Tobacco, Alcohol, Gambling and Me
I smoke. I drink. I gamble. And there are plenty of people out there like me. In fact any person who has never smoked, drank or gambled would be rare to find and probably be disappointingly boring too.
What chance do government efforts have of stopping activities which, inspite of their purported harmful effects, are engaged in by an overwhelming majority at same point in their lives? None whatsoever.
I, for one, resent government intrusion into what essentially is my personal matter. Government and society has no role to play in deciding whether I light up a Marlboro, have my daily scotch, or I bet on cricket.
What is the effect of legislation which makes it mandatory for cigarette companies to place statutory health warning on all their packs and advertisements. I, like all other smokers I know, could not care less. The warnings elicit barely a thought.
And it has to be so. Anything which is as ubiquitous as warnings about tobacco gets a big yawn. It is part of the background which you see but hardly notice or pay attention to.
My doctor tells me to quit smoking, and so do my parents, wife and friends as well. I don’t need the government to do the same. This nagging, whether by friends and family or by the government, has no effect on me. At best I ignore the nags, at worst I find it so irritating that, in presence of those who object, I light up even more.
I will give up smoking whenever I’m ready to do so and not a day before. If I get cancer in the meantime so be it, I have the right to live my life as I wish and take as much risk as I desire. Perhaps my family, friends and well-wishers too will be affected by my decisions besides me, but, no one else will be. Therefore government and society doesn’t even come into the picture.
Leave my smoking, drinking and gambling habits for me to sort out with those who are near and dear to me. I value my freedom to be left alone far more then my health. I will therefore ask the do-gooders to desist from using the power of government to control my life, even if they think it will do me good. I am not a child and do not like my actions to be monitored or controlled by a nanny state, when I harm no one except myself.
And even if you wish me well, and are bent upon using government to do me good, good which I do not desire, you will never succeed. If you make alcohol and tobacco too expensive, you will, in fact do me more harm. I will not stop drinking or smoking, I will just move on to cheaper brands. I will smoke beedis if I have to but smoke I will. I will drink even illicit hooch if you make scotch too expensive, but drink I will.
What if you, acting in my interest, but against my wishes, forbid production, distribution and sale of cigarettes and whisky, and, make gambling illegal. You will be making a big mistake for you will achieve nothing. Don’t worry about me, whatever you do, I will get my smoke and my drink from illegal, underground sources if you make it impossible for legitimate businessmen to supply what I need. I will also find someone to accept my bets whatever you do.
Economics and history would both be on my side. Mahatma Gandhi tried to enforce prohibition in India. He failed. India’s efforts to ban gambling have resulted in every street in India having gamblers who will either be placing or accepting bets on cricket matches. Americans experimented with prohibition in the 30’s, the experiment was a miserable failure leading to the rise of gangsters like Al Capone who kept the Americans well supply with their daily drinks. America’s current efforts to control drugs have also failed and have in fact exacerbated the drug problem. The underworld keeps drugs within easy reach of all students in every campus in every US state.
My advice to government, society and do gooders, ‘Leave me alone, for it ain’t anybody’s business if I smoke, drink, or gamble.’
The Himalyan Times
Plan or Prosper
Most people believe that governments must plan. Communist and socialist regimes made planning the centerpiece of their development agenda. India had its five year plans, copied on the basis of central planning by its ally the Soviet Union. Nepal too has its planning commission.
Government it seemed – and still seems to most – is required to plan everything. Government has to plan the savings rate. Government has to plan the growth in population, and family size. Government has to channel investments according to its plan. Government has to plan the food grain output. Government has to plan, plan, and plan – for four decades after independence the government of India planned the production of cement, iron, scooters, cars, fertilizers, electricity, wheat…
Nothing in India could be produced without a license. The government decided that it alone must allocate scarce resources in a planned manner for its people’s benefit.
Government also intervened directly to mandate that no private investment would be permitted in TV, airlines, railways, telephones, power stations … and that government would exclusively run and plan the production of these goods and services.
The private sector and markets were subjugated. Indira Gandhi referred sarcastically to those who advocated free markets as ‘marketwallahs’. In interest of planning India’s progress she nationalized the insurance companies and banks.
How successful were these plans? Indian industry was chained and crippled by its planners. Shortages became endemic. People could – at least some people could – satisfy their urgent requirements by buying in the black market. Smugglers satisfied the requirement of goods demanded from abroad.
Government planned the use of foreign exchange. “Perish the thought of private importing”, the people were told, “we hardly have enough dollars to buy petrol”.
Government of India planned. The economy stagnated. The sub 2% growth rate achieved during that period was dubbed, “the Hindu rate”. There was a problem with Hindus, thought the people of India. Inspite of such extensive government planning, if we still can’t progress, the reason must lie in our nature and our religion that advocates a belief that life is pre-destined and beyond our control.
All this changed in the early 1990’s. Industrial licensing was abolished in one fell swoop by the Narasimha Rao government. What could not be achieved by bureaucrats in over four decades of planning was accomplished by businessmen in a few years when planning became their job.
Shortages of steel, cement, telephones, scooters, and cars vanished. Today, not only do these industries fund their own expansion, they pay huge taxes as well. Foreign exchange reserves have grown from zero to $110 billion and the problem now is how to effectively use all the dollars coming in.
Similar failures of planning became even more apparent in the former Soviet Bloc. Planning by the state doomed the ‘evil’ Russian Empire. It collapsed overnight. The Berlin wall came down and East Germany disappeared in its rubble.
What is required is not planning by the state, but a complete separation between government and the economy. The role of the government must be minimized, that of the market maximized.
It is not the job of bureaucrats to allocate resources, it is for the consumer guided market to do so. Bureaucrats have no incentive to take correct decisions. If they allocate too few resources for the manufacture of cement, so what, they can always shift the blame to greedy hoarders. If government buys wheat at a price leading to overflowing granaries that serve as food stores for rats, so what, the loss gets to be borne by the taxpayers.
If private companies make mistakes – and they often do – it is they who lose out, not the taxpayer. Businessmen, therefore, have all the incentive to rectify mistakes fast or risk bankruptcy. If they produce too little they leave room for a competitor to come in and bridge the gap. If they produce too much, they run into a loss. They will thus continually struggle to get things right. There is no taxpayer and no currency printing presses supporting their mistakes.
Government, if it is serious about economic progress must shut down its planning office, and leave planning and implementation where it belongs – in the hands of businessmen.
The Himalyan Times
Don, you are wrong about taxes
In response to my December 27, 2004 article advocating reduction in taxes, Don Michaels sent a letter, published in THT, making a case for an increase. Let us analyze each of his arguments.
Don’s first contention is that even if taxes are reduced businessmen will not reduce prices. Don is right that when taxes go down, the prices may not immediately go down, but, in general goods are available at a cheaper rate to consumers in a lower taxed nation than in a high one. Isn’t zero or very low taxes the reason that countries like Singapore and Hong Kong boast of the world’s highest per capita trading volumes as well as living standards which are the envy of those of us in the 3rd world?
Further, high prices due to high taxation reduce demand and thus lower economic activity in the country. If Don, you can afford to buy a Toyota RAV 4 for Rs.20 lakhs, you may not, perhaps, be willing to buy it when taxes result in it being priced at Rs.40 lakhs.
Does Don really believe that if duty rates are brought to zero from say 100% prices will stay the same? How can they? Competition amongst sellers ensures that the consumers get their reductions fast.
Second point made by Don is that, “governments use taxes to build infrastructures; without them nations cannot progress”. I do agree with the later part of the sentence. Nepal does need infrastructure, desperately so. However, if anyone thinks that government taxes result automatically in building infrastructure, that person is dreaming.
A committed socialist like Rajiv Gandhi stated that not more than 15% of what government collects is spent on what the collection is for. 85% or more just disappears in funding the government machinery and in corruption. Why not let the private sector do the job? Why not allow foreign and domestic investment to be utilized for building of roads, airports, communication networks, and power plants?
In India when government regarded telephones as infrastructure people had to wait for years to obtain a connection. And if you did manage to get one it was just that one model made by a government factory and had to be black. When a member of India’s Parliament complained about his instrument not working to the Minister, he was told that only the ‘lucky’ few got telephones as India was poor and there were no funds for ‘luxuries’. Now India’s private companies are not only supplying phone connections by the millions each month, but, are also contributing thousands of crores in taxes to the government.
Don your argument regarding infrastructure doesn’t hold water. Tax money is people’s money, if it is not collected by government it would be available for whatever people desire including infrastructure. To allocate resources is the work of capital markets not government bureaucrats and politicians.
Thirdly, Don says, “As for ‘taking’ money from the rich, who is it that creates the wealth of a nation? Is it a CEO in his plush office or the worker on a construction site, factory, mine or farm?” The implication here clearly is that the worker builds wealth, the businessmen contributes nothing.
This contention displays such ignorance of the wealth generating process that all other arguments of Don pale in comparison. How can anyone even think that a worker without capital, or managerial resources, can produce wealth? Far from it.
If workers could produce wealth on their own then Nepal would be as rich as the US. Does Thapa, a porter, in a remote mountain village at Lukla work harder, or, Smith, an elevator operator, in New York’s Waldorf Astoria Hotel? Thapa in Lukla barely survives, Smith in New York with 1% of the effort owns a car, an apartment, and flies for a holiday to Mexico each year. If Thapa in the Himalayas expended the same effort as does Smith, Thapa would surely starve.
Don, productivity and wealth are the result of capital and capital is destroyed by taxes. Businessmen are required, for they bring in this much needed capital; without them, there would be no site on which to construct, no factory, no mine, and no farm except for subsistence hand to mouth agriculture.
The Himalyan Times
Rakesh Wadhwa. Ever since, I was a school boy, I knew India was on the wrong path. Socialism was just not what we needed to get ahead. Government controlled our travel; government controlled our ability to buy and sell; and government controlled our freedom to move our money. My life has focused on the inherent rights people have. When I was in college, I never understood, what the governments meant by their "socialistic attitude". If people are free to buy, sell and move their capital themselves without any restrictions by state, then the welfare of people is inevitable & hence the countries they live in will become wealthy.
The Bastiat Award is a journalism award, given annually by the International Policy Network, London. Bastiat Prize entries are judged on intellectual content, the persuasiveness of the language used and the type of publication in which they appear. Rakesh Wadhwa won the 3rd prize (a cash award of $1,000 and a candlestick), in 2006.
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