Even as the upper-crust hanker after second cars and bigger houses, their ‘Yeh dil maange more’ cries as insatiable as ever, they find their anxieties echoed by millions who earn less but are eager to gatecrash their party. In an ironic twist of fate, both middle-class achievers and aspirants—who together number about half a billion—feel threatened by renewed reforms. They have developed a set of vested interests in the status quo...
Second, the global financial meltdown of 2008 gave people a vivid picture of the horrors of a free market run amuck. Suddenly, Indians saw the ugly side of globalisation, a lack of which had insulated them from jobs and investments going poof overnight. Once the West’s Great Recession hit, India’s economy dipped to a growth rate of under 7 per cent in 2008-09, from over 9 per cent earlier, but bounced back soon after. India suffered no bankruptcies and few job losses. This was a relief. In a 2009 article, Ruddar Datt, an economist, wrote that ‘the lesson of this experience is that India must exercise caution while liberalising its financial sector’.
What's the problem with Alam's analysis (stated above)? As usual it's a lack of understanding of free market economics. And please don't assume all economics is welfare economics.
Note Thomas Sowell's response on the same,
Reason: What do crisis (finacial meltdown) like this, and public reaction, say about general public understanding of economics?
Sowell: I think in the U.S. and in most of the world the public understanding of economics is abysmal. But it’s one thing not to understand something. I don’t understand brain surgery. It’s another to want to form policies on things on which you are ignorant. I hear the wonderful phrase “I want to make a difference” when it comes to policy. I would be horrified if I wanted to make a difference in brain surgery. The only difference is more people would die on the operating table.
The only encouraging thing about public reaction to the crisis is that going by polls citizens seem to have more misgivings about some of these policies than politicians or the media. Still, though there have been studies that indicate the New Deal prolonged the Great Depression by years, what is also clear is it was enormously popular. FDR was elected four straight times, and more than once without ever having brought unemployment down to single digits. An economic disaster does not necessarily mean a political disaster. If we could raise the average level of understanding of economics to what Alfred Marshall had in 1890, the vast majority of politicians would be voted out of office.
What should the likes of Alam do before they write such one-sided nonsense?
Learn free Market Economics for real, not the welfare kind.
If you can't, at least listen to Sowell (video above).
Read my post above on why middle class greed is good.