Sanjay Negi's thoughts on Current Affairs and Information Technology Directions.

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Friday, April 13, 2012

Should the State have any role in economic development and evolution of society in modern times? | LinkedIn Answers | LinkedIn

Should the State have any role in economic development and evolution of society in modern times? | LinkedIn Answers | LinkedIn


Should the State have any role in economic development and evolution of society in modern times?

Most problems of corruption, mis-allocation of capital, bureaucratic red tape, top heavy governance structure, poor distribution of public goods, poor re-distribution of wealth etc...happen because at the root of it all lies the medieval and feudal assumption that the state must foster economic and social development of society...


The immediate excuse for state role in economy is that markets are not very good at redistributing wealth....hence the state must progressively tax and give to those less fortunate...is this supported by facts?...


If markets are found not good at redistributing wealth, surely the solution lies in addressing that weakness of markets rather than usurping that role and giving it to governments...


As an illustration if Bill gates gets enormously rich by inventing and selling software, the solution lies in creating more competition by shortening the copyright or patent duration for the software that he sells...not by taxing him more....the cause of the problem needs to be addressed not the consequences...


Most public goods can be delivered by free markets....the era of natural monopolies in electricity, water supply, telecommunications is long past with inventions in distribution logistics...few domains like defense, roads and policing remain...


In India the real private sector is the government sector...it enjoys monopoly, price preference, free land and other subsidies....the employees cannot be sacked, they never deliver therefore...contracts are routed to government favorites...and so on...all at the cost of the poor public who is continuously bombarded with the lie that the government sector is the public sector because the ownership is with the public...


Isn't it time to redefine what is really private and what is public...based not on the ownership but on the behavior of managements...

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