The Great Redistribution - India Uncut

2 min read

source

8 highlights

  • For the last 68 years, since a group of white-skinned rulers handed over power to a bunch of brown-skinned rulers, all the governments that have run India have done one thing incredibly effectively: they have redistributed wealth from the poor to the rich

  • Our local retailers—all the people consulted by the ministers—were scared that their bottomline would be affected by this competition, so they successfully petitioned the government to block it. The result: the consumers will get less value than they otherwise would; the local retailers will make more money than if competition was allowed. In effect, it is a transfer of wealth from a large, dispersed group of consumers to a small, relatively wealthy interest group.

  • Who benefits from competition? The consumers do. The greater the competition, the more value for money the common consumer gets. This is axiomatic.

  • What is seen here is the good done to one specific group of people (with money usurped from a poorer group, which by itself is surely morally wrong). What is not seen is what the consumers would have done with that money.

  • Subsidies are also redistribution of the reverse-Robin Hood kind, if in a more obvious way.

  • The wealth taken from the poor is not in terms of marketplace prices or value for money, but is taken directly from your taxes. And while the poor may not file income tax returns, they pay taxes too.

  • All interventions in free markets amount to a redistribution of wealth from the poor to the rich. Anything that reduces competition or artificially raises costs for the consumers amounts to just this. Restrictions on FDI, tariffs, licensing processes or regulations that make it harder to open a business or to run it, subsidies; and so on.

  • If Rs 2 from the taxes you paid last year went as a subsidy to the widget industry, you won’t even know or care. The widget industry, making millions from the accumulated Rs 2s, will care, and will lobby aggressively, contribute to party coffers, buy off politicians and bureaucrats – whatever it takes. That is why government policy is not dictated by the people at large, but by the aggressive lobbying of hundreds of interest groups, out to make a killing at the expense of the poor1

Footnotes

  1. Diffused costs, concentrated benefits - as public choice economists would say ↩

Graph View