayment date and panic. 

Now, though, the repayment date is like “dooradha betta” and the panic is quite real. My EMIs have fattened up and I am on a crisis-management mode. Who do I blame for this? Firstly, me, because I fell prey to a consumerist mindset. Secondly, luck for being caught out on the wrong side of the economic cycle. And, thridly, the lassiez-faire capitalism propagated and instituted by Ayn Rand-ian economists such as Friedman and Greenspan.

The USA, under Greenspan’s iron Fed hand, eptiomized this model for more than three decades, abandoning regulation and oversight totally. The lassiez-faire capitalism model works well in a perfect world where every human is provided equal opportunities, exercises rationality and creates wealth as he/she is capable of. It sounds good on paper and as a question on a logical test. But, as most people are already aware, people (and hence, industries) tend towards greed and more importantly, equality of opportunities is a myth that cannot be expected to turn real. 

Suffice to say that evidence of the absence of foresight and reality-check in this model is all around us right now. What this augurs, or should bring in, for the future is a climate of centrist policies – capitalism with the government entities functioning as non-partisan regulators without direct funding of industries. The government, clearly, has no business running coal and steel factories (like in India) neither does it have any right to transfer healthcare and education to unregulated private players (like in the US). Banks cannot function as glorified financial engineers and big industry players as exploitative monopolies. Some of long-time Randian libertarians have already turned around.

I can do no better than agree with this article by Paul Samuelson, that grand old economist, whose books many of us learnt from and still do. There are a couple of more distressing points that came about during this financial crisis – the US National Debt has almost doubled from just over $5 Trillion to crossing the ticker over into 14-digits at $10 Trillion in the last 8 years.

There’s a lesson for every economy in that, especially growing economies such as the ones we inhabit. Interest rates will cyclically go up and down and I can only curse my luck. But, what is avoidable is complacent laziness that almost always translates to raiding of citizens’ savings and taxes, in one way or the other.

A Libertarian Critique

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