Importance of private properties

Neo liberalism’s trickle-down theory of catering to the needs of the rich so that development at higher level would trickle down into the lower levels to bring people out of poverty is futile.  But, this does not mean that private property would do harm. Private property has its own advantages.

Firstly, private owners tend to make better use of their property as they will reap the benefits of any increase in its value, or suffer if its value decreases. 

Secondly, the economic value, that is the price that the property will fetch in the future, incentivises the private owner to maintain the asset.

Thirdly, the attempt of the private owners to gain profit ensures competition which would in turn result in innovation. 

The duty of the government is to ensure that the private players do not override the natural market mechanism to indulge in unethical practices. At the same time, the basic framework created by the government must be simple, transparent and conducive to ensure the high performance of private individuals

Ensuring safe functioning of market mechanism

Prices convey a lot of information. It not only tells producers what to produce but rather informs the producers to produce what people want. The more inaccurate the information gets, the lesser will be the economic coordination which will in turn lower satisfaction of wants. Thus interference in the information conveyed by prices is destructive to the economic progress of an economy.

We often fear that an increase in competition and advancement in technology will take away the traditional livelihoods of the people. Norman Macrae, an editor of the Economist, pointed out that with the advent of Industrial Revolution in England, about two thirds of the jobs that existed in the beginning of the century was eliminated by the end of the century, yet there were three times as many people employed at the end of the century. But the jobs were not the same. He pointed out that in the late 1880s, about 60 per cent of the workforce in both the United States and Britain were in agriculture, domestic service and jobs related to horse transport. Today, only 3 per cent of the work force are in those occupations. Jobs will change with competition, but there will always be more new jobs created than the ones lost. 

Kerala being a literate state was subject to this primal fear during the computerisation drive in 1990s. In fact, when the agitation against computerisation subsided and computers replaced manual labour in banks and government offices, employees in Kerala found an enhancement in the quality of their job without leaving anybody unemployed. 

The duty of the government must not be to preserve jobs but to equip individuals to grab better jobs.

Does ideology really matter?

Throughout history, there have been different ideologies promoted by various thinkers. After their death, different schools of thought develop and ardent supporters of the ideologies debate among one another claiming superiority of their schools. Lee Kuan Yew, the most celebrated statesman of Asia shared his success mantra for developing Singapore from a dot of mediocrity to the most developed city state of today. He said, “We are pragmatists. We don’t stick to any ideology. Does it work? Let’s try it and if it does work, fine, let’s continue it. If it doesn’t work, toss it out, try another one. We are not enamoured with any ideology.”  The Economist argue that the welfare oriented Nordic states gained popularity because they were able to inject market mechanisms into welfare state to sharpen its performance.The whole idea behind the formation of a state is to provide a sanguine atmosphere for its citizens to develop their potential to the highest level.

Lucky is the state that do not drench itself in the lacuna of ideologies, but derive its policy framework according to the needs of time and wants of its people.