September 04, 2004
"Road to Liberty: Markets Alone Reward Diverse"
By SAUVIK CHAKRAVERTI
Socialists insist education will help the poor. Actually, millions are poor not because of ignorance, but because of socialist law. Unlettered tribals in the jungles of central India, for example, know how to distil mahua but laws prevent them from selling it. Millions of poor coastal Indians know how to climb the palm tree, harvest the juice, and brew toddy. They are poor because laws prevent them from selling the fruits of their traditional knowledge. In Sri Lanka, toddy is touted as the national drink and sold in tetrapak. No toddy is sold on Brigade Road, Bangalore: Excise law.
Similarly, millions of unlettered Indians know how to sing, dance and play musical instruments. But they languish in poverty because the socialists have outlawed nightlife. The poverty-stricken north-east is full of potential rock stars. Arun Shourie showcased many great north-eastern bands in Delhi recently but where do they perform, given all the restrictions on opening bars and clubs, serving alcohol and so on? In Mumbai, entrepreneurs have invested in thousands of dance bars which fork out crores in taxes, but cops routinely raid bars and arrest these girls who are just trying to earn an honest living with skills they already possess. In Maharashtra, legends recount the Peshwa Baji Rao’s deep love for the dancing girl Mastani. Today, poor Mastani would be in jail or in a municipal school! Tamasha is an ancient Maharashtrian form of ribald popular entertainment, but it has been legally crushed, and the papers report that tamasha artistes today survive as mistresses of corrupt local politicians. Mujra is banned in Lucknow.
In America, black slaves made it big in music. New Orleans produced Satchmo and hundreds of jazz and blues stars not because of education, but because of liberty: The liberty to earn an honest living.
The socialist emphasis on education also demonstrates complete ignorance of how knowledge operates in the market economy. Main Street, Pune, is a busy market. Walking around, you find hundreds of small bakeries that turn out a dazzling array of breads, buns, biscuits, rolls and so on. There are scores of small jewellers, tailors and
expert darners. Many tiny establishments make picture frames. There are Irani, Parsi, Chinese, tandoori and continental restaurants. Budhanis is famous for its potato chips. There is a popular home-made softy ice-cream joint. There is a vada-pau stall that always has crowds of customers. There are bhelpuri and chaat-wallahs. A group of acrobats perform for passers-by. The street is lined with hundreds of shops selling diverse products ranging from footwear to sarees, from electronic goods to kitchenware. This is what Friedrich Hayek called the division of knowledge: Every economic actor is operating with distinct know-how.
Important implications follow the Hayekian view of knowledge. First, that central economic planning can never work, because knowledge cannot be centralised: What cannot be known cannot be planned. The socialist central planner, Hayek said, suffers from fatal conceit: He does not see the wonder of knowledge, and thinks he knows it all. It is because of knowledge failure that there are shortages of everything that is planned, from roads to power. There are no shortages in the market economy.
Second, Hayek showed how knowledge and education are entirely different things. Hayek found much of the knowledge used in the market economy to be inarticulate and uncodifiable. The bakers, tailors, expert darners, and bhelpuri-wallahs of Main Street possess this kind of knowledge. This shows the limits of formal education as a means to economic achievement.
Formal education churns out certain types of economic actors only: Bureaucrats, managers, accountants, doctors, lawyers and so on. The vast majority of successful economic actors get their knowledge elsewhere. That is why VJs, DJs, sports-persons, fashion models, and hotel chefs earn more than professors of economics.
Liberty matters much more than all the education the socialists can impart. Liberty means free trade and open borders. Liberty means there are no restrictions placed on economic achievement and it is this freedom that empowers the poor to enter the market, not education. Liberty beats education in another important way, for education requires us to pay a new tax, while liberty is free, requiring only that repressive laws be repealed and meddlesome, corrupt bureaus be shut down. So why have almost all educated Indians agreed to the education cess?
Perhaps their education made them forget liberty. In 1215, when the Magna Carta was signed, Englishmen were all quite illiterate, but they instinctively valued liberty: Every freeborn Englishman is the king of his own castle. Thus, we see the birth of constitutional democracy and the birth of capitalism. The merchants of cities and towns
extracted from King John constitutional liberties to self-government and trade by land and sea. The richest livery companies in London then were those of the fishmongers, grocers and fruiterers because they sold what everyone consumed. The merchants of England’s cities and towns comprised the commons. But in every Indian city today, people in these basic trades have their surpluses robbed by parasitic state personnel. How can we believe we are a true constitutional democracy when we don’t have liberty?
-- THE TIMES OF INDIA
Sunday, Sept. 5, 2004