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Why should Indians worry about ‘poor’ economic freedom?

Chanting “Bharat Mata Ki Jai” isn’t enough. Defending cows isn’t enough. Abusing liberals isn’t enough. There’s much more to introspect, examine and discourse beyond the kafkaesque of what has been told to us. To begin with, each and every Indian should dare to decode the status of economic freedom in his own nation (if at all one is concerned about defending his/her own liberty to trade, exchange, earn profits, employ, work, etc.). On the so-called international level, India is holding her sound position but her economic freedom is moving in reverse gear. For a government, since May 2014, so devoted to rankings and ratings, India dropping 20 places to 143 in the 2017 Index of Economic Freedom must have been a bummer. India may be the fastest growing economy in the world, but it still finds itself way behind other economies like Nepal (125), Sri Lanka (112), Pakistan (141), Bhutan (107), and Bangladesh (128) in preserving economic freedom. If Prime Minister Narendra Modi felt it worthwhile to approvingly cite India’s improvement in the World Bank’s Logistics Performance Index, surely such a dramatic fall in economic freedom should send alarm bells ringing? Please be informed that the loss of economic freedom hits the poor especially hard. Over the past decade, countries like Hong Kong, New Zealand, Singapore, Taiwan, South Korea, etc. that increased economic freedom saw poverty levels fall almost twice as much as countries that lost freedom. People in countries like Finland, Chile, Switzerland and Ireland with more economic freedom were not only happier, but more prosperous. The correlation between economic freedom and prosperity is stunningly high, with more freedom translating to greater per capita income.

Economic freedom—free markets at home and free trade in the world—is essential to human liberty. Without it, people are unable to improve the conditions under which they and their posterity will live. Worse, they are vulnerable to oppression, especially by the Government. We only need to recall the human toll of slavery or “soviet model” to understand what Friedrich Hayek meant when he noted that “to be controlled in our economic pursuits means to be always controlled,” and that if all economic decisions require the approval of government, then “we should really be controlled in everything.” In the end, liberty is whole and universal: The world will not be free politically if it is not free economically. 

Father of India’s constitution Dr. B. Ambedkar knew that liberty is about more than just securing political freedoms. True liberty requires economic freedom—the ability to profit from our own ideas and labor, to work, produce, consume, own, trade, and invest according to our own choices. The evidence shows that economic freedom leads to economic growth even where countries have limited political freedom. The reverse is not true: political freedom, without economic freedom, does not bring growth. Therefore, it is vitally important that emerging democracies encourage free markets, protect property rights, provide a stable currency, and minimize the government’s role in the economy. There is also evidence that nations with higher incomes tend to be more democratic and more protective of civil liberties and political freedoms. Thus, indirectly, economic freedom leads to political freedom. The evidence clearly shows that without an environment of economic freedom, growth will not take place. Economic freedom contains a number of components like judicial independence, property rights, enforcement of contracts, tax reforms, and government efficiency, etc. all of which must be in place for an economy to grow. An economy must have a stable monetary system, secure private property rights, an impartial legal system, low taxes, minimal/small/limited government, and low barriers to international exchange. If any of these components are missing, an economy will not grow.

A limited government will fade in the face of the modern regulatory state, and no laws can protect us from its deprivations. Economics not only trumps politics, it determines its very form. The root cause of economic interventions is the mistaken belief that government can improve our lives by making economic decisions for us. By their very nature, economic interventions by government are coercive in nature. Voluntary cooperation in the marketplace, on the other hand, requires only access to an honest criminal justice system to enforce contracts and protect property rights.  Government mandates require government coercion for their enforcement. While drafting India’s constitution, Dr. Ambedkar realised the salient features of property rights. He introduced it but after his death it was removed. Well, it is evident that the right of acquiring and possessing property, and having it protected, is one of the natural, inherent, and unalienable rights of man. The right to own property protects other freedoms. It is directly linked with economic freedom.

The more government meddles in the economic sphere — which should require no regulation at all, since it is completely voluntary — the more police power is necessary to force us to comply. All government agencies possess huge enforcement mechanisms that not only can confiscate our property but take away our freedom. Although the Indian economy has sustained an average annual growth rate of about 7% over the past five years. Growth is not deeply rooted in policies that preserve economic freedom. Progress on market-oriented reforms has been ‘uneven’. Even after the end of so-called license raj system, the Government of India maintains an extensive presence in many areas through public-sector enterprises. A restrictive and burdensome regulatory environment discourages the entrepreneurship that could provide broader private-sector growth.

To conclude, the government of India should not have any business in the economics of businesses. It should simply reinstate property rights, protect the liberties and guard the law. The more the government meddles with our economy, the poorer we become. Time has come to limit the parasitical size of India’s government or else people would become the slaves of the government.

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About the author

Jaimine Bezboznik

Jaimine Bezboznik

Very 'critical' box writer. A blasphemous writer awaiting sedition charges for making readers to think critically and anarchistically.

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