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Get the full details here. | | | "Wealth without work.
Pleasure without conscience.
Knowledge without character.
Commerce without morality.
Science without humanity.
Religion without sacrifice.
Politics without principle."
--Mahatma Gandhi's Seven Deadly Sins
This week, I returned to India to attend the Mont Pelerin Society meetings in New Delhi, the capital, and to give a lecture before the government of India on gross output and the positive role of business in society.
Twenty years ago, my wife and I visited India on a worldwide book tour to promote my work "The Making of Modern Economics" (now in its fourth edition and available at www.skousenbooks.com).
I was curious if things had changed in India, the world's most populated country (1.5 billion people), in terms of poverty, bureaucracy and the environment.
Today, India is the fastest growing country in the world. While its neighbor China has seen a sharp decline in economic and population growth, India continues to grow at an 8% rate or more, largely due to its burgeoning IT and manufacturing sectors and foreign investment.
The India stock market has also improved in its performance. Throughout most of the 21st century, the Bombay Stock Exchange did not keep up with Wall Street. India has averaged a 7-8% return compared to 12-13% in the United States.
But in the past year, India has actually caught up with the United States, both rising around 21% in 2024. Can it continue?
Twenty Years Ago…
Twenty years ago, India was famous for its grinding poverty, ubiquitous begging, over-the-top regulations and bureaucracy and environmental degradation.
India touts itself as the world's largest democracy, but that doesn't mean it has dramatically altered its protectionist and regulatory past. John Stossel once compared India with Hong Kong, both former British colonies. While it took months for Stossel to start a retail business in India, he obtained his license in Hong Kong in one day.
Milton Friedman visited India in 1979 for his "Free to Choose" TV program, and talked about the backward policies of the Indian government, using the example of the handloom business.
I recommend you watch his three-minute video of the handloom business of making cloth in India. It can be found here. How would you like to do this tedious work all your life?
And yet, it continues to do the same to this day, due to subsidies and protectionist measures in the face of the more productive machine-made power loom textiles. The handloom sector is India's second-largest industry after agriculture, employing over 4.5 million people. It contributes 13% to export revenues, 4% to gross domestic product and 14% to industrial production. | | The REVOLT against electric vehicles has begun (here's how to play it) You may not have heard much about this in the Green Media…
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In my visit around the nation's capital, India still appeared to be a third-world country, with shabby shacks, beggars, chaotic traffic jams and unbearable heat.
But progress is also seen everywhere: India is now the second largest manufacturer of mobile phones in the world and the fourth largest manufacturer of automobiles.
It is among the top 15 nations in information and communication technology, and it has made great progress in the development of biotechnology and new drugs.
It has done so by gradually deregulating the economy and opening it up to foreign competition.
Poverty has steadily declined from 25% or more in the early 2000s to 5% today.
The Indian brain drain may be reversing itself. Many entrepreneurs are staying in India, or are coming home after working and studying abroad.
But the world's largest democracy cannot guarantee progress unless it continues to adopt the Adam Smith model of economic liberty. According to the Fraser Institute, India remains in the "mostly unfree" status, #87 out of 165 entries, due especially to its low ratings in property rights, rule of law, business regulations and trade restrictions.
President Modi, Are You Listening?
The Legacy of Socialist Harold Laski in India
Much of the failure of India to become a free nation with high standards of living for all is due to the influence of two men: Mahatma Gandhi and Harold Laski.
Gandhi is honored as the "Father of India" for his fight for India's independence and self-rule, which was achieved in 1947. But he also advocated self-sufficiency (no imports) and was anti-machine, including modern transportation systems such as the railroad and airlines! He was famous for his manual spinning wheel and was supportive of the outdated handloom industry.
One of the most fascinating essays on Gandhi is "The Gandhi Nobody Knows," by Richard Grenier, based on a review of the 1982 film, "Gandhi." It's quite shocking. Read it here.
My Indian friend Barun Mitra disagrees, arguing that Gandhi was a classical liberal. He notes that Gandhi advocated swaraj (self-governance) and that collective organizations should be subordinate to individuals. Gandhi believed that the root of social problems was violence, and that the state's monopoly on violence was the cause. He believed that a democracy based on nonviolence was the ideal.
The founders of independent India were also highly influenced by Harold Laski, professor of political science at the London School of Economics in 1920-1950. He was politically active as the chairman of the Labour Party when it replaced the Churchill government in 1945, started nationalizing major industries and created the modern welfare state in Britain.
Mark Skousen and guru Barun Mitra in front of Gandhi's statue.
Over time, Laski became more radical and moved from being a Fabian socialist to an outright Marxist. He actually condoned the Soviet terror in the 1930s.
Indian students such as Jawaharlal Nehru became followers of Laski (instead of the free-market economist Friedrich Hayek, who also taught at the LSE) for two reasons:
First, Laski was one of the first British leaders who supported self-rule for India.
Second, socialist central planning was popular during the Great Depression, as advocated by Laski. Students lost faith in capitalism during the 1930s. Hayek was discredited during this "Age of Laski."
Nehru was handpicked by Gandhi to be India's first prime minister, and he remained in office until his death in 1964. Under the influence of Gandhi and Laski, he advocated a variety of socialist measures -- nationalization of major industries, self-sufficiency and protectionism and big government. He imitated the Soviet Union with India's own five-year plans. Only one Indian economist opposed the five-year plans, B. R. Shenoy (1905-1978), a student of Hayek.
Milton Friedman also criticized India's Soviet style five-year plans after visiting India in 1955: friedman-on-india.pdf (ccs.in).
But Shenoy and Friedman were a small minority. John Kenneth Galbraith, ambassador to India under President Kennedy, supported industrial planning. According to Galbraith, "India was the country most influenced by Laski's ideas… The center of Nehru's thinking was Laski." In the 1950s, in every meeting of the Indian cabinet, there was a chair reserved for the ghost of Professor Harold Laski.
To show you how adamant Prime Minister Nehru was about capitalism, the story is told that he was having a lunch with J.R.D. Tata, India's leading industrialist (founder of Tata Motors and Air India). Tata reminded Nehru that his business was expected to make a profit. To this Nehru's response was astounding. "Jeh, profit is a dirty word. Let's not spoil our lunch talking about it!" | | #1 A.I. Software to Find What to Trade With thousands of assets to choose from, filtering through these to find the most promising ones can be daunting.
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After years of central planning and slow growth, in the early 1990s, Indian leaders faced a final crisis. It ran out of foreign reserves. Finally, the government reversed course from the socialist days of Nehru and his daughter Indira Gandhi, who was prime minister for years from the 1960s into the 1980s. The new leaders threw off much of their controls, and India has been growing faster ever since.
But the government needs to do more. Despite many reforms, they are notorious for postponing licenses for business -- it can take months if not years to start a business. India is considering approving a 24-hour license, which would be a great boon to the country.
Over 70% of all firms in India have less than 10 employees to avoid all the crazy rules and regulations the government has imposed over the years through various acts of the Indian Parliament. Examples include the Factories Act of 1948, which mandates the types and placement of spittoons in factories. The Minimum Wages Act of 1948 specifies colors for official registration paper and ink. The Plantations Labour Act of 1951 dictates the frequency of changing bed linens in worker accommodations.
A report from the Mercatus Center at George Mason University regarding this topic was just released: Why Indian Firms Don't Scale: Labor Edition | The 1991 Project
Tom Easton, the Asian editor of the Economist, added, "India wants to grow. Everybody works in India, they just need to work more productively."
To get on board, consider buying the iShares MSCI India ETF (INDA).
Join Me in the 'Hat Party' at Orlando Money Show!
Special Announcement: The Orlando MoneyShow takes places this year Oct. 17-19, at the ChampionsGate Resort. Since October 19 is my birthday, Kim Githler, president of the Money Show, has decided to do a "hat party" in my honor on Friday, October 18. Come join me for the fun, where we will award the top three attendees wearing the best hats! My daughter Hayley and her husband Pablo and their band will be there to perform.
I'm also going to debate Mike Turner on "Buy and Hold or Market Timing: Which Has a Better Chance of Beating the Market?" Don't miss it, the sparks will fly.
Other speakers include Keith Fitz-Gerald, Steve Moore, Charles Payne, Louie Navallier, Kelly Wright, Peter Schiff, George Gilder, Adrian Day, Brien Lundin and Ed Yardini. To learn more and register, go to https://www.orlandomoneyshow.com/registration/. Sign up soon before the $149 registration price rises. Use promo code 063467 for the discount.
Good Investing, AEIOU,
Mark Skousen
Doti-Spogli Endowed Chair of Free Enterprise, Chapman University
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FreedomFest | | Trump Dodges Question About the National Debt Crisis By Mark Skousen
Editor, Forecasts & Strategies
"I promise to eliminate the national debt in eight years." -- Donald Trump (2016)
Donald Trump, known as "The King of Debt" in his real estate empire, is proud of his fulfilling his campaign promises.
One that he has ignored is his 2016 campaign promise to cut and even eliminate the national debt in eight years.
Instead, the deficit ballooned, even before the COVID-19 pandemic hit the United States in 2020, the last year of his administration.
Nick Gillespie, editor of Reason magazine, confronted Trump this week at a New York "Bitcoin" bar on this very issue and wrote about it here: Trump dodged my question about the federal debt.
Now, in 2024, the national debt is over $35 trillion, thanks to Joe Biden's deficit spending. We're at full employment, shouldn't we be running a surplus? Even Keynesians favor balanced budgets during full employment.
Trump is again promising to reduce the deficit through new taxes (tariffs of 10% or more) and "new growth." He makes the supply-side argument that lower taxes on income will stimulate production, which will mean more taxes and thus lower deficits.
Unfortunately, history has shown that lower tax rates may indeed increase revenue, but Congress is so hungry to tax and spend that the deficits keep getting bigger. You have to control spending through a tax limitation and a balanced budget amendment -- something Congress has never been willing to do.
The national debt crisis can only get worse -- until a mature government leader comes along and addresses it directly. | | | About Mark Skousen, Ph.D.:
 Mark Skousen is an investment advisor, professional economist, university professor, author of more than 20 books, and founder of the annual FreedomFest conference. For the past 40+ years, Dr. Skousen has been investment director of the award-winning newsletter, Forecasts & Strategies. He also serves as investment director of four trading services: TNT Trader, Five Star Trader, Low Priced-Stock Trader, and Fast Money Alert. | | | | | |
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