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از خوابِ گِراں خوابِ گِراں خوابِ گِراں خیز
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تو تیر آزما ہم جِگر آزمائیں

Sunday, 28 December 2008

Menaces of Democracy and its Problems

Democracy! Today we see the whole world going crazy about democracy and for the democracy. We see proponents of democracy all over the place and it has been engrained into the minds of people that democracy is the only form of government that is right, therefore should be the only one acceptable. Then we see wars taking place all over the world by these proponents of democracy into foreign lands to establish democratic governments there as well. Of all these people, I really doubt if many know what really a democracy is. Or what other options there are apart from a democracy? What are the short-comings of democracy? Is it all good and no pain? Is democracy the best type of government? To this last question someone answered: “Democracy is not the best but all others have been tried.” So are we falling for democracy just to have a different experience from the past? Besides, didn’t the ancient Greeks have democracy?

Democracy is popularly defined as, “Government of the people, by the people and for the people.” Democracy is described by Aristotle as a form of government that has in its view the interest of the majority; because majority of the people are poor therefore it is the government in the interest of poor. What this means is that the majority becomes a ruler in the state, where rulers are paid to go to the assembly.

So what other options are there apart from a democracy for the political setup of a society? The forms of government can be easily divided into four main groups, while all the rest being variations of these. These four groups are called monarchy, oligarchy, aristocracy and democracy. Monarchy or dictatorship is theoretically the same thing. Monarchy can have two extreme variations, first being a benevolent monarch or a dictator and second being the tyranny thus headed by a tyrant leader who can be a king or a dictator as is often called these days. Then oligarchy is a political setup where the rich people rule. In oligarchy again there can be two extremes of one where the rich take care of their poor populace and the other where the rich are greedy and thus loot there poor populace. Aristocracy is a political setup where the affairs of the state are run by the best people from among the population and the criterion for the best can be chosen be morally best, religiously best or economically best, where in the later case the aristocracy would be similar to oligarchy. Finally, democracy is a political setup where majority runs the affairs of the state. As generally the majority is poor, therefore democracy can be called as a government by the poor. In another case if the majority of the population of a society or state is rich, this would be same as oligarchy. In yet another case if majority of the population of a society is incoherent or racist or barbarian the government would inevitably become tyranny by many. All these forms of government can be summed in words of Aristotle as:

Tyranny is a kind of monarchy which has in view the interest of the monarch only; oligarchy has in view the interest of the wealthy; democracy, of the needy: none of them the common good of all

As already stated democracy is a form of government that takes care of the majority of the population or serves the interests of the majority only. This would mean that majority of the population if they want can and will make or change laws of the land as and when they want. This gives the majority the power of a monarch and thus of a tyrant ruler. If we have learned anything from the history it is that power corrupts and absolute power corrupts absolutely. Some would argue power if divided among many would be so little in itself that they would not be able to do anything. But the problem is that although divided it is still more than the people who are being ruled. If for example we assume that majority of people of a certain state are fascist or racist, they would try and eliminate all other nationalities from the society who fall in the category of minority. This would bring misery and injustice to the people and would morally not be correct, otherwise what Nazi’s did in Germany should not be looked down upon as Germans were a majority in that land and thus exercised the right of majority to dislike or hate the minority races and thus take any action they deemed necessary.

Again in another case when the majority rules and they are poor, they can try and usurp the property of the rich. As they are powerful thus they out of their jealousy or hatred for the rich people can try and forcefully loot the property and money of the rich, which not only is morally wrong and unjustifiable but harmful to the state itself. Therefore, if not properly taken care off or look properly at a democracy can easily turn into a tyranny of the majority. In such a state there would be no rule of law for the majority. As majority is the one who makes the laws and thus can make laws best suited to serve their own purposes.

Another phenomenon common in politics of majority is known as mob behaviour. As majority governs, when together in a group have a tendency to exhibit the behaviour of a mob or a herd. This psychological phenomenon means that people when together in a group exhibit irrational behaviour, plus they behave in the same way at the same time. This is how stock market rumours take the market to a crash. This is how ordinary citizens behave is the most irrational way during riots at sporting events or political rallies. This at times gives rise to further injustices as obviously the victims are the minorities. These irrationalities are even more evident in those classes of population who are uneducated or uncultured or emotionally charged at certain moment.

Another point of concern is decaying moral and ethical standards. As majority is the sole authority in making or changing any laws, then if majority of the people are somehow convinced about certain thing either good or bad can be made as a rule of law. The process of decaying morals starts with a single seemingly insignificant step at the time that can lead to big changes in the later years. Then the minds of the majority can also be changed through propaganda campaigns. This is evident in the history as in the case of crusaders when pope was able to get people to march to capture Jerusalem. It can be sighted as an example of propaganda campaign to achieve certain objectives. In the same manner propaganda can be used as an instrument to convince people for changes in certain laws which at times does also lead to decaying moral standards. It is just 50 years ago many of the things were unlawful because of the moral standards, but somehow or the other the moral standards have been reduced and the majority has been made to accept the ideas which were previously unacceptable.

These effects are evident all over the so called democratic world and because this democratic world is the one that is ruling over the rest of the world, these effects can be seen all over the world though in varying degrees from country to country and region to region. Let us consider the reducing moral standard, not more than 50 years ago porn was considered something bad and not to be viewed. But today it has become a household thing, again varying from society to society. I think this is because of an increasing infiltration into the society by the rogue elements. These elements have managed to convince more and more people slowly and gradually to accept this phenomenon, making the moral standards to reduce. Take the other case of democracy being the tyranny of the majority. Many people will consider this idea to be bizarre but like it or not this is what has been happening in many parts of this world. Take the example of India recognized all over the world for being the world’s biggest democracy. But each year in the whole on India thousands and thousands of minority people are killed, whether they are Muslims, Christians, Sikhs or other minority groups by the fascist Hindu groups. These killing get the government cover because the Hindus are in majority they get to say what they want done and whom they would allow to live in India and whom they would kill. If this is not tyranny then what tyranny would be? Chief Minister of the state of Maharashtra is reported involved in the sporadic killing of Muslims in the state using Hindu mob groups, under the police cover. But he even then gets elected back because the Hindus are in majority. Another example from the same country would be in eastern India where thousands of Christians are killed their women raped and churches burnt by the Hindu mobs supported by powerful political parties who have been in power for ten years. But nobody raises the voice because they majority is happy and majority get to have the say. Take another case of Serbia, where thousands and thousands of Bosnian Muslims were slaughtered by the Serbs who were in the majority and thus had their say.

You might think this phenomenon is exclusive to third world and doesn’t belong to the Western Europe in particular. Some years ago in France, the government imposed a strict ban on wearing headgear. Now had this headgear belonged the majority of the population’s dressing, of course this would have been a political suicide. But this headgear was worn by not the majority, rather the religious minorities of Muslims, Jews, Sikhs and others. So as these religious groups were in minority their religious right could be taken away by the majority by the sole method of majority having the power to do so. Therefore under the tyranny of the majority the rights of the minorities were quashed and nobody even noticed.

In the recent times another factor has been introduced into the equation which is mass media and its role as propaganda machinery. Some would argue this has always been there. In some way or the other, propaganda has been part of the equation throughout the history. But in recent times this has risen to become one of the most important of the factors in the equation. Media through its various means of newspapers, television and cinema is what rules the hearts and minds of the people. People believe everything without question what this little black box tells them to be true or what the newspaper tells them. I think these are very important means of keeping people informed of what is happening around them and what are the steps their governments are taking and more importantly where the tax payer’s money is being spent by the government. This never the less helps them in making their decision in the future elections. Today if we consider United States of America only it would have got thousands of private Television Channels which work on their own agenda and are not controlled by the government. Private media without any government control should mean impartial and honest reporting so that the citizens stay informed whether the government likes it or not.

In today’s democracies these media outlets can either make or break the life of anybody they want and especially the politicians. Anybody the television tells to be a terrorist people believe him to be one blindly, or anybody this television tells to be a philanthropist and a patriot, people would believe him to be so as well without any question. Politicians need it to gain public support for their agenda and businesses need it to grow, while a common man needs this television to stay updated with the world around for the television tells him everything and plus to be entertained by it. If you consider this black box in the house, you would notice that you start liking whatever this box tells you to be good and dislike whatever this black box tells you to be bad. In other words ethics are also governed by this little machine in the house, to some extent if not totally. In a democracy where the opinion of the majority is what matters and not what is right or wrong, this invention just made the task of propaganda a lot easier and effective. People can now sit in their homes, get entertained and brainwashed at the same time to whatever the owner of that particular channel wants you to. This means that in a system where opinion of the majority is what matters, this television would be almighty and powerful for it has the power to make and break the opinion of people. Slowly and gradually when you have the majority of people conformed to your opinion you make it a law and or an adjustment in the law. All the ethical and moral standards can go down the drain.

After all the above discussion a question that arises is that who controls this powerful thing that can make or break anything around myths, opinions, heroes, villains, demagogues and presidents. Who has control over all this power? What are the ethical and moral standards the controller follows? For he has all this power we ought to know this as well. Unfortunately, today this all powerful media is not controlled by the people with the highest of the moral standards. If you look around, most of it is in controlled by big corporations. Behind these big corporations are filthy rich business men who are doing business. Profits being the main driving force for all of today’s ventures, for these businessmen anything that would sell would be good. Now with the all powerful media in their hands they are like gods. This would mean that these people on top have the power to make or break the governments. They can make populations content or they can bring upon revolutions. They can make governments to make or bend laws in their favour. They can force governments to make peace or to wage wars on other nations. So what does it do? It changes a democracy into an oligarchy. Where only that will happen what the rich want and what suits them the best. Only those people are allowed to rise through the corridors of power who have conformed to the desires of these rich. It would increase the exclusivity of the rich and therefore they would not like newer entrants either. Having all the power in their hands they would be very easily be able to ensure this. People will not be told what they are not supposed to know and only that which does not hurt the power of these powerful men.

If anything we have learned from history that would be that power corrupts and absolute power corrupts absolutely. So that would mean that private corporations should not be allowed control over such a vast amount of power. But what are the other options that we have? What other possible arrangement can be made apart from private people holding all this power? Some would argue that if all television stations would be in the hands of government the problem would be solved. Let us examine such a situation. A democratically elected government if starts to control the media, it would mean that the government would get control of the hearts and minds of the population and they can know make people to believe and like and dislike whatever they want. This would undermine the democratic process itself as it would allow those in government to over-power any opposition they have and get away with it. It means all the ills that were previously considered for the corporations can now be assumed to be for the ruler of the state and thereby democracy can in this way change into a monarchy of the head of the state where nobody can question him for he can choose what people should know and what they should not. It would imply he can very easily drift to become a tyrant ruler who would look for the benefits of himself and those who serve him properly. Therefore, a government controlled media is a potential threat to a democratic setup itself. But is free and independent media not a threat? Our previous discussion shows that free and private media is also a threat to the democratic setup. This is because it would do the same thing as the government controlled media but would only use more cosmetics.

In light of the above arguments I have managed to reach a logical conclusion. No matter how alluring and romantic a democracy may sound, democracy is not a best form of government. This is because of the irrationality of the majority of the population. Again the majority of the population is not so far sighted so as to judge the long-term impacts of short-term benefits. Most of the people are not even bothered to stand and think about the impact of the laws on the society in the long-term. Again if majority of the people think something to be right it does not mean that something is right. As evident from the entire above argument majority can be overtly or covertly be made to think that a certain something is beneficial to them and they would start and believe. People can be made to believe into much false propaganda and they would start to believe it. I think choosing democracy is synonymous to allowing people to commit suicide provided majority of them thinks that it would be beneficial to them.

What remains at large is the question of control of media. Who can be entrusted with such a powerful instrument? Should this thing be destroyed for once and for all, so that no one can use this power? But what about the contemporary methods of propaganda, as apart from television movies are very often used to portray a certain race of people to be evil so much so that the people are brainwashed to think that all the evil in the world is committed by that certain race of people. Then there are newspapers as well who make the opinions of the people. If we talk about blocking all the sources of propaganda machinery then newspapers are also a part of it and an important part of it. Should newspapers be closed down as well? Today another method being used are the video games, which the kids play and they then from their childhood are led to believe that so and so race or country are good and in the same way so and so countries are axis of evil and should always be fought against. Therefore, children are brainwashed to believe and behave in a certain way from the feeble time of their mental development. Should then the video games also be banned? Another question that arises is where should it stop? Because in this way we would end banishing everything, from television and movies to newspapers and video games and public gathering. Then certain things are for the betterment of the general people as well. For the newspapers and television do keep people updated on the national matters and concerns. People know about the problem and grievances of other people as well. So where the line should be drawn for what should be permissible and not permissible?

Unfortunately, these questions remain at large and deserve more deliberation and time. For the conclusion that seems logical maybe too harsh to implement or immature in itself to be whole heartedly implemented. But one thing is certain that a democracy is not the best form of government, rather more corruptible and more fatal to the fabric of the society as a whole.

Saturday, 25 October 2008

The Case of Income Tax and Sales Tax in Pursuit of Equal Distribution of Wealth

Income tax is a tax levied by the government on an individual’s personal financial income. This tax is also levied on the income of corporate or legal entities as well, therefore making the people and corporate sector to pay a portion of their income to the government. Size of this portion varies from country to country, some governments charge a very high tax while others charge at a lower rate. Nevertheless almost every country (if not all of them, but I seriously doubt if there is any that doesn’t) in the world imposes income tax on its citizens in one way or other. The only purpose of enforcement of income tax is to generate revenue for the state.

Income tax as it is known to us today was introduced in 1798-99 for the first time in Britain by William Pitt the younger, so that to support costs of Napoleonic wars. This initial income tax levied 0.8333 percent on incomes over £60 and 2 percent onto incomes over £200. It was hoped that this measure would raise £10 million but it fell short of target and actual tax collected only totalled around £6 million. The tax was later repealed in 1816. Its opponents argued that such a tax should only be imposed to finance wars; they further wanted all records of tax burnt along with its repeal. Due to this all records of tax were publically burnt although copies were retained. In US income tax was introduced in July 1861 where all incomes over $ 600 where charged at the rate of 3%. In this case as well this measure was adopted to finance Civil Wars. Later this idea was slowly and gradually adopted my others around the globe.

There are three main categories of income tax; progressive tax, proportional tax and regressive tax. Progressive taxation is generally followed taxation method all around the world. Under progressive taxation regime many income brackets are formed and higher income groups are levied higher tax rate while lower income groups are levied lower tax. By this method of taxation lower income groups are given protection by not imposing any tax at all onto them as they already have lesser income and even a small percentage can be very heavy upon them. While higher income groups who can afford to pay higher rate of tax are made to pay income tax at a higher rate.

Regressive taxation is the opposite of progressive taxation. In this taxation method poor people are made to pay more percentage of their income in tax while rich pay lesser percentage of their income in tax. This method of taxation is not followed anywhere in the world, because of its inherent injustice. On the other hand proportional taxation method levies flat tax on all citizens irrespective of their income. Proportional taxation although not very popular, still is followed by many countries especially Eastern Europe, Russia and Central Asia.

Sales tax or ad-valorem tax is a tax levied by the government on consumption. Generally known as GST (General Sales Tax) or VAT (Value Added Tax) sales tax is mostly charged as a percentage of prices. This tax generally increases the prices of these goods, total amount of tax being shared between consumer and seller or producer. The proportion of sharing of total amount of tax varies with products and markets depending upon various other economic factors.

Although Excise taxes were common in ancient world, but sales tax as we know it today is a relatively new idea. Multi-stage taxation was largely developed during First World War, but Value Added Tax was first implemented in France in 1958. This was taken up by other European Countries generally in order to harmonize taxation system inside European Union. Today this is employed in over a 100 countries all over the world. Sales tax is a form of indirect taxation. But sales tax has a very dreadful history with governments being toppled and kings being killed since then. (For further reading on history of sales tax, click here)

Inherently sales tax is a regressive tax, implying people with from lower-income groups spending more percentage on tax that those from higher-income groups. There are generally two reasons for imposition of sales tax. Sales tax is either used by the state to generate revenues. In this case this tax is imposed on many items which in third world countries also include items of basic necessity like milk and bread. In this kind of taxation regime poor person naturally pays more percentage of his income in tax than the rich person, therefore it increases economic inequality and pushes more people below poverty line. Secondly, sales tax is also imposed on certain goods to discourage the use of them in which case items of basic necessity are exempted from tax. A particular example of such a measure is imposition of high sales tax on cigarettes and alcohol. What it does is that it increases the prices of those commodities onto which this tax is enforced, which makes the demand for them to decrease according to basic economic law of demand. Although its usefulness as to whether it does reduce the demand of goods such as alcohol is debatable, in which case only purpose of the tax can be to generate revenue for the government.

The problem with income tax is that it is inhibitive in nature, especially when percentage reaches very high it discourages the individual from wanting to earn more and thus to work more. For example, if in a certain tax regime lower threshold is $10,000 for tax. It would discourage an individual from wanting to earn more. If his basic needs are being fulfilled within this amount of money, why should he work more and then he would have to pay the tax as well? Secondly, income tax is indiscriminate of needs of person who is paying the tax. For example, if a person is earning more than a certain threshold he would be taxed at a fixed rate, whether or not he is able to fulfil his needs with this money or not. Needs of people vary from person to person and family to family. Some people might just have themselves to support while others may be supporting a large family. Although a general estimate of the population can be made but it would still at best be a ‘general estimate’ which is not bound to make everyone happy. But I believe that even if only one person is unable to fulfil his needs while is bound to pay the tax, it is unfair to him and his happiness should be as important as happiness of all the rest. Besides, why should he pay the money to the state when he cannot even support himself? Lastly, income tax I believe is unfair in itself. It looks like state looting people of their hard-earned money in a systematic way. Just assume if a person is levied a tax rate of 10% per annum, the state takes away his income of more than a month. That means he worked 36 days (1.2 month) in a year for the state while rest of the year for himself. He does not get the credit for his hard work of a whole month. Think of it when the rates go higher. 25% to 40% is a normal rate of income tax in today’s world, meaning 3 months and almost 5 months in a year of 12 months. I am sorry to say, but I tend to compare this to slavery, economic slavery. Someone working for half of the year for the state while half of it for himself, if this is isn’t slavery than what would be?

Whereas sales tax as already stated is a regressive tax. Unless used shrewdly only on those items whose use is deemed hazardous and dangerous and needs to be discouraged from using, sales tax is inherently unfair to a poor man.  As already stated it is because poor person pays more percentage of his income in tax than a rich man, while poor man’s ability to pay tax is less than compared to a rich man.

In contrast with both income tax and savings tax, if savings are taxed it seems a lot more fare. This is because savings is that portion of wealth of a person which he didn’t need for a certain accounting period. If a person didn’t need a portion of his wealth, implying that it was over and above his needs, when state asks for a percentage of that wealth from him it seems a fair and would mean that only rich are taxed. Although this might encourage consumption-ism to a certain degree but even if it results in lower savings, this would mean that wealth is circulating in the economy and thus creating more jobs for people. This can also lead to a society with better distribution of wealth.  A society where rich are taxed and poor are not, which the gap between rich and the poor is also that great.

Many would argue that such a move would reduce revenues of government and thus development. I think in a society where private sector does everything, the need for government’s revenue greatly diminishes unless it needs to fight wars. Besides there can be many other ways of taxation than income tax and sales tax, in which only rich are taxed and poor are exempted. Property tax and wealth tax are a few of the examples. Another line of argument can be that such a system is difficult to implement, but it should be kept in mind that in today’s recorded economies this step is not that difficult to take.

In light of the above arguments I believe income tax and sales tax create unequal distribution of wealth and increase the gap between rich and the poor. These taxations methods favour rich people while suppressing the poor, therefore put be replaced with savings taxes and wealth taxes which are not a burden on poor people while are paid by those can afford to pay. I think this would lead to economic emancipation on population and create a world where everyone gets his fair share from the society and gives his fair share to the society. A society where rich people would not be hated by the poor, in short a better and coherent tomorrow for us all.

Thursday, 25 September 2008

Economics of Money and Inflation in Historical Perspective

Money! It is around which today’s world revolves. But have you ever thought of how money is defined? We all know that a dollar note is considered as money, but say if someone from outer space comes here and asks what is this money? How would you explain to him what money is? In short how would it be defined? Well there are quite a number of definitions that tend to satisfy the cause and more importantly the type of money used in today’s world. Some of the definitions are:

                “Money is a commonly accepted medium of exchange in commerce.”

                “Money is a legal tender used as a medium of exchange in commerce.”

                “Money is what money does.”

                The official currency issued by a government or national bank

Unlike money inflation is a relatively new phenomenon. Inflation is defined as persistent increase in general price level. In layman terms, if prices of goods of general use persistently increases over one accounting period this percentage increase is called inflation. Just to give you a little insight on inflation, there are two main types of inflation.

One is demand-pull-inflation. In this situation inflation occurs because of difference between the demand of certain commodities and their supply. Say for example; demand for milk and bread increases drastically due to some reason and supply cannot be increased immediately. This will cause prices to increase as well and not only of the milk and bread but all those things that are directly related to milk and bread, thus generally price of almost everything. This is demand-pull inflation.

Second type is supply-push-inflation. In this situation the supply of certain essential commodities contracts suddenly due to certain circumstances, therefore prices would go high because of unmet demand. For example, there is certain country that produces wheat. Its share in global market for wheat is 15%. It is struck by famine during certain year causing wheat production to be almost zero. This would cause the global prices of wheat to rocket-up, because the supply contracted and the therefore demand cannot be met. Take another situation which is closer to today’s world. If United States of America invades Iran for one thing or another. Iran being second largest producer of oil will not be able to export oil to the global market, creating huge shortage of oil. This shortage of oil would kick the prices upwards; making prices of everything go up as oil effects everything else as well. These would be supply-push-inflation as supply contraction would push the prices up.

For centuries man has been using gold and silver coins to fulfil his commerce needs. What is different in gold and silver compared to the modern currency? Since the beginning of time gold and silver or their coins for that matter have their own intrinsic value. Whether they owe this to their chemical properties, physical properties or whatever, it is beyond the scope of this article. But the bottom-line is that gold and silver hold some intrinsic value. Although the respective governments used to put their stamp on those coins, but still it was gold. It could be easily trader with any item anywhere around the world, irrespective of the stamp. Unlike today’s currency notes which need to be exchanged to buy stuff from the foreign countries. Then gold and silver are not perishable. Implying if you bury gold for a thousand years, it would still remain gold when you take it out and not decrease in value by even an ounce.  But at the same time they had their own drawbacks like transportation was difficult and hectic task and security of them was also a problem.

To overcome these disadvantages of gold and silver, some private businessmen came up with a business idea. What they did was to open a shop where they would store gold of people and in return issue a receipt to them confirming that the holder has got so and so amount of gold with the issuer of that receipt. They called this institute a bank and the receipt later came to be known as bank notes. These receipts and gold were inter-changeable and thus equally good for commerce. The scheme because of its usefulness attracted many among people and use of bank notes became more and more common. This popularity of these bank notes made many businessmen to venture in this field. Up until this point everything seems good as the banks provide security to the gold of people and they in turn use bank’s receipts to do the commerce. There is no problem of inflation being faced either. All through the only time things start to get bad is when centuries old human attribute of greed comes into play. According to history not much time after the establishment of bank, greed destroyed fortunes of many people. The bankers when realised that people who have got deposits with them don’t really come to check or collect their gold and are content using receipts, started giving out fake receipts or vanish away with all gold that they have. These fake receipts were the ones which did not have any gold at their back. Therefore, when somehow this news came to the depositors they rushed to the bank to check if their gold was there or not and thus world saw crowds outside of banks. The banks closed because they could not exchange receipts for the gold as they didn’t have the gold of the amount of receipts they had given out. Thus the term, ‘run at the bank’.

Later the authority of issuing those receipts was transferred to the central banks and Federal Reserve in case of US. Most of these institutes are owned by the government apart from US, where Federal Reserve is a private institute as well that makes and follows its own policies. Another bit of information about it is that American presidents for decades had been opposing the establishment of such an institute as a central bank, but finally federal reserve act was passed through senate when most of the senators were on vacation and only a handful were available in senate. Such an important institute was enacted in a single day without consent of more than half of the senators, which had been vehemently opposed for decades. The central bank was for the purpose of providing security to the depositors in case any bank defaults.

During 1930s a couple of really interesting events happened in America. A law was passed making it illegal for people to have possession of gold with them and many were prosecuted and imprisoned on ignoring this law. Therefore whole economy was shifted to paper money, although it was still gold backed. Then there was great recession in the American economy. Thirdly, American currency was devalued by Federal Reserve. Meaning amount of gold at the back of every American dollar was reduced without any reason given to its stake holders who were forced to use that paper money by law. Overnight Federal Reserve which has currency issuing authority removed certain amount of gold at the back of not only new American dollars but also the existing ones. What it caused was sky-rocketing inflation. Before this adventurism with paper money concept of inflation was non-existent, although only in those societies who were not using paper money or were still fully gold backed. This concept was called partial gold standards. Whether this drastic change in economy prolonged recession period or was the cause of recession itself is still debatable and subject of many conspiracy theories as well along with enactment of the very same institute. To deny everything that these theorists say would also be wrong because where there is smoke, there has to be some sort of fire. Therefore, I believe until some clear logical explanation is given for the said step these theories would continues to roam around. If of course, there is some explanation behind this.

After the Second World War, the Breton woods system was formed. According to this system all of the world currencies were to be pegged to US Dollar, while US Dollar was still pegged to gold (gold standard). Dollar was made exchangeable with gold. While US promised to redeem the dollar in gold to other central banks. Trade imbalances were corrected by gold exchanges or loan from IMF. Breton woods agreement signed in 1944 gave the world two more institutions viz. International Monetary fund (IMF) and International Bank for Reconstruction and Development (IBRD) also known as World Bank. The charter of these financial institutions says that no country should be allowed to revert to gold standards and they use every possible mean to ensure that sometimes even using the American military muscle. Therefore in a way the whole of the world was made dependent on the United States of America and its dollar. 

In 1971, American economy was in recession because of heavy American involvement in the Vietnam War. With war expenses sky high and not enough gold to with US Government for to make dollars, the government thought of revoking the gold standards altogether. What did do? What were the implications? Well, for starter it reduced the value of banknotes to just printed pieces of paper. Then the government could technically print any amount of paper as was required and use it. This certainly solved the problem of government not having enough money for their war. But as later the economist came to know that this leads to drastic inflation. Why? Because that piece of paper now no longer has any intrinsic value and is just a ‘legal tender’ which do. As for the rest of the world, it already was not gold backed rather fixed with US dollar in accordance with Breton woods agreement. United States unilaterally came out of this agreement and whole world had to bear the consequences of fiat currency. Previously dollar was fixed to an ounce of gold, after Nixon reneged Breton woods in 1971 it was no longer fixed to gold, something measurable, it was only fixed to printing press of Federal Reserve System of US. The economist agree that decade of 1970s was the worst after 1930s in terms of economic performance. Although oil crisis was the reason behind this as is popularly thought, but the fact remains that oil crisis just added fuel to fire which was already there.

This crisis was stabilized by creating demand for US dollar in international market. An agreement was reached with Saudi Arabia according to which oil could only be sold in dollars and in return US would support “house of Saud” Saudi royal family. After this other OPEC countries followed suit and accept oil payments only in dollars, therefore every country in the world needed US dollars to purchase oil and therefore made dollar a de-facto global currency.

So how does this inflation happen? Well as explained earlier, inflation is persistent increase in general price level. Therefore when more money is printed to take care of expenses more of this money enters the economy, demand for goods increases. As people would have more money they would demand more as well. When they would demand more, prices of goods would increase. The money that is in circulation now does not have any intrinsic value therefore prices of goods vary according to prices of gold, which in turn depends upon its demand and secondly the amount of money in circulation in the economy. More recently in the past couple of years, United States is again engaged in a series of endless wars the so-called “War on Terror”. Keeping other things aside these wars have grown really expensive for American economy which is finding it had to finance this war. They can borrow money from Federal Reserve which runs the printing press but they already are under a debt of billions if not trillions of dollars to this Federal Reserve. The pitifulness of the situation can be judged by the fact that now US government is borrowing money from Saudi Arabia and China at lesser interest so that it doesn’t have to borrow from Federal Reserve which lends at higher interest rates. What this does it that it further weakens already dismal situation of US economy. The state of US economy is directly related to value of US dollar. Therefore meaning that as US economy further weaken so does the dollar, as does the dollar weakens prices of goods that have some intrinsic value increases including oil. When oil prices increase in nominal terms it further increases the prices of other commodities especially food items. When all these prices increase US economy further weakens and the vicious cycle goes on. The inflation that is being observed these days is in nominal terms only and not much in real term, although wages have been decreasing in real terms.

I tend to believe no matter how desperate be a situation, there always is a solution to it. The solution being hard to come up with or not is a separate matter and depends on the particular situation. In my opinion a possible and only solution to this problem is reverting back to gold standards and if not gold other commodities can be used for the purpose of trade, those commodities that have their own intrinsic value and is not just a printed piece of paper. These commodities can be silver, Iron, Wheat, Rice or oil. It might seem old thing to you but it is the only possible remedy to the curse of inflation, fiat paper money was a bad idea. Gold standards would close down the printing press of the government and give some real value to the money of people and make wealth of people independent of those sitting in the government, thus more secure. At the same time it also makes economies of countries independent of US hegemony when their currencies are linked to some other real commodity instead of US Dollar. What right does the government has to erode the hard earned money of people whenever they want? Or what right does the person sitting in Wall Street has to devalue the hard earned wealth of a person sitting in Africa? Therefore, the gold standard would make people and nations more independent of their government’s policies or US hegemony respectively. It would give them more authority over their own wealth and it would get the world rid of the curse of inflation.

Saturday, 13 September 2008

Comformity???.............

"Sitting there, he pleaded with himself into writing that first letter. The ordeal was a sense of apprehension of reading what he would write. What if it wasn't a hopeless piece of work? Zhan bit his lip and smothered out that first letter. "C". A brown "C', or rust as the label said it. Ever since he'd taken up writing, he always used crayons for acts of expression; he believed it allowed him to write without that brashness that came with the pen. A crayon was a medium not to be trashed and forgotten. 

'Conformity' he began,' is an act of belonging. It is man's struggle to be charitable in his acceptance of ideas and ideology. It is the simplest of sacrifices one makes for a human relationship. Conformity approaches one's initial bias by rewarding it with the stature of acceptance. Even those who rebel out of tradition continuums, conform at the poles. Conformity by its very nature results out of an act of thought. Conformity is the original sin.'

He paused for the slightest of moments, as if to perhaps contemplate what he had only just claimed.

'The East in its mystical framework takes into consideration the conditioning of man. Thus, the initiate gets to observe how he perceives everything based on what he was conditioned to perceive and how he responded based on how he was be expected to respond. That is not in itself an elusive task to accomplish. You and I, in moments of misplaced sincerity, sometimes feel as if our lives are being constrained by forces beyond our influence or control. As if we have all been allocated timeslots and are being subjected to a subtle experiment. Everyone has left the red pill for the blue one. This feeling of doubt, perhaps even a sense of utter bereavement, refuses to last for any considerable period of time. No mysteries are solved, no conspiracies exposed and no revolutions erupt. The solace of our monotony is rejuvenating. What I cannot help but wonder is where this theatre of self-reassurance leads to? Does it create in us the inklings of a pattern of amnesia for the conformity of contemporary response - or say contemporary behaviour? Let us imagine that the members of most social, political and cultural sororities are coerced into acquiring this reflex. Each individual now follows this pattern, and when faced with an analogous predicament, they may look for a comparable solution. If I easily dismiss my doubt in being controlled, would I not then be as easily able to dismiss the doubts I have of my faith? This is by the far the surest track to instil a doctrine moral and religious hypocrisy into the psyche of the masses. Suddenly all those New World Order plots seem slightly subtler, slightly more plausible and possibly more true. ' "

I'd written all of that a few months ago in condescending cynicism. I had also failed to notice that I had fallen into the very same fallacy that I had been busy describing in the slightest of time spans. With the bravado of enlightenment and all that, of course.

Let me explain. For the longest time, I had been accepting morals and ideas, not just on the basis of conformity but also on whether I could intellectually subscribe to its justification or prohibition. Hah, I thought, I don't fall into the trap of letting myself be a complete hostage to conformity. Then if at any occasion I found myself making an ethical opinion, I'd readily find myself delving into the matter, until I could attach to it an abject morality. It would assure me with a sense of righteous personality and complete that struggle in me. Everything deconstructed to smallest detail: The devil's in the detail as we all know (excuse the pun). All thought of and debated, of course.

That was it, that would complete the process within me and it would be over. Like the above written story. And like it, I would rejuvenate in misplaced sincerity and chuck everything out of the window. You know of the cliché where everyone attacks the religious leaders and clergy of having done nothing but orate and repeat? Just like that.

It was only later - much later - that I began to notice the real essence of morality. I'd always figured that unless you actually understood why you were committing an act, you weren't really committing the act with purpose. I had also never tried to equate the more complex moral questions like war and abortion with things like rudeness and procrastination. But instead of going on about what thought about it this time, let me just say this: No matter what the circumstance or issue, the morality of any situation is of equal importance; it's about choosing what one personally feels is correct. And its about actually making an effort to follow on with that choice It's really simple. As long as morality stays within us, it'll only stay there. I think it's time we take it out and led it spread some.

Tuesday, 2 September 2008

Another Cold War?

Russia and the U.S. seem destined to be moving towards another Cold War. The recent intractability of both Parties has brought back the old memories when former Soviet Union and the United States were locked in horn for a period of not less than 40 years in the last century. Robert Gates, the defense secretary of the U.S., said a few days back, "Russia has taken a U-turn and is heading towards Past now." And the Russian President Dmitry Medvedev replied in an unmistakable tone that Russia was not scared of another Cold War, although it did not want it. No doubt that the stand-off between the two countries is at highest point since the demise of the U.S.S.R. in 91, many aspects need to be considered before conveniently using 'New Cold War' for the recent rhetoric of Kremlin and White House. Many ask, did the cold war really end? Or is it just the same war now being fought with a changed global strategic balance and on new Eurasian fronts. No doubt the same trust deficit is there between the two parties but the world surely has changed since 91, and this Cold War, if it is that, will be fought differently than the previous one.The world was quick to announce the end of Cold War in 1991. Everyone was hailing 'New World Order' in the uni-polar world but little did they realize that the Cold War mentality had not changed. Although the economy of Moscow was in shambles yet it never ceased to be a strategic competitor of Washington. The Warsaw Pact was dissolved but NATO kept on growing and never disbanded itself. Many argues that the U.S. has always been wary of the Russians, and the Yanks had never let go of their isolationist policy towards the Russians. The pacified era of Boris Yeltson did not bear any sign of Cold War but the rise of national Vladmir Putin did mean that Russia was eager to regain its erstwhile strategic space. It was only a question of time as when would Moscow announce its revival on the world stage, which now has a different global strategic balance then what one observed in 1991.Analysts say that global strategic balance of power is shifting from unipolarity to multipolarity where many regional organizations have sprung up to assert in world politics. The global hegemony of the U.S. is over whelming but it is under strain and challenges in many regions. Gone are the days when the U.S could bestride on any continent of its choice with no one to challenge its authority except certain 'rogue' states. Washington's engagement in Afghanistan and Iraq seems to b e taking toll on its economy. China is no more the same as it was in 80's; its economic and military might has increased many fold in the recent years. Now there is a strategic alliance of the Chinese and the Russians to check the U.S. in its backyard. The center stage of the previous Cold War was central Europe, and now the recent Georgian conflict is termed as the first battle of the new Cold War.Georgia is a former Soviet Union country in the Caucasus region along with Armenia and Azerbaijan. Tiny Armenia, which borders Iran and Turkey, readily accepts Russian protection. It is Georgia, a vital region for the Wes, which is centre of attention these days. Pipelines through Georgia supply Europe with 1 million barrels of oil per day. Mr. Saakashvili, president of Georgia, is a pro-U.S. leader who has shown his ardour to join NATO on various occasions. The lobbying for NATO invites the wrath of the Russian; As Moscow sees NATO against the spirit of political understanding that took place between Gorbachec and George H.W. Bush. Georgia went to war with Russia recently over its break away provinces viz. South Ossetia and Abkhazia. Although the Western media did its best to paint Russia as a bully in its region, it remains undeniable that Georgia first attacked on the peace keeping Russian troops in the region. The result was inevitable; The mighty Red Army crushed the Georgian batallions and asserted its rule in the region. It was a clear signal for the West that Russia would not allow any U.S backed intervention in the region go unpunished. The U.S. vehemently supports Georgian stand and pushed the European world for sanctions on Russia. The Georgian conflict led to the build up of NATO ships in the Black Sea, and the heated harangue between the two parties followed. The situation had been restive in the Eastern Europe too prior to the Caucasus war.In the Eastern Europe, Polan and Ukraine are the major fronts in this new Cold War. Poland and Czech Republic recently signed a missile defense shield agreement with the U.S. Although the U.S maintains that the defense shield in these countries will be for rogue states like Iran yet Moscow hardly buys this and was left in fury over the agreement, and vowed that Poland will face nuclear strikes in regions in which it hosts the shield. These new threats from the Russians can not be discarded now as rhetoric especially when the shadow of the Georgian war still looms. Ukraine is the other country which is bone of contention. Moscow has not been on good terms with Kiev since 2004, their pro-democracy Orange Revolution which saw a U.S backed candidate Viktor Yushchenko coming in power. Ukraine was also involved recently in a spat of words with Russia over a Ukrainian Black Sea por, Sebastopol, which was leased to Russia till 2017 by the previous government. The population of Ukraine is sharply divided between the U.S and Russia for their support. 17% people of Ukraine are Russians and Moscow takes special interest in their politics; while U.S is eager to bring Ukraine on the tables of NATO. While Russia struggles to grow its influence in the Eastern Europe, the situation is not that desperate for her in Central Asia.The Central Asian states, viz. Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan and Kyrgyzstan, are currently wedged between Russian and China. Several are resource rich and endure varying levels of autocratic rule. The U.S faces difficulty in this region, for this is the area of Shanghai Corporation Organization (SCO). Washington applied for membership of the energy club (read SCO) but was bluntly refused in 2005. In 2005 Uzbekistan had to tell U.S to scrap American bases from its region owing to the growing pressure of the Russians and the Chinese. Stakes are high in this region, as this is the area termed as 'heartland' by Mackinder. Although the U.S. found it easy last time to grab the support of the Western Europe against the communist ideology, it would not be a walk in the park this time.The U.S is in Atlantic alliance (named NATO) with the Western Europe. This time NATO seems divided on how to deal with the Russians. This was evident in the last meeting when Germany vetoed against the inclusion of Georgia and Ukraine in NATO. France is also hesitant in calling the Georgian war its own war as White House wishes. The reasons behind this reluctance are not difficult to interpret. The West Europe does not feel threatened by the communism as they earlier used to. A quarter of oil and gas of Europe is provided by Russia with Germany and italy its biggest gas consumers. They do not want to be a part of this scepticism game that Russia and the U.S play.Trust deficit and scepticism is all time high as it was in the previous Cold War. Russian prime minister Vladmir Putin recently came on CNN and alleged that the whole Georgian conflict was orchestrated by the U.S to benefit one of its presidential candidate. He was pointing towards John McCain, the Republican candidate, who has often relied on his anti-Moscow rhetoric in his campaign. McCain has often called for the ouster of Russia from G8 and WTO. On the other hand, the U.S alleges that Russia is still living in the Past and has not gotten rid Cold War mind set. Both party accuses each other of continuing the Cold War. When one compares the previous Cold War with this new one, he will find many disparities.The New Cold War is different than the previous one in a sense that it is not an ideological war.. It is a war of strategic space with both super powers asserting themselves. While the U.S enjoyed global hegemony for 18 years, this time it is being checked by the Russia in its backyard. Many people would like to compare the recent Georgian war with the Soviet invasion CzechSlovakia in 1968. Sergey Lavrov writes in Newsweek, "Those who long for Cold War may wish to compare Russia's defense of its peace keepers and innocent civilians to the Soviet aggression of last century." Russia might not be ready now to check the U.S in all areas as it did in Vietnam and Korea, but the Russians' strategic might is sharply increasing thanks to the rising oil prices. There remains no doubt that this new Cold War will be fought differently.Both countries never let go of the Cold War mind set and they have only chosen new war fronts for their battle. The world has changed since 1991, as many new colossal entities like SCO and EU have emerged. The goergian war showed: no matter how much you turn to Europe but you can not run from your geography. There is a hint in it for countries like Ukraine. Moreover, the Europe is not ready to repeat the history by isolating Russia again. Whatever the results of this Cold War may be, this remains beyond doubt that a tussle between two super powers will harm the global interests, and the world's fight against terrorism, poverty and other menaces will be jeopardized.


I would like to thank the author of this article Mr. Husham Ahmad Cheema for permitting me to publish his work on my blog

Friday, 29 August 2008

Narcotics and Western Imperialism

According to Oxford dictionary, the word narcotics means; an additive drug affecting mood or behaviour. The word also means a drug which induces drowsiness, stupor, or insensibility and relieves pain. Some of the drugs which fall under the category are mandrake root, Opium, Heroin which is an opium derivative and Cocaine. In legal context, narcotic refers to Opium, its derivatives and Cocaine.

Narcotics in general and Opium in particular have a very dreadful history. It reminds me of events during the beginning of the 19th century. When British came to the then Indian Sub-continent as traders, this trade was not limited to sub-continent. Trading expanded to China as well but using Indian Sub-Continent as a base. The problem occurred when the British realized that their trade was heavily in the favour of Chinese because they did not have anything to sell to Chinese. In order to balance the trade British started growing opium in the Bengal. This region had already been conquered from Mughal Empire of India. Slowly and gradually whole of the land of Bengal which was previously used to plant food crops for the whole of eastern region of the empire was forced to grow Opium, because it was bringing in money to the British. What were the effects of this move? The people adversely affected by this move were Chinese and Bengalis. British were able to turn the balance of trade in their favour within a couple of years at the cost of Bengalis who had to face famine because British didn’t allow any food crop to be planted and Chinese whose whole society was being destroyed because of opium addiction. But who cares, if the ancestors of today’s civilized world played with the lives of millions of people to gain wealth for the crown?

Did the locals not complain? Did the Chinese sit quietly and wait for the slow destruction of their society? When Bengalis had nothing to satisfy their hunger, they rebelled against British. The rebellion was successfully squashed and later the people were ruthlessly massacred villages were set on fire and their residents burnt alive. Those who tried to run off were shot by the British army supervising cremation. But in this case the people were alive. This is the past of today’s civilized world. Are you not surprised when they raise the slogan against Nazis for massacre of Jews? Are you not surprised when these people acting as saviours of the free world invade Serbia and Iraq and charge their leaders of war crimes and genocide? I would not say that I was against the ousting of Saddam Hussein and Slobodan Milosevic or a supporter of the genocide that they carried out. But I am questioning the real motive of these saviours of civilized world, behind these steps. Could it not be money this time again? Or to dominate the region for that matter?
At the other front when Chinese government resisted destruction of their society because of Opium and banned opium trade in China, Opium Wars were launched against Chinese. All this was done to earn “profit”. All this blood of humanity was shed by ancestors of today’s saviours of free world and so-called-upholders of human rights to what end? The answer is, to destroy a superior society of Chinese and earn “profit”. In brings me to ask a very important question, is the human blood so worthless? Does human life has no value in the eyes of these predators? On what moral grounds do they wage wars on other nation in the pretext of drugs and human-rights abuses? Or do they have some other motives behind these expeditions, earning of “profits” at the cost of human blood.

What so ever maybe the case, fact remains that Chinese society was destroyed by the British Opium and they could not recover until Mao Zedong came in and killed all such perpetrators in 1949.

History tells us that by the end of Second World War, Imperialistic powers were declining and within a few years there were many new nations across the globe that got freed from previous Imperialistic powers. So is imperialism a thing of past now? Actually, imperialism had not died away; it had just evolved itself in the changing world scenario. Now most aggressive is economic imperialism which does also depend upon military might of those countries, not necessarily, but more often than not. Today United States of America stands as a sole superpower and enjoys imperialistic powers because of its military might. It’s CIA has destroyed societies of all Caribbean and Central American nations up to various degrees, with the exception of Cuba, with these drugs. It is the same CIA whose personal are shown in Hollywood movies as saviours and heroes of the so-called free world. So narcotics are still playing a role in achievement of foreign policy objectives of western imperialistic powers. Before people start labelling me as anti-western or something, I deem it necessary to clarify; history is witness to this that no other imperialistic power has ever used drugs to achieve its purposes. Soviet Union was an imperialistic power as well, but it did not use drugs to subdue the nations or to destroy their societies.

Then history saw Soviet-Afghan war. After this war Afghanistan became newer Bengal, this time not because of some imperialistic intervention but at the hands of nature. Afghanistan saw worst drought and because poppy being only crop that can be grown with least amount of water, afghan farmers started cultivation of poppy. Because of this, most affected nations were its neighbours viz. Pakistan, Iran, Tajikistan, Uzbekistan, Turkmenistan and China. But this poppy was being able to find its way to more lucrative markets of Western Europe and most importantly United States of America. This time the UN started a war against drugs and so-called civilized world suddenly woke up. Loads of money and effort was put in but not much was availed because of lawless Afghanistan.

In 1996, Taliban came into power in Afghanistan and they were successful in achieving what the rest of the world had failed to achieve. They because of their religious affiliation destroyed all poppy cultivation in Afghanistan. No matter what we think of their way of governance, of their way of life or their religious views, but they deserve the credit for poppy free Afghanistan.

After 9/11 world’s only superpower invaded Taliban’s Afghanistan under the pretext of so-called war on terror. Was it really a war on terror or it had any other political objectives? I wouldn’t go into that detail, as it is beyond the scope of this essay. After Taliban were ousted, things started to change for worse. Newer imperialist were no different from the old. US of A the world’s sole superpower after installing a puppet president of Afghanistan who was a former Unocal employee, is involved in planting opium in Afghanistan itself. Opium is being grown all over Afghanistan left, right and centre. They like us to believe that they are trying to stop it, but the fact of the matter is that it is being done right under their nose with largest output from the second largest city of Kandahar. This city after the capital Kabul is strongest hold of the coalition forces and more importantly, US troops. The fact of the matter is that there is heavy CIA involvement in opium cultivation. Then this opium under CIA supervision is being ‘exported’ to Pakistan and China. This opium is again coming into Pakistan to destroy our society, so that CIA can support it ‘covert’ operations in the region. Other than this it has got some political objectives as well. It is directed towards China again. It is rampantly being ‘exported’ the eastern provinces of China. Now that its production is being done in a controlled way and is directed towards those states where US wants it to go, we do not hear any clamour in the western news media or UN.
This quick view on the history tells that man is as barbarian as he has always been. It tells that man is as self-centred today as he has always been. It tells us that nothing has changed. Man would do everything possible to achieve his political objectives and to subdue other men. Today United States of America stands as a sole superpower of the world, but still is employing the methods centuries old. It is not that these methods are to win a war; rather they are to kill the whole society. It is to bring that society to its knees. This is the face of CIA, the real CIA whose face we only know from the Hollywood movies. Hollywood never gets tired to bringing out movies that would portray CIA as the saviour of the world. But it seems like an organization of ruthless criminals being governed by the corporatocratic government of their country. Willing to go as inhumane as possible to achieve what it wants. If this same heroin reaches American coast, it becomes illegal and the world needs to wage war on it. The world suddenly needs to stop it. But when it is being sent to other countries and by their own agencies, world never hears about it. Nor do we hear it in any of the corporate-controlled international media. Such are the double standards of the world today.

All we hear is an occasional appeal by some government official asking Hamid Karzai to do more to stop poppy cultivation in Afghanistan. Hamid Karzai, who is the puppet of Americans themselves does not have any authority over Afghanistan is nothing more than the mayor of Kabul, While his brother happens to be world’s biggest heroin supplier. Mr. Karzai’s brother was detained by airport security for carrying heroin in US some two weeks ago.

Tuesday, 26 August 2008

Social Impact of Quantitative Pricing of Water

Britain happens to be an island, located at the northern part of the western hemisphere. Although its location suggests that the place should be cold, but the temperature here moves around zero degrees Celsius in the southern part which includes England and Wales. While in the north it does snow during winter time, imply that temperature does go subzero. In the summers, the temperatures get mild but still it has got loads of cloudy days. As for the weather, the saying goes “It is always raining in England.” The winter months get most of the rainfall, where it literally rains every day. As for the summers, they are relatively dry but still there is sufficient rainfall.

A thing that has recently been introduced by the water companies is the new pricing mechanism. According to this new (at least to this part of the world) mechanism, the water supply to the households and other consumers would be charged according to the amount used rather than the previously working system of fixed monthly charge levied on the populace. All this would either be being done under the pretext of “saving water” or increased costs.
Let us first examine the “saving water” part. Does Britain need to save water? Does Britain face any water shortage in near or far future for that matter? What would Britain do of the water saved? Well, my analysis says that Britain does not need to save water. Here I dare not suggest that everyone should start wasting the water, but at the same time Britain does not face any shortage of water in near or far future to make any extensive measure to save water. As for the water saved, it would end in the sea anyway, because as we all know Britain is an island.
So is it because of increased costs that this new scheme is being introduced? Well if it was only about cost they could easily be handled by increasing the fixed amount already being charged. Assuming there are 2 million households (which is far less than the original figure), an increase in the fixed amount by 1 pound raise the revenue by 2 million pounds. Therefore, the idea of tackling increased cost does not seem to fit it in either.
The only thing today’s ultra-capitalist system cares about is called “profit”. I would not say that I am a proponent of communism, but I do also believe that making profit out of the essential need of the people is highly immoral. It is not only about spending more money on a basic need like water or making more profit out of it, rather it would have serious social implications as well 30 years down the lane.
Let us just examine how it would affect the lives of people and because it is being introduced on newer connections only, its affect would become evident slowly but surely. We have always taken water for granted, and why not it is abundant. 70% of the Earth’s surface is water, excluding the rivers and streams. Water is used for many purposes in many different ways. Apart from the primary use of drinking it is used for bathing, washing and cooking.
Today if someone asks for a glass of water people readily give it to him because it does not incur any cost on them and it is morally inappropriate to say no to a thirsty man’s request for water. Taking the same situation in future, when someone comes asking for a glass of water. This time people would think before giving this to the person. They would think that can they afford to give water to someone? In the end they might simply refuse, even if they find it morally inappropriate but they cannot afford to give water even to a guest. Can you think of it? Someone comes to you asking for simple glass water and you refuse it? I think this is bizarre, but this where the society would go if such a measure is adopted. Therefore, what it does apart from “saving water” is that it de-grades the moral values of people.
Take another scenario, a poor man returns home running and has a dry throat tends to drink water but then in occurs to him, can he afford that glass of water? Or probably he would be able to survive without that. It would remove self-respect from that person. What would be the life of a person who would need to think about his pocket before he drinks a glass of water? Can the poor man not even drink water without thinking about is pocket? The rich people would still waste water and use it the way they want. It is the poor man who would be hit by this measure, who would be deprived even of the luxury of drinking water. Because of this condition he might want to earn more and more money. Such a person would put his heart and soul in the single purpose of earning money. At first sight there would not seem anything wrong in it, if a person wants to earn more money. But it would make him more and more materialistic in nature, then a more materialistic society at large. When a society becomes more and more materialistic it loses moral values and all that it cares about is money. Then you can never ignore the crime rate, which is intrinsically bound to go up under such circumstances.
Things get more and more bizarre when it gets involved in things such as euthanasia. There is a man dying man taking his last breath, he asks for water. Would you give him water in those circumstances? Of course, this is human nature. Now picture same situation some 30 years later, would the dying man be given water? Would the person not think about his purse before giving water? He might as well think that the person is going to die anyway, why “waste” money on him. In the end some people might end up not giving water to the dying man. With the passage of time we would not know and it would be happening at large in the whole of the society. What did it do? It took away the compassion from the society. It made the society more and more materialistic. The only possible next step would be taxing oxygen in the same way.
In conclusion this newly introduced scheme apart from “saving water” would have many adverse effects on the society, including degradation of moral values, making the society more materialistic, increased crime rate and taking away compassion from society thus making it less and less human to name a few.
What this scheme is achieving is more profits for the water company’s owners and share holders at the stake of the whole society. People would argue what is wrong with the desire to earn more profits and making more money. I would reiterate that making excess money out of the essential needs of people is highly immoral. This further reminds me of a phenomenon by the name of hoarding that sometimes occurs in some third world countries. When certain crops are harvested some wealthy business men, in order to make “profit”, buy all the harvest from the farmers before the crop reaches the market. What it does is that it causes shortage of that crop in the market making the prices to go high. Then these businessmen sell the hoarded crop slowly in the market at a higher price, making “profit”. Is this way of earning morally legitimate? I mean if profit is the only thing that should govern every aspect of life, then I find nothing wrong in this hoarding. But profit is not what governs every aspect of life; profit should not be governing every aspect of life.
The further question that arises from here is that if profit is taken away, what would be the motivation behind people to do business? I totally agree that private entities and business are always profit driven would always do enter any business only for profit. Therefore, a resource as strategic as water itself should not be in the hands of private entities at all. They should be in the hands of the government and thus a collective responsibility of the whole of the society. They should in the government control not because I am against free-market economy. Rather they should be in government control because they are too strategic to be at the hands of private companies. The governments are there for the welfare of their citizen and therefore would not be inclined in making profits out of the needs of people. I believe putting water in private hands is tantamount to privatizing the nation army or the police. Therefore, by the above stated argument I believe that Quantitative pricing of water does more harm to the society in the long term and it should be abandoned. If the profit motive of the private enterprises is at stake then these water companies should be nationalised. The citizens of state at least have the right to safe drinking water available to them for free or at minimum fixed price, provided to them by the state.