Blogging is useful for the truth…
Yesterday I had posted a link to Deepak’s blog showing how sensex EPS projection is at best a futile exercise….
well today I am posting a link to how ‘big bang’ retail can create problems, stories, etc. to make a case for itself. Take the case of Gillette – once upon a time (say 125+ years ago) – made it famous that ‘bodily hair is inconvenient, and therefore ….so all men (and women) started using Gillette blades….and the rest is history!
Similarly here is an argument about how big box retail is trying to enter India by creating stories. Not sure how many of you remember the ‘lose oil sales fiasco? Sure loose oil sales must have slumped and the beneficiary must have been the ‘packaged oil’ industry…..
We continue to buy loose coconut oil, til oil, etc…and no, no regrets!
read on about why onion prices rise, fall, etc…..
http://devinder-sharma.blogspot.com/2010/12/now-it-can-be-told-onion-crisis-was.html
rrp
When Edison invented bulb and company were marketing it saying “light with no smoke”, some people (:-)) told that “Dont buy it, candles are cheaper, if you buy bulb you will be forced to buy electricity also and will be paying for it *forever*. Use candles and gas lamps only, far cheaper in the long run and all savings will be compounded …”
;-P (just kidding)
Dr Mohammed Ali Khan
Subra
This article which you gave a link is a nothing but Socialist drivel..
What is wrong if Wal Mart comes into India..?
He makes an absurd claim that if is because of the arrival of supermarkets, the number of farmers became low in western countries..
He seems to be a secret communist blaming all the ills of the world on America
Sambaran Mitra
Subra, what is your opinion about Devinder Sharma’s blog? There is a distinct possibility that Devinder’s blog shows his anti-market bias. On the other hand, I agree that for a farmer 1 big-retail-customer may be much worse than an army of less-wealthy-middlemen.
I fail to arrive at any strong conclusion/opinion (be it for or against) about entry of big-retail in India.
Maaran
The article you have linked is socialistic babble & obnoxious. For someone who seems to advocate individual responsibility in matters of money, I am surprised how often you seem to argue for socialistic economic policies! Perhaps you should switch to “The Mint” from “The HINDU” !
Onion prices wouldnt have risen up so much so fast if the import duty on onions were ZERO to start with ! We should all be asking why isn’t the import duty zero on lot of other vegetables/fruits as well. Why should it be a problem to anyone if the prices of vegetables go down with low/ZERO import duty ? Millions of Indians stand to gain, isnt it ?
Why should it be a bad thing for Walmart to sell goods at low prices to millions of Indians ? How can it succeed otherwise ? There is such a thing as “free enterprise” & “competition” in the first world that keeps check of monopolistic fears.
Unless govt intervenes, there can never be a monopoly in any industry, really !
Sambaran Mitra
Maaran, I consider myself a free-market enthusiast but with some reservations.
You talked about zero-import-duty on onions and other food products. My worry is that it might kill a whole breed of farmers. If some country (say X) hugely subsidizes its agriculture, then a zero import duty will lead to dumping, that will lead to farmers quitting farming, that will lead to loss of food-self-reliance, that will lead to ruin if X chooses to increase food prices.
Free market in agriculture would have helped if we could ensure all other countries are freeing agriculture from government intervention.
Maaran
To demonise WALMART is just ridiculous. Not allowing FDI in retail & a lot of other industries is irrational.
If common people didn’t find any value in buying from WALMART, how can it be so profitable & successful?
What we should worry about as Indians is if Govt indulges in crony capitalism by designing Retail/FDI regulations to benefit & allow only one or two players.
Allowing Free market in RETAIL can only do good things for miilions of FARMERs & common man(consumers) !
Sambaran Mitra
I completely agree with you that if FDI in retail is allowed with strict supervision to prevent any form of cartel, it can do good to our country, farmers and customers alike.
I would like your opinion about my counter comment to your zero-import-duty proposal.
subra
who said retail is not allowed in India? We have so many foreign banks – Citibank, Hdfc, Hsbc, Icici, …all are in financial retail. They are doing so much good for the country are they not?
Maaran
Mr Mitra – India remains a country of poor people purely because of the reliance of a significant population on agriculture. Blame our archaic labour laws for that. It is not going to be easy to undo the 63 years of Nehruvian socialism & collectivism that is stifling the free enterprise of Indians. But we should start somewhere.
Recently after the advent of NAC (National Advisory Council),NREGA & other horrendous policies, we seem to be reversing on the few steps we took towards the path of economic freedom !
“With strict supervision to prevent any form of cartel” – This is a typical nehruvian arugment that only some arbitrary panel/committee knows what is best for the entire country ! Any godly panel/committee only lead to more corruption !!
There is no such thing as a cartel or a monopoly anywhere in the world without the aid of a governmental panel/committee/ministry/legislation !
Sambaran Mitra
Mr. Maran,
Agree with you that more people in unsmart agriculture means more poverty.
Free enterprise was stifled in India for most part, again agree with you there. Terming pre 1991 system as Nehruvian socialism is something I can argue about. In hindsight it is delightful to curse Nehru’s stupidity. I am not sure if things were as clear back in 1947.
NREGA being bad for the country, I have no opinion. I do not know enough. May be good, may be bad. Who knows? If some smart IAS officer can get some good work done with NREGA fund, what is bad in that. But again, I really do not know much about ground realities of NREGA.
‘Strict supervision’ has been termed as Nehruvian by you. Under SEBI’s strict supervision, entry load was banned. Was it very Nehruvian, Mr Maran?
I agree with your last part that government’s hand is mostly dirty. Whatever it touches, it tends to become corrupt. But, can you really wish away the government, even in a free market system?
Maaran
Nehru may have well been a product of the times he lived in. I don’t hold anything against the man! But what pains me is to see his policies still being celebrated in India and our kids being taught the virtue of selflessness & altruism ! Socialism&altruism are so against the nature of human beings.
The NREGA is so utterly demonic I dont know where to start. Instead of letting entrepreneurs create jobs, Govt is actually competing with them for labour ! These IAS offices are no saints. I wish we had a vaccine or something we can inject into these govt officials that they will efficiently use our tax money.
SEBI’s banning entry load is typically arbitrary of any govt panel. Please look beyond the obvious. Access to equity markets for people in India (especially smaller towns) will be less as a result. Banks have started selling ULIPs & FDs in the place of mutual funds ! I don’t know how this makes anything better. To force fund houses not to charge entry load in a still nascent equity market can only be detrimental.
May be SEBI should also start recommending a set of stocks & Mutual funds to invest in ! How can they be so sure otherwise if the fund manager has the best interest of the investors in mind !!
subra
Hi Sambaran and Maraan – this is the LAST post on this topic please :):)
Swami
Excellent argument and counter-arguments by both Maraan and Samabran. Enjoyed the comments section as much as the post.
Subra, I see the comments section evolving into mature debates with people arguing on issues/points rather than on personalities.
Dr Mohammed Ali Khan
Its heartening to see more and more of my countrymen awakening to this sick ideology called socialism..
I wish a groundswell of opinion forms in our country against Socialism, and if it forms, I am confident, given the hard working, intelligent and civilized nature of Indians in general, released from our socialist shackles, we will become a prosperous nation.We will no longer be a ” Third world” nation..
Dr Mohammed Ali Khan
” Hi Sambaran and Maraan – this is the LAST post on this topic please :)”
Why Subra.. This is THE most important topic that we should discuss, and discuss in depth.. Look at the poverty that this ideology o Socialism has kept India for the last 60 years..
subra
No Dr. Khan see world history. Ayn Rand is a hopeless romantic. She created an ideal world where capitalism works. The American, European and some other countries are so far ahead that they continue to subsidize their stupid farmers. If you do not worry about subsidies, tariff and non tariff barriers, educational barriers, biases…then yes capitalism will work.
US is one of the worst culprits in not letting capitalism work. In an ideal world I should be able to buy land in Australia, take labor from Orissa, Africa, and other locations, grow sugar, and export it to USA. In the real world it is not possible.
Australia will not let me buy (ask China their bid for ores was aborted), they will not issue me 500 visas – saying please use Australian labor. And US will not allow imports of sugar.
Ayn Rand is nicely kept in a museum, that is all. QED.
Dr Mohammed Ali Khan
“Ayn Rand is a hopeless romantic”
I agree..
Its the nature of our species..
What I am saying is …do not blame Capitalism for essentially Socialist policies of Governments..
“subsidies, tariff and non tariff barriers, educational barriers ” – All these are socialist policies.. These are NOT Capitalist, Free market policies championed by Ayn Rand..Thats why my hero Sauvik Chakraverti of http://sauvik-antidote.blogspot.com/ calls USA – USSA.. United SOCIALIST States of America
If Ayn Rand has to be kept in a museum, I will lose all hope for Humanity, I will lose all hope for Rationalism, I will submit myself to blind irrationality & mysticism
Maaran
As much as I wanted to hold back, I couldn’t. Sorry for this laboriously long comment 🙂
Subra – You are giving way too much credit for Ayn Rand than she deserves for the rise of capitalism in the first world. It all started long way back even before the period of one Adam Smith. Capitalism stems from the love for Individual Liberties. That is why I find views of quite a lot of well read, well intentioned, freedom loving Indians, dare I say, hypocritical. Thats what prompted me to post a comment to your blog.
You mostly talk about international trade. Let me come back to that later. But there are a million things wrong in today’s India that has nothing to do with inter-national trade & everything to do with collectivism. Archaic Labour laws, Poor Property Laws(Eminent Domain), Govt literally in every business/industry you can think of Railways, Airlines, Banks, Hospitals, Education, etc(As blogger Sauvik Chakraverti nicely put it, Govt should be constitutionally limited from doing any business & wasting our tax money).
With respect to International Trade, your views appear to justify India’s completely flawed trade policies based on equally flawed & misguided policies of other nations.
Prosperity comes from having your needs & wants of the masses met. Not by boasting how much trade surplus as a country you have over another. If I get onions, cars or anything cheaper and/or of better quality made in another country I would rather buy from them. Protecting my local producers means rewarding mediocrity.
Trade barriers can only make one poor. Let me quote what Don Boudreaux had to say on trade barriers – “Blacksmiths and horsebreeders of 100 years ago would never have agreed that the automobile has been good for them. Nor would wheel-chair makers and manufacturers of crutches have agreed 55 years ago that the polio vaccine has been good for them. NO producer groups who lose market share, either to direct competitors or to producers in completely different industries, believe that the market process has been good for them. But that’s the nature of the market; such creative destruction – powered by entrepreneurial freedom and, more importantly, consumer sovereignty – is utterly necessary for a high standard of living that is widespread.” Why shouldnt this apply to international trade.
Governments all over run on interest groups, lobbies, votebank politics that economic prudence are thrown out of the window. I dream of the day when govts will do the only thing they are supposed to do – “Protect Individual Rights&Liberties”.
Leave alone international trade, we don’t have a uniform tax regime GST (I hate taxes just like everyone) implemented all across india. Each state in India protects its own traditional businesses ! Imagine the possibilites of a uniform market within India first !
If in India we don’t take steps in the right direction atleast now, our next generations will not forgive us just the way Nehruvian policies are looked at today.
Dr Mohammed Ali Khan
@ Maaran
Kudos.. Excellent and elegant reply..
Just one thing Id like to say..
Ayn Rand did not invent Capitalism, nor did she claim that she did..
But the essence of her argument was that “Capitalism is a MORAL system, ethically good system, a just system, only system compatible with individual liberty”
What she wanted to say was that unless the intellectual climate favours a system, it will not flourish..
Unfortunately in our country, and sadly worldwide, the very word “Capitalism” means something evil.. In spite of its spectacular successes.. Thats what the article linked by Subra was hinting at..
( For example, in India every Socialist or Trade Union leader is looked upon as someone who is essentially good, “selfless servant”” of the community, whereas a business man who actually creates wealth and provides services is called a “Greedy Capitalist “)