Dear Shivam,

Firstly, you’re welcome. I still remember those days when you interviewed a famous personality, but you couldn’t get the trashy newspaper you were working for to carry that interview. From there to a prominent blogger, you’ve come a long way.;) (Note to others: Inside joke. Please ignore)

Having said that, I must confess that I am utterly baffled by the point you are making. Completely, utterly baffled. Here’s why.

Through the sting operation, Cobrapost has proved how corruption has seeped up to even the topmost layer of government. You have proved that the lawmaking process can be bought for a few thousand rupees. And then, on that basis, you argue that we should have more regulations?

Tell me Shivam, how will more regulations help? The people making the regulations are the same people who are on the take. What makes you think that the regulations made by them will benefit honest people rather than their corrupt paymasters?

In your comments you keep making the point that it is not just the legislators who are guilty, it is also the private bribe-givers. You make it sound as if your “Cartelian” opponents are actually defending the bribe-givers. But it is beside the point. Even if we concede that the entire blame should lie on those who paid the bribe, your argument still does not make sense. The fact remains that a bunch of extremely corrupt, evil people have subverted the system that is supposed to regulate them. Tell me again, how is that an argument for more regulation?

You may protest that when you are asking for regulation, you are not talking of the current, hopelessly corrupt system. You are talking of a future system that will be established when we, the people, finally rise up and overthrow our corrupt rulers and set up a government and representative body that is accountable and responsive to the public. When that happens, you probably say, regulation will be better than the market system.

But Shivam, I must remind you that you criticise our proposed market system because it is too idealistic, too utopian, does not correspond to real life and will take a long time to establish. How can you propose an alternative that is idealistic, utopian, has not occurred in real life and has taken more than 50 years to establish, but is still not in sight?

I do hope you will answer this Shivam, and I hope that you will do it without launching into yet another attack on the mythical free market that you think we are defending. In fact, for the purposes of this post, I will concede all the faults of the free-market and yet I must tell you this: Your argument would still not make sense. Why do you think that a hopelessly flawed regulatory system will fix the problems in the hopelessly flawed market system?

Oh, I haven’t yet told you why there weren’t sting operations in those days. That will come in the next post. I will also defend the market, but not in this post. In this post, the spotlight is entirely on you.

30 thoughts on “Dear Shivam,

  1. This is what Sivam said:

    “All this is not to deflect from the gravity of the issue. For me the biggest lesson of the IIPM imbroglio was how a free market isn’t all that free after all, that a free enterprise can buy its way through unethical means.”

    That is what he said in his post, Which part you do not understand?

    The comments went all over the place and why are you selectively quoting them here?

  2. He did say this also:

    “I had been arguing on email about this with Amit, and it was Operation Duryodhana that I had in mind: I knew that this is the extent to which business lobbies go to influence policy in their favour.”

    Want more dope read today’s Washington Post

    “In a rare schism, employer groups led by the U.S. Chamber of Commerce are pressing to kill a Republican-sponsored measure that would require businesses to verify that all of their workers are in the United States legally and would increase penalties for hiring illegal employees.”

    That is how business lobby in the mecca of the free market. The URL is

    http://www.washingtonpost.com/wp-dyn/content/article/2005/12/13/AR2005121301706.html

  3. In the first place, I haven’t quoted him at all, so the question of selectively quoting him does not arise.

    In the second place, he has quite clearly tried to use the breakdown of the regulatory process to argue that there is a problem with the free markets. I do concede that in this post he has not asked for more regulations, but he has done it many times before, in mails. I would still like to know from Shivam if he still believes that regulations will work, given that he himself has proved that the process of making regulations is so corrupt.

    In the third place, the link that you have given fills me with despair. The US is not just the mecca of the free market. It is also among the best governed countries in the world. If even such a country, with more than 200 years of experience of the democratic process, cannot set up a regulatory system free of business influence, what hope do we have of setting up effective regulations?

  4. “If even such a country, with more than 200 years of experience of the democratic process, cannot set up a regulatory system free of business influence, what hope do we have of setting up effective regulations?”

    I agree with you. By the way did you also notice the jerky way in which WTO talks are going? Free market in practice on both the sides, North and South!

  5. “cannot set up a regulatory system free of business influence”

    Oh I thought you were blaming the business influence too! Can you see it? It is business people who are trying to kill it and the govt. who is trying to pass it.

  6. OK, am not following anything. None. Zilch. What is his point and why is your argument on layer 2?

    And what is the exact scope of the ‘Ethics Committee’? I am lazy 😛

  7. The problem, to take a philosophical angle, is that humans are very brainwashable.
    So Mridula et al, in fact the majority of the populace, who are indoctrinated since childhood, find it difficult to escape the dark side (in this case, of freedom-hating)

    I feel there are only two ways in which progress can be made:

    (i) indoctrination: making sure children are brainwashed with free-market ideas

    (ii) flight: fleeing those parts of the world which have a majority of pple like Mridula

    The third possibility, of trying to get people to rationalize what is good etc., is utopian. Amit took the example of women emanicpation. I’d reckon a good part of the current levels of emancipation is due to indoctrination since early childhood.

    How to get to Step (i), of being able to indoctrinate, is of course quite trivial and left as an exercise for the student.

  8. “(ii) flight: fleeing those parts of the world which have a majority of pple like Mridula”

    Wow, what a profound logic! I am unable to argue at your level, hence I take my bow.

  9. Mridula, I agree that the business people are very very bad people. I agree with you that they should be blamed. So our challenge is to devise a system that is immune to, or resists, the harm that these evil, bad people do to the regulatory system.

    Unfortunately, the evidence you have presented indicates that such a system has not been established, even in a country that is among the world’s best governed. So why do you want to persist with a regulatory system even in the face of overwhelming evidence that the evil, bad businesspeople will subvert it to satisfy their ends? Is there any regulatory system that has not been subverted by these monsters? If the answer is no, then don’t you think the better solution is to junk the regulatory system rather than persist with something that is doing more harm than good?

  10. Sorry to be nitpicking again but i was also taken aback by “seeped up to”. Always thought that seeping, like trickling was a top-down, or at most, horizontal affair, but maybe you are on to some new physics and language here.

  11. “then don’t you think the better solution is to junk the regulatory system rather than persist with something that is doing more harm than good?”

    And make business above the law of the land? You surely must be joking?

  12. Mr. Ravikiran Rao,

    I must intervene at this point to warn you that if you continue with this discussion, eternal despair and damnation awaits you.

    Regards.

  13. as, believe me I tried very hard to come up with an appropriate metaphor. I then consoled myself that seeping up is possible in Physics.

    Mridula, as you have demonstrated, setting up a regulatory framework amounts to giving businesses a carte blanche to write the laws of the land and enforce it on others. What harm will junking regulations do in that case?

  14. as – Always thought that seeping, like trickling was a top-down, or at most, horizontal affair, but maybe you are on to some new physics and language here.

    ravikiran as, believe me I tried very hard to come up with an appropriate metaphor. I then consoled myself that seeping up is possible in Physics.

    Cheer up, Ravikiran. Osmosis, can be thought of as the phenomenon of “seeping up”.

  15. “Don’t you think you have a responsibility to explain how they will be made to work?”

    I show you how they are made to work. Read these two articles, business baron Lord Black is accused of committing fraud with company’s money (yes fraud are not always committed only with tax payers money, company’s money can be used for personal gain) and you can see some of the colorfull details here.

    http://news.bbc.co.uk/2/hi/business/3617908.stm

    He is facing a trail in court for it.

    http://news.bbc.co.uk/2/hi/business/4533418.stm

    If convicted, he faces justice. That is how regulation works. That is what rule of law is for or do you think private companies are above the rule of law and they should happily be doing such fraud with employee’s careers and shareholder’s money?

  16. Joining the debate rather late…anyways, I guess the sarcasm could be toned down a bit…

    I think (as Ravi Kiran has pointed out), there is mixing up of different issues, and of cause and effect.

    Firstly, that the regulatory system failed to effectively regulate in India has been construed to be symptomatic of the way the markets function. As we all know, the regulatory system in India, aka the State, has a miserable record in this regard (and in fact, in most other areas). Such practices in fact have become endemic precisely because of the creaky regulatory framework. The fact is, there are better states and worser states, and that is where states derive their competitive advantages from. Blame greasy palms, not deep pockets.

    Secondly, be it India or anywhere else, transgressions of the kind pointed out (Enron etc.) do take place (basic human nature?) and that is not a fault of the free market system. That would happen in any system.

    Thirdly, may be the wrong questions are being asked. Should we ask, are there things that are better left to the market, and are there things that the state can take care of better? Education and healthcare are two of the favourite areas where people advocate state intervention. Yet the record of the state ranges from the abysmal (in third world countries for example) to spotty at best (in the welfare states of Europe). On the other hand, there are issues with escalating healthcare costs and scant or no insurance for a large section of society in the US. These are complex real world problems that perhaps cannot be addressed on this forum, and definitely not by looking at such problems from an ideological viewpoint.

    In any case, at least in India, having seen what we have, there is no question we need the economy to be even less regulated (that’s an understatement). Be it ther Licencse Raj era or now, the state in India has always

  17. Hi,
    I really dont understand what the problem is. Im really sorry, if any of you believed that MPs could not be bought. The truth was known by anyone with any understanding of the realities of Indian politics. Why did we need this expose to begin blogging about it?
    Also, every advanced country in the world sees instances of this. Sometime back, 3 british MPs were caught with a bribe of 1000 pounds, a pittance. Why are we getting so angry when it happens to us?
    Im not justifying this act, not yet at least. But I will, now.
    So they accepted money to ask questions. Whats the problem with that?
    There are two conflicting forces in a democracy. One is money, another is free press.
    The press will always be on the side of the poor and the underpriviledged, because theyre the ones who pay for the newspaper. So they will always try to support the poor. The poor have the power to vote out the rulers, and so the rulers would never dare to go against them.
    The rich, on the other hand, are not so fortunate. The media is usually never on their side. This could be a bollywood influence, or just communist, but the media believes that they are on the wrong. What do they do? Where do they get their support from? I believe that money is the answer. They get their lobbies to push for them.
    Therefore, the ruler (MP) would have two forces guiding him. One is the lure of money, and the other is the fear of losing their position. I believe both these are evenly matched, and will never let either down.
    Ive blogged more about this. Would like your thoughts.

  18. But Mridula, which do you think will be easier – getting regulations to work in India, or getting the free market to work in India? Note that I’ve put “in India” in both cases.

  19. Ravikiran, without a doubt as of now the government is utterly corrupt, but the CII too hands out regular suitcases to them, instead of opposing them. I know this because I know someone who worked with CII and not because of our free media reporting it regulalrly.

    Since you are fond of talking about future, who knows, who becomes more corrupt in the future. My answer: whoever has more power.

  20. But Mridula, which do you think will be easier – getting regulations to work in India, or getting the free market to work in India?

    So you see the two as mutually exclusive? I see.

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