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Source link: http://archive.mises.org/3850/the-polluting-state/

The Polluting State

July 20, 2005 by

Jayant Bhandar writes: When I once went to visit a public sector electricity-generation plant in New Delhi, one of their top officers told me this: “I dump the ash (the residue from burning coal) in the river, I do not pay the railways for delivery of the coal, I do not pay the coal company, and I will keep running it this way.” Forget about the so-called charitable thoughts of public servants, I could not believe that I was talking to a human being. He was corrupt and irresponsible to the core. FULL ARTICLE


Nathan Shepperd July 20, 2005 at 9:04 am

A lot of people would just say India needs a “better government”. What this means in practice is less government – private energy companies.
It’s a good job that nationalised industries were ditched in the UK, otherwise the country would be in a similar mess. The generally greater level of wealth can partly mask the inefficiencies generated by regulation, so most people don’t see the problems. A similar look at what happens with privatised but regulated utilities would probably be handy.

Aaron Singleton July 20, 2005 at 10:19 am

Anyone who has traveled to the third world is probably familiar with this scenario. One needn’t tour the local power plant to see the destructive effects of socialism first hand. When I traveled recently to Vietnam and Cambodia I noticed that everyone seems to treat the entire country as if it were their personal trash can. The streets and alleys are literally filled with trash. Near shore the ocean is covered with a layer of garbage and when we went diving we saw literally no sea life. This is contrasted with the inside of the average person’s home which is spotless and meticulously clean. The difference: their homes are the only things privately owned. Everything else is “public” land. The whole country is a Utopian socialist paradise. That is if you like living in a landfill.

Daniel Morin July 20, 2005 at 10:23 am

What a great article. Thanks for writing it!

Doug July 20, 2005 at 12:35 pm


Change the names and geography, and the article would be no different from a scene in *Atlas Shrugged*. The similarities between the fictional and non-fictional stories are quite striking!

P.S. Why do you choose to live in socialist Canada, rather than the U.S.?

Harry Valentine July 20, 2005 at 1:44 pm

Reading Jayant’s article was quite an eye opener . . . if not a rude shock. How could any government leader in his (or her) right mind oversee an economic system this utterly deplorable . . . . but again truth is stranger than fiction. Ludwig von Mises wrote about the difficulty (impossibility) of doing rational business calculation in a socialist state . . . but this deplorable situation in India takes socialist economic miscalculation straight into the realm of the bizarre.

Jayant, thanks for literally shocking our minds with a jolt (explosion) of reality from India’s economic debacle. What is even more mind boggling than this shock, is that some academic (mystic) will actually teach the wisdom of state-run economics in a state-run Indian educational institute.

Harry Valentine

Curt Howland July 20, 2005 at 2:28 pm

Harry, the people “overseeing” benefit quite well from such a system. They themselves live in beautiful homes, with clean water and fresh food.

The “rulers” always do, regardless of the condition of the “ruled”.

The closer to anarcho-capitalism you get, by definition the fewer “rulers” there are. A very strong argument in favor, in my opinion, regardless of its other benefits.

averros July 21, 2005 at 7:18 am

Harry, the people “overseeing” benefit quite well from such a system. They themselves live in beautiful homes, with clean water and fresh food.

This is not exactly true… although rulers tend to live much better than the ruled, they live much worse than average people in freer societies.

One of the main reasons for “perestroyka” (and the subsequent collapse of the Soviet Union) was the realization by the majority of members of the ruling communist elite that they live materially much worse than middle-class Americans. Contrary to the popular myth, perestroyka was driven from the top, and was not initially supported by the population.

Jayant Bhandari July 21, 2005 at 11:29 am

Doug: I do not live in the USA as I do not have that choice. With an Indian passport I need a visa for almost every country on the earth. My partner until recently was German but even for Germany I could get a visa for only 30 days.

Averros: I had an interesting talk with a bureaucrat in India once. He told me that the only way he felt happy about his drink was when the other person could not afford it or if the other person’s was of lower standard. Indian bureaucrats have no problems getting money as bribes. Their mindset is such that they cannot enjoy their money. They live vicariously through their children. The enjoyment they get is from demeaning citizens. They enjoy the power. Paying money to them is not what I hated the most, but the experiece of being demeaned. I agree with you that they do not have fabulous homes – but not because they cannot afford it but becuase this would expose their corruptly acquired money. It is however true that they look forward to sending their children to the West, and run to the USA when they need medical help.

Harry Valentine July 21, 2005 at 1:37 pm


Your article and related comments have provided one hell of a shocking education about what is really happening in India. In view of your comments about some East Indian families living vicarioulsy through their children, I’ve had first hand experience with this, sometimes with tragic results and even after the family has moved from India to either Canada or the USA.

A few years ago, there was a shocking murder of an East Indian family in Toronto, Canada. The only survivor was the family’s son who was away at university. As this saga unfolded, it became obvious who the culprit was . . . he had been used by his family to “please and impress” other relatives and was expected (pressured) to get a university education so that he could achieve for the sake of the family’s social standing in the East Indian community. I have witnessed first hand the toll this has had on some East Indian offspring whose families had chosen their life’s purpose. Their purpose in life was to enhance the family’s social standing, be their family’s conversation piece about whom they bragged.

I have a friend in the funeral business of a large Canadian city, who related to me that every year after university final exams, he has a lot of East Asian clientele. Their offspring had committed suicide because they were unable to achieve the A+ grades or in someway failed to produce the spectacular levels of achievement that brought new status to their family.

As for the demeaning behaviour, I’ve actually encountered this first hand from a few who treated everyone below them with sheer contempt. I’ve also had several collegues of East Asian (Indian) background and have had very good rapport getting along with them.

India needs a good dose of laissez-faire, free market economics. Perhaps this would eventually ameliorate the social conciousness that pervades East Indian society. I’ve become aware of a few tragedies that this has caused in the lives of a few East Indians. The tragedy of India is that so much incredible potential is being squandered by corrupt political and bureaucratic behaviour.

Harry Valentine

Vince Daliessio July 21, 2005 at 3:01 pm

In an article on my own site, I noted that a lot of the dislocations that are blamed on state ownership apply almost as well to regulated, but privately owned power, railroads, etc. It is not just outright nationalization that causes these things, but to the degree that any state involvement exists, there will be dislocations and pollution;

MCLA July 24, 2005 at 1:36 am

Thanks for another great article, Jayant!

Many readers here have expressed shock at the state of affairs in India. I must mention that things have generally improved. The statists have accepted in principle that socialism doesn’t work and that private capital is the only way to prosperity. Manmohan Singh, Chidambaram, and Vajpayee before them, have done a lot to remove regulations and dismantle the “licence raj”. The recent prosperity an average Indian has seen is mostly because of Manmohan Singh’s efforts at freeing the business owner from the clutches of the bureaucrats. But make no mistake; Manmohan Singh and co. are as hardcore statists as their socialist predecessors. They have merely realised that socialism is bad even for the rulers.

Unfortunately many people in India are getting the impression that India is doing well because of a good govt. They are yet to realise that govt is bad per se, not just its socialist or corporate variant.

greeni August 1, 2005 at 12:06 pm

Granted that a lot of the problems in India and elsewhere result from governmental involvement/interference. What does Austrian Economics say to address the more general issue of shared resources (like the environment) being squandered as tragedies of the commons — is there a free-market model that preserves the individual and collective ideals like clean water, clean air, etc?

Maikel August 1, 2005 at 1:04 pm


Yes there is a free-market model that preserves the individual and collective ideals like clean water, clean air, etc. One that stems from the Property Rights Axiom of Libertarianism. Let’s take for example air pollution.

In the mid 19th century large factories were build, which produced a lot of smoke(containing damaging gasses). Thus the property rights of the people who lived near the factory were being violated, because there lungs were being damaged, certain crops couldn’t grow etc. The people back then as the courts were very aware of property rights and so the people went to sue the factories for violation thereof . What happened was that the judges concluded that the property rights were being violated but the economic productivity of the factories were worth more to the whole of society then the worth of the violated property. So the factories could do as they pleased.

What would have happened if the property’s rights were respected? Then the factories would have been forced to pay damages to the people, this would probably have made it uneconomic to proceed with the pollution. This would in term have forced the factories to develop “filters”(or something else) to stop the pollution so that they wouldn’t have to pay damages anymore. The result of this would be no more air pollution. Unfortunately this wasn’t the way it went down and here we are today. I think it’s clear in this analysis that the free market theory does consider these kind of problems.

If you want more information there is an audio file on this site from Rothbard dealing with air pollution, water pollution, exhaustion of resources etc. the title is “Conservation and Property Rights”, he also deals with this subject in Power & Market and For A New Liberty. I won’t go to further depths, because these sources will give you all the information you’ll need(at least for starters) about this topic.

Paul Edwards August 1, 2005 at 1:05 pm

Hi Greeni: Private property. Allow people to own the resources we treasure, and they will be treated as treasure. It runs like this: people, including yourself, don’t use your front yard as a garbage dump. But why? Because it’s your property and you care about it. In contrast, people do use valuable public waters as garbage dumps. But why? Because it’s no ones property and so no one cares about it. But, you will say, “Ridiculous! Of course we care about these precious resources!”, and we certainly should. But why do we act as if we don’t? It is because irresponsible politicians and bureaucrats rather than responsible private property holders are “caring” for them. The solution is plain enough, but people have to kick it around in their heads for a while to see it.

greeni August 6, 2005 at 7:41 pm

Maikel and Paul Edwards,

Thanks for the excellent replies. I’ll pursue the Rothbard. Has anyone analyzed the outcomes of privatization efforts historically (must’ve been done)? I’ve only seen negative analysis of turning private companies public but not the opposite — turning public enterprises private.

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