Thursday, June 18, 2009

Enthused by its massive election victory the Congress is apparently thinking of ways to bring more wealth to the villages. What could be more laudable than bringing prosperity to rural India thus getting rid of poverty as well as creating some 700 million more consumers whose spending will stimulate industry leading to job creation thus leading to more consumers and so on? So the thinking goes. Hugo Chavez of Venezuela has already been there and done that. When elected President he started a massive social program bringing thousands of doctors from Cuba to improve health care and opened schools to bring education to the poor. His distribution of the country's oil wealth made him very popular with the poor until the prices dropped. Having increased spending and people's expectations he is suddenly faced with collapsing revenues leading to desperation. He nationalised rice mills accusing them of inflating prices and is now nationalising the oil industry. Inceasing government controls will reduce efficiency, increase corruption and cause scarcity. Suddenly he may find himself facing a situation like Zimbabwe. The reason is that every policy built on lies is bound to fail. The truth is that poverty is because of increasing population especially of the poor and unless politicians face the truth and start to seriously address this problem nothing will happen. With the poor growing exponentially neither the earth's resources nor increasing wealth creation is going to work. Time to read some fables to politicians i.e. who will bell the cat?

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