Monday, June 19, 2017

Can you make anything easy by using force?

"Why care about the 'ease of doing business' (EoDB)?" asks Prof Vivek Dahejia. There is no direct correlation between EoDB and economic growth or a rise in per capita gross domestic product, or GDP. "However, in India and other formerly socialist economies featuring a very large overhang of a meddling and burdensome state, it is safe to take it as a working assumption that up to a certain point, which we are still far away from, what is good for business is good for everyone." Saurabh Ahuja tried to import a $600 3D printer for manufacturing drones in his Delhi workshop, he ended up spending another $900 in taxes and bribes and waited three months for it to clear customs. "If my business grows, the country grows with me. But the government won't let me grow," said Ahuja. No wonder the World Bank ranked India at 130 out of 190 countries in the EoDB. Prof Tyler Cowen wrote that the "Legacy of British rule is still holding India back". Whatever the British did was to increase their power and not to increase living standards of Indians. In Thailand, which avoided colonial rule, per capita income is $16,300, while it is only $6,100 in India. But, the worst legacy of the British is that we still have a colonial form of government - adversarial, distrustful and exploitative, enforcing its diktats through brute force. Demonetization and biometric identity cards, where the entire nation is held culpable for actions of criminals that the state protects, are prime examples. The Goods and Services Tax has over 5 rates and returns must be filed in every state every month, which makes it so complicated that companies will need an army of accountants and lawyers to obey the law. The cost of compliance will have to be added to the selling price for any business to survive. But, the government has armed itself with an 'anti-profiteering weapon' to punish companies for not reducing prices. The government forces citizens to deduct taxes from rent or sale of properties, submit it to the tax department and then provide a tax certificate to the payee, wrote Gautam Nayak. A tenant has to follow rules exactly and penalty for not doing so is Rs 200 per day. This when tax officers and politicians get huge salaries and perks, while taxpayers get nothing from the government. You get shot dead if you protest. At least the British left you alone if you did not revolt. Private sector investment is at a standstill and the economy is surviving on government spending and private consumption. If there is no investment there will be no jobs. Jobs are being lost in almost all sectors. Women are losing out. India is at 120 among 131 nations in the share of women in the workforce. Force can never make anything easy. EoDB is only for professors to write about.

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