Liquidity Traps, Local and Global (Somewhat Wonkish)
16 minutes ago
On the ultimately decisive economic front the Government has added to its own burdens by its blind and bland acceptance of Gandhi's policy towards decontrol. The Mahatma's approach to economics is unashamedly pre-feudal, and he has converted the doctrine of laissez-faire beyond the dreams of Adam Smith into what is little less than a branch of metaphysics. We now have the spectacle of a Government trying to create a modern State and depriving itself of the power to tackle food-hoarders and price-ring profiteers save through appeals to their social conscience, the one commodity in which they are totally lacking. The decontrol policy has been opposed by Mountbatten as well as by all responsible Civil Service advisers without exception. It is the outcome solely of the Government's awe of Gandhi. It is causing almost at once a vicious spiral of inflation, and will involve an extra eight crores of rupees on Civil Service salaries alone to meet the rise in prices. Altogether it is estimated that some one hundred and ten crores of rupees will need to be pumped in to meet the cost of Gandhi's economic ideas. Sugar and salt have both rocketed up to one rupee eight annas a seer - the rise in the price of salt being no less than five hundred per cent.
A demagogue, in addition to hypnotic glibness, must also be intellectually inconsistent, sometimes boldly so. This eliminates challenges to authority by weeding out clear-thinking young people from the flock.