Is Capitalism Compatible With Hinduism?

Capitalism is about the individual. It recognizes the fact that a group is comprised of individuals who are anything but similar in nature. All policies must therefore be built by keeping individual rights in mind.

Since everyone of us is fundamentally different, capitalism allows us to act in accordance with our likes, dislikes, attitudes, beliefs, disbelief(s), tastes, and preferences. Bans or “fatwas” have no place in capitalism.

In this sense, capitalism is equivalent to freedom – freedom of an individual to pursue his own interest rather than conforming to the group as a whole. Please don’t get me wrong. Group is important, but only to the extent that it allows us to reach our desired end. Most companies, for example, are realizing the fact that individuals in a team only perform their best when they are provided autonomy and independence. The more control a superior wields on his subordinates, the less productivity he yields from them. Innovation only happens in a free, decentralized environment.

Does that mean we should be completely free, even free to harm others? A key principle of capitalism is accountability. No freedom is possible without it. We all are accountable for our actions. Freedom cannot be protected if criminals are allowed to roam free. They must be incarcerated and brought to justice.

Also, please note that capitalism ≠ crony capitalism. Crony capitalism (also referred to as corporatism) is the evil nexus between government and big businesses. Capitalism, on the other hand, ensures healthy competition. It makes sure even small businesses are given equal opportunities to compete through tax breaks, privatization, few regulations, enforcement of property rights, economic freedom, etc. so big businesses don’t thrive on political favors.

Hinduism, too, is about the individual. Like capitalism, it recognizes the fact that each of us is in a different phase of life and spiritual development and hence cannot be confined to a prescribed set of “commandments” which must be applied collectively. This individual freedom to pursue our own path depending on our personal suitability is one reason why we presently have so many sects, each interpreting Vedas according to their founder’s personal experience of Vedic knowledge. In other words, individual freedom has allowed Hinduism to become a bubbling cauldron of world-class philosophical ideas.

Vedas are the central books of wisdom in Hinduism. All existing sects today owe their basis to these books. And yet, they contain general principles (not strict rules or even history) for living a noble life. Most importantly, Vedas grant us the freedom to accept or reject their claims. Each of us is free to experiment. Free to question. Free to dissent in a dignified way. One one hand, we have had several theistic saints while on the other hand, we have also had the Hindu atheist Charvaka and also Buddha, the man who severely questioned (in a dignified manner) established contemporary interpretations of Vedic knowledge. It is this freedom that has allowed Hinduism to retain its robustness. And it is this freedom that we must protect.

Anyone who has even remotely studied Hinduism knows that we do not have a strict hierarchical system as found in most Abrahamic religions. Hinduism is antithetical to authority. It is antithetical to centralization. It acknowledges the fact that each individual soul is a repository of knowledge and power. And hence, all power in the hands of a few select individuals is to be abhorred.

Hinduism is based on merit. Through acquiring right knowledge and realisation, we must become rishis ourselves. We need not blindly follow anyone. As Vivekananda said, “You must not merely learn what the Rishis taught. Those Rishis are gone, and their opinions are also gone with them. You must be Rishis yourselves.”

In summary, elements such as individual liberty, decentralization, merit-based system and so forth are fundamental to Hindu philosophy which makes it perfectly compatible with capitalism. Socialism, on the other hand, is sacrilege. It represses individual potential and creates an unending cycle of poverty now seen in India and hence totally opposed to Hindu philosophy.

For further reading on this topic, pl. read this excellent collection of posts by Sanjeev Sabhlok: http://sabhlokcity.com/tag/hindu-capitalism/

Why higher taxes are detrimental to our economy (Part 2)

There are innumerable reasons as to why imposing higher taxes on the rich is both disastrous and counter-productive. Earlier, I compiled a list of some arguments against taxes here.

Today, I came across another informational piece in Business Today. Wish to share it with you as well as record some of the excellent arguments provided in it for future reference.

As the article notes, “There is not one instance in history where taxing the super-rich has worked as part of the solution to an economic crisis. The evidence, on the contrary, shows that it has only compounded the problem.”

France example

“The new French President, Francois Hollande’s main election plank was to levy a 75 per cent tax on the super-rich. This has resulted in a mini-exodus from France to Belgium and even, of all places, to Russia.”

Germany example

“In a war-ravaged economy, Ludwig Erhard, who shaped the German economic revival after World War II, had the courage to adopt a regime of lower taxes and very few controls. Erhard famously said he would let the money and Man loose and they would make Germany great. England did otherwise and suffered the consequences. Instead of following the Erhard route which has worked, we insist on repeatedly following the path of increasing taxes.”

India example

“The practice of taxing the rich has been tried in India with disastrous consequences . At their zenith, income tax rates soared to 97.75 per cent and this achieved the unintended twin objectives of massive tax evasion with serious erosion of our national character. Large scale cash transactions became the rule, fueling a huge black market economy.”

Further, the article notes, “The theory of bringing in equality and equity to society by taxing the super-rich is similar to Marxist ideology. It sounds delightful on paper but is utterly unworkable in practice. Marxist practices have ruined the Soviet, Chinese and North Korean economies with the attendant slaughter of 60 million of their own people.”

Some more reasons against higher taxes (from the article):

1. Lower taxes = Higher revenues: “Another lesson of history is that rates of taxation are inversely proportional to the total collection of taxes. Lower rates of taxes have always resulted in higher revenues and greater compliance with tax laws.”
2. “Taxing the super-rich primarily involves increasing the rates of personal income tax or property taxes. It ignores what actually happens with the incomes of the super-rich. Higher expenditure on goods and services results in more revenue being generated through indirect taxes. And if the taxes are low, there is no incentive to conceal either income or the acquisition of goods and services. Beyond a point, most income is then invested with financial institutions which, in turn, helps fuel industrial and economic growth.”
3. “[Indirect taxes such as GST] has led to the practice of not reporting sales and purchases of goods and services. The introduction of GST will result in a huge boom in the black market economy.”
4. “If a man cannot become rich honestly, he will do so dishonestly. Alternatively, if he has a sense of values and ethics, he has no option but to escape to other countries. The migration of a large number of India’s brightest engineers and doctors was in no small measure due to our socialist principles and heavy taxes.”
5. Another article in Business Today read, “A higher rate of tax on high income group taxpayers is uncalled for as this would discourage entrepreneurship. It could lead to professionals relocating to low tax domiciles such as Singapore,” FICCI President Naina Lal Kidwai said.
6. On the issue, CII President Adi Godrej said: “We have said any increase in taxes (on rich) will create a negative perception on investment and therefore should be avoided.”

The government DID NOT create the Internet. Xerox did!

One argument often posed in support of a big government is that Internet wouldn’t have been created had it not been for the research capabilities of government-sponsored entities such as Pentagon. Nothing can be further from the truth. Internet wasn’t created by (or because of) the government. It was created IN SPITE OF the government — by the famous PRIVATE company Xerox.

It is a shame to learn that even presidential candidates like Obama support this urban legend. He wants to increase the power of the government and undermine the efforts of REAL innovators of America i.e. private businesses. All the more reason why Americans shouldn’t vote for him! 

Anyway, I read an article which appeared in WSJ recently and wanted to share with you. Although I recommend reading the entire article here, I present some excerpts below for a quick scan:

1) If the government didn’t invent the Internet, who did? Vinton Cerf developed the TCP/IP protocol, the Internet’s backbone, and Tim Berners-Lee gets credit for hyperlinks.

2) But full credit goes to the company where Mr. Taylor worked after leaving ARPA: Xerox. It was at the Xerox PARC labs in Silicon Valley in the 1970s that the Ethernet was developed to link different computer networks. Researchers there also developed the first personal computer (the Xerox Alto) and the graphical user interface that still drives computer usage today.

3) According to a book about Xerox PARC, “Dealers of Lightning” (by Michael Hiltzik), its top researchers realized they couldn’t wait for the government to connect different networks, so would have to do it themselves. “We have a more immediate problem than they do,” Robert Metcalfe told his colleague John Shoch in 1973. “We have more networks than they do.” Mr. Shoch later recalled that ARPA staffers “were working under government funding and university contracts. They had contract administrators . . . and all that slow, lugubrious behavior to contend with.”

4) Blogger Brian Carnell wrote in 1999: “The Internet, in fact, reaffirms the basic free market critique of large government. Here for 30 years the government had an immensely useful protocol for transferring information, TCP/IP, but it languished. . . . In less than a decade, private concerns have taken that protocol and created one of the most important technological revolutions of the millennia.”

I suggest you read point #3 again: “its [Xerox’s] top researchers realized they couldn’t wait for the government to connect different networks, so would have to do it themselves.” This makes it abundantly clear: The govt.’s process in connecting the networks was sluggish and shoddy, which prompted Xerox to invent the Internet themselves. Explains why we must limit the power of the government. It does nothing worthwhile ever.

The Dark Knight Rises and the Beauty of Capitalism

The Dark Knight Rises is exceptional. We must thank not only Nolan for directing the movie beautifully, but also the POLITICAL system that helped create the director himself in the first place. Confused? Let me explain.

We know well that both China and India are far from achieving even a fraction of the level of sophistication employed by Hollywood. And at least part of the reason for this failure is the underlying system of governance — the failure of socialism. In contrast, The Dark Knight Rises stands as a defense to the success of capitalism and freedom.

Although it may not be easily apparent, it is owing to the existence of CAPITALISM that movie directors like Nolan are able to put their creativity into action. In capitalism, their efforts are not sapped by a bureaucratic government eager to crush all individual endeavors made towards creating world-class products.

For those unaware of what ‘capitalism’ means, it is a beautiful political and economic system where every individual pursues his self-interest and, in so doing, also ends up benefitting the society. How so? Adam Smith, the father of modern economics, gave a simple example: Take, for instance, a bakery owner. He makes loafs of bread so he can sell them and earn income to fulfill his needs and luxuries. He doesn’t do so out of his love for mankind, does he? In pursuing his self-interest, he ends up fulfilling the needs of bread-consumers i.e. you and me. Thus, this voluntary transaction benefits both the bread-producer as well as the consumer.

This, in simple terms, is capitalism. It does not condemn self-interest because it acknowledges human nature as it is. In fact, it uses basic human nature to benefit entire humankind.

Chris Nolan too worked primarily out of his own interest, his selfishness. Do you think he created TDKR out of his pure kindness for the audience? Do you think he would still have created this movie for millions of fans if there was a 90% income tax in place? Absolutely not. He created it so he could earn in millions and perhaps also acquire fame.

The beauty of capitalism is that Nolan’s self-interest not only enabled him to get what he worked and aspired for (wealth and fame), but also served the audience i.e. us through providing entertainment. We, the “consumers,” savored every scene of this movie despite the ticket price being relatively expensive.

The Dark Knight Rises was possible because government STAYED OUT of Nolan’s business. Because state officials did not interfere into his private affairs and his pursuit of creating a stupendous trilogy. Because the process of getting required licenses and paperwork done was not hindered by the debilitating effects of bureaucracy which is rife in all government departments.

It is for this reason that I vehemently oppose government interference in private matters and vigorously support the slogan, “That government is the best which governs the least.” Remove the far-reaching hands of the government from almost all public affairs and what you get is high-quality products, whether it be movies, books, iPad, education, roads, railways, postal system — the list is endless.