Newsletter: SEPTEMBER 2006

Greetings friends in FLOW,

Our Member Platform this month features Gary Hoover on “The Future of Mexico.”  It is an optimistic piece that will inspire a love for Mexico for those who haven’t been and will rekindle a love for Mexico for those of who have been.  With a retailer’s eye, Gary focuses on those small commercial details that are evidence of a better world.

Having spent much of my life in academia and K-12 education, where one often encounters people who hate markets, I have had to learn to appreciate the importance of those small commercial details.  Twenty years ago I would have sneered at descriptions of the growing consumer class in India:

[India’s] consuming class typically owns a TV, cassette recorder, pressure cooker, ceiling fan, bicycle, and a wristwatch.  Two-thirds of the consuming class own a scooter, a color TV, electric iron, blender, and sewing machine, but less than half own a refrigerator.1

This class was about 6% in the 80s, 18% by the mid-90s, and it is estimated to be 40% today.  This is an extraordinary transformation of a large society.

Now my heart pounds with the vicarious excitement of a family that buys its first ceiling fan or pressure cooker!  In a country legendary for mass poverty, in the past fifteen years most Indians have earned enough to buy their first wristwatch.  Stop and, with an empathetic heart, imagine 125 million people smiling as they slip the band of a newly purchased watch around their wrist for the first time in their lives. 

Gurcharan Das’ India Unbound is a beautiful, tragic tale of how the idealism of India’s Independence under Nehru led to economic stagnation through socialism and, ultimately dictatorship under Indira Ghandi in the 1970s.  But it is also the heroic tale of redemption through India’s free market reforms in 1991, and the subsequent exciting tale of rapid progress.

While he acknowledges, “in part, this is a story of the betrayal of the last two generations by India’s rulers,” for the most part Das is wise, rather than bitter, about the follies of socialism, because he was once a believer himself:

When I was young, we passionately believed in Jawaharlal Nehru’s dream of a modern and just India.  But as the years went by, we discovered that Nehru’s economic path was taking us to a dead end, and the dream soured.  Having set out to create socialism, we found that instead we had created statism.2

He is acutely aware that his Harvard education was responsible for his belief in socialism:

As I look back on my four years at college, I am shocked that we were so concerned with the distribution of wealth in those days that we ignored the whole subject of wealth creation. . . . Caught up in the Western fashions, I did not read the great Austrians, Schumpeter, Hayek, and Mises.  Thus, I missed the excitement of the capitalist revolution and the romance of “creative destruction.”

As a consequence of the policies that followed from these beliefs, by the 1970s tiny Hong Kong earned more from exports than all of India.  Indira Ghandi’s campaign to “End Poverty” perpetuated and deepened poverty; through regulation and government ownership, Indian manufacturing productivity declined half a percent per year from 1960 to 1985.  The result was straight out of Atlas Shrugged:

Anyone who lived in India in the 1970s and 1980s felt the tremendous shortages.  There were constant blackouts as power was unavailable.  Railway freight suddenly started declining.  There were shortages of coal, cement, and steel.  One seemed to feed on the other.  For example, once railways started doing badly, then coal did not get taken from the coal mine to the thermal plant that made electricity from coal.  If electricity was not generated, then enough coal could not be mined.  If coal and electric power suffered, then the railways could not run.3

Das quietly provides insight into a real world struggle for economic freedom:

More and more young Indians insistently ask how we could have created these terrible things.  And why did so few protest and demand economic freedom?   The reason is that the victims were unorganized private citizens – farmers, businessmen, the unemployed, consumers.  Businessmen are fine producers of goods and jobs, but they are cowards and do not speak out.  One of them, Rahul Bajaj, did finally speak out at a hearing of the Monopolies Commission.  The court asked him why he should not be prosecuted for producing more scooters than his licensed capacity.  Bajaj replied “Sir, my grandfather went to jail for my country’s freedom.  I stand ready to do the same for producing on behalf of my motherland.”4

Das’ largely autobiographical story provides a wealth of extraordinary detail that brings the value of capitalism to life.  More than any book I know, India Unbound provides a living sense of the quiet tragedy of democratic socialism, from a wise, spiritual, literary man who lived through these events.

Pakistan and India are nuclear powers that have been engaged in violent border disputes since independence.  The first full-scale nuclear war may take place there.  Das knows there is another solution:

How to change the thinking of politicians from territory to trade?  Economic integration will do more to diffuse political conflict.  It is economic integration of the European Union that has ruled out war between Germany and France.  South Asian economic integration can do the same for India and Pakistan.5

Peace through Commerce is not merely a slogan.  It is a way to prevent the deaths of millions of human beings.

Our Peace through Commerce campaign kicks-off on September 30 in D.C.; please join us. Visit www.peacethroughcommerce.com for more information. We are creating an extraordinarily diverse coalition devoted to supporting peace through commerce, and we are very serious about putting together this coalition in such a way that we do, in fact, create a more peaceful world.  Please spread the word.

Celebrate commerce for the sake of peace with us, and do not let bullies discourage you!

Peace,

Michael Strong
CEO & Chief Visionary Officer
FLOW, Inc.

Please contact us at contact@flowidealism.org with ideas, insights, and inspiration.

P.S. For a voice from the U.S. Army in support of Peace through Commerce, see the article on our home page by Major Miemie Wynn Byrd, Combating Terrorism:  A Socio-Economic Strategy.  We are delighted to have Major Byrd’s support for our initiative.

P.P.S. Remember that FLOW is a non-profit organization that promotes economic freedom and broadly distributed prosperity. You can support FLOW through your financial contributions among other means.

FOOTNOTES

1. Gurcharan Das, India Unbound (New York, NY: Anchor Books, 2002), p. 287.
2. Ibid., p. x.
3. Ibid., p. 159.
4. Ibid., p. 174.
5. Ibid., p. 321.