"Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety."
- Benjamin Franklin
This was the quote in the first page of the book, "The road to serfdom" by Hayek (probably the greatest advocate of free market theory). And this is the perfect one line summary of Hayek's theory.
I am in the process of assimilating Hayek's theory. I shall write more about it once i do that.
Saturday, March 15, 2008
The Rs.60,000 crore farm loan waiver in Budget 2008
Few of the questions that came up to my mind when I read about this relief package announced by "P.C., the populist"...
- What is the fundamental cause for the farmer's indebtedness? Did they grow the wrong crops at the wrong time or is it because of the too low/too high rainfall?
- Should the farmers continue to bet on such rainfall sensitive crops?
- The Finance Minister indicated that more credit should be available to the farmers. And that once their old loans are waived they should be eligible for fresh loans. What if the farmers bet on the same crops and fail again? Will the Government pay off their loans again?
- Isn't the Government covering up the consequences of their bad decisions? So, where's the motivation for the farmers to act right?
- What about the farmers who acted harder and wiser and repaid their loans? Doesn't this demotivate them?
- I learnt that the money would be paid to banks in cash over next 3 years from the budget provisions (which means that includes my money too). So whats the opportunity cost of the Rs.60,000 crores spent on this ?
- What is the fundamental cause for the farmer's indebtedness? Did they grow the wrong crops at the wrong time or is it because of the too low/too high rainfall?
- Should the farmers continue to bet on such rainfall sensitive crops?
- The Finance Minister indicated that more credit should be available to the farmers. And that once their old loans are waived they should be eligible for fresh loans. What if the farmers bet on the same crops and fail again? Will the Government pay off their loans again?
- Isn't the Government covering up the consequences of their bad decisions? So, where's the motivation for the farmers to act right?
- What about the farmers who acted harder and wiser and repaid their loans? Doesn't this demotivate them?
- I learnt that the money would be paid to banks in cash over next 3 years from the budget provisions (which means that includes my money too). So whats the opportunity cost of the Rs.60,000 crores spent on this ?
Tuesday, March 4, 2008
Economics of Discrimination
We had an economics professor (Dr.xxxx) deliver us a guest lecture on economics of discrimination. He spoke about how the white males had dominated the United States during his generation (he is around 60 yrs old..so shud be a baby boomer) and how opportunities were denied for the blacks and Hispanics.
And then we discussed about the affirmative action policies and about how the white males are now in the receiving end. Dr.xxxx said, " I feel bad when I see my grandson struggle. We didn't have to go through this when we were young. But, yeah.. we got too many benefits. So you guys need to pay a price for that".
And Michael, my friend responds.." Dr.xxxx, then why don't you give us ur social security??"
And then we discussed about the affirmative action policies and about how the white males are now in the receiving end. Dr.xxxx said, " I feel bad when I see my grandson struggle. We didn't have to go through this when we were young. But, yeah.. we got too many benefits. So you guys need to pay a price for that".
And Michael, my friend responds.." Dr.xxxx, then why don't you give us ur social security??"
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