Freedom From Intrusive Taxes India

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Changes

Needed

in

Economic

Policies

BY

Firdos J. Mubaraki

Freedom Publishers

Freedom Farms

Dahanu - 401 602.

MAHARASHTRA.

All proceeds from the sales of this book in India will be used for Publishing, Advertising, and

Promoting the concepts till they are implemented.

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file:///C|/Documents and Settings/Administrator/Desktop/FFIT book.htm (1 of 244)5/9/2009 6:00:08 PM

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Copyright ©1987 by Firdos J. Mubaraki

Copyright © 2005 second edition by Firdos J. Mubaraki

ALL RIGHTS RESERVED. No part of this book may be reproduced in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, including information


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storage and retrieval systems without permission in writing from the publishers, except by a reviewer who may quote brief passages in a review. For information write to:

FREEDOM PUBLISHERS

Freedom Farms

Dahanu 401602.

Library of Congress Catalog Card No. 87-90702

ISBN 0-9618937-0-2

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ACKNOWLEDGEMENTS

Without God's blessings and power we are nothing. I would like to acknowledge God's guidance in helping me write this book. I know that without His blessings I would

not have been able to complete this book and put it together so

clearly and concisely. I would also like to thank all the people who

helped me.

God helped me choose a tree as my symbol because it is the most beautiful peaceful living thing in

this world; it has a longer life span and is larger than any living thing;


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it nurtures life and does not harm anybody. Most trees will keep

growing and sprout new shoots until they die. Humans should

learn from nature to keep growing in the right direction and live in

peace with each other.

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Foreword

Most of us are aware of the corruption, mismanagement and wastages in our system, so I will not waste your time mentioning

the problems. Solutions are more important.

The optional ideas in this book are public ideas I have heard and discussed over the years. I do not

endorse it or deny it. I am mentioning it in here because

they are

interesting and make sense and there should be public discussion

on it and finally the majority public opinion should prevail as

should be in a democracy.

Some of the statements written in the book may seem like they are being repeated but it had to be

done to get the full impact of the new thoughts.Wherever the word he appears it automatically means

he/she.

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CONTENTS

Chapter

1 DO WE NEED CHANGES IN ECONOMIC ....... 1

POLICIES………………………………………... 2 INTRODUCTON TO CHANGES

NEEDED IN ECONOMIC POLICIES. ………..... 13

-SUPPLY-SIDE VS. DEMAND-SIDE............. 15

3 TAXES …………………………………………... 22

-SIMPLIFYING THE TAX LAWS .................. 22

-CONSUMER - SERVICE TAX (C-S) ............ 23

-ADVANTAGES OF C-S TAX OVER INCOME, EXCISE, SALES, OCTROI, VAT AND OTHER INTRUSIVE TAXES....................................... 25

-DISCUSSION OF C-S TAX ……. ................ 31


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-TURNOVER TAX (OPTIONAL) ................ 35

-BIRTH TAX (OPTIONAL) ........................... 37

-GUIDELINES FOR C-S TAX LAWS .......... 38

-PRODUCTION LICENSING LAWS …...... 42

-WHAT WILL THE MONEY COLLECTED

FROM C-S TAX BE USED FOR? ............... 44

-HOW WILL THE ROADS BE PROVIDED

AND MAINTAINED?..…............................. 50

-QUALITY AND MAINTENANCE

OF ROADS................................................ 53

-TRANSPORTATION ALTERNATIVES FOR

CROWDED CITIES.................................. 54

-STATE, DISTRICT, AND CITY

GOVERNMENTS ……………...............

4 PRIVATIZATION, ANOTHER SOURCE OF

REVENUE ..................................................... 57

-PRIVATIZING PRECIOUS AND

NON-PRECIOUS METALS, MINERALS, OIL

AND GAS FOUND ON PRIVATE PROPERTY..... 59

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CHANGES NEEDED IN ECONOMIC POLICIES

-PRIVATIZATION OF OTHER NATIONAL

RESOURCES ................................................. 59

-RAILWAYS ..................................................... 60

-AIRPORTS AND SEAPORTS......................... 62

-PRECIOUS AND NON-PRECIOUS

METALS, MINERALS, OIL AND GAS FOUND

ON PUBLIC LANDS ....................................... 62

-FORESTS, MOUNTAINS, RIVERS................ 63

-DAMS............................................................... 65

-DEFENSE …………………………................ 67

-CENTRAL ECONOMIC PLANNING ……… 69

5. CORRUPTION AND CRIME ............................... 70


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-CORRUPTION .............................................. 70

- HOW DO WE ERADICATE CORRUPTION... 71

-HONOURARY COMMITTEE MEMBERS .... 72

6 WHO WILL MAKE THE GOVERNING DECISIONS? ...... 76

-HOW DO YOU ELECT YOUR REPRESENTATIVE ..... 77

7 THE IRON TRIANGLE ………...…………............ 87

-HOW TO DISMANTLE THE IRON TRIANGLE......... 89

8 INTERNATIONAL TRADE AND

IMPORT-EXPORT POLICIES ………….……...... 92

-WHAT HAPPENS WHEN THERE IS A

TARIFF ON TRADE? …...…….…......................... 93

-FREE ECONOMIC TRADING ALLIANCE.......... 94

-SUBSIDIZING EXPORTS ………….….…........... 95

-HOW WILL INTERNATIONAL

-TRADE ACHIEVE TRUE PEACE? ……….......... 98

-HOW TO ENCOURAGE FOREIGN CAPITAL …… 101

-SPECIAL ECONOMIC ZONES (SEZ) ................. 101

9 UNIONS …………………………………………. 102

-GUIDELINES FOR UNION POLICIES………… 103

-MINIMUM WAGES ………………………......... 104


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-WHO PROVIDES FOR AND

PROTECTS THE WORKER? ………................. 105

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CONTENTS

-CREATED UNEQUAL ……………….…............ 105 -WELFARE STATE ………………………........... 106 WHO WILL PROTECT THE CONSUMER? ..... 107

10 GOVERNMENT SPENDING ……………...…... 109

11 INFLATION ………………………………..…… 112

EFFECTS OF INFLATION ………….…............. 113

WHY DO POLITICIANS CHOOSE

TO PERPETUATE INFLATION? ………............ 114


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HOW TO CURB INFLATION

PERMANENTLY ……………..………............... 117

12 PATENTS ………………………….………….... 118

13 DYING INDUSTRIES, UNEMPLOYMENT,

TARIFFS, AND SUBSIDIES ……......….………. 121

-PRODUCING JOBS IN DYING ...................

-INDUSTRIES BY TARIFFS

AND SUBSIDIES........................................... 121

14 EDUCATON ……………………………………. 127

-HOW DO YOU SUBSIDIZE EDUCATION?.... 128 -HANDICAPPED …………………………...... 133

-HOW TO YOU SUBSIDIZE THE

TEMPORARILY HANDICAPPED? ……........ 133

-HOW DO YOU SUBSIDIZE THE

PERMANENTLY HANDICAPPED? ……...... 134

-WHERE WILL THE SUBSIDY

MONEY COME FROM? …………................. 135


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CHAPTER I

Do we need changes in economic policies?

Let us first examine what most major economies of the world are following. The government needs to raise revenue to pay the salaries of the politicians, bureaucrats, for the administration work that they are supposed to do, plus all the other services that they are supposed to provide such as defense, roads, water, electricity etc. Most of which can be supplied by the private sector. In order to raise revenues they have a tax structure which taxes Income (personal and corporate) and production in the form of Income, Excise, Sales and Octroi. Recently some countries have replaced the sales tax with a VAT (value added tax) or GST (goods and


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service tax) these are all intrusive taxes, (local municipal taxes are not intrusive taxes).

All of the above are "Intrusive Taxes" meaning the tax officers can intrude into your personal life by entering your residence, businesses office or factory premises and do a raid/search and seizure. They have the right to open up your business transactions books and ask you any questions on any transaction dating back 5 years and if any of your answers are not to their satisfaction then they have the right to seize your property, lock up your business premises and they can make you pay the back taxes with interest and penalty which could be 10 times the original amount.

This puts every possible person under the scrutiny of the tax officials. In India tax officials treat every taxpayer as if we have cheated until you prove you are innocent. This can take years in court. It creates lot of tension for individuals as well as business owners. In most cases people settle the issue with a bribe to the officers concerned plus pay a nominal amount of actual taxes. Most people would agree that the bribe amount is

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a lot more than the actual official amount collected. Whenever you have an economy having various intrusive taxes, each more complicated than the other and to top it off these tax laws are changed every year, this creates a lot of confusion, fear, anxiety and frustration among the people and the economy does not realize its full growth potential.

Lets take one step back in the past and analyze how and why the concept of taxes came about. The simple answer is that government need money to pay their own salaries, provide administration, infrastructure, defense, hospitals, schools, dams, power plants and a number of other things. The question here is: does the government need to collect taxes from the people to pay for the above expenses or is there a better way?

There is a better way, without intruding and threatening people's lives. Today's income tax system not only charges an income tax to the higher income people it also charges at a higher rate of taxation as their income goes higher. This seems unfair and discouraging to the person working harder. Why should a person who works harder or smarter be taxed at an increasing rate on his excess income? This will discourage them to earn higher income or encourage them to hide their income or send their money out of the country to avoid the higher rate of taxes. This makes cheaters out of honest people and creates an open door for bribes and corruption. It is not a nice feeling for people to work hard/smart and then to save their hard earned money, cheat on taxes. This tax option does not look good either for the taxpayer or the tax collector.

DOES THE GOVERNMENT NEED TO COLLECT TAXES?

Let's ask the fundamental question. Does the government need to collect taxes from the people to run the government system and provide the infrastructure in the country, the defense and all the other services that it


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provides in the economy?

The government needs some source of revenue to give the above-mentioned infrastructure and services. So far most

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DO WE NEED CHANGES IN ECONOMIC POLICIES?

governments all over the world have found taxing the people the easiest way of raising revenue. It also seems a fair way in the government's mind to do so - but not to the taxpayer.

Besides taxing is there an alternative means of raising revenue for the government? Can the government not raise revenues just as any other business organization does? Businesses provide some kind of products or service to the economy whereby their total revenues is greater than their total expenses. This creates profit or surplus revenue.


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Why can't the government achieve this simple business formula with all of the joint public assets, which they are supposed to manage for us? From the profits of the vast resources of our country and the joint public assets the government should be able to generate enough income to replace the concept of taxation.

The fact today is that most economies, even after charging several types of taxes, are not able to earn higher revenues than their expenditure. Hence their budgets are in a deficit every year after year. (Explanation given later how this deficit is financed).

We will look at two examples and these will be used as references throughout the book on how the same can be applied in our government system.

WHO ARE THE OWNERS OF THE WEALTH OF INDIA?

I have taken the example of a housing society and a business organization to explain the above question. Suppose you own a flat and live in a housing society where there are one hundred houses. Therefore, you are member of the society and you own one hundredth joint ownership of all the open spaces and you have to pay for one-hundredth share of the maintenance of the common properties. Now suppose there is one-acre open space allotted in your society for a clubhouse and restaurant. By majority decision the hundred owners decide to take a loan and build this clubhouse for themselves as well as for non-members of the society so that there is additional revenue to the clubhouse. Of course every member of the society would pay for the usage

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of the clubhouse. Those who don't use the club facilities would not pay the user fees. (user fee is an important concept to do away with taxes)

Each homeowner would be responsible to pay one hundred of the loan expenses. If you owned two homes you would be responsible to pay for two hundredths of the loan expenses. So also when the clubhouse starts making a profit and you owned one house then you would be entitled to one hundredth of the profits and if you owned two houses you would be entitled to two hundredths of the profits of the clubhouse.

It would not be possible for all hundred homeowners to be part of the management team to build this clubhouse. So the hundred homeowners would elect a team of committee members from among the homeowner members. This committee would be responsible for implementing the will of the homeowners in building the clubhouse and be answerable to the homeowners. These committee members would then hire professionals to build the clubhouse. The final plan and cost of the clubhouse would have to be approved by a general body meeting before the plan is implemented.


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Once the clubhouse is built it would not be possible for all hundred homeowners to be running the day-to-day affairs of the clubhouse. So the hundred owners through the committee hire a professional manager and a team under him to operate the clubhouse.

In the above case who are the owners of the clubhouse? Not the committee members nor the manager nor the staff. The hundred homeowners are the joint owners of the clubhouse! The manager and his staff are not the owners, nor are they entitled to any share of the profits. In theory all the hundred homeowners are the owners of the clubhouse even though they are not operating the clubhouse on a day-to-day basis. The homeowners may jointly decide to appoint a committee to look after the management of the clubhouse. This could be an elected committee by the hundred homeowners. This committee is answerable to all the homeowners. They do not become the owners of the clubhouse, nor are they entitled to the income of the clubhouse. They may or may not be paid a salary as per the will of all the homeowners. They will be entitled only to one hundredth or two hundredth of the profits

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of the club as per their ownership of homes in the housing society.

From the above example it is clear who the owners are and who the caretakers are. Comparing this to our joint assets of our country; the committee are the same as our politicians, the manager and his team are comparable to our departmental secretaries and the staff that are under them. This is a very important and powerful concept to understand. The politicians and all government employees are caretakers of our joint public assets. They are answerable to us, the people of India.

Now let us take the case of a business organization. Supposing an individual or a group of individuals decide to start a business. They would each put in some of their own cash, balance they would borrow loans and/or sell shares of the company to raise funds to start the business.

With that money they would buy or lease land, office space, factory etc, whatever was needed to produce the products or provide the service that they would have decided in order to run their company at a profit. Initially for a few months or few years depending on the product or service they may not get any profits. But eventually they would make some profit or the business would have to be shut down because banks would not keep on loaning them more money and the shareholders who have invested to get a return on their investment would not be willing to give the business more money if they would not get any returns.

Many businesses do pay the interest and principle to the banks and also give a percentage of their profits to the shareholders and keep some profits for future expansion of the business and on top of all this each year they pay some money from their earnings to the government in the form on Income, Excise, Sales and Octroi taxes whatever is applicable to them.. Still many companies


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manage to do all of the above and increase their profits and acquire more properties or factories or shares in other companies. In other words they increase their overall wealth..

Keeping these two examples of the housing society and a business firm in mind let us compare and analyze it with our country "INDIA."as our business and our society

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Prior to August 15 1947, the British were "GOVERNING" over India and upon independence they left India completely to the citizens of India.

So millions of acres of land called "India" was given back to the citizens of India. We did not have to pay the British any large sums of money to leave India or since then have to pay them any yearly tax for this property called "India" from the income that would be derived by India. We did not have any debts borrowed against India that the people would be held responsible for (as would be the case with a business firm which usually has to pay some interest on borrowed debts plus pay dividends and taxes).

Upon independence Indians owned or rented a flat or at least a hut or land which was their personal property. What about all the other properties, which was not owned by individuals or business? For example who would own all the forests, rivers, dams, beaches, coastal waters for fishing and oil and gas all the mineral resources on the land, the train system the roads the schools, colleges, the public lands, offices that were left behind by the British. Naturally as in the case of the housing society, what was not individually owned was jointly owned by all the homeowners. In the case of India all Indian citizens jointly owned all of the above wealth. Technically one citizen at time of independence would be one shareholder of all the joint assets of India.

Now suppose at independence the population of India was 100 million. This means that upon Independence each citizen would be 100 millionth shareholder of all the joint assets and liabilities of India by default. Any one Indian citizen could not say that this is 100 millionth part of the joint assets of India and I want my share separated and kept as my private individual asset. Same as in a housing society one homeowner cannot claim a one hundredth part of the joint property as his sole and seperate property.

Since at that time we didn't want another form of government to rule over us we chose to be a democratic society based on similar lines as the United States of America model which in principle was "of the people, by the people and for the people". There are variances in the


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actual election process and

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government forming methods. Today you ask yourself the question for the above statement. Our democracy may be "of the people" 100%, by the people less than 100% because some percentage of the population does not vote, but "Government for the people?" You answer this question yourself.

So as per the society example it is clear that every citizen young or old would be 100 millionth joint owner of all the assets of India at independence. It would be impossible to manage all the joint assets by 100 million people throughout India. As in the case of a "housing society" explained earlier, we the Indian society decided to choose or vote a committee to take care of the management of the joint assets of "India" society. These elected committee members are our politicians. These elected politicians are our caretakers of the assets


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jointly owned by the people of India. They are not the sole owners of our joint assets, nor have we elected them to GOVERN over us. They are basically our area representatives and are there to serve us since they are paid a salary from our taxes or from the income of our joint resources. For our reference the word committee and politicians would mean the same. The committee=Politicians (C/P) would be empowered to hire managers to run the day-to-day business of our country. These managers would be various secretaries commissioners, tehsildars, RTO's etc.

In effect we the people, the shareholders and owners of our joint assets have elected the C/P to look after our assets and generate a profit from it and give us a dividend each year as would be the case in a business. C/P that have a majority appoint their Chief minister or Prime Minister depending on the level of government. The chief would appoint the different Ministers and secretaries of different departments to look after our joint assets. They are all answerable directly or indirectly to us, the owners of India, i.e. the citizens of India. We have not elected the politicians to "GOVERN" over us as the British did. We have elected them to be caretakers of our joint assets and be accountable to us. But now it is the other way around we are accountable for all our incomes and expenses to our public servants and they on the other hand have almost no accountability

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and are having a party with our income from our joint assets and taxes that they force us to pay. And just as in the case of a business firm that can efficiently pay its loan interest and principle (which at independence India had none to pay) plus pay all different taxes (which again India did not have to pay any taxes to any other government i.e. the British or Portuguese) and yet a business pays dividends year after year which our politicians have never paid us. If our joint assets were managed as a profit making business organization we should also have been paid dividends of our joint ownership of our country's assets for over 50 years. So how have they managed our joint assets? Very, very badly I would say so! Wouldn't you agree with me?

In the last 50 years have our politicians paid any profits to us, the shareholders? NONE. Neither have they had to pay any taxes to any other entity as a business does, nor did they have any loans to pay off at the time of Independence. How would you rate our C/P for managing our joint property compared to how a business organization does? Lets look at a few more things.

Have they increased the size of our property by buying any new property, as most businesses would do? No, the C/P have not bought any property outside our land space called "India" in the last 50 + years. They have not had to pay off any old loans left behind by the previous management i.e., the British. In fact, over the years the C/P has amassed so much outstanding loans against our joint resources that it is unbelievable (this topic is discussed later). The C/P has not kept any surplus funds for future expansion, as a business would do. Nor have they given any dividends to the shareholders in the last 50 + years as most business would do. Should we be happy with their managing of our joint assets? Do you


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think it is time we ask them to do the necessary changes mentioned in this book or shall we wait and watch for another 50 years?

On the other hand if you were to listen to the politicians side of the story they would say: We have increased the size of our infrastructure, Roads, railways, Airports, schools, colleges, hospitals, dams, power plants, and a whole lot of other things that the politicians have accomplished. TRUE but that is a pittance

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for what they should actually have done over so many years. Besides, most of the above have been done not from the income of our joint assets but by taxing us and borrowing loans against our joint public assets. Look at the quality of our infrastructure and compare it with Japan or Germany, which were completely destroyed at that time by World War II.

Let us ask the C/P the question. Have all of the above projects that the C/P claim to have provided to our country been accomplished from the income from our joint resources/assets or have they done it by just taxing us, or by printing more money or by borrowing incredible amounts of loans.

All of the above! They have asked the Indian people, the shareholders, to shell out money year after year in the form of income, sales, excise, and octroi taxes. The Indian people have not paid these taxes happily and willingly, as is the case everywhere in the world. They have been forced to pay it under duress and threat from rules made by our own C/P and implemented by our bureaucrats, the secretaries and the different tax collecting agencies, which they have created without our direct consent.

Compare the above to a business firm. If you as a shareholder were asked to pay money (by whatever means) to the firm year after year because they would tell you if you didn't pay them the money (taxes in case of our government) they would not be able to run the business and they would have to shut it down. You as a share holder would say enough is enough and you would stop paying the company money year after year and let the business go bankrupt. The creditors would sell the asssets to recover their money and your shares would have almost zero value.

But as shareholders of India can we allow our business empire called India to go bankrupt? No! So we have kept paying our taxes to keep our joint assets operating. But we have to wake up and say enough is enough. We want the C/P to really change the whole concept of managing our assets so that we should not have to pay any more taxes and eventually all expenses should be paid from the profits of our joint resources. There should be a user fee system,


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which means you only pay for what you use (explained later).

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The C/P have no right to give away part of the citizen's joint property to certain privileged or underprivileged citizens without the consent of the rest of the citizens. The C/P will claim that they have done this on the grounds of humanity or is it really because they may be getting votes from them. The C/P should have gotten Majority consent from the citizens before approving these asset giveaways to any individual or group of people.

Not only have we paid taxes each year to keep our India operational. But each of us taxpayers has been looked upon by the tax officials as dishonest tax evaders and as a personal source of income. On top of that, they have further burdened us by borrowing huge loans from different organizations as the world Bank, IMF and others to provide us these so called infrastructure


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projects. The interest alone on the above loans are so huge that now each year the C/P borrow fresh loans just to pay interest on the original loans. On top of this the Politician/Bureaucrats continue to borrow brand new loans for new infrastructure projects to make the original loans even bigger so that they can improve and provide more infrastructure to us. What kind of financial future will these debts lead us to?

The result is a very big percentage of our budget goes just to pay the interest on the debts. Some loans do get paid off but that is very small percentage. Net result is that our principle loans and interest payments keep getting bigger and bigger each year.

By printing excess quantity of money to avoid heavy taxes leads to inflation and devaluation of our currency, which is not very acceptable to the citizens.

Comparing the above scenario to a business organization, no bank or any other institution would loan them money year after year if they had to keep borrowing more funds just to pay the interest. Coming back to our India business, is there an end to this ever-increasing loans and interest payments? You decide.

Do you think its time to say good-bye to the present form of intrusive taxation i.e., Income Excise, sales octroi, VAT, CST, GST and whatever new tax C/P come up with? Would like to see our economy move away from the intrusive

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tax system and go to a very simple easy to understand and implement system of taxation? And within 10-15 years reduces these taxes to only a user fee form of structure?

With the right economic policy we should be having a budget surplus each year to pay off the debts of our country, this will automatically lead to lower revenue collection requirement, hence a reduction in taxes can follow. Also all the wastages and leakages due to inefficiency and corruption in our economy should be controlled. How corruption can be completely controlled is explained later under title "Corruption". If corruption is controlled more than half our problems are solved. Corruption is a big drain on our resources and this requires the need for higher tax collection. By improving our efficiency and eradicating corruption our expenses will be reduced. This will help in further reducing the requirement of revenue collection or this money saved can be used to pay off the loans faster so we don't need to raise this extra revenue to pay interest to foreign debtors.

And lastly but more important this book will show the


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necessary economic policies to be implemented to actually earn a positive revenue inflow from our joint resources, which will not only help in paying off all the loans, but also do away with taxation (except for a user fee system as explained later)

India has always been a wealthy country throughout the ages. In the past people from all over the world throughout history have come here to trade with us and gained from trading with us. We have also gained from the trade, but we would have been just fine without the trading. We have not had to go out of our country to look for trades to increase our wealth. People from all over the world have come to our country to trade with us to increase their wealth. And so it can be again! Only in the last couple centuries Indians have gone out for better business opportunities But that trend can be reversed.

With the right economic policies and the will of the people to get it implemented and executed, we will see the above paragraph happening again.

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The question is would you like to see it happen?

If you do, then do the following few steps and you will see the changes happening for the betterment of our country and for each and every individual.

1. Read this book carefully and try to understand it. It has been written in a simplified way so that most people can understand it. Remember first an idea has to be successful in your mind only then it can become a reality.

2. Discuss the ideas in this book with all your friends and relatives. Give them a copy of this book or ask them to order one for themselves and read it.

3. Most important if you can afford, then send a copy of it to your MP and ask him to read it and start discussing and implementing the policies herein. Although the policies explained are well thought out you may not agree with each and every one of the policies mentioned here and you may want to specify that to your politician. You may also email your suggestion to freedom @ffit.in. If others have similar suggestions then it will be incorporated in this book later. After all, this book is "for the people".

The easiest thing would be to send the sample letter on the last page to your MP and ask him to start implementing the policies of this book, if he does not take you seriously, he will not get your vote the next time around. Tell him you will vote for any candidate who will be willing to implement the FFIT program.

ALL the policies in this book come under the "FFIT PROGRAM" If you are aspiring to be an honest politician then you can stand on the platform of " FFIT PROGRAM" and this offer is open to any political party or any independent person to follow. You can write to me for any explanations or clarifications. Let's get our country FFIT for all to enjoy not just the selected few.


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CHAPTER 2

INTRODUCTION TO CHANGES NEEDED

IN ECONOMIC POLICIES

This book addresses important economic policies that almost any capitalist or semi-capitalist economy could implement with minor alterations and achieve unprecedented steady economic growth.

These policies are based on "supply-side economics". Before discussing supply-side economics, let us take a brief look at demand-side economics, which was introduced by Keynes in the 1930's after the great depression in the U.S.A. and Europe.

Demand-side policies have been implemented by nations around the world for the past 70 + years. Today almost


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all the economies of the world have a constantly increasing budget deficit and therefore an ever-increasing national debt. Yet few of these nations have a strategic plan to balance their budgets and to start paying off the national debts.

As explained earlier let's compare a nation to a profit-making business organization. Suppose a firm operates at a loss year after year without any plans to make a profit, and it finances these operating losses in the form of long-term debts (i.e., long-term liabilities, which are comparable to the national debt, most of which is also long term). This type of firm would no longer be attractive to investors or lenders. It would not be able to raise money to finance its operating losses year after year and, eventually, it would go bankrupt. This is the same problem facing most nations today. They are either virtually bankrupt or rapidly moving in that direction. The only difference is that when a nation's loans become due, they are either rolled over and added back to the national debt, or taxes

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are increased, or more money is printed to pay off the debts.

What happens when the government takes the above steps? How is the economy affected? How are you affected? All this is explained in the section "Why do Politicians Choose to Perpetuate Inflation?" Essentially borrowing more money and increasing taxes leaves smaller amounts of money for the private sector to spend, thereby slowing down the economy or what economists call stagnation. Printing more money faster than the growth of the economy causes inflation. In the 70's stagnation coupled with inflation was dubbed "stagflation." Keynesian policies or demand-side policies do not have a solution to this problem, since Keynes never anticipated such a phenomenon to occur.

Keynes's solution to recovery from recession was to artificially stimulate the economy. This would be done by the government injecting money into the economy, through government-sponsored projects. The objective was that these projects would employ people and the income earned by these employed people would be spent to buy products and services, which in turn would create more jobs in the private sector to provide for those products and services. So by this process the economy would be pulled out of recession. Sounds good! But this is only a temporary solution and has a major flaw in it.

The money spent on the government-sponsored projects has to atleast return enough income to pay for the interest and pay off the principle otherwise it is an economic loss to the nation. When a business invests in a project it has to make a profit in order to pay back for the investment and also to get some return on the investment, to make it worthwhile for the investors. If the project never makes a profit, then investors will shy away from that business organization. The business will not be able to get new loans to keep on financing its losses and, eventually, it will go bankrupt. Are we moving in that direction?

What happens when the debts on these government projects come due? Most government projects almost


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never pays back the invested amounts (let alone making a decent return on investment.) They simply disintegrate, or money has

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INTRODUCTION TO CHANGES NEEDED IN ECONOMIC POLICIES

to constantly be pumped into them to keep them alive. The government uses its power to either borrow more money, or raise taxes, or print more money to pay off old debts. This puts the economy into a bigger recession than the previous one, and the government does the juggling act again to pull the economy out of the recession. But each time the balls get bigger and harder to juggle (i.e., the debt becomes larger) until it pulls the whole economy down with it. Then we will have a complete collapse in the economic system, which is what most nations of the world are fast approaching.

SUPPLY-SIDE VS. DEMAND-SIDE

From the above explanation it is clear that demand-side


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policies do not have a permanent solution. They simply give the economy temporary relief and postpone the disaster. Each time it costs the private sector more and more and it has a snowballing effect. The supply-side policies recommended here have permanent solutions.

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PS = Price

when supply is increased

PD = Price


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when demand is increased

P = Price

Q = Quantity

S = Supply

D = Demand

E = Equilibrium or assume it is the current situation

QN = New

Quantity

SN = New

Supply

DN = New

Demand

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Let us examine the graphic implications of demand-side and supply-side economics. What happens to price and quantity?

Assume PE and QE are the current equilibrium prices and quantities in an economy. Q is also referred to as gross national product (GNP) or total quantity of products and services produced by a nation.

When you examine demand-side graph G1, you find that as demand is increased from the current equilibrium position DE to the new position DN, the quantity or GNP or total output increases from the current quantity QE to the new quantity QN. But at the same time there is an upward pressure on price to increase from the current price of PE to the new price of PD.

Now examine supply-side graph G2. When the supply is increased from the current equilibrium positions SE to the new position SN, the quantity or GNP increases from the


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current QE to the new quantity QN——roughly the same magnitude as in demand-side graph G1.But examine what happens to the price in supply-side graph G2. The price has fallen from the current equilibrium PE to the new price of 1PS.

Assuming that both the demand-and supply-side economics have the same increment in quantity, examine the comparison box on the left-hand side. It shows PE as the current equilibrium price. The demand-side graph pulls the prices upward to PD while the supply-side graph pushes the prices down to PS. The net price difference between PD and PS is vast.

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This price difference in an economy could mean an immense inflation due to demand-side policies, as opposed to steadily increasing quantity or GNP with steadily falling prices. (Later, this book will address the separate effects of inflation and deflation on an economy.) It is quite simple to graphically explain what happens to price and quantity when you increase the demand or increase the supply. But in real life it takes decades of testing economic policies to know the real effects of a policy or a group of policies. Also, a group of polices will have a slightly different effect depending on the overall national economic policy and the world economy.

Very few supply-side policies have been authentically implemented and tested. In my opinion, true supply-side policies should foster these goals:

(1) Encouraging steady growth in the private sector.

(2) Minimizing tax laws and abolish all intrusive taxes.

(3) Maintaining a balanced budget and keeping government spending to a minimum. Government should always spend less than what they have, to keep reserves in case of emergencies.

(4) Not subsidizing any industry (except education and the handicapped).

(5) Maintaining a steady growth of money supply (M.S.) to accommodate the increase in GNP (i.e., an increase in M.S. should be roughly equal to or less than the increase in GNP). This policy would keep prices fairly stable.

Supply-side economists have different ways of achieving the above-mentioned goals. Most of them want to take the existing tax laws, production policies, import-export policies and simply refine them to encourage growth. This would surely have a positive effect on the economy. But the basis of these existing policies has its flaws and limitations. The supply-side policies proposed herein do not encourage mere cosmetic changes but suggest a complete overhaul in the structure of the existing policies.


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What the present supply-side economists are suggesting is to trim the fruit tree, fertilize it, and make it grow and produce more. This will only produce more of the bad fruit. What I am proposing

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is to uproot the old tree and plant new superior quality fruit tree in its place. Looking at it another way, the present supply-siders are trying to build a ten-story structure on a foundation that was built to support no more than two stories. Even if one uses the best paints and plumbing and electrical systems, that does not mean the foundation will support a 10-storey building.

The supply-side policies I am proposing would build an economic foundation so strong that it would have no foreseeable limits. Within five to ten years of its implementation, most major capitalist countries would want to learn about these policies and implement them or they would be left far behind and their citizens would


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not be happy about it.

The beauty of these policies is that they are simple and realistic, yet most effective. Some would even call these policies idealistic. They are relatively easy to implement and maintain. Once in operation, they will not call for any major structural changes; if any, some minor adjustments may be needed in the long run. As compared to the taxation policies today that have so many changes every year that businesses as well individuals have to live in fear as to how these new tax policies will affect them. Again they have to waste so much time and resources planning to reduce their tax burden.

All this adds to the cost of the end product or service that the company provides and the consumer pays for it all. This reduces our competitiveness in the global economy. The concepts explained here are rock solid and will stand the test of time. For these policies to work effectively and have the desired results there should be no concessions and it should be simultaneously implemented in order to get quick , full and long-lasting impact. Some of the policies in this book are optional and will be mentioned as such in the following chapters. These optional policies are common suggestions, which I have heard over the years, I do not endorse or deny it they are interesting thoughts floating among the people and can be implemented after public debate and opinion polls. I am not a doomsday economist. I have great confidence in the human race and our Indian people. We have proven ourselves all over the world in various fields as

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to what we are capable of accomplishing. (Except for sports we need a lot of improvement there). We need to evaluate and be aware of the situation, realign our path in the right direction and move forward. The changes in economic policies proposed in this book will do exactly that.

I believe the role of an economist should be one of a thinker, a person who comes up with workable solutions to economic problems. Most economists today are heavily involved in statistics, using complex mathematical formulas to estimate and forecast economic figures, which are incorrect most of the time. Yet what do these numbers mean to the rest of us? Does it translate into a more stable, people-profiting economy? Sound economic policies are worth much more than the most accurate forecast figures. For example, making the right management decision to make a profit, rather than a loss, is more important than forecasting the exact amount of sales or costs or profit or loss or the exact time when the company will go bankrupt. We need to focus our view and make the necessary changes to head away from a disaster and be on a steady path of progress.


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While reading the book lots of different thoughts will be running through your mind, but be patient and keep on reading and most of your questions will be answered and you will realize how effectively everything fits together so perfectly.

Lets look at this example. Supposing you were overweight and you were not feeling healthy. Your blood pressure is getting high, your cholesterol is high, you have indigestion problem, joint pain etc. You take opinions from two doctors. The first one has a lot of computer gadgets and he attaches it to you and does the input of your different reports and tells you this. You will get a heart attack after 368 days, 16 hours and 24 minutes so you better go and check into a good hospital a day in advance so that doctors can care for you. In the meantime just continue with your lifestyle.

The second doctor takes one good look at you and seeing you overweight tells you to control your eating habits and puts you on an exercise program. This will automatically reduce your weight and gradually all the weight related problems start fading away

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and you will feel fine and healthy. Which of the two doctors would you prefer? The exact amount of food and exercise is unimportant a little more or less will not make such a big difference. Doing the right thing is what is important.

In theory everyone will say the second doctor has the correct advice and you should do as he says. In reality everyone will follow the first doctor's advice because nobody wants to take the difficult task of controlling their eating habits and exercising. So also in managing our economy we need honest and hard working people to get our economy into good shape.

In this book the changes needed in economic policies suggested are that of the second doctor. It will be difficult for the politicians and bureaucrats because they will have to control their official spending to balance the budget, that is comparable to controlling our diet, and make all our joint assets profitable, that is comparable to exercising. The more the politicians do the above the faster the change in the economy and in your life.

Corruption will be controlled or done away with (explained later) and C/P will have to work hard and smart and with honesty to show the results to the people of India or they will be made to resign their positions by the honorary committee (explained later) of each ward. Corruption is comparable to a virus. Once it enters the body it keeps on spreading until it weakens the body which is giving life to it . Ultimately it kills the body. Lets stop this virus (corruption) before it kills our country.


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CHAPTER 3

TAXES

SIMPLIFYING THE TAX LAWS

No matter how much you prune, fertilize and water a low quality fruit tree it will not produce sweet high-quality fruit. Similarly, reforming the present income tax laws and other intrusive tax laws will not produce any net advantage to the nation. It will merely compound an existing problem because the concept of taxing income and production has many adverse effects and results. Why should we pay part of our hard earned income to the government? Instead of the government being thankful to us for parting with our hard earned income they want to keep track of each and every Rupee we earn and how we spend it. In the name of simplifying taxes and reforming taxes they burden us with complication beyond not only a common mans understanding, but also beyond most college graduates and even most professional accountants have to attend seminars to understand and clarify what new changes are made in the tax laws each year.

Income tax is an old concept, definitely dating as far back as the Roman Empire and probably as far back as the Egyptian Pharaohs and other Kings worldwide. Their tax system may not have been the same as our income taxes as we know it today, which requires so much details and paper work and wastes so many man-hours and resource. Theirs could have been a simple tax. Such form of taxation has always led to a slow down in economic growth, an underground economy and eventually an economic disaster. The same things are happening today. Man should learn from his past mistakes and not repeat them.

In an economy, Income tax along with any of the other intrusive taxes mentioned before and corruption are like the

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clutch and brake in a vehicle. If the clutch and brakes are not released the vehicle will not move forward. Even with the clutch and brakes not released this vehicle called India has moved forward especially since the mid 1990's. Just imagine what kind of power and speed this country will unleash when the clutch and brakes are fully released. The ideas in this book when implemented will do exactly that.

In order to make people's lives easier, abolish all intrusive taxes ie, income, excise, sales, octroi, VAT or any new taxes that the Politicians can think of next. All of these intrusive taxes can be replaced with a simple 20% Tax on all products and services sold to the final consumer. This would be the easiest way but it would not be fair to the poor people. A better way is explained below.

CONSUMER-SERVICE TAX

Let us make a real historical change for the world to follow- let us not copy them. Once and for all abolish all intrusive taxes and introduce a Consumption Tax


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or call it a consumer tax and a service tax (C-S Tax). This would be collected once only at the time when the retailer would sell the final product or service to the end consumer/user of the product or service. There would be no tax to the producer or the supplier of products or services from one business to another. Even today all the taxes that the manufacturing companies, stockiest, wholesalers, distributors and retailers are paying are eventually added into price of the product/service and is being paid by the final consumer. So why not reduce all the headaches, harassment, cost of tax accounting, wasted man hours in preparing and reporting taxes, high cost of implementation and collecting all the intrusive taxes. By abolishing all intrusive taxes the basic prices of all products and services would come down tremendously. The percentages mentioned below may seem high initially but still the final price to the consumer would be much lower than with the present intrusive taxes (except for luxury and imported products) and that can be reduced each year. Lets have the following tax only.

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The C-S Tax should be a progressive tax, divided into four categories:

i) Zero percent C-S tax on necessities of life, 1) Food, this should include all farm produce as well as inputs that go into growing farm products ie, tractors, water pumps, all kinds of farm goods transportation, fertilizers, spray pumps etc, 2) Education including all text and note books for school and college students, 3) Clothes with at least 50% Indian grown cotton. 4) Indian grown Ayurvedic medicines 5) Products that use renewable energy sources—Indian made or imported machines, vehicles and electric generator sets that would use renewable energy sources i.e.; solar, wind, hydro, agricultural plant energy source, gobar gas plants, etc.

ii) 20% C-S tax on normal products and services, this would include almost everything except the necessities mentioned above in the 0% tax bracket, imported foods and restaurant foods could be kept in 20% bracket since it is not a necessity for the poor.

iii) 50% C-S tax on energy consuming products made in India and 100% on imported energy consuming products that use fossil fuel or electricity or batteries, all fossil fuel consuming vehicles, generators engines could be classified under this category.

iv) 100% C-S tax on Indian made luxury goods; and 200% C-S tax on imported luxury goods. All unhealthy products and services should also be included in this classification i.e., Alcohol, cigarettes, pan, ghutka, gambling places, nightclubs etc.

So here in one page (full size) you have the whole country's tax system which any ordinary person can read in 3-5 minutes and understand the concept. Refrence may be required for classification of luxury products or other specific products and explanations of how and why these items are classified. The whole concept of taxation for raising revenue can be part of the constitution, not to be manipulated by the Finance minister every year to


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make people's lives miserable. The majority of the people are unaware of how different tax laws will affect their lives or death.

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Existing tax laws only discourage people's instinct to progress and to make a better life for themselves.

ADVANTAGES OF C-S TAX OVER INCOME, EXCISE, SALES, OCTROI, VAT AND OTHER

INTRUSIVE TAXES.

The C-S Tax is relatively easy to understand, implement and enforce. Instead of keeping track so many income earning individuals and companies, plus excise, sales and octroi on so many businesses, with the C-S tax the taxman has to just monitor the retailers which are much fewer than the present taxable individuals and businesses. Here are some of the advantages of C-S Tax over Income Tax and other intrusive taxes.


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The best part of removing income tax is that not only will it relieve a lot of tension from the people but the concept of black money or what some people call an underground economy or parallel economy would disappear. Everything is usable money for anything a person wishes to invest in or purchase. He will not be cornered to invest in tax savings instruments just to save on income taxes. He can invest in whatever investments he likes which will give him the best returns. And the better part of it is that all the black money sitting in foreign banks would be transferred back to India since our interest rates have been traditionally higher than many other countries. No questions asked where the money comes from.

Many estimates are that this black money in foreign banks could be so large that we could use this money to pay off the entire foreign debt. So instead of paying interest to foreign banks we can pay the same interest to our Indian citizens whose money has come from abroad. And when these people have more un-taxable income they will either invest in the Indian economy or purchase more goods and services in our economy. This will further give more employment for production and services. Both of which would be beneficial to the Indian economy as well as the Indian people.

When this huge amounts of Indian peoples money sitting in foreign banks in foreign currencies is transferred to India they

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would have to sell the foreign currency and buy Indian currency in the open market or through the Reserve bank of India. This would have a downward price pressure of the foreign currencies and an upward pressure on Indian Rupees. With the Indian rupee appreciating against the foreign currencies we would have to spend lesser rupees to pay off the IMF, World Bank and other banks that have loaned us the money. This is also an advantage to us because now we would have to raise lesser taxes to pay the foreign banks.

As this process catches momentum the economy will grow bigger, the C-S tax revenue will also grow bigger. This excess tax revenue should not be for the government to squander off but to further reduce the national debt and interest payments. If all the policies in this book are implemented, within 10-15 years we should be able to be a debt free country and then we can considerably reduce or do away with the C-S tax to make peoples lives better and easier.

C-S tax would be fair and equitable. People in the middle and higher income brackets would spend proportionately more of their money on normal and luxury products, thereby paying a greater percentage of


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their income on C-S Tax. Lower income people would spend the majority of their income on necessities, thereby paying very little or nothing in C-S Tax. The C-S Tax would have no loopholes for the rich to get away with paying very little or no taxes. It is fair because it would charge the most to those who can afford to spend the most (not necessarily who earn the most). It is equitable because it would not penalize an individual for earning a higher income.

Private individuals would not have to report their income or expense to anybody. When they buy any product or service that is taxable they pay and forget about saving the receipts for tax officials. Since they would not have to pay any income tax or capital gains tax, people would invest their surplus money in banks, stocks, bonds, real estate or other forms of investment. People would not invest their money in foreign countries or just hide it some place or buy gold and diamonds. Cash stashed away in the ceiling or ground or foreign bank accounts or gold does not do any good for India or the Indian citizens.

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TAXES

Business that are in production or service industries would not have to pay any of the intrusive taxes or C-S Tax as long as the product or service they are providing is to another business organization and not the consumer of the final product or service. For example a call center providing a service to a foreign company would not be charged a service tax because this service is a contract from one company to another company. This foreign or local company can charge a service tax to the consumer. If the consumer were in a foreign country we would not charge them any service charge hence making our services competitive. (Same applies to products). This would substantially lower the cost of doing business in all the service or production industries in India. Therefore, it would encourage businesses from all over the world to come to India and set up their production plants and serving offices. This would lead to full employment in the nation, raising the overall national and individual income. People would have more money to spend. Hence, overall C-S taxes collected would also increase.

Since all of the taxes charged to the businesses are passed on to the final consumer of the product or service, there is a huge snowballing effect on the price. Plus the consumer pays for the product or service through his tax paid money.

Every individual or business would have to pay the local municipal taxes and each municipality would decide property taxes as per their norms.

Those who do not consume would either save or invest for their future. This would make more money available to businesses, which would reduce the cost of (interest) money i.e., the same advantages as explained in the above paragraph, more business, cheaper production, more employment.

The government would not have to worry about setting quotas and tariffs for businesses to import products. When those imported finished products are sold in the nation, the consumer would pay the same C-S Tax as per the brackets specified, when he buys it from the retailer.


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The label would show which country the product was made in and the retailer would charge the appropriate C-S tax. When a private individual imports or buys luxury or normal products from overseas for personal use, he would be charged the

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same C-S Tax on those products at the port of entry as would be applicable in India under the C-S Tax bracket.

This would discourage people from going overseas just to buy foreign products, and it is fair that everybody pay the same C-S Tax whether they buy the products in India or from abroad. Of course each traveler would be allowed a certain amount of products for himself without worrying about customs duties.

If a business or an individual imports some raw materials or production machinery he would not be charged any tax at all. Reason being this raw material or machinery will create more jobs and if this processed


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material is re- exported which is made with the help of the imported machinery then without the tax factor on the raw material or machinery our products would be competitive in the global market. This would create further jobs and growth in our economy.

As the cost of production drops, because of zero income tax and no other intrusive taxes and lower cost of capital, we would be able to export more than we import. So there would be no need for any kind of trade restrictions or check on individual travellers. This would eliminate the need for customs and duties for business (and save on custom officers salaries) a very inefficient means of collecting taxes and also a major headache and deterrent for international traders. Everybody would gain from the free flow of products and resources. In addition, it would keep the local businesses on their toes and competitive with the rest of the world producers.

When a producer exports, he would not pay any Tax (because the product would not be consumed within India), hence making his product very competitive in the world markets. No nation could criticize us for unfairly subsidizing any industry since none of the businesses would be taxed. If they felt they could not compete with us because of our C-S Tax policies, then they would be welcome to adopt the same tax policies.

The need for an underground economy would be minimized because the retailer himself would not be paying any income or C-S Tax, so there would really be no incentive for him to cheat. All he would be doing is serving as a revenue collector for the government at the point of sale to the final consumer. If a retailer were caught

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not collecting the proper C-S Tax, or collecting the tax and not paying the government then he could get a warning and the second time around he would lose his selling license forever and /or pay a hefty fine. He would be blacklisted and he would never be able to get a government job or government contract, plus there could be a prison term for breaking the law. The C-S Tax agent who apprehended such a retailer would be paid a percentage of the fine collected by the C-S Tax agency. This would encourage C-S Tax agents to work harder and to deter retailers from cheating.

The C-S Tax would be a very efficient way of collecting revenue. The tax-collecting agency would need a much smaller staff and computer resources to oversee a few million retailers with just one tax throughout the country, versus hundreds of million of private individuals,traders, retailers and businesses complying with several different taxes . The retailer's job would also be very simple. He would simply add up all the taxes collected each month and send them off to the tax-collecting agency. There would be no advance tax system. As it is the retailer is doing the government's job by collecting tax for the government on top of that it is not fair for the government to ask him to estimate his next months


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collection and pay in advance. Advance tax should be abolished in the constitution so in future some Finance minister should not reintroduce this concept. Nobody would feel threatened by the C-S Tax policies.

With modern developments in computers and electronics and satellite services it would be a very simple operation to eventually give each retailer an electronic device directly linked to a satellite. This link would keep adding the total of everything that each retailer sold and at the end of each transaction the machine would show exactly how much C-S tax the retailer had collected. He could send off the tax collected on a monthly basis or when it reached a certain minimum level. With the present income tax the whole country is tensed when it comes close to income tax filing time and year ending closing time. For them it is almost like appearing for a final exam. All this waste of productive time, money and tension would go away with the removal of the intrusive taxes and replaced with the C-S tax.

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Every time there are changes made in the income tax laws, millions of man-hours are wasted in the economy to understand and restructure financial positions in order to take advantage of the new tax laws and minimize tax liabilities. With the C-S Tax laws the only change that would be needed would be to redefine the normal products and luxury products, which would change their tax bracket. This would be necessary because as the economy prospers some of the luxury products would become normal products. As the majority of the population's need and affordability for a particular product increases, it is only fair to rate it down from a luxury product to a normal product. In this way the products that are most needed in the economy would be produced at a greater rate, which would make the economy more efficient and minimize waste of productive time and resources.

The system would yield a much more accurate way of keeping track of the GNP. There would be no double counting. For example, a resale of a used automobile or any other used product would not be charged a C-S Tax because the taxes would have already been paid on it once. Those who wish to minimize their C-S Tax would buy used products. But when they replace parts of their automobile, those new parts and labor would involve the 20% C-S Tax. In the present accounting system the final product sold is highly inflated with the cost of the intrusive taxes in place today. By increasing the intrusive taxes the price of goods and services would go up and show a bigger GNP figure to make the politician look good in the short run.

The GNP indicator is an important signal to large corporations to make their decisions and also for the Reserve bank to print new money as the economy grows. With the present tax system since so many different taxes are applied at each stage of the production process the end result is that the final product price add up to a lot more. For example if excise tax were to be increased from 10 % to 15% then by the time the product reaches the final consumer it could get inflated by 20% or more. This would show a distorted growth of the GNP. When government uses improper


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means of calculating GNP and provides distorted figures, industries react in ways that may be detrimental to the economy.

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TAXES

The C-S Tax would encourage investors from all over the world, since income would not be taxed. True, some of the profits would be taken out of the country, but overall a lot more would be coming in. Most of the profit would stay within the nation because the interest earned on the profit would not be taxed, but if they took it to their own country, it would be taxed in most cases by their own country. So most businesses would re-invest their money here, until they absolutely needed the money in their home country. The government could have a simple 10% tax on all the funds taken out of the country regardless of weather they make a profit or loss on their original amount brought in. This could be an additional source of revenue to the government.

The C-S Tax is so simple yet so effective that every


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individual and business would see a positive sum gain. Any average person would be able to understand how the C-S Tax system works within a few minutes, although he/she would not be able to see all the advantages and disadvantages immediately. By reading this book anybody could start to understand the advantages of C-S Tax.

. The only disadvantage of the C-S Tax would be that a majority of the employees of the income-tax collecting agency and the other intrusive tax agencies would not be able to throw their weight around. Accountants will always be needed by businesses but the "tax specialists" would have a look for other jobs. They would easily be absorbed by the growth in other industries. They would have to work harder because they would not be able to make money from people's fear of the mysterious income tax and other intrusive tax laws.

DISCUSSION OF C-S TAX

When an individual, partnership, or corporation decides to open a retail outlet, or provide a service to the end user or beneficiary of the service. They would simply fill out a one-page application form to be registered as a retail outlet or service provider. They would have one ID No. This C-S tax ID No can be used to sell goods or provide a service. Each transaction would have a code

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that would decipher whether the amount collected was for the sale of a product or for a service provided. This will help to give a clear picture of growth in products sold or services provided in the economy. These forms could be made available through the post office, libraries, and bookstores. This form would have simple questions like: name of business, name of owner(s) or corporation, location of retail store, if traveling type of retail salesman then location of sales office or head office, type of retail outlet, whether they will be selling necessities, normal, energy consuming or luxury products and services, or whether it will be a combination of any two or all three.

The central government would send the retailer an identification number, which would be used on every sales transaction and service provided. An individual who sells some products through his house or provides a service from home can collect the C-S tax and send it off to the tax office at the end of each month by just using his present PAN number and name as his ID. If he is doing this business on a regular basis then after 6 consecutive months he should apply for a C-S tax Id number and regularize his home based business.

A retail outlet can be defined as a business that sells any product or service to be used by the end consumer. Here are some examples of services that would be considered retail outlets: a taxi service, air travel, an attorney's legal services, an electrician's or mechanic's repair service, etc. A retail outlet that sells products to the consumer would be very easily identifiable. Transportation Company would be excluded from C-S Tax because when the final product is sold it would include the cost of transportation plus the fuel used by the trucks is already taxed at 20 % C-S tax bracket.

A manufacturer or a service company providing a


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service to another manufacturer would not have to pay service tax. For example a textile machine manufacturer will need to provide maintenance and repair service to the manufacturer using their textile machine to produce cloth. The cloth manufacturer is not the user of the end product i.e. cloth. He will sell the cloth to the wholesaler hence neither he nor the wholesaler will pay any C-S Tax. The cost of the service and spare parts for maintenance to the cloth manufacturer would

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not fall under the C-S Tax since all these costs are added into the price of the final cloth which the consumer will pay money for and pay the C-S tax as is applicable or not.

There could be some complications in defining whether a service is being used by the consumer or by a business in order to provide the final product or service to the business. For example, if a business owner who manufactures a product uses an airline to travel in order to make a business transaction, then he should not have to pay C-S Tax on the airfare since he is using it for his business. If he does have to pay, it would be a kind of double taxation because that airline service is needed by the business in order to manufacture his product. He is not the end user of his product but his traveling is part of the business expense and not a pleasure trip. But suppose he is doing both then how do you define how much C-S tax should be charged or not. In the present intrusive tax system there is so much double taxation that there is no comparison between the two.

Let's assume for the sake of discussion that you exempt all services used by business from the C-S Tax; then business owners would have a big loophole. They could classify other personal services as business services and avoid paying C-S Tax on them. This would not be fair to other C-S Taxpayers who do not own a business.

An alternative would be to have zero C-S Tax on all services so as to be fair to business as well as non-business owners. But this would create another problem. For example, automobile retailers would overstate the value of the service provided and understate the actual value of the automobile, in order to save C-S Tax.

A modification of the above alternative would be to have zero C-S Tax on all services, except for those services sold in conjunction with a product. As shown in the above example, the automobile retailer would charge C-S Tax on the value of the car as well as on the service warranty. If a different company sells the service warranty, then the retailer should not be able to dictate whom to buy the service warranty from, so that two different companies with the same ownership may not have price fixing and be able to avoid C-S Tax.


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What happens when a production firm buys a product such as office furniture, supplies, automobiles, etc.? These same products can be used by a consumer as well as a business. If businesses are exempt from paying C-S Tax on the above products, to avoid double taxation, then we have the same dilemma as in services. Business will buy these products as if they are bought for business and then use them for personal purposes.

From the above discussion it is clear that there is bound to be some overlapping of taxation or there are going to be major loopholes for business owners to exploit the C-S Tax for personal benefit.

Between the two choices, some overlapping of taxes is better than having loopholes. At least in the C-S Tax method there is a one-time tax and a small fractional tax overlapping in some cases, especially when businesses buy the same type of product or service that a consumer would also use.


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In relative terms the C-S Tax is a very minor form of double taxation compared to the current income tax system in most countries and ours today. For example, under the income tax system all of the following pay an income tax on their profits: the company that mines the metal ore; the company that makes steel from the metal ore; the company that manufacturers automobile parts; the company that puts the automobile together; the wholesale distributor; the final retailer. Not only do the businesses pay an income tax, the owner (stockholders) of the business also pay income tax on the dividends they receive. So income tax and other intrusive taxes are paid throughout the production process by each of the different companies that are in the production process, unless the same company owns the whole production process, which is very rare. In either case, the consumer is the one who pays for all of their income taxes and other intrusive taxes by paying a much higher price for the car. To top it off, the consumer pays for the car from his income, which has already been taxed! So there is no comparison between the intrusive tax overlaps and C-S tax.

Let's examine the above case under the C-S Tax system. Only the retailer would collect 50% tax once at the point of sale to the

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consumer (the actual user of the car). No C-S Tax would be paid throughout the production process, nor would the owners (shareholders) pay any C-S Tax on the profits or the dividends. In relative terms the C-S Tax is a much lower form of double taxation than the income tax. The overall price of products and services would be much lower to the consumer under the C-S Tax than under income tax and other intrusive taxes.

A user of a product, whether an individual or a business, would have to buy the product from a retailer and not a wholesaler. A wholesaler could sell the product only to another wholesaler or to a retailer but not to an end user or consumer because only a retailer would be allowed to collect C-S Tax (the wholesaler would not). A wholesaler could get a retail license also. If a business buys a car from the dealer (retailer), then the business should have technically not have to pay the C-S Tax on the car, since the car is going to be used for the business. He could also use this car for personal use. Here again you have the dilemma to decipher whether to tax or not to tax. Such products and services that can be used by an individual as well as a business should be charged a C-S tax in order to avoid the big loophole for businesses.

The words "consumer" and "user" of the product would be one and the same for C-S Tax purposes in order to avoid a loophole for businesses. So a business pays C-S Tax whenever it buys an end product (or finished product) such as furniture, office supplies etc. which indirectly assists in the production of another product, such as a car. But it would not pay C-S Tax on any of the raw materials of the car, even if they were end products of another firm, such as an engine, tires, glass, seats, etc., since it is not going to be consuming them (or using them). It is merely going to use these raw materials to produce an end product, i.e., a car.

Suppose a company is manufacturing just car tires. It


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sells the tires to a car manufacturer and also to the consumer through a retailer. In this case the car manufacturer would not pay any C-S Tax on the tires it bought but the consumer would, because the consumer is going to use those tires on his old car, while the car manufacturer will install the tires on the new

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car and sell it to a wholesaler. When the car is finally bought by the consumer the end user he will pay the C-S tax on the whole car which includes the cost of the tyres. The car manufacturer should have to pay C-S Tax on the tires it uses on cars that are used by the employees.

A car manufacturer sells almost all of its cars, but it may use some of them for the employees and management to run the business. For this purpose it should not have to pay a C-S Tax on using a product that it manufactures and uses. But if this car manufacturer buys a car from another manufacturing company or dealer (retailer), then it should have to pay C-S Tax on it. Also if the


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manufacturer were to directly sell a car to its employees they would have to collect C-S tax on that sale. Here the manufacturer has himself become the retailer. Therefore he would require a retailer outlet license No if he were doing this on a regular basis of over 6 months.

TURNOVER TAX (OPTIONAL)

An additional optional tax to raise revenue if acceptable to the majority public could be a one percent turnover tax (TT). This can be implemented after taking a public opinion poll. TT would be a voluntary tax. No Agency would be set up to check on this tax. Consider it more of a donation to the Government rather than a tax. Any individual could send one percent of their turnover to the government. For every Rs1,000 or Rs5,000 (or whatever the amount that would be by public opinion poll) TT paid the government would grant one extra vote to that individual. (Refer to the new option of election system in chapter) Since all the elections would be held once in 5 years within one or two months time span, all the TT paid by an individual would be added up in the governments computer system and accordingly the number of votes would be allocated to that individual. If someone decided not to pay the TT at all or if someone wanted to pay more than or less than one percent of his turnover in the TT tax then he is free to do so. No questions asked. I'll let you decide on the pros and cons of such a tax since it is optional.

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This TT money to be used to pay off the national debt. After that the money could be kept aside for natural calamities, or accidents. This surplus when created would be invested in liquid funds. Within the scope of this optional TT all companies listed on the stock exchange could be asked to pay one or two percent of their turnover in TT tax. TT could be made mandatory for such companies. If so, there would be no need to monitor such a tax because stock companies have their own audits and have to disclose their figures to the shareholders. This would make it hard for them to cheat.

BIRTH TAX (OPTIONAL)

Another optional tax suggested to me was a birth tax. No tax for the first child. Till he/she is the only child full preference to be given to the child as well as the parent of the single child in every government as well as the private sector school, college, jobs, contracts, etc. Of course everything would be on merit basis only. This is if there are two applicants selected for one position and if everything else being equal the single child or the single child's parent would be given preference. But as soon as a second child is born to them all these preferences would be taken away. Plus on the second


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child everyone would have to pay a birth tax of Rs ——(whatever was decided by a public opinion poll. If a couple could not pay the birth tax then the government would sterilize them both. So at least they would not produce more kids. The third child would have a birth tax 10 times that of the second child's birth tax rate. This amount would be paid in advance to the government by the time the mother would be 2 months pregnant or latest by the time the child was delivered. If they couldn't pay then??? you decide. These optional ideas are public ideas I have heard over the years. I do not endorse it or deny it. I am mentioning it here because they are interesting and make sense and there should be public discussion on it because the fast growing population in certain sectors is a concern to all of the citizens who understand the implications of an overcrowded and overburdened economy.

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GUIDELINES FOR C-S TAX LAWS

Only a retailer with a C-S license would be allowed to sell a product or a service to the consumer and collect the C-S Tax, depending on the classification of the product or service. If a private individual did some retailing from home initially for 6 months he would collect and pay the C-S tax under his PAN number and then apply for a regular C-S tax registration as explained earlier.

v The retailer of a product or service would collect the C-S tax from the buyer/actual user of the product or service. The C-S tax would be added to the actual sales price of the product or service as per the C-S tax category. .

v If a business buys a finished product merely to transform it into another product and sell it, then it does not pay C-S Tax at the buying end.

v If a business buys a product to use it for business, then it does not pay C-S Tax on it except if the same product is classified under a final consumer product also. A consumer would also pay the C-S tax on any product if it is classified a final consumer product.

v A business would not pay C-S Tax on the actual production equipment it buys.

v An individual consumer would pay C-S Tax on raw materials that he buys for himself from a retailer to use or consume.

v Business and individuals would pay C-S Tax on all products and services that are sold to private individuals.

v Businesses would not pay C-S Tax on services that are related to the actual production equipment i.e., business-to-business sale of spare parts products or services unless it is specified as a final user product or service.

v Retailers would be responsible for collecting the appropriated amount of C-S Tax from the buyer and giving the buyer a hand


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written/printed receipt for the every sale whether the product or service is taxable or not. (For accurate GNP total)

v If the retailer sells an item on credit, the retailer is liable for that C-S Tax amount even if the buyer does not pay up. (It would be in the best interest of the retailer to at least collect the amount due on the C-S Tax , but he would not be required to do so by law. He would then have to pay the C-S tax from his own pocket).

v The C-S Tax collected each month would be paid by the middle of the following month. If the C-S tax collected would be below Rs1000- then he would wait till it exceeds Rs 1000 and then file it. There would be no advance tax and no minimum amount collected exemptions. An exemption is where the cheating can start. The retailer would simply fill out a form and send in the C-S Tax money collected for that period. The form would have all of the information that would be on his


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application form to identify him. The retailer would enter the amount of products or services sold in each of the four categories (necessities, normal, energy consuming or luxury) and the amount of C-S Tax collected for each category, add all of it, and send the money in with the form. The new computerized satellite units would reduce this form filling workload.

v For any private individual or business to sell a product or service to be consumed or used by the consumer, he would fill out an application form to be registered as a retailer with the central C-S Tax agency.. (The actual physical location and building structure would have to comply with the local building codes and ordinances that would apply to the retailer.)

v Only the central government would be in charge of and collect C-S Tax. No other level of government (city, district or state) would collect any other form of tax except the municipality tax and property taxes. The city municipality or village gram panchayat would be allowed to collect a maximum of half percent as property tax of the value of the property every year. They may charge less than half percent if they choose to.

v For Road, train service or any public utility expansion work the property owner will be given compensation on the value on which he pays property tax. Normally the government has valuation as

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per the area. But if a person feels his property is more valuable than the government records show, then he is free to pay at the higher rate within a certain specified ratio gradually each year. He would not be allowed to raise the value of his property by more than ten percent each year. Otherwise property owners upon knowing information that their property is going to be taken away for road expansion would simply double or 10 fold the tax paid and recover the higher amount from the government. The 10% increase in his tax payment would help him to get a higher compensation when his property is taken over for public works expansion. No property owner can go to court if his property is required for public works but he would be paid just compensation as per the taxes he has been paying. If no property tax has been paid then no compensation would be paid.

vThe identification number of each retailer would identify him by the city, district, and state in which he sells. The central government would keep track of where the tax money came in from and disburse the C-S Tax money collected in these proportions: i.e. of Rs 100 collect from any city or grampanchayat Rs 25 would go back to the city or grampanchayat where it was collected from, Rs 25 to the district in which the city came under,


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Rs 25 to the state in which the city came under and Rs 25 would be for the central governments use.

25% to the central government

25% to the state government

25% to the district government

25% to the city government or

gram panchayat

v If a company owns five retail stores in five different locations, each retail store would have its own identification number. This would assure that the right cities, districts, states get their pro-rata share back from the central government.

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v With the C-S Tax money received by the different government levels, they would provide the essential services, mainly of administrating. The actual services would be contracted out to the private sector on competitive bids. Eventually within ten to fifteen years the C-S Tax would be reduced and completely done away with (as explained in the section "What Will the Money Collected from C-S Tax Be Used For?").

v When a retailer is caught by a C-S Tax agent for not collecting the C-S Tax, the retailer should be made to pay a penalty ten times the amount of what the C-S Tax would have been. The C-S Tax penalty would be split 50% to the state where the penalty is collected and 50% to the private C-S tax-enforcing agency, an incentive for the C-S Tax agents to work harder. With the new electronic devices that have direct satellite links the retailer would directly punch in the transaction weather the customer asks for the receipt or not. By not doing so would mean a breach of law and the retailer would be penalized as per the penalties mentioned earlier.

v Each state could have between 5-10 private companies authorized to police as C-S Tax agents. The penalty collected would be split between the state and the private enforcing companies 50-50. The enforcing companies would pay a percentage of their receipt to the agent who catches the culprit, based on an incentive structure. The reason for having each state police its own retailers is that the more each state collects and sends to the C-S Tax agency, the more it would get back in return from the C-S Tax agency.

v If a C-S Tax agent is caught accepting a bribe from a retailer, he would lose his job, be made to return the bribe to the state, be made to pay a fine, be "blacklisted" and never be accepted in any public service job. Public flogging could be an added deterrent.. If the management of the company is in on the bribe, then the company would lose its agency and be shut down and the above applicable to all the management and staff involved.

v When a retailer starts a new retail outlet, he would get a booklet along with his identification number. This booklet would explain all the C-S Tax law, as to how


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much he would collect and what types of products or services would be exempt from the C-S Tax.

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Even those products and services on which the retailer collects zero C-S Tax should be totaled and reported to the C-S Tax agency, or in case the retailer has the electronic devices then it should be entered under the code of zero tax. This way the government can keep better track of the GNP on an online real time basis.

v The C-S Tax agency does not have the authority to restrict anybody from getting a retailer's identification number. In other words, it is not a licensing agency; it merely gives out the next number in line as soon as an application is received. This whole process should take

less than ten minutes to get an identification number since the system would be computerized.

v Within 10-15 years, when the C-S Tax is no longer


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necessary, the retailer should still be made to send in the total sales information to the C-S Tax agency. This would be helpful in determining the growth rate of the economy, which would dictate the increase in money supply.

v When the retailer closes his operation, he would fill out a simple form asking the C-S Tax agency put his number in the non-active list. This would help the government maintain a proper record of active and non-active retail outlets in the country. The retailer can reactivate his license by filling a simple application form or even by a phone call.

PRODUCTION LICENSING LAWS

All manufacturing companies would have to register with the state to set up each manufacturing plant. The registration would be handled by the state government based on guidelines set by the central Environmental Protection Agency (E.P.A.). Every state would have to comply with these same guidelines. The company would fill out a simple form asking for general information, such as the product it manufactures, what kinds of raw material they use and what kinds of waste, by-products, pollutants, etc. are created in the manufacturing process and how these pollutants would be neutralized or safely stored or disposed.

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If the whole manufacturing process is non-hazardous and non-toxic, then the registration could be approved by the state. Each state would have the choice of establishing higher standards than those set by the E.P.A., but minimum standards would have to be met by all the states at all times.

If the product, by-product, or waste were hazardous to human health, then special licensing would be required. This licensing would have to be approved by the E.P.A., which would be in charge of protecting the environment throughout the nation. They would have the power to oversee the operation of the state registration department; they could fine the state for not complying and the official (s) who do not follow the guidelines of the E.P.A. would be sacked from their jobs and their names blacklisted. E.P.A. would have the power to check up on any manufacturing plant throughout the nation and if they discovered noncompliance, then they could shut down the plant, plus make it pay fines and make it pay for the damages and clean-up charges. The officials (s) who approved the plant could also be held responsible if they had been negligent in the registering process.

The reason for licensing hazardous industries is that the spillover created by these industries is not included in the cost of the product. The people using these products do not pay the true cost of the product. Society as a whole pays for it indirectly. This is not fair. Why should a person who does not use these hazardous products directly or indirectly pay for it. Let the people who use it directly pay the true higher cost of that product. This higher pricing will automatically discourage them and make them look for alternatives,. An example is pollution or acid rain the direct producers and consumers do not pay the true cost; society pays for it by contracting different kinds of cancers and illnesses. It


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would be much cheaper to import these items from nations where they have the facilities to take care of these hazards, or find non-hazardous substitutes. For example use jute bags instead of Plastic, HDPE bags. Jute is a plant whereas HDPE is an oil byproduct.

Industries that can produce non-hazardous substitutes for hazardous products should be encouraged by having zero tax on their products at the final selling point, even if they

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are luxury products. An example: if a company can produce a car that runs on natural gas, alcohol, or any fuel from which the exhaust is only CO2 and H2O

(Carbon dioxide and water, or any non-toxic, non-hazardous exhaust), that product should have zero tax to encourage consumers to use it. The reason is that, in the long run, lesser pollution yields fewer medical bills, better health and increased productivity. As society produces more, generally prices fall and the nation can be competitive in the world market.

WHAT WILL THE MONEY COLLECTED FROM

C-S TAX BE USED FOR?

The number one priority of all levels of government (central, state, district, and city) should be to preserve and protect human rights and private property rights. These nations that do not respect and protect private property are in effect violating human rights because they are one of the same. In other words, a person's property is a part of himself.

For example, a shop owner makes a living by selling products and from the profits he buys food and other things for his family. The government decides it is going to charge the shop owner income tax so that it can provide him with protection and other services. The shop owner decides not to buy these services from the government. The government does not give him a choice and threatens to charge him a penalty and sell his shop off to obtain the taxes from him. But if the government sells his shop, they will have disposed off his means of making a living. This could cause him great discomfort or even starve him and his family. The government, by threatening to take his property, has in essence threatened his life.

In effect, the government is a legalized extortion monopoly which says: "We the government have given ourselves the legal right to collect taxes from

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you by whatever means, to protect and provide you with certain services no matter what it costs you; whether you want to buy it or not, we shall continue to do so even if it costs you your life or livelihood. "Therefore, taxes are a contradiction in itself; therefore even the "C-S Tax" should be reduced and completely done away with as government learns to run itself like a profit-making business organization and charge a user fee only. (This concept is discussed in other sections of this book.)

Protecting human rights and private property rights includes protection from internal as well as external threats: Internal threats would be from immoral people within the country, who steal, cheat, damage property, commit physical violence, and take the law into their own hands. These immoral people should be given a fair and speedy trial and when found guilty, should be severely dealt with to deter crimes in the future. The police and the legal system should give protection from internal threat. To reduce cost of imprisoning such people their prison sentences should be substituted by public flogging. The injured party should be allowed to


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flog the criminal. But if the person is wrongly accused and later proves his innocence then the court can allow him to give the accuser double flogging plus pay for financial damages. This would deter people from giving false testimonies and accusations. The Middle East concept of dealing with criminals is the quickest and cheapest way to deter crimes. And if people talk about violation of human rights on behalf of the criminals then they should first ask the question "what about the violation of the human rights of the victim?"

External threats would be from aggressive, oppressive governments who want to take over; these threats would also include terrorists, hijackers, kidnappers, etc. The national defense system should provide protection from these external threats.

Politicians who resort to warfare to resolve disputes between nations should understand that 1. It does not settle the dispute. 2.It is the most expensive means of settling a dispute. 3. Disputes can be settled only when both parties sit down and talk to resolve the problem. Might is not right. If they cannot agree, then

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they should allow three to five nations to act as neutral arbitrators whose decision will hold. There is no justification for war. Why should innocent people die for politicians who disagree with each other. War should be avoided by all means. Individual people don't wage wars on other nations; it is the politicians sitting in comfortable offices who make these decisions. Let them go to the front lines and fight their own wars.

In recent years improved ties with our neighbours Pakistan, China and other smaller neighbouring countries will go a long way is saving unnecessary expenses toward our defense as well as theirs. The amount of money we three countries have spent fighting and defending the border disputes must be more the 10 times the value of the land we are protecting. If we would have sat down and once and for all agreed on permanent borders among all our neighbouring countries, then with the money saved there could have been so much developments in our own countries to make the lives of people better and easier. We could have bought large tracts of agricultural lands in other foreign countries to increase our wealth and increase our food production capacities.(optional idea, or if environmentalists agreed we could do so much landfill around our own country shores and increase the size of our country as Singapore is doing now since a few years)

The second most important function of the government should be to run the judicial system: to see that law and order is maintained, that contracts are honored, that disputes are settled speedily according to proper legal procedures, and that people respect and abide by the laws of the land and not take matters into their own hands to come up with legal solutions which may be biased in their own favor. For any dispute both parties can first approach the honourary committee of their area. Honourary committee can give a quick and fair trial on similar lines as "the peoples court". Naturally the person


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who does not get a fovourable decision can go to court, but he will have an idea that he is wrong. Most disputes can be resolved with guidance from the honourary committee.

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The central and state governments should provide funds for emergencies and natural disasters. The central government should match the amount spent by the state government for the emergency reliefs. This would encourage state governments to invest some money in liquid assets and not be on a spending binge.

The remaining functions are to be handled by the central government in close conjunction with the private sector and state, country, and city governments.

Government should help finance projects like power plants, dams, hospitals, schools, etc. The actual construction should be done by the private sector


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through competitive bids. Ownership of these projects could be 50% or less by the government or 100% by the private sector or any combination of the two, when initially built.

Once a project is in operation and starts making a profit, the government should sell its share to the highest bidder within the private sector on the open market. The timing for sale of government projects should be based on maximizing profits or minimizing losses. However, government should sell its share as early as possible, within a few months to no more than three years of project completion. Money from the sale of these projects should be used for new projects.

Some of these projects would have to be sold at a loss in order to make it profitable for the private sector to run and maintain them (see "Privatization"). Losses would be compensated by other profitable projects or by the C-S Tax revenue.

Initially, money would have to be allocated from C-S Tax to new projects, but as completed projects are sold at a profit there should be money available for new projects. The need to keep allocating new funds from the C-S Tax source would decrease; hence, the C-S Tax could be reduced to a minimum and later completely done away with. Additionally, as the free-market enterprise system grows and becomes healthier, the market would be able to absorb and provide for the new projects, so the government role as financier of new projects would decrease.

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Until such time as government plays the role of financier of new projects, the government should give priority to projects based on the following criteria: the highest return on investment, which would increase the amount of money available for new projects so less money would be needed from the C-S Tax source and eventually none. Within a few years (less than ten) the government should be able to sustain itself from the growth and profits of the initial funds.

Projects that can be completed and sold at the earliest, for a profit, upon completion should be given priority. This would ensure that funds are not tied up for too long and money is available for new projects.

Governments should give priority to those projects, which have a higher percentage of money invested by the private sector, because the private sector's main motivation for investment is profit. Since they have to invest their hard-earned money, people will do their best to invest in projects that are relatively sure of making a decent return on investment. Government funds would be at less risk of sustaining a loss.

Another reason is that, since government would have to


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invest a smaller percentage, it would be able to spread its money on a larger number of projects. This would make society more productive and consumers would benefit from the abundant products and services produced by these projects, directly or indirectly.

All of the above-mentioned priorities should be given equal importance in the decision-making process of investing funds in different projects. However, no priority should be given on a first-come, first-served basis nor on the strength of the lobbying group. Strong lobbying is part of the reason behind corruption in the system (see "Iron Triangle") and the negative effects of our economy.

As the government's role of an active investor/owner in projects reduces, it should use the money left over from not investing in new projects to be a passive investor and earn interest on it by depositing it with different banks. This would make more money available in the private sector for easy growth and would

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enhance the whole positive cycle of production, employment, consumption, and saving.

The private sector may be able to provide the financing for most of the projects sooner than anyone could anticipate once the tax structure is changed to the one suggested in this book. This would convert the government's role as an active investor to a passive one much faster. Without unfair government intervention, unfair regulations, and unfair subsidies, the private sector would unleash its potential to provide for projects that are profitable and needed most, at the right price.

Even today when the government says it will provide money for certain projects, it is doing so by collecting taxes from the private sector, or by giving tax incentives in these investments and people invest not because of the quality or importance of the projects. They invest blindly because of the tax saving. This in a very inefficient decision making process for an investment and money is channeled in wrong projects. So why not let the private sector provide for the projects that it chooses to. People should be given specific investment choices, it should not have a broad based investment choice such as housing or agriculture or road. It should specify which particular housing project or which particular road project your money will be invested in. This way you make the choice, which project your money goes into. The projects that the people feel unnecessary or unsure of will not be getting public funds.

Almost nothing is free when the government provides you with it. You have paid for part or most of it through taxes; if you have paid for none of it, somebody else has. Why not be a responsible person and pay for your own expenses by directly buying products and services from the private sector, because when the government provides them, either you or somebody else is paying a much higher price for them because of government inefficiencies and corrupt practices.

As the responsibility of providing these services is shifted from the government to the private sector, the private


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sector would provide it at a competitive price. The consumers would gain from the lower prices. They would be able to buy more products and services for the same amount of money than when the government provided them. This would create more jobs in the private sector. So the sooner we get government out of the picture to provide for these subsidies and services, the better off all of us will be except for those who don't pay a fair share of their taxes and receive large handouts from the government and the government officials who handle these large funds.

The above discussion ties in with "How to Reduce Government Spending" and "How to Dismantle the Iron Triangle." As the private sector gets stronger and provides most of these government services, the C-S Tax should be reduced and completely done away with. The government should learn to provide the basic administration and protection from the interest income


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earned from its passive investments.

HOW WILL THE ROADS BE

PROVIDED AND MAINTAINED?

Assume a society where there is minimum government and all of the property within the nation is owned by private individuals or businesses. In this case the roads would be owned by private individuals who would maintain and expand them as needed by society. Each private owner would pay for this cost by charging a certain amount to each individual who used his roads. Those who did not use his roads would not pay him anything. This is a fair way of paying for any products or services that a consumer uses since nothing can be provided for free, somebody has to pay the cost. Let the ones using it pay for it.

To apply the above concept to the reality of today's world is difficult since the road system is too vast and is owned by the government. The government could privatize the road system and let it be owned by hundreds of individuals and businesses throughout the country. Each company could collect a fee from each motorist

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who used their roads. But it would be a nuisance to the road user to pay a charge every time he drove from one road owned by one company to the next. Also, this would be an inefficient way of providing the roads because the cost of collection would be too high in relation to the total amount of money collected.

The most efficient means of providing the roads system would be if it were handled by one entity, i.e., the government at the present time. Part or most of the cost of the road system could also be provided from the C-S tax it collects from the sale of the vehicles and the C-S tax on fuels it consumes.

All of the C-S Tax money collected from the sale of automobiles, motorcycles, trucks, tractors, trailers, etc. that use the road system should go toward providing for new and maintaining the old road system. "Road system" includes highways and bridges and all roads within the nation and connecting to neighbouring countries.

Maintaining the existing road systems and expanding them as neded by the economy is vital for growth. In most nations the road system is among the top five most expensive items on the budget. Some people use and benefit from the road system more than others, so it is only fair that those who use and benefit more pay their fair share. When one travels by train or airline he pays for it by buying a ticket. So also when one uses the road system, he should have to pay for it.

Optional revenue source may not be necessary. There could also be a "road tax" for all vehicles using the road system on a yearly basis or the one time tax which most states have switched over to. This tax should be based proportionately to the weight of the vehicle when loaded. A lighter vehicle would be charged lesser road tax than a heavier vehicle, because a heavier vehicle puts more wear and tear on the roads than lighter ones. Also bridges and roads have to be built stronger for heavier


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vehicles so construction cost goes up because of the heavy vehicle.

The reason that tax on vehicles would be based on "when loaded" can be explained as follows: If an empty one-ton

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pickup truck weighs 500 pounds and an empty two-ton pickup truck weighs 600 pounds, there is a difference of 20 percent in weight. But when they are both fully loaded to capacity, the two-ton truck weighs almost twice as much as the one-ton truck or a difference of almost over 80%.

The actual charges in taxes between a one-ton and two-ton truck would not be twice as much. Engineers can figure out how much the extra weight would wear out the road and taxes could be based on these proportions.


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All of the road tax charges would be set and collected by the central government and should be uniform throughout the country. This would discourage people from going to neighbouring states to save on taxes. The money would be used for building and maintaining interstate road systems. The city, district, and state road systems would be paid from the revenues of C-S Tax. Initially it would be paid from the C-S Tax. When the C-S Tax is completely eradicated (within a decade), the money for the road system could come from three sources: 1.Part of the investment incomes received by each level of government could be used to provide and maintain the road system. 2. Some of the increase in money supply could be used toward the cost of providing the road system, as explained in the section "Where Will the Subsidy Money Come From?" 3. Road tax from each vehicle could still be collected and, if necessary, so could the C-S Tax on sale of fossil fuels that are used by the vehicles using the road system. This is a fair alternative because those who drive more will use more fuel and spare parts and end up paying a greater share of expenses for the road. The money from the C-S Tax could be redistributed as discussed under "Guidelines for C-S Tax Laws."

The central government would also be responsible for making driving laws, issuing drivers' licenses, and issuing license numbers for automobiles. This would do away with the nuisance for national trucking firms to register with different states. Once registered in any state they should be allowed to freely drive all over India. Registration amount should be uniform all over the country.

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TAXES

The people could decide whether the government should provide the road system or a private corporation. The principle here is that there should be no mandatory charge to the entire population; charges should be based on usage. And, whether the road system is owned by the government or a private corporation, the actual construction work should be done by competitive bidding from at least five to ten different companies, so that the roads can be provided at the lowest cost to the consumer.

QUALITY AND MAINTAINANCE

The company that gets the bid for constructing a new road or reconstructing an old one will have to give a time warranty as specified in the biding contract. At every kilometer from the starting point to the end point the construction company would have to keep signboards stating the following information:

Name of Construction Company :

Date of construction started and completed :

Number of days mentioned in the tender for completing


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the project :

Number of days actually taken for completing the project :

Date warranty of road expires :

Sign post number :

Phone Number of construction Co. :

Phone Number of city road department :

With this type of a signboard any motorist, or police vehicle noticing a pothole would simply call the phone number stated on the signboard and give them the sign number and approximate distance and direction of the pot hole from the sign. The complainer would be given the time and number of complain. The city road department would immediately call the construction company and ask them to repair the pothole. The company should

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repair the pothole within 24 hours of the complaint. If it were not repaired the city road department would repair the pothole and charge ten times the cost of the repair work to the Construction Company. If such pot hole complaints comes frequently (that means that the construction company has not done a proper job in the first place) and the pot holes are not fixed in time by the construction company, they would be black listed and not be granted any further government contracts in any field.

TRANSPORTATION ALTERNATIVES FOR CROWDED CITIES

Most of our cities have not kept in mind the ever-increasing population and vehicles that use our road systems. Even today in major congested cities in India there are several buildings being built on exactly the same spot where the old building stood. Law should be passed immediately that all buildings should leave 20 to 40 feet for road expansion. They can have the same FSI and go higher up. All new buildings should not only have enough parking spaces for themselves but for guests also. All ground floors should be for parking and they can have a small general store in every housing complex so people have to travel less to buy their daily things.

The most important thing that all cities desperately need is an overhead tram or monorail system. This would eliminate the need for buses and most rickshaws/taxis to run on the roads. More people would use the tram system since on top there would be no signal light halts or traffic to slow them. As more people travel on the tram system, the need for rickshaws and taxis would reduce, this would clear the roads for speedier cars and also more people would opt for motorcycles since the overhead tram tracks would provide some shelter from sun and rain.

The tram tracks can be on single center pillars so they


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don't use space of the roads and at the tram stops it can be on double pillars at the edges of the roads. There could be tram stops on the crossroads. This would facilitate changing of trams going in other

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direction if needed. Also the complete area of the cross roads could be covered from sun and rain, easier for police to manage at signal lights. It can be a public overhead crossing point also. The cross beams of the tram system can be made wider to accommodate new water, electric, phone lines so the constant digging of roads where the tram is installed is eliminated.

How will the elevated tram tracks be financed? (See under Railways) The government could make a master plan and just authorize the tracks of each route to be built by private companies through an auction system. The government could get these elevated tracks built by the private company that bids the highest. The track


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company would in turn rent the tracks to different coach companies to run their trams on the tracks at specified timings. The government could get their tracks built free and the tram companies would collect the 20% service charge from the passengers, which would be an additional source of continuous revenue. By this process a facility is provided to the public without any cost to the general public, only the user of the tram pays the tram fare and the service tax, and becomes a source of revenue for the government. A win win situation for all.

Where there are no tram tracks, to eliminate the need for digging roads, they should once and for make big enough RCC channels underground for drainage and along the sides of the channels there can be utility lines along the walls. This would be a lot cheaper then constantly digging up good roads (if any) and while laying one utility after another. Every time a new building comes up they dig up the roads. To lay one line they damage another old line so the wastage is unimaginable. This is because of lack of care among the politicians and the bureaucrats to do public good. They all love to point the finger at the others and nobody wants to take the initiatives or responsibility. If someone is bold enough he will be boycotted, because then the rest may also have to work harder. Here again the main fault lies in automatic promotion and job for life policy.

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STATE, DISTRICT, AND CITY GOVERNMENTS

All levels of governments would use the C-S Tax money from the central government mainly to be administrators. All of the essential services should be contracted to the private sector by competitive bids. They should use surplus funds to invest in projects that will give them the best returns, as explained earlier in "What Will the Money from C-S Tax Be Used For?" They should plan on investing and spending in such a manner that they will be able to survive without receiving any C-S Tax money from the central government within ten years from enacting the policies recommended in this book.

City, district, state governments would not have the right to impose any new kind of taxes without a constitutional amendment. This would make it a difficult proposition for governments to think of any new creative means of taxing as we have seen the finance minister do each year. State governments would not be allowed to have any interstate trading taxes, barriers, quotas, restriction, etc. Any kind of resource flow barriers should be completely removed. This would benefit everybody within the nation.


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CHAPTER 4

PRIVATIZATION, ANOTHER SOURCE OF REVENUE

"Privatization" means return to private ownership or, in other words, selling off or leasing off properties and organizations owned and run by the government. There should be a method in disposing this wealth so that maximum value is received for it. Loans may have been borrowed to start these Public Sector units PSU's, so first the money from the sale of these PSU's should be used to pay off these loans and not be use for their on going budget expenses. Purpose being that governments should have no long-term outstanding debts. First the non-strategic profit making industries should be sold in the open market.

The non profit making public sector units should be given three years time to make it into a profit making center otherwise these organizations should be sold off without guaranteeing the jobs of these employees in other government sectors. Once such a step has been taken most of these organizations would become profit-making centers because PS's jobs would be terminated. Right now with the job guarantee for life the PS don't give their full effort, plus promotions are guaranteed on seniority basis so why should they be bothered to give their optimal performance. Once the loss making PSU's start making a profit then it would fetch a higher price in the open market. This should create enough wealth to pay off most of the government debts.

Private individuals and businesses will take better care of their properties and profit-making resources than the government. The government is an entity that has acquired all of the wealth within its national boundaries almost free of

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PRIVATIZATION, ANOTHER SOURCE OF GOVERNMENT REVENUE

charge. But then, who owns the government with all of its wealth? All of the citizens of the nations, but in reality the government officials treat it as their personal wealth which it acquires free of cost. Hence, the government does not appreciate and make good use of our resources.

Each person within the government, whether it be an employee or an elected official, cares only about getting as much money as possible for himself and his friends. So the government system consumes its freely acquired wealth and then goes out and gets more from the private sector through taxes. This process has got to be stopped and reversed for the betterment of all Indians and mankind. The answer is to sell or lease these freely acquired resources (joint public assets) to the private sector with certain conditions. (Explained later)

A constitutional amendment should be made that all governments must balance their budgets and no deficit spending should be allowed. Their expenditure should always be 10% less than the previous years tax collection and other sources of revenue. When selling off a resource, the principle amount received should not


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qualify as a revenue source because it is a one-time receipt. The income received by the investment from the sale of a resource is a continuous revenue source. 90% of this revenue source can be spent in the following years budget.

An example, supposing the government sells off some land, or a factory or a coal any asset or mine, the amount received from this sale should be used to pay off debts. After all debts are paid off they should invest the principal balance if interest bearing banks or give loans to the private sector for projects that are demanded by the public through opinion polls.

Once the debts are paid off, then the governments would not be allowed to borrow further. Their expenditure would be limited to what they would receive from the C-S Tax initially and later on it would be limited to their passive or active investment earnings.

Also, no government level (state or central) would be allowed to nationalize or take over any private property or trust. Let the government buy their own properties from the open market and create trusts from their own revenue generations and not by taxing or making laws and snatching from the private sector.

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PRIVATIZING PRECIOUS, NON-PRECIOUS METALS,

MINERALS, OIL AND GAS FOUND

ON PRIVATE PROPERTY

If a very strategic metal, oil and gas, precious metal or stone, coal etc were found on any private property, then the property owner would become owner of the materials found under the land. The government does not own it. The government would have the first right to buy it from the private individual at the market price. The government could not buy it cheaper by force or threat. If the government did not want to buy it then the private individual could sell it in the open market. The first choice would be given to Indian buyers and the excess if any to foreign buyers. This is the only way the nation will benefit the most from the resources and the maximum resources will be searched and come into the open market. With today's laws suppose if I knew that there would be oil or gas or gold in my land I would keep quiet about it. Because if the government would come to know they would pay me a pittance and take over my land in the name of national interest. I would have no say in the matter. After that how they would squander and siphon off the money from the resource for their personal gains, nobody can question them.

PRIVATIZATION OF OTHER NATIONAL RESOURCES

National resources are the same as joint public assets. Therefore we should get the maximum price for it. The money from the sale of these national resources should be used to pay off the national debts. Industries should be privatized in order of strategic importance, least


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strategic first (depending on each country, some have more than the following industries under government control, while others have just a few or none of them owned and run by the government):

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1. Textile

2. Steel

3. Transportation, which includes railways, buses, and airlines, ports.

4. Banking and Insurance

5. Utilities (electricity, water, and garbage collection)

6. Mining Industries: coal, oil and gas, metals and then precious metals.


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7. Postal service.

8. Telecommunications: telephone, radio and television

9. Forests, rivers, mountains, etc., except for those areas set aside for animals. All animals should have their share of space on this planet.

10. National Defense (where possible to sub-contract)

RAILWAYS

Railways in India are a huge government monopoly and are very vast and employ a lot of people. In the last fifty years the railways have made a lot of progress. But this progress is miniscule compared to what it should have been considering the number of people traveling on it and the quantity of goods being transported on it. With this kind of ready market available to the railways the service should have been world class instead people have to travel in worse conditions than animals do even in India.

We could privatize the railway system in the following manner. Let the railways be integrated into one gauge throughout the country. Break up each section of the network and sell it off to the highest bidders. The money received by this selling off would be used to build new tracks to increase the connectivity to more cities and towns within the country as well as to the neighbouring countries. Private companies would build the new tracks and the government upon completion would sell off the

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tracks to private companies for the highest bid. This money would be used to make more tracks to increase connectivity throughout the country and this process would carry on till there is complete connectivity. The company that buys each section of the network would be responsible for maintaining their tracks. Their income would come from renting out the railway track to different companies who would like to run their trains on the tracks. So one company would own the tracks and several different companies would own the trains running on them. The train owners would buy slots of time to run their trains on these tracks at certain times and they would pay a certain price to the track owners for the allotted time slot.

The train companies would have to maintain their engines and coaches in very good condition so that their trains would not be delayed. Any delay due to the negligence of the train company would attract heavy penalties. It would also be in the interest of the train companies to design their trains to run on more than one engine in case of failure of one engine. To deter negligence on the train owner's part towing charges by the railway track owners would be very high. By this method the train service would become world class.


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The government would get the service tax of 20% from the commuter's ticket charges and 20% on the charges of goods transported on the tracks. Today the government hardly makes a profit on railways but by the above method it would be guaranteed 20% as net profit on the railways turnover. The railway track company would not charge a service charge to the train service companies since the train service is not the end user of the track, the commuters are. The commuters and the transporters using the trains are the end users and they are charged the user fee plus 20% service tax. This could add to thousands of crore.

Among all modes of transportation railways make the most efficient use of energy hence the most cost effective. Railways when privatized can come up with a system where instead of driving long distances you could drive your loaded truck on a flat bed of a goods train and you sit in your truck till you reach your destination and just drive away. This would be safer, faster and lower cost than driving the truck yourself. With oil prices shooting up efficiency and alternative renewable energy will be the name of the game.

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AIRPORTS AND SEA PORTS

There is a severe need for increasing Airports and Seaports in our country. With the population and trade increasing and when the new policies of this book implemented there will be so much growth that the government will always be falling back in providing the infrastructure. So here again the government should plan the airports and seaports throughout the country and just auction off the sites to the private companies. Even the planning should be done through private consulting firms. When the government takes on these huge projects, it is almost always delayed, above cost, leaves a lot to be desired and worst of all paid from our tax money which we all have paid whether we get the benefit of the ports or not.

When the private companies do it there is no cost to the general taxpayer. The users who benefit from the ports gets charged the user fee and the government gets their 20 % service tax as revenue for doing practically nothing. But its better they do just nothing except for the planning because when they do anything we know the consequences.

PRECIOUS AND NON PRECIOUS METALS, MINERALS, OIL, GAS AND OTHER RESOURCES

FOUND ON PUBLIC LANDS.

The government manages huge tracts of public land off shore as well as inland, which may be rich in different minerals, oil and gas and other precious and non precious metals. The government may not have the time, money or motivation to exploit these for the public welfare. Instead of the government leasing these public lands to different companies at a fraction of its real value, the government should allot these public lands to private companies to the highest bidder but with the condition that the mining is done without damaging the environment or the wild life.


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Further condition would be that whatever is mined, half of it would be given to the government free of cost. The government would then sell these half minerals or oil and gas or whatever they

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receive of their 50% share to the private sector or foreign buyers. The money derived from this would be used first for paying off national debts, infrastructure projects and pay their own administrative cost, thereby reducing the taxation burden and eventually doing away with it.

FORESTS, MOUNTAINS AND RIVERS

Forest, mountains and rivers have a great potential to be developed into a great source of income, employment of unskilled labour, as well as beautiful areas for healthy living and tourism. It can also reverse the trend of villagers migrating the cities looking for livelihood.


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Today instead of these resources being a great income source it is actually a cost to the private citizen to maintain. Today good forest wood is been stolen from right under the noses of the forest department officials. The forests, which belong to all the citizens of India jointly, are an expense instead of income to the private tax-paying citizen of India.

Here is a method by which the above forest resource can be made into a huge profit-making center. Tracts of forestland ranging from a minimum of ten acres to hundred acres can be allotted on a 30-year lease to individual farmers or group of farmers. The yearly lease amount would be through biding tenders. Each plot of land would be leased to the highest bidder.

The first five years of the lease would be free of cost to the lessee. The lease amount of the bid would have to be paid after five years. The bid amount should not be less than Rs.5000/- per acre per year, which he would pay the government for each year period on a yearly basis up to the full term of the lease. This is because it would take the farmer few years to develop the land and start making a profit plus he would have to recover his investments used for developing the forestland into farmland.

Each lessee would have to keep a deposit of 5 years lease amount in advance as a security deposit. At the beginning of the 6th year he would pay for the yearly amount of the lease of the 6th year in advance. This is fair because he is not charged anything

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for the first 5 years. If he does not pay the lease amount for two consecutive years then the land would be taken away from him and the balance security deposit would not be refunded. A fresh bidding process would take place. The same farmer who could not pay the lease amount would not be allowed to bid for the same land again. The lessee will never become the owner of the land even if he has leased the land for 30 years. Since he and his family have taken the trouble to develop and maintain the farm, he will have the option to extend the lease for another 30 years. This second time around also the leasing would be done by the same biding process of tenders but the existing farmer would be allowed to bid ten percent higher than the highest bid and extend the lease by 30 years. If the highest bid were purposely bid extremely above the other normal bids to remove the original people from that land, then that bid would be disallowed.

The forest land allotted would be on the outer periphery of the forest tract and would not exceed ten percent of the total area of that particular forest. By this process there would be a compound to protect the ninety percent of the forest inside the periphery. The condition for these forest farms would be that on their boundaries they


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would plant two rows of forestry furniture wood plants i.e teak, kheir, saal, sandal wood or whatever forestry trees that grow naturally well in that area. There should be a rough road between the rows of the outer boundaries of these forest wood trees in each and every farm. All access roads to the interior forest should be planned while subdividing these forest lands. Within their allotted land also they would be allowed to grow only natural forest mixed fruit trees. Having a natural mix of fruit trees of multi-culture is a better way environmentally. Some of the useful forest trees, which are good for humans as well as forest animals are black jambu, mango, cashew, sitafal, dates, drum sticks, tamrind (Emli), etc. These would require care for the first year than it would grow on its own. A drip irrigation system should be encouraged on such farms. This would save water, electricity, and increase production.

If ten percent of such forestland would equal to crore of acres of land. In the above method farmers would get the land

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free of cost (except for the deposit) and they could use their money for developing the land. If one crore acre of forest land is leased then after five years the government would get a revenue of at least Rs.5000/- crore or more each year depending upon the bid amount. Plus the rural productive employment that such a scheme would create. This would eliminate the need for rural people to go to cities in search of jobs. In fact a reverse trend may occur whereby people from the slums in the cities who live under in-human conditions would themselves want to migrate back to the farms. These forestry farms could be a long-term steady and cheap source of fruit supply for India as well as for exports. This source of income to the government would further reduce or eliminate the need for taxing people.

These forest farms would employ a huge labour force increasing their spending power; these in turn would buy products from the economy, which they could not have earlier. This would create more jobs in the other industries and benefit the whole economy.

DAMS

Dams should be encouraged wherever possible. With increasing populations all over the country the demand for water and food is going to keep on increasing. Wherever there is a good site to construct a dam it should be done because; it provides water in the dry season to the local people, the local farms, the animals in the surrounding forests, provides fishes, keeps the surrounding temperatures cooler, electricity could be produced from large dams, and water could be supplied to much larger areas for irrigation for which a fee can be collected by the dam owners.

Small to medium size dams can be constructed under these guidelines. The people whose land is going to be submerged by building the dam would form a society and they would get shares in proportion to their land that they would loose. Homes would be built for the displaced farmers from the dam projects funds Plus there could be other farmers/ financers who would


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be interested in building the dam for profit or because they would need the water for their agriculture land. So some kind of society with shares as per the amount of investment, and or land given into the dam project would be allotted. The governments could give the engineering guidelines and expertise for each dam construction. The society people would be responsible for the proper construction and management of the dam. Dams also control floods in rainy season.

These dams would be run like a business and profits be given to the shareholders as per the ownership of the land. Income would be derrived from selling water to the joint owners of the dam as well as non-owners. Share holders would have the first right of purchase in case of shortage of water. Additional income could be derrived from fisheries and electricity generation. By constitutional amendment no landowner could stop the dam from being constructed because it would be for the


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larger public good. On an average one acre of submerged land in the dam could easily supply enough water to irrigate 30 to 50 acres of farmland depending on the height and storage area of the dam. Also the whole area below the dam would have a rise in the water table. The landowner would get his share of profits which would be more than what he could grow on his land. He could sell off the land to the dam project or to the government and be paid as per the valuation of the tax he has been paying, whichever is higher, so he should have no complaints. Sentimental values of one landowner should not stop the progress and water requirements of many.

In certain parts of India we have excessive rains and some parts there are drought conditions sometimes for years on end. Also we have severe flood problems when snow melts in the Himalayan Mountains. Instead of spending billions of dollars on war planes and ships and bombs and giving employment to other countries why not spend the money to have an integrated river canal system to take these excess water to avoid flooding and either through natural gravity by canals or even with pumps from excess rain areas to dry areas to make all of India have sufficient water for farming as well as for personal use. With our cheap labour, soil and weather condition we can become the biggest exporter of fruits, flower, other agriculture and forest products.

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DEFENSE

National Defense is one of the big budget items. It is a big drain on our economy. Do we need to spend such huge amounts for defense? Who are we defending against? We have fought two wars with Pakistan and one war with China both for border disputes and the disputes still continue. The quantity of money that we have spent since independence to defend our disputed borders, this amount would buy ten times or more than the disputed land areas. Is it worth the cost to continue spending lavishly to defend these disputed land areas? Why not once and for all sit at the table and have a final demarcation and jointly put up some kind of a barbed wire fence.

From years our politicians / ambassadors have been going back and forth to China and Pakistan and their politician / ambassadors have been coming to India and we are still negotiating. The cost of these negotiations and back and forth VIP travels itself must have cost a small fortune. When two businesses have a dispute both would like to settle the dispute as early as possible and get on with their business. Why does it take two countries more than fifty years to settle a boundary disputes? Do these politicians / ambassadors really want to settle the dispute or are they only having a party in the name of dialogue at taxpayers expense? Are there other foreign powers who would not like to see the disputes settled so that they can keep selling expensive arms to both countries? Isn't it obvious by now to our politicians? Or are they getting a cut on the sale of these expensive weapons? You decide.

It is time for people of all three countries concerned to tell their politicians to settle this boundary disputes and end this huge military spending. The loss of life to all the three countries over the last fifty years is invaluable.


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The people living near the borders of the three countries have always lived under tension and fear of losing their lives. Most of these people would not care under which country their land and house comes under as long as there is total peace and free movements across their borders. They must also be wondering why their governments are spending such huge amounts for their

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lands. I am sure both side the land owners would be very happy if both governments stopped wasting money and spend a fraction of it on their welfare. They would rather see their government spend that money or making more schools, hospitals, roads, dams, canals, etc to improve the standard of living of the border people, which have been neglected and destroyed in the name of national pride, integrity, and security.

National defense would consist of two divisions, Navy and Army. Both would have their own Air Force. Since they would not have the right to charge a service tax and make any revenue, the Central government would allot a budget for the two divisions. War is the most expensive way to settle any dispute and it does not settle the dispute; therefore, war should be avoided at all cost. (According to the explanation in "How Will International Trade Achieve True Peace?" if this is implemented then national defense will become irrelevant within a few decades). All countries should have a small national defense force but they should be trained and geared toward defending their own people from natural disasters such as earthquakes, fires, floods, famines, and tsunamis and not fight wars.

The Utopian answer to defense is to produce only consumer products and no guns. But since the world is far from Utopia, it is more realistic to maximize consumer products and minimize guns as is explained above. Of the small amount spent on defense in future, the majority of it should go for the above purpose, Research and Development (R & D) and a small amount of it for actual maintenance of an armed force, for two reasons.

1. In today's world a nation uses a very small portion of money to fight a war; the rest sits idle in the name of back up and security. This great amount of investment in back up and security does not produce anything, it sits idle. So it is a waste and also leads to corruption, in buying and maintaining huge quantities of arms each year and is a big cost to the nation.

2. A better back up and security would be to have this money invested in R & D. By this process the people employed would be productive. The majority of the R & D for defense could also be


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used by business, it would be a natural spill over. For instance, instead of using satellites and rockets for bombs, the same rocket technology could be further developed and used for space shuttle. So not only is this R & D beneficial from the consumer's point of view, but we can also tell the world that we mean peace by having such a small armed force. This would not mean that we are weak; after all, we would have all these inventions (like laser and rocket technology etc,) that we would continue to develop for consumer benefit, but which could very easily be converted for defense. Another good point about this R & D is that it could be sold to business (e.g., shuttle flights) to recover some cost of defense spending.

CENTRAL ECONOMIC PLANNING

As far as economic planning what, and how much


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should be produced? This should not be planned by governments. The market, through supply and demand, plans the economy better than any government.

The only planning that should be done by central and state governments is the infrastructure skeleton plan of the freeways, railroads, and airports, water canals and pipelines that will be needed in the future. The local city governments should leave the right of way and spaces for the future, so that resources are not wasted to tear down structures or curve the railroad ten miles around because they cannot afford to break down buildings and buy the right of way later. Planning ahead for the future saves a lot of money, time and headache. The future becomes present faster than you realize.

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CHAPTER 5

CORRUPTION AND CRIME

Corruption is the main problem in almost all the economies of the world toady. The root of the problem lies in the greed of mankind to amass quick and easy wealth. In India corruption seems to be the norm rather than the exception. It has spread from the government sector to the private sector as well. People in the private sector dealing with the government sector see how easily in a short duration of government service many employee's of the government sector amass great wealth not directly in their name but on other family members name. This encourages people in the private sector to ask for bribes or favours for work that they should be doing in any case, for the salaries paid to them. Everybody seems to know the problems created by corruption in any society so we will go directly to the solution.

Corruption in itself is a crime but it also fosters other crimes. Because of the corruption in the government there are less resources left in the private sector. This leads to lack of growth in the economy, which leads to lack of jobs and money for a lot of people who stay poor. Since these poor people have no jobs or opportunity to earn a decent living they get tempted to resort to crime to make a living. So corruption is the cause of crime.

People in general who have decent jobs and house and a good future will not get involved in criminal activity. By reducing corruption and improving the financial status of the poor will automatically reduce crime. Everybody has a right to make an honest income. But what about so many politicians, bureaucrats and some businessmen who may already be making a good honest income but they still resort to corruption to make unbelievable amounts of money which they could not spend in 10 lifetimes, yet they want for more. When does it end for such people?


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How do we eradicate corruption?

We need to have an official website " blacklisted Indians." This website would have subcategories for public servants, politicians, government contractors, people in private sector caught taking bribes, any and all convicted criminals and other categories that can be added later. Once a person is blacklisted even from the private sector, he would be banned from all government jobs, government contracts, and political positions for the rest of his life or should we go easy on them and make it 25 years.

First lets identify the two main areas where corruption takes a toll on our pockets as well as our economy. The main people who benefit from corruption are the Politicians and the Bureaucrats ie, public servants and people with vested interest that deal with them. All are hand in glove in this act.


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It seems like an impossible task. But if majority of the people want to eradicate corruption it can happen. This is what needs to be done.

First we need to look at the laws made over the decades and remove ones that don't apply in today's world. More than half the laws would be outdated and unnecessary. Also many new laws may need to be enacted because of change in technology there much bigger financial crimes committed from the offices, banks, stock market etc. The legal profession can be consulted and committees can be formed to scrap outdated laws. From an economic point of view all these outdated laws are a delay to the justice system hence an economic cost to the whole nation. This delay in justice encourages people to take the law into their own hands. Few simple questions can be asked of each law:

Is this law protecting an individual's life, liberty, private property and his right to succeed and better his standard of living? If yes, then keep the law. Is this law protecting the environment, public properties and peace of the area? If yes, then keep the law. If both of them are negative then scrap it.

As an economist it is out of my scope to discuss deeply about legal matters, we are only concerned how the legal system affects

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the economy. One thing is for certain that jail sentences cost the taxpayer and does not have the deterrent effect it is supposed to have. As suggested earlier the Middle East concept of public flogging would be the best deterrent and most economical choice. For the person committing the same second offense the sentence of flogging would be doubled. And same third offense the flogging would be quadrupled. On face value this may seem very harsh but crime will come down so fast in India that actually very few flogging cases will actually take place. There is no harm in trying it for one year and seeing the result. Most people who have been harmed would like to see flogging become a reality; I am sure most victims would like to personally flog the culprits; the ones who are the culprits would definitely oppose such a law.

Corruption and any kind of bribe taking could also be made into a crime, punishable by public flogging and loss of job and getting black listed. This will definitely not be very popular among the politicians and bureaucrats who are corrupt. Majority of the public would love to see this happen. A simple national advertising campaign on this topic with an SMS reply center could get the public opinion.

In fact all of the ideas mentioned in this book can be put up for public opinion through an SMS type of rating before any of them are enacted.

HONOURARY COMMITTEE MEMBERS (HCM's)

Once powers are given to the ordinary citizens to remove any government employee, no matter what his rank, from his job for corruption or not doing his job on time or harassing the public with delays and excuses then all government employees will fall in line and respect the public and do their work in time without


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bribes. Here is how we can make it happen.

Once likeminded people are elected as members of parliament then a constitutional amendment can be passed empowering each and every ward in the county to have a team of fifteen honorary committee members.(HCM's). They would not be

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paid any salary. Every month five new HCM's over the age of 21 would be inducted and five oldest ones would leave. These 5 new members would comprise of 2 college graduates, 2-business men/women, and one from any walk of life. If the 2 college graduates are not available then there could be 4 from the business category, and one from any walk of life. A black listed person could never be on the committee. Any person could put his name on the waiting list to become a HCM. Every person in the ward would have the first right to be on the committee once before the person who has already been on the committee one time even if the


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once HCM's name comes up on the waiting list before the new person.

These HCM's would meet every Sunday at a specified time and place convenient to them and to the people of the ward. Their two main functions would be; 1.They would listen to complaints of their ward people regarding any public servant or politician. 2. Try to settle disputes between two parties.

If a person goes to any government office and applies for any work that requires to be done by him, he would be given a voucher stating the date on which his work would be ready for pick up. This voucher would have the name, date of application, date of work to be completed (not more than seven working days) and signature of the concerned public servant. If on the specified date the public servant does not do the job then he has to give a new voucher and a new date (not more than seven working days from the first voucher date). If on the second voucher date he still does not complete the job then the applicant would simply call up and meet one of the committee members and show him the two vouchers on which dates his job was not done by the concerned public servant.

The committee member would then ask the concerned public servant to appear before the committee on the following Sunday. He would have to give good reason as to why the job was not done even after two dates. If the PS completes the job and hand delivers the paper to the applicant before the following Sunday then the applicant should inform the committee member of his work being done. This will go on record against the public servant. Five such complaints of not completing peoples jobs

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on time, after the two dates goes against his record and could make him loose his job and all the benefits there with.

If the PS does not do the work by the following Sunday he should appear in front of the committee and convince them about the cause of the delay. If he is unable to convince them and he has even one earlier complaint against him of not completing the job after two dates, he could be fired from his job by the committee, no matter what his ranking in his office. If the PS is able to convince the committee about the cause of the delay then by a majority vote the committee could give him one last chance to complete the job and personally hand deliver the paper work to the applicant at his residence with an apology. If he does not do this then his job is automatically terminated, all his benefits cancelled, his name black listed, this PS would not be allowed to apply for any government job or government contract in his life time he is free to work in the private sector as an ordinary citizen.

If this process is enforced throughout the country then within a short time all the lazy PS will either be fired or they themselves retire. The ones that stay back will be


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honest and genuine workers. This is what we need in all government offices.

Slowly the name "government offices" should be changed to be called "Public service offices" and all the employees no matter what their ranking should be addressed as "Public Servant" PS all over the country because that's what they are. In short all public servants should have a "PS" in front of their title. This will teach them some modesty. Any Public Servant who does not like the PS title can leave his job and work in the private sector. (Then he will come to know what real work is like, without being called a sahib all the time.) The British had uplifted the then public servants into "Sahibs" because they were ruling/governing over us. They wanted the Indian public to look up to these Sahib's. After Independence the story had changed but our Sahibs still live in the memory of the past glory. Our Sahib's now include even an ordinary clerk and peon. All these PS have to be brought down to earth. They have been appointed to serve the public and not govern/rule over the public. It is our joint assets that they are managing for us. We are their Sahib's and not the other way around. It is about time

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we let them know "who's the boss".

A similar system can be followed to keep the politicians on their toes. If the people of the ward have complaints against their elected politician whether city, state, or central then the people would put forward the complaint to the committee. Once a month it would be the turn of the politician to face the committee for complaints against him/her. If the politician has enough complaints against him/her from his ward or wards as the case may be and if he is not able to satisfy the honourary committee / s about his will to do the work of the people then the committee /s after giving him a maximum of five chances or less would ask him to step down from his position. The committee could even black list the politician if he had done something really drastic and he acted arrogantly and does not apologize for his mistakes. No new election would be held till it is due, after the five years are up (Explained later). The person having the second highest votes in the area would be made to take charge of that position. After that the next person in line would take charge, he would be the one with the third highest votes. No wasting public time and money on elections until the 5 years are up.

An ousted politician by a committee would not have a very good chance of winning an election a second time. So he would do his best to keep the people of his area satisfied.

So by just making a constitutional amendment and giving powers to the honourary committee of each ward the politician as well as the bureaucrat will fall in line faster than you can imagine. They only hold the powers because of their position, which we the people put them in, but if their position and powers can be taken away from them directly by the very same people then they would behave in a very responsible way throughout their five-year term and not just before the elections. In fact with a dishonorable discharge by the HCM's these public servants and politician would be blacklisted and


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looked down upon by the ordinary citizens. No public servant or politician would want to bring that shame upon him.

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CHAPTER 6

WHO WILL MAKE THE GOVERNING DECISIONS?

In a democracy the governing body should implement the will of the people. Does this happen in reality? You decide. With advances in technology the will of the people can easily be implemented.

When a bill is introduced at any governing level an opinion poll can be taken via the SMS service or some kind of phone-in system. This will give the politician an idea which way to vote. Today if contests like miss world and others at a world wide level can be


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determined through an SMS then why shouldn't our policy decisions be made by public opinion polls. When a bill is introduced at any government level it should be announced on local T.V news channels at a fixed timing so anyone who is interested can see, as well as newspapers and other media. A toll free number can be assigned for this purpose there could be three to four codes. These are suggestions; No.1 could mean a complete yes, meaning go ahead with the bill the way it is written. No.2 could mean a complete no, meaning scrap the bill. No.3 could mean yes, but certain changes need to be made before passing it. No.4 means the concept of the bill is good but needs major changes before being acceptable.

The system of election that's going on in India seems ok. But if you are not pleased with it let's look at this optional plan if it sounds good it can be discussed and debated to come up with a business like approach to running our country. The political election system is not my field but since the elected politicians implement the economic policies this optional plan of electing our politicians seems like a better workable solution. This I have done after discussing and taking opinions of several people.

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We have too many elected politicians and bureaucrats at every level of government. We elect a herd of politicians to many unneeded posts so that they may make life comfortable for themselves. People have proposed that we do away with these unneeded positions. Do we really need so many politician and government officials to take care of our joint assets? As explained in chapter one it is clear that all these elected politicians and the government officials have not made a profit in the last fifty + years. Now it is time to reduce the number of politicians as well as administration staff.

We have to come up with a business like approach so that our nations joint assets give us our dividends. At least if they cannot pay us the dividends they should not be charging us taxes. So instead of the government scrutinizing our income, expenses and taxes let us take more interest and make them responsible and accountable to us. It is our money that the government is spending so they should be under our scrutiny. Where they give us money to spend then let them scrutinize us. These would be all government contractors. The rest of us should be left alone to earn and spend as we wish. Hence I strongly recommend the intrusive taxes be abolished.

HOW DO YOU ELECT YOUR POLITICIAN?

To understand the proposed new way of electing our politicians, you have to clear your mind of the present election system or else you will mix them up in your mind and confuse yourself. Let us directly elect a chief politician at the city, district (district), state and national level. This would eliminate the need to have a majority party system who would then elect a chief. The people would directly elect each of these politicians once every five years. During the elections the citizens would vote for a different politician at each level who would be in charge of administrating the position he had won.


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Each politician could run for one position only. He could not run for city as well as district level elections. The elected politician who gets the highest number of votes directly from the people would be considered the chief of city, chief of district, chief

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of state, chief of country as per the category that he has won in election. You may give him title as Chief or President or whatever. The people would directly elect him so no wasting time afterwards on who is going to be the chief minister or mayor or governor or president etc.

By this method there will be no hung parliaments and no majority business or opposition party. Every elected politician works for the betterment of his area and the country as a whole. No voting down a bill just because they are in the opposition party. In this system there is no opposition party. Everybody should support a good bill and everybody should


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turn down a bad one. It shouldn't matter who has introduced the bill. Any individual elected politician can introduce a bill in the Parliament/State legislature/District/City level business meetings. If it is a good bill and public opinion is in favour of it, then all or most of the other politicians will vote for it, if it is not good it will be voted down after public opinion poll is taken. How each politician votes will be declared on TV Business news and papers so we know how our elected politician is voting. Public can take necessary action against him through the Honourary Committe if he is not voting as per public opinion.

At each level of the election process there will be between 10 and 300 runners-ups to the chief depending on the population of that area. The runner-ups would be given the opportunity to serve on the different Committee's, for the five-year term. Committees would mean the same as ministries as is currently known and Committee member would be same as minister/Mp, for our purpose of discussion these two words mean the same and are used interchangeably) The number of people serving on the Committee would depend on the size of the city, district or state. On the national level there could be 200 to 300 runners-ups that would be serving on the different Committee/ministries. The balance would be on the waiting list of committee members in case if any one is made to resign by public opinion or in case of death or whatever, the first one on the waiting list would be inducted in at the bottom of the serving committees.

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At each level the president/chief will have reserve voting powers whereby he will alone have 50% extra votes to pass or cancel a bill. For example at the national level any one member of parliament can introduce a good bill even though he may have won with the least amount of votes. After public opinion to pass it 70 out 100 elected members decide to vote against it. Therefore there will only be 30 votes out of 100 voting for it. In the present system such a good bill would have been struck down but in this new system if the president feels it is good for the economy and public opinion is also in support of it then he can use his 50 reserve votes and vote for it to make a total of 50+30=80 votes for and 70 against . This way the president could override the 70 against and the bill would be able to pass.

Reason for this extra 50% reserve voting power to the president is because if anything is a failure or success everyone points the finger at the person at the top so why shouldn't he have more powers to have things done his way. Since the people have given him the highest number of votes and would expect him to perform for every ones betterment, he should be given the powers to get things implemented as he sees best.


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This same voting powers will be given to the president at all levels of government, as well as to the chief of each committee/ministry. A telecast of how each representative votes for a bill would be shown. This way people would know if the elected representative was voting as per their wishes. If he is not then people could complain to the honorary committee and give the representative a warning about his voting. If he disobeys the public opinion on voting a second time then upon the publics second complaint to the honorary committee the politician could be replaced by the second in charge.

The function of the Committee would be to assist the chief in moving toward the goals and objectives outlined in the manifesto or program that got him the majority vote of the city, district, state, and nation. If the Committee received too many complaints from the people or if they felt the chief was not going according to the plan that brought him into power and overstepping his bounds or was incompetent in that position, then with a two-thirds vote by the committee against him they would have the power to ask

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for an opinion poll from the public whether he should continue as the chief. If he is voted out by the public opinion poll then in this situation the first runner-up would automatically assume position as chief for the rest of the term. If this runner up also is found incompetent then the same procedure as above would be implemented and the third runner up would become chief and so on. No wasting money for re-election until the 5 years are up. The chief who is voted out would not be allowed on any of the working committee's. He would have to resign or he would be dismissed. Since all the remaining elected committee would move up the ladder there would be one vacancy. The person with the highest number of votes who is on the waiting list of the elected members would fill this vacancy. By this process we will do away with the concept of a mid term election. An election is an expensive affair so it should be held once in five years only.

With computerized election systems now in place in India, the suggested new form of election would hold the village gram panchayat / city, district, state, and national level election all in one attempt. The computerized election the screen would have four columns. The candidate list would show the name, age, and qualification. Also 5main points in short statement that the candidate would like to accomplish and photograph of each candidate. Each candidate's information would be shown on the screen. Column 1 would have a list of candidates who are interested in being elected at the gram panchayat / city level. Column 2 would have a list of candidates who are interested in being elected at District level. Column 3 would have a list of candidates who are interested in being elected at state level. Column 4 would have a list of candidates who are interested in being elected at the Central government level.

The voter would just move the curser to the politician whom he / she would like to elect and do a click against his picture. The list of candidates appearing on the computer screen could be given in the local newspaper a few days before the election so that the voter can study the list of politicians and decide whom they would want


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to vote for. This way less time would be wasted in the election booths. At each level one candidate could stand for election only in one category i.e city, district, state or national. In each category the person with the highest number of votes would become the chief in

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that category, the person with the second highest votes would become the vice chief. Now suppose in a small village/city only 5 committee's are needed then the third to seventh level highest voted elected politician would become the chief of each serving committee of the village gram panchayat.

In the city level depending on the size and population of the city they would have between 10 to a maximum of 50 serving committee members. They would be selected in the same order as per their votes.

At the state level depending on size and population of


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state they could select 20 to 70 serving committee members as per the number of voters in the state.

At the national level there can be 200 to 300 serving committee members. The person with the highest votes becomes the president 2nd highest votes becomes vice president. Suppose there are 20 ministries in all at the national level, the person with the 3rd highest votes along with the president and vice president would select which ministry/committee he would head. In this new system a committee and not a single minister would head each ministry. Each of these committees would have their own chief. The president would have the final say in who will head which ministry. The president along with the vice president and 3rd person with highest votes would select a 5-member committee from the 23rd highest vote winner to the 28th highest vote winner. They (23rd highest vote winner to the 28th highest vote winner) would help the selected person with the 3rd highest vote to accomplish the goals of that ministry keeping in mind the presidents programs. The 4th highest vote winner would get the second choice of ministry with the president and vice presidents consent and he would get 5 elected elected members to be his helping committee members. So the 29th highest vote winner till the 33rd highest vote winner would form the committee of this group. This same system would be carried on for all the 20 ministries at the national level. The 3rd , 4th , 5th, till the 22nd head committee member would have similar reserve voting power of 50 % voting to resolve issues within his own group of committee members in case if he did not agree with their ideas or if public opinion was against the idea.

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This same system can be followed at the state, district, city / gram panchayat level. At the state level there can be just 3 committee members in each committee at the District and City levels there can be just 2 (or even 1) helping committee members depending on the size of the state, district or city.

As later explained in the section "How to Dismantle the Iron Triangle," all of the policies recommended in this book should be made part of the Constitution. This process would take away a lot of discretionary power from the politicians to make decisions affecting people's lives. The president would have to work within the guidelines of the Constitution.

If any changes would be needed in the Constitution, then the president or for that matter any elected member can put up such a proposal in the form of a bill or he could suggest his ideas to the people or through TV and newspaper media and if enough people would like the idea through an opinion poll. A formal bill would be introduced, and then the parliament would have to approve the change by a two-thirds vote. If the elected members approved the changes by a two-thirds vote, the president would get his 50% reserve vote in these


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matters also then only those changes could be made to the Constitution.

If a good bill was being opposed by two-thirds majority, the president could use his 50% reserve vote to overturn the two third majority vote of the politicians, if he felt that majority of the people wanted the change but the politicians were opposing the bill so the president does not get credit for a good bill and get even more popular among the people. By this process the people would directly approve or disapprove the changes that could affect their lives and the president by using the 50% voting power could implement the will of the people even if other politicians oppose it. This would be approaching a true democratic process. Also, if changes were really needed then more than 51% of the population should feel that way. This way the people would be governing their lives, rather than a group of politicians or bureaucrats or lobbying groups. Only if 80% or more of the elected members were against the president's wishes then they could oppose the President. His 50% and the supporting 20% would not be enough to overturn the opposition vote of 80%.

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Here again if the people were for the presidents idea then people would call their local elected politician and ask them to fall in line with the president if not then the people could take the elected member to task through the honourary committee.

Under this system, who would be the chief secretary of the various government agencies? The selected committees managing each ministry would have the right to appoint the head of each government department or bureaucratic agency, This selected head would be from the high ranking officers of the department and would be answerable directly to the committee. The committee would also have the right to terminate or demote him to his original rank of their services if they were not satisfied with any of the bureaucrats job performance. The head of each department would also have the right to hire and fire any employee based upon job performance since the committee would expect results from the head bureaucrat. This would place the ultimate responsibility on the president's of each committee's shoulders. If things did not work out, then the people would know whose fault it was.

Today, the way most systems are run, every politician and bureaucrat is ready to point the finger at others for things that go wrong. But don't get the wrong idea, I am not proposing any kind of dictatorship or oppressive government; what I am proposing is that people should take responsibility for their actions, take credit for good results and improve on their mistakes. Of course, if their mistake has hurt somebody, then they should be held responsible for the damage and the injured party should be paid for the damage.

How would the presidents/chiefs job performance be rated? When the elected president took charge of his office, all of the assets would be under his charge. The accounts would show what assets he started with. He would manage these assets on behalf of the people he


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represented. He would diversify his investments; no one investment could involve more than two percent of the total asset base. He would use the income from these assets to run his administration. The surplus income he would reinvest for growth of assets.

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Sixty days before the end of his term a private auditing firm would be hired by the Committee to audit and prepare a standardized report of the governor's financial performance. This audit would be carried out throughout the nation at all levels of government. Although each Committee would use the auditing firm of their choice, the auditing firms would follow the same procedures of accounting. They would condense the reports into percentages to put the governor's performance into perspective with the other chiefs at their same levels. The condensed report would include percentages of asset growth or shrinkage, as well as actual figures (because percentages can be deceiving), administrative


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spending, and salary increase or decrease, total work accomplished and total wealth increased by him.

The Committee at the national level would choose an accounting firm that would take these condensed reports of all the chiefs at each level and figure out the average percentages. These percentages would be reported to the public through the news media. These percentages may not be a fair way to judge the performance of each chief because different areas may have different potentials and problems. The people could then judge for themselves how their elected official at each level performed compared to the national averages, and also compare the current politicians' performance to the past politicians' of their area and then make their own judgments of whom to vote for in the next election.

Also in today's election system even if you are an honest, knowledgeable, and capable person you will find it very hard to win an election. Reason being that great amounts of money are required to advertise yourself and to do this you may have to ask for help from industrialists and government contractors. But they are more likely to help a political party rather than an independent. To join a political party means you have to fit in their mould even if you agree with it or not so you are not left with much choice.

The election commission can ban all advertising from all politicians. Three months before elections the potential candidates has to get at least one percent of his constituency to nominate him to stand for elections. With this proof he can file his election papers. He can make a 10-point program and fit it in one page and the

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newspapers by law would have to print it free of charge. This way all the people would be able to read their potential candidates program and by an opinion poll take up debates on important issues on TV shows (free of charge to the politicians) to see how each politician intends to solve these issues. This way even a poor new candidate can get equal or more coverage if his ideas are good and acceptable to the public.

This process of electing politicians would do away with inefficient, corrupt, and incompetent politicians who did not know what they were doing and what was going on in their own backyard. Let the politicians move with the normal people and see the problems they faced on a day-to-day basis. This whole process would also do away with corrupt politicians. Unscrupulous private companies would not be able to get any benefits or handouts from politicians and bureaucrats, since the politicians and bureaucrats would not have the power to return their favours without public consent. These companies would no longer see the need to give huge payoffs to government officials. This plan would also eliminate the need for lobbying groups since they would not be able to get anything from the politicians directly.


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One of the problems with the current system in elections is that politicians need to spend huge amounts of money for publicity and they go to lobbying groups and industrialist and government contractors for financial help. In return the politicians promise them certain favours and paybacks to the people who have helped them. After winning the elections the politicians are bound to return the favours, but the politicians cannot do this directly, they have to get the help of the bureaucrats to release these funds to the contractors and industrialist's. So a strong bond is formed between the three groups.

This leads us to our next topic of the Iron Triangle. This is basically the fruit of the current election and management system of our country and most democracy's. We all know it is happening but we feel it has been going on for a very long time so who am I to change it. Well, you alone cannot change it. But if all of us are aware of better alternatives and we start spreading and improving on the ideas of this book and demand it by writing to our politicians,

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things will start happening. Think how with the suggested idea of the government system it could be made to work for the betterment of the majority of the people rather than the select few. the present scenario and see if you find it acceptable or would you like to see the changes mentioned above.

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CHAPTER 7

THE IRON TRIANGLE

The bureaucrats, beneficiaries, and politicians combine to form the Iron Triangle. A very strong bond is created among the three groups. Their main priority is to look out for themselves and help each other to further their own cause.

THE BUREAUCRATS: The more planning, regulations, and restrictions involved in an economy, the more government controls, this makes them susceptible to corruptions and bribes. The larger government is self-perpetuating; once started, it does not want to stop growing, does not want to give up power and control.

Who are the bureaucrats? They are the secretaries and officials and all employees of the public service agencies. (In reality today most of them are public dis-service agencies.) In theory they are public servants, but in reality they are public bosses. They include all kinds of enforcement agencies and different kinds of revenue-collecting agencies, sanctioned by the politicians.

Politicians may come and go; beneficiaries may come


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and go; but the bureaucratic agencies have been constant. They are the base of the Iron Triangle. The bureaucrats are so powerful that they interpret the laws passed by the politicians in a way that benefits their cause; laws that reduce the bureaucrats powers are acted on in their own sweet time, because the present politician may be gone after his term expires plus he may not be given the authority to control these bureaucrats. A new politician who gets voted in (by the help of these bureaucrats) will give the bureaucrats more power, on which they will act immediately. Today Bureaucratic agencies have a will of their own and are not really controlled even by the entity that brought them into existence, because those politicians who voted them into power have long been gone.

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Who governs the government? No one individual can. Each arm of the government is like a leech, it keeps sucking blood and growing. The final effect is that the leech gets stronger and the animal gets weaker until the animal dies. The bureaucrats suck upon the country's resources until they drain it to such low levels that it is about to collapse economically, and this creates social unrest throughout the nation. Each of these government's arms becomes so powerful that none of them can be broken off (removed, scrapped) even if all the rest of the arms got together. Then again, the rest of the arms won't get together to scrap anyone because all of them realize that the next one to go could be their own and they do not want to set a trend of reducing the size of the government. In fact, when one arm becomes too big and strong, it will start its own offshoot that becomes another individual powerful arm. This is the Tyranny of the Bureaucracy, one side of the Iron Triangle. Among the three sides of the triangle, I would say the bureaucrats is the most stable and deep rooted and therefore the hardest to amputate. But nothing is impossible. Remember in a democracy it is the will of the people that has to be implemented. The question is do you have the will?

THE BENEFICIARIES: These are the different organizations that benefit from licensing agencies, tariffs, and all the agencies that restrict trade or put barriers to entry to the newcomers. It is beneficial to those who are in the industry to have maximum barriers and difficulties to entry so that they can stop the newcomers and the small businesses from really growing unless you are exceptional. Existing large firms do not want to share the pie; therefore, they make life much easier for themselves by avoiding competition. When there is very little room on the boat, people will still want to come aboard; but once they are on, they want to stop the rest from coming on. These groups have concentrated interests and will form strong lobbies to protect themselves. They will try to make their interests sound like national issues to get the sympathy and support of people. This is a very self-defeating process for the whole economy. This type of thinking is food for the corrupt politicians.


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THE IRON TRIANGLE

THE POLITICIANS: The lobbyists (beneficiaries) need politicians in parliament/legislature to speak for them and support them. The beneficiaries choose a politician who will support their lobby and the beneficiaries help politicians win elections. The politician has all to gain and nothing to lose, so he goes along with it and supports their lobby as a return favour. At the central level the politicians merge with the bureaucracy. "You scrub my back and I'll scrub yours" is the philosophy. The majority of the public loses; only the few unscrupulous win.

HOW TO DISMANTLE THE IRON TRIANGLE

Although it seems impossible to dismantle the Iron Triangle, it is not. In reality it is much easier to break or dismantle something than it is to make or assemble something. Then why do we feel that, although there are so many wrong things happening within the Iron Triangle, we are a majority, they are a minority yet they have become so powerful that we as individuals cannot


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do anything to change the system for our good? We also have to join together and show our strength of majority to change the system.

Who is it that supports the Iron Triangle? We the individual people who vote the politicians into power; we the individual people who pay taxes to support the different governmental dis-service agencies; we the individual people who directly or indirectly support our lobbying groups to pass legislation in our favor and to hell with the rest of the people.

We are made to believe that we are doing ourselves good by giving our money and support to them, because we need the subsidies, jobs, favorable legislation, and protection from the other lobbying groups that will take away the whole pie and leave nothing for us. But in reality only some of us are getting only a small portion of our money and support back from the Iron Triangle. The majority of the money and support is sucked within the Iron Triangle to perpetuate its own cause, not ours. After all, they can give us only part of what they take away from us. The way most government systems are run, they are not productive; they are very efficient consumers and wasters of our money.

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From the above discussion it is clear that the Iron Triangle needs our money and vote support much more than we need them. So if we were to cut our support of them, and support the right politician who will support us and not the Iron Triangle then they would not be able to sustain themselves and would fall apart.

How do you cut your support of the Iron Triangle? If you stopped sending them your tax money, you would end up paying a penalty and/or end up in jail. That's not a viable solution. If you stopped voting, that would not make any difference because there are enough people involved in the Iron Triangle to vote themselves into power.

Here is a package of solution, all of which are essential to dismantling the Iron Triangle:

1) Ask your local MP to read this book and innitiate and support the policy guidelines recommended herein. Tell him you want these policies to be incorporated in the national constitution, and if he will not take you seriously, you will be voting for another politician who will.

Any politician who cares for the people, who has some understanding of economics and how the free-market system works, will see how the policies outlined in this book will cure most of the defects existing in the system. He will also see how he, as a powerful politician who passes bills to spend huge amounts of money in favor of his beneficiaries and bureaucratic organizations, can become instead an efficient financial manager for the public. If he is not effective enough in the position that he has been voted into, he will not get your precious vote the next time around.

The politician's role of spender of public money and perpetuator of ever-increasing budget deficits,


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national debts, and tax increases would change to preserver of public money, increasing the total assets by investing, reducing and eventually doing away with budget deficits, national debts, and the C-S Tax. The politician will have to be well versed in financial management as explained in this book.

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The politician's philosophy of "You scrub my back and I'll scrub yours" will be over. If he does not perform well financially and does below average, then his chances of being re-elected will be slim. The new role of the politician will be to keep the spending of the few leftover bureaucratic organizations to a minimum. The thought of creating a new bureaucratic organization will be detrimental to his political career, since that would increase spending and make him look bad. In fact, the politician will be tempted to reduce or completely close down unneeded bureaucratic organizations to reduce spending. This process would help to dismantle the


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tyranny of the bureaucrats, beneficiaries, and politicians.

Now that you understand how we have been unknowingly supporting the Iron Triangle to cause us discomfort and make us feel helpless and unimportant, you can very easily cut off that support by taking charge of your life; by being aware; and by making the people you know also aware of and motivated to work on the solutions recommended in this book.

Timing is of the essence; this is a package of economic policies that have to be implemented simultaneously in order to have their full positive impact. Just as when you need to blast a hole in a granite mountain to build a tunnel, if you have set five explosive charges to blow the hole as deep as possible, in order to accomplish that you must release all five charges at the same split second. If, due to some malfunction in the timing mechanism, the explosive dont blow off together, you will still have a hole from the blasts, but it won't have the depth you originally intended. So also all of the policies recommended should be implemented within the same year. The shorter the implementation period, the greater the impact.

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CHAPTER 8

INTERNATIONAL TRADE AND

IMPORT-EXPORT POLICIES

There are some people in India who feel that these foreign businesses come to India only to make money and they take away more than what they bring into the country. Even if this is true, we do not loose. In business there is a positive sum gain. Meaning both the foreigners as well as us gain by the production, service, trading activities that take place. So when foreign companies take an active part in investing in a production plant, and exporting those products or setting up an office to provide a service to their or other foreign offices then we as well as they gain. Where I have my reservation is when foreign companies just invest in the stock market and sells off when the share prices go up and take their money home, this is where I feel our investors are put at a disadvantage. With their huge money power they can manipulate the market in their favour. Lets examine how the foreign company and we can gain by free trade policies.


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Following is an analysis of import-export at a personal level and also at the national level. When an individual buys something, he is essentially importing that product or service from another person in exchange for currency. So also when the individual sells his labor or talent; he is exporting his labor or talent in exchange for currency.

Now let's take this import-export analysis from a personal level one step further and see what happens when people do not trade, and when they do trade, and also when they trade with tariffs (or taxes).

Suppose that there were absolutely no trading at all between individuals. In this case the individual could not specialize

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in any one trade. He would have to spend a lot of time learning to produce everything he needed, i.e., a variety of food, clothing, shoes, pots and pans, and build his own house. He would buy nothing from stores but manufacture each and every item needed to suit his lifestyle. This may sound ridiculous, but in this extreme case of no trading, individuals would have a very low or no standard of living. How much can one person do individually? The simple necessities of life would be beyond his reach.

Now let's look at the complete opposite case of absolute free trading between individuals. Each person specializes and works in a field that will maximize his income, depending on his ability to learn a trade or skill, with the resources available to him. He can sell his talent in the open market (or in other words export it) and earn enough currency to maintain a certain standard of living. If he wants to improve his standard of living, he will further specialize by educating himself in a growing industry that is in demand. If he specializes in a dying industry, he may actually reduce his standard of living because they do not need any new people; in fact, they would be laying off experienced people. So he should steer away from such industries. (This concept ties into the topic of "Dying Industries.")

In the natural case of free market with no government intervention, regulation or subsidy, industry and individuals would direct their resources towards products and services that are needed by the local and world economy. Individuals and society as a whole would prosper form these new demands of products and services. The whole cycle of investment, production, employment, income and spending would take place.

WHAT HAPPENS WHEN THERE IS

A TARIFF ON TRADE

Whom and how does it affect? A tariff reduces the overall benefit of trading. It takes money out of the trading process. It affects the consumer the most because the consumer has to pay a higher price for the product, all of the taxes throughout the production and


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distribution process is rolled over and added into the final higher price of the product, an undesirable effect. Because of the increase in price, a certain number of consumers may not be able to afford the product, which reduces the total number of units the producer can produce and sell. This, in turn, reduces the producer's total revenue and his total profits. Because of this the producer's employs fewer people than he normally would. Lower employment means lower income to society. So tariff is a net loss to both societies.

If the consumer and producer both lose from the tariff, it seems that the only one to gain is the agency collecting the tariffs, i.e., the government. Yes, the government does make some gain by colleting tariffs in that revenues collected from tariffs normally exceed the costs of collecting the revenue. But there is a high cost of collecting revenue in this manner. It is hard to police; officials are susceptible to bribe; and tariffs are a very inefficient means of collecting taxes.


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With tariffs there is an overall net loss to the society and nation. When you add the losses to the consumer and to the producer in lost jobs, lost profits, loss of consumer satisfaction (utility), loss of production and employment, all these losses add up to a lot more than the small gains derived by the tariff-collecting agency.

It seems, then, only logical to have policies that allow complete free trade within and with other nations of the world. To accomplish this in reality, a nation would have to have bi-lateral treaties with other nations to have a free flow of all resources, including labor. Most of the trading should be done through the private sector without any kind of subsidy. All the nations would be encouraged to join in on this free economic trading alliance.

FREE ECONOMIC TRADING ALLIANCE (FETA)

Let us say that a nation decides to start a Free Economic Trading Alliance (FETA). A major requirement for all of the FETA members would be to allow complete free flow of all resources among any and all members of FETA. If they could get anywhere

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from five to ten nations to go ahead with FETA, they would see such prosperity that in a short period of time majority of the nations would want to join FETA. The members of FETA would be allowed to trade with non-FETA members also. They would be allowed to charge a tariff to non-FETA members. This would encourage non-FETA members to become FETA members, in order to gain free trading access to these countries.

FETA members would not be allowed to charge either import or export taxes to fellow members. Breaking this part of the agreement could lead to a loss of membership.. If any country decided it did not want to be a part of FETA, all the other members would be notified. Each member nation would have a committee that would oversee the smooth flow of trade. Any complaints would be made to this committee to settle matters. All of the member nations could meet periodically to discuss how they could improve on the structure of FETA and increase membership and overall world trade.

SUBSIDIZING EXPORTS

There is absolutely no way to police each member nation, if it subsidizes its own exports. Most members would get upset if some of the members subsidized their exports, because they would have unfair price advantage and would be able to be more competitive. On face value, it seems true that if you subsidize and export more, you are gaining. But let's see what happens when you compare this to an individual selling his labor as exporting and buying other products as importing.

Subsidizing his exports means that an individual would charge less than market value for his labor so that he could sell (export) more of his labor. In order for him to sell more labor, he would have to sacrifice his leisure hours and other activities he could have accomplished in those hours (which is a cost to him, although it is hard to


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put a monetary value on leisure and personal activities). Surely because of the extra hours, even with a lower pay, his total take-home pay would be more (but his income per hour of work has declined). This would give him some extra

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money to save or to spend. Most people would not like to work below their normal wages just to get a few hours of overtime work. In fact, most people would want above-normal wages for overtime work. So subsidizing wages or charging less per hour of work you do, at an individual level does not make sense.

In the case of a nation subsidizing one or more industries to increase exports, either the citizens or other industries would be taxed at a higher rate to pay for the subsidy. (See how subsidies affect the industry under the section "Dying Industries, Unemployment, Tariffs, and Subsidies.") This means that the consumers of the


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subsidizing nation would pay higher tax so that the importing nation's consumers could buy the products at a lower-than-market price. This would not go too well with the consumers of the subsidizing nation if they realized that their hard-earned money was being taxed at a higher rate so that foreigners could buy their products for a cheaper cost. It would be the same as giving away part of their income or part of their labour at a cheaper salary. From this it can be seen that the subsidizing nation would be clearly at a loss.

The other argument for subsidizing exports is that a nation can have a surplus in its foreign exchange by exporting more and importing less. Let's name the exporting country EX and the importing country IM. Now EX would eventually convert all of this surplus foreign exchange it earns from exporting into its own currency when it needs to consume it or use it for investment within its country. EX could have held this surplus either in the form of gold or in a strong stable currency, usually the U.S. dollar, the British pound or more recently the Euro. But when it sells these U.S. held dollars into its own currency, it puts as upward pressure on the price of its own currency. Meanwhile, the IM countries also need the EX currency to buy EX's products and services, putting a further upward pressure on EX's currency price. This makes the products and services of EX more expensive than those of other countries. Hence, the exports of EX are priced out of the selling market.

In the meantime, since EX's currency value has gone up in relation to IM's, now EX can buy a greater amount of products and services from other countries and therefore a reverse

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trend occurs. This reverse trend will not be able to totally cancel itself out but will stay within a certain range and go back and forth since the supply and demand of products are dynamic and change every second because of the modern online internet service.

One could argue that some nations would always be at a disadvantage because they may have a few natural resources and a large population to feed. So they would have large trade deficits if they had free trade policies. But we know that this is not true because Japan, Singapore, and Hong Kong have almost no natural resources, they barely have enough land to build homes on, yet they are very strong economies. On the other hand, third-world nations with few natural resources that have huge populations could provide cheap labor, to produce labor-intensive products. So in simple words, every country has some resource, whether natural or human, that it could provide for the world economy at a competitive price.

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nation progresses in the right direction, everybody progresses. While achieving this progress there are bound to be trade surpluses and deficits, as economies adjust to the growth and needs for products and services change. Without any government intervention, subsidies, taxes, or quotas, economies will adjust to this change in order to maximize their wealth.

The main purpose of free International trade is to gain comparative and absolute economic advantages from trading, technological advances and, most of all, peace. When people, technology and materials cross borders, soldiers don't have to. Only when we have complete free international trade will we achieve true peace.

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HOW WILL INTERNATIONAL TRADE HELP ACHIEVE TRUE PEACE?

Definitely not by every nation increasing their military spending each year. The answer is by allowing free flow of people, products and resources. Imagine a world where half the products and services produced by each nation is exported all over the world and half the products and services consumed by each nation is imported from different countries around the globe. Also imagine a world where every nation has about fifty percent of its population living and working overseas in different countries around the world and each country has 50% native and 50% foreigners living in it. Furthermore, suppose that an average family changes their country of residence once a decade.

This world would be so homogenous that within a few decades the concept of being nationalistic would start fading away and people would start thinking along the idea of being a citizen of the world or planet earth. Eventually, the concept of national defense would die away and a huge waste of resource would be stopped. Guess how much lower every nations expenditure would be. This would lead to further production and cheaper or stable prices for products and services.

Some may argue that in the above scenario if everybody can produce more then where will the consumers come from. The answer is simple. Without the waste in defense resources people all over the world will have to work less in order to maintain the same standard of living, or if they continued to work at the same pace they would have a higher disposable income each month. If this excess income were invested properly he could retire at an early age, This means people all over the world will have more time to spend with their families, friends, and visit places.

Just imagine what could happen to the tourism industry all over the world. So many new jobs would be created in the tourism and related industries. I am sure that most humans would like to see the whole world in their lifetimes; this is how God has made us, to enjoy life. (But with the wrong policies all over the world


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the P/C have made life miserable for most of us except for the selected few who are in their team.) Imagine if just 20% of the world population could visit a foreign country each year. How much pleasure for mankind, how many new jobs and how the world would flourish with happiness, just the way God intended for humans to live.

Lets take an example of two neighboring states within a nation. They do not have to support an army to protect themselves from each other, they don't have to patrol the borders and have barbed wire fences or have visas to travel from one state to another, a huge saving in cost and resource not to mention the tension. Now suppose if each and every state in India had to have an army and weapons to defend itself against the bordering states. What a huge cost and tension to each of us. None of us would want to see such a stage happen so why cant we apply this same philosophy all over the world. If people told their politicians to stop wasting money in the name


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of defense and live without the threat of war between countries as we don't have wars between our states. Citizens all over the world should make it clear that they will vote for a politician who will reduce military spending, and it will start happening. So when mankind moves in the direction of the above-mentioned concept, armies won't be needed and the huge economic drain of military spending will be greatly reduced and eventually outdated and done away with.

The resources now spent on defense could be used to make human life easier on earth, so people can spend their leisure time enjoying themselves and learning more about themselves instead of being slaves to their jobs and businesses. By this process mankind will be headed in the direction of everlasting peace national defense function would be limited to help its country people from natural disasters. Once God sees that mankind has learned to live in harmony with himself and Gods creation, which we have all around us then God may decide to reduce the natural disasters.

Here are some guidelines for providing stability while trying to create a homogenous world. Foreigners could own their primary residences 100%, but all other investments would have to be 51% owned by a local investor, for two reasons, social and economical.

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Socially, people wouldn't feel that foreigners own everything, which leads to animosity against foreigners. Since a foreign government or individual could not own more than 49% of any investment or business, any one foreign nation would not be able to control or ever be an economic threat to the host country, because of the fact that this 49% foreign ownership would be diluted between several different countries and companies.

Economically, there may be many small businesses that a foreigner may want to invest in but may not have the time or the resources to manage. They may just want to invest and be a silent or investing partner (since the country having C-S Tax would be considered a "tax haven", many foreigners would want to invest here). Local entrepreneurs who may have the management and business skills but may not have the financial backing could take advantage of such opportunities. By this process both locals and foreigners would benefit.

Many countries have for a long time been involved in joint ventures in both private and public sectors, which worked out quite well. So I propose that the joint venture system be greatly encouraged in, along these guidelines:

Foreign Company 49.5% of stock

Local Private sector 49.5% of stock

State or Central Government 1.0% of stock

Top management to be 50% local, 50% foreign or whatever is mutually agreed upon by both parties; percentage of other employees would be based on whatever the labor market has to offer.

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a joint venture would occur only if a dispute arises and if the decision involves a strategic problem; then, the government would have the right to decide on it.

Any nationality from anywhere in the world could come for business or pleasure, without visa restriction. Only a security check for terrorism would be done; terrorists would be dealt with very seriously. When we allow people from all over the world

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to move to any part of the world and stay as long as they wish, for business or pleasure, without having any immigration restrictions, we will be moving in the direction of achieving world peace and stability.

HOW TO ENCOURAGE FOREIGN CAPITAL

Make a constitutional amendment to have complete privacy of banking accounts. No local or foreign governments would have the right to infringe on this privacy except for the police department in cases of suspected robbery or fraud or drug money. Of course, this would require a special court order. Foreigners opening accounts in the local banks would have this same protection (another means of attracting foreign money to the nation if needed).

With interest income, dividend income or capital gains not being taxed, all the foreign funds would flow in very freely along with the other policy changes mentioned in this book. This would encourage business growth. More businesses means greater production and higher employment. Greater production means lower prices for consumers; higher employment means more income for employees to buy the products. So here you have a business cycle that benefits everybody. When foreign funds leave the country there should be a flat ten percent tax. No questions asked.

(Notice under section on "Unions' how higher employment rate makes unions an unneeded phenomenon.)

SPECIAL ECONOMIC ZONES (SEZ)

This concept favours only the big businesses because small businesses cannot afford to buy expensive plots and setup new plants in far off places where the SEZ are designated by the government Under the policies of this book, the whole of India will be a SEZ.

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CHAPTER 9

UNIONS

By removing the intrusive taxes in India and by implementing the new C-S Tax laws, international trading policies, strict corruption control and other policies recommended in this book, there would be so many old and new businesses in our country creating plenty of new jobs. In order for businesses to attract good employees they would have to pay attractive wages and benefits. Therefore, unions would become superfluous. In fact once the policies in this book are implemented there would be no need for unions; old unions would be allowed to continue, but just for the record from the day these policies are implemented, new union formation should be banned in all old and new businesses starting from a particular date. This will encourage so many new businesses to start all over the country that the old unions will automatically be disbanded or fade away.

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discouraging policies toward businesses, you have fewer businesses; fewer businesses mean fewer jobs; fewer jobs means employees have to come up with a means of saving their jobs; so the answer is unions. At face value, this seems like the right answer to the employees. But in the long run, new businesses do not want to come into areas of strong unions and existing ones go out of business, because they aren't able to compete. So in the long run unions aggravate rather than cure the problem.

Unions do almost the opposite of what they are intended to do. Instead of fostering more jobs, protecting and raising salaries of existing employees, unions end up diminishing jobs and driving businesses to move to another area, sell off to another firm, or completely close down. All of these eventualities are undesirable

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to the employees and the employer.

Employers are Entrepreneurs, they take a lot of risk on capital, use their knowledge, and work hard to start a business to earn a profit. Besides dealing with competition, government taxes and rules and regulations and harassment from them, who needs the harassment from your own employees whom you are paying a salary and providing them a livelihood.

Lets do a survey of union leaders and union members and ask them a simple question. Suppose if they had the money to start a new factory. Would they start it in an area where he was guaranteed his employees would form a union or would he start his factory in an area where he was guaranteed no unions and he could hire and fire, promote or demote any employee based on work performance and requirement Let the answer from this survey decide whether unions should be allowed or banned.

Now look at the other side. When you have encouraging business policies, you have more businesses coming into the areas. More business leads to more jobs; more jobs means greater demand for labour, which leads to better negotiating power for the employees. When employees earn more and more people are employed, they spend more, which means more production of products and more services are needed, which encourage new business. So it is a beneficial spiral and everybody gains.

GUIDELINES FOR UNION POLICIES

In the initial stages, while there are unions, these are guidelines of the policies that should be implemented:

v Allow only localized unions. "Localized" means that only the people working within the firm could be part of that union. An outside entity not employed by the firm could not be part of or organize a union.

v No employee of any firm could be forced to join the union. If


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any employee is threatened or forced to join the union, the state and central government should disband the union and press criminal charges against the union leaders. If the union goes on strike, the non-union members should be protected to work and, if the employer and employees cannot come to an agreement within ten working days, then the employer should have the right to start hiring new employees.

v No salary would be paid to striking union workers, while they are on strike.

v An incentive for a firm to stay non-unionized would be to have some kind of profit-sharing bonus scheme. This could be in the form of a central government mandate, whereby all firms participating in the following profit-sharing bonus scheme would not be allowed to unionize. All employees and management would share in this plan. A minimum of one percent of gross sales by law should be allotted for this profit-


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sharing plan (only for non-unionized firms). The maximum could be whatever the owners of the firm decide. This would be competitive because if the owners decide to be greedy and give out only the minimum each year and other firms gave out more, then they would lose workers to the ones that offered more. The amount allocated for this profit-sharing plan would be shared equally among all employees regardless of their position. The only criteria for an employee to qualify for the profit-sharing plan would be that he has to be employed with the firm for one year; this would be fair to employees who had worked hard in prior years.

MINIMUM WAGES

Slavery is illegal, so also force and threat should be illegal either by employer or employee. Whatever the employer and employee decide upon mutually would be legal. In other words, there should be no mandatory wage limits. Let the market dictate wages. Those who want to earn more money will educate themselves for industries that are in demand and pay a higher salary. This concept ties in with the topic of "Dying Industries, Unemployment, Tariffs and Subsidies."

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WHO PROVIDES FOR AND PROTECTS THE WORKER?

The worker must use his own skill and ingenuity in finding an employer who will pay the most for his skills. Of course, laws would be there to protect him from employer force or threat, but other than that, he must rely upon his skill and his private contract. If he is not satisfied with his wages, he should get higher education. If his skills are becoming outdated, he should get educated in areas of demand . That is part of his own financial management. He could either save some money while he is making a good wage (savings would be higher since neither savings nor interest earned would be taxed until it is consumed on a normal or luxury product) or he could keep updating or learning different skills, just as a firm would have to allocate some capital for re-investing in new machinery. If he does neither, then he can start at the bottom in some new industry as an apprentice when his skills are outdated. Everybody would have to work for himself. There would be no direct redistribution of wealth, i.e., welfare, unemployment, social security, or subsidies for strong lobbies except for education and handicapped people. This brings us to our next topic.

CREATED UNEQUAL

There is an old Indian proverb, "All fingers are not made equal." Since you cant make all the fingers grow to the same height, the only way to make them of equal height would be to chop the longer ones off to make them all into equal height. This would leave you with only a thumb. Even though the thumb is one of the most useful finger, it would be almost useless on its own. The philosophy of the proverb is that God did not create or meant everything in life to be equal. Everything and everybody is different colour, height, size, looks, strength, intelligence, personality differences, so no two people on earth are the same. Even twins are different. There are countless leaves on this planet but no two are


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exactly alike. Everybody may not have the motivation to

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UNIONS

become a millionaire. So government has no business to make every body equal. P/C should create a level playing field and give equal opportunity for everyone to prosper in life.

Life would not be interesting if everybody on this planet looked exactly alike. So also no government can bring financial equality at any cost. Every person is not willing to make the necessary sacrifices to achieve higher financial levels. But there is also another proverb, "Water seeks its own level," so if you leave the individuals alone without government subsidies and restrictions, they will do their best to come up in life or to the level they are comfortable with. Some of them may choose not to, and government should respect their will. The policies in this book will give opportunities for everyone who wants to succeed and come up in life.


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Let every individual have his own freedom of choice, of what and where he wants to be. Government should have no role in making everybody's life equal, or planning and directing everyone's life. However, the government should set up a program whereby the physically or mentally handicapped who cannot make a living on their own could get some kind of government help and whereby those seeking education could attain it more swiftly than they would if they had to finance themselves. (explained under education).

WELFARE STATE

Within the scope of these policies, there would be no government welfare program, except direct help to handicapped people and to those seeking education (see chapter on "Education").

Most developed nations have several welfare programs like unemployment, medical benefits, social security, retirement, etc. Here again people don't have a choice, they are forced to pay into a system whether they like it or not and whether they can afford it or not. As we know that most services provided by the government cost double or more. It would be much better if each individual bought these same services directly from the private sector. Also encourage every individual to invest 10% of his salary in his own

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retirement plan. It could be in the form of a life insurance plan, or mutual fund or saving account or whatever an individual chooses. It is not fair that the government channels people's monies into their projects by giving these projects tax benefits. Let these projects attract their own funds on their own merits and not on tax advantages. Let them compete with other private investments, only then will we know the true cost of each project that the government spends on.

The governments of nations that have welfare programs should give people in the work force a choice of either continuing to pay into these programs and receiving the benefits or stopping their contributions and receiving no benefits. Most people would stop paying into the welfare system. Those who receive more than what they put into it and those who are close to retiring would choose to continue with the program.

Most people who have ten or more years left before retiring would find that, they would still be better off investing their money directly in the private sector. At retirement they would get better returns than what the government could have given them.

WHO WILL PROTECT THE CONSUMER?

The answer is: the consumer himself. Critics would say that consumers do not have enough knowledge to know all the products on the market. Yet life is a process of trial and error. Also, a company, in an effort to protect its own brand name, would try to keep the consumer satisfied. Consumers should buy products that are money-back guaranteed or with repair/replacement warranty or that have a good name. Companies that produce counterfeit products should face the strictest penalties and also criminal charges, because in essence


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they are stealing a brand name, which the originator may have spent a lot of money and time to develop. These counterfeiters are cutting into the profits of the reputable firm (see "Patents"). They are also stealing from the consumer, because they are not giving the consumer the product he thinks he is buying.Therefore, consumer fraud should be a criminal offence and be punished by monetary fines

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UNIONS


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payable to the harmed as well as the culprits should be publicly flogged,no jail sentense. If people buy a cheap product, then that's the chance they are taking, to save some money. If they are dissatisfied, they will report to the news media, tell their friends and so on and the company will not stay in business very long. When buying a new product from a new company buy a small quantity, once you like the quality then buy more.

What if a consumer gets physically hurt by a product? If it is just one consumer, then it probably could be the consumer's negligence and that can be decided by a court. But if many people have been harmed by the same product, then it could be the manufacturer's fault and he should discontinue the product and pay for the damages. (Penalty may include closing down business and prosecution for criminal charges, if the deed has been done maliciously.)

What if a manufacturer pollutes the environment, water, etc.? Licensing laws would take care of the hazard industries. If they are not abiding by the law, then there should be stiff penalties; if it keeps recurring, the government should shut down the plant. As far as possible, it would be better to have those products imported from countries that have the technology to take care of the hazards. The licensing of those industries should be very strict. However, nonhazard industries would just need to register with the state; no license would be required for them (see "Production Licensing Laws").

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CHAPTER 10

GOVERNMENT SPENDING

I would like you to notice that this is the smallest chapter in the book. Thats exactly how I would like our Governments spending to be "as small as possible". The government should have an overall development plan for infrastructre and use the guideline in the chapter of Privatization to get the infrastructure made to the developed world standards. Our own companies should be given preferential treatment in getting the contracts, they can have foreign consultants.

Money spent by the government is the least effective use of money because of the inherent inefficiencies and corruption in most government systems. The officials spending the money do not have respect or accountability for the public money because it is not their hard-earned money. Easy come, easy go; directly or indirectly into the pockets of the bureaucrats, politicians and beneficiaries.

There may be many bureaucrats, politicians and


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beneficiaries that may be honest and would like to stay honest but the system has deteriorated to such levels that even an honest person has to be corrrupt in order to survive. With the right policies in place I am sure many of these honest people will come out in the open and show their true self. You may have heard the saying that "one rotten apple spoils many", among the above three groups you decide how many rotten apples there may be for our country to be in this situation today.

Every government talks about reducing government spending but in reality most of them seem to be doing just the opposite. Every bureaucratic agency, lobbying group, and politician feels that their cause is the most important and needed in the system. In fact, each of them feel they need to increase their own spending

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GOVERNMENT SPENDING


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and cut the spending done by the other agencies. The result is that most of them get an increase in their spending and we have an ever-increasing budget deficit and national debt.

In order to effectively cut government spending, the following policies should be implemented:

v Freeze hiring new employees in all government agencies, except essential services. If any of these essential service agencies needs new employees, they should give preference to the employees from the government agencies that may have excess employees and are on the lay-off list.

v Every elected politician should take a ten percent pay cut in salary for the next five years. Furthermore their salaries at that point should be frozen for five years i.e. no salary increases.

v Freeze the budget of all government agencies to existing levels and/or have a steady five percent reduction in their budgets each year. Some of the semi-essential services, like the Environmental Protection Agency and the Food and Drug Administration, should be able to raise 75% or more of their expenses by the fines and fees they would collect. If they cannot collect that much in fines and fees it should be a signal to the bureaucratic agency to lay off some people, or to take pay cuts, or to apprehend more culprits. If, after due process, they don't catch enough people breaking the laws that means there are lesser people breaking the law then it is time to lay off some of the staff. It is not fair to spend taxpayers' money on services when the demand for them has decreased.

v Streamline the functions of the government agencies and eliminate unnecessary paper work and red tape. A cost-benefit analysis of all government agencies should be done(except essential services). If the cost far exceeds the benefit derived from that agency, then it should be shut down and its employees should be given the chance to be absorbed in the essential service agencies, if they are needed. Again, they should be hired not on seniority but on job performance and qualifications


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v Base all promotions and demotions and lay-offs in government services on an individual's job performance. The traditional way of promoting employees based on seniority (number of years

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in service) is mainly the reason for the inefficiencies cultivated in government agencies. Lazy employees with below-standard production should be fired from their jobs and the high producers promoted. Top management should also be treated the same way. This would attract hard-working, productive people to compete for government jobs. Some of the agencies that have the power to collect fines from people who don't comply with the law (e.g., tax collecting agency, police, Environmental Protection Agency) should credit a certain percentage of the fine collected, after due process, to the agent or officer who apprehended the culprit.

Since incentive makes people work harder, there


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should be an incentive system set up for every employee of the government. The traditional method of a secure job for government employees, until they retire, should be done away with. They should have to work hard and smart to keep their jobs, just as people in the private sector. It is not fair that hard-earned taxpayers' money be used to pay for cushy jobs of government employees that are secured until they retire even though they hardly do any productive work.

By implementing the above policies, we would at least be able to hold government spending to a constant amount, if not actually reduce spending. Even if we could maintain a constant amount of spending, we would in reality be reducing spending because as the rest of the economy grows, the percentage of government spending as a total of GNP will actually be smaller each year. This is a step in the right direction. The faster these steps are taken, the better off we will be as individuals and as a nation.

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CHAPTER 11

INFLATION

Money is an essential commodity, since it is the cheapest means of transacting business, especially in today's world, where huge amounts of business are transacted each day. In the foreign exchange market alone, hundreds of billions of dollars are transacted each day, and there are many other large markets such as commodities, metals, oil, etc. The total amount of money transacted on this planet each day runs into trillions of dollars.

In the old days, before money came about, barter was used for transacting business. This medium was replaced by money since the cost of transacting business became too high. Money took on many different forms before it came to what is called today "paper currency" money.

Every kind of money is prone to inflation. Inflation occurs mainly when the quantity of money supply is increased without a similar increase in quantity of products and services provided in the economy. So inflation is not a new phenomenon. It has been with us ever since the concept of money has come about. Politicians have always found different excuses for inflation in the economy. But the most important cause of inflation is the sharp increase in the growth rate of the money supply, which is much greater than the growth rate of products and services produced by the economy.

If the money supply is increased roughly in proportion to the increase in products and services in the economy, then you will have fairly stable price overall. The new C-S Tax system would be able to keep a fairly good account of the increase in GNP in the economy (unlike the present intrusive tax system, which has a high percentage of extra cost built into all products and


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services). This would help to control the money supply in the

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right proportions there by keeping inflation to a minimum. Prices of certain products and services may move up if there is a sudden and sustained increase in demand or sudden and sustained shortage of supply. Prices will fall if there is a sudden and sustained decrease in demand or sustained increase in supply. Price changes also depend on the availability of substitutes for these products and services. If there are no substitutes, then prices will react more dramatically than if there are substitutes.

If the supply of money remains constant and the economy keeps growing, then prices steadily fall and "deflation" occurs. Deflation occurs even if the growth rate of money supply is slower than the growth rate of the products and services produced in an economy. In the past 50 years most nations have had huge amounts of


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inflation and the money has lost purchasing power from 10- to over 100 fold. For example, in some countries a loaf of bread now costs over a 100 times more than it did 50 years ago. In order to give a reasonable value to currency, the money supply must be kept constant or increased at the same pace than the growth of the economy.

Now than we know the primary reason for inflation, let us analyze what effects it has on the general economy, and on you and me. Why do politicians choose to perpetuate inflation? How can inflation be curbed permanently?

EFFECTS OF INFLATION

Inflation, if not checked in time (and at least slowed down if not reversed), will have a snowball effect. It keeps growing and leads into hyperinflation, which spells disaster for the whole economy. There have been many examples of Hyperinflation throughout history (e.g., Germany, Russia, Chile, and Argentina), Today most countries have realized the problem of high inflation and are trying their best to control it. Imagine what the people have to go through if, every year, prices are doubled, tripled, or more:

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INFLATION

1. Inflation debases the whole economy.

2. Inflation drives people to make unwise investment decisions. Inflation gives the illusion that you are gaining 100% in an investment but within that same time period, if the prices of everything have gone up 150%, then you have actually incurred a loss of 50%. Since the prices of everything do not go up evenly, it is difficult to make sound business decisions. It gives some businesses unfair advantage and disadvantages others.

3. Inflation raises your tax bracket without you voting for it or without the politicians having to fight for it, which may have cost them votes and financial support in future. With high inflation prices of everything goes up and so do peoples salaries and incomes. This pushes them into a higher income tax slab.

4. Inflation redistributes income from creditors to debtors. Debtors will pay creditors the same amount of money plus the agreed interest. But this amount of money will at a later date buy fewer products and services, because the money has been devalued or lost purchasing power. So in effect the creditors will have received less money than what he originally loaned out.

5. It raises the interest rate and slows the growth of the economy.

WHY DO POLITICIANS CHOOSE TO

PERPETUATE INFLATION?

Government are constantly in need of more money for their ever increasing need to fulfill their own cause, as will be explained in the section of "The Iron Triangle". Since governments have constantly increasing budgets, they need to increase their revenues. They can do this in three ways: 1. Borrow a larger amount from the free


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market each year; 2. Increase taxes to businesses and individuals; 3. Increase the quantity of money supply. Let's analyze the implications of each of these alternatives.

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1. Borrowing larger amounts from the free market leaves smaller amounts available to the private sector. Governments and businesses are competing for the same funds, plus governments have the unfair advantage of borrowing by giving the lenders a tax free incentive on the interest on money loaned or not charging capital gains tax on sale of property if you invest the total amount in certain government funds for a certain period of time ( with income tax abolished they would not be able to avail of this unfair advantage) and since government are not fiscally responsible, they will continue borrowing more money and leaving smaller amounts for the private sector. This lower quantity of money supply puts an upward pressure on the price of borrowing money, which is higher interest rate. This in


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turn increases the cost of doing business which leads to a larger number of business failures, fewer new businesses being started, and existing businesses postponing expansion plans. At such times businesses tend to cut labor costs and raise the prices of their products in order to make a decent profit. This leads to higher unemployment, inflation, and decreased purchasing by consumers and businesses. The whole negative growth cycle picks up momentum.

Private individuals will also borrow less money at the higher interest rate and will spend less. Producers will have to slow down production in response to reduced buying by consumers. This will lead to more layoffs, which leads to even less buying because people will conserve whatever they can during bad times. This whole process of the government borrowing greater amounts of money leads to a recession. This makes the politician look incompetent, not a very desirable image for his career.

Some critics say that higher borrowing and spending by government leads to higher employment and higher spending by the employment people, which leads to a higher consumption of products and services, which is good for business and the economy. This may sound good, but there is a fallacy in the reasoning. Government does not produce products and services at competitive prices that are demanded by the economy (now they have slowly started moving in the right direction, but it is still too little-too late in the game. What were they doing all these years). So it wastes money (very efficiently) on un-needed

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INFLATION

projects, which will almost never pay back for themselves, let alone make a decent profit.

It spends money on the bureaucratic (dis) service agencies, which are constantly growing in size. The favorite is defense spending. Government spends huge quantities of money to buy weapons and bombs. This money is tied up for non-productive use for long periods. The only productive purpose that bombs and weapons can be used for is the destruction of life and property. So the government uses borrowed money for all the wrong reasons. The same money could be used by the private sector to competitively provide products and services needed by local and world economies. Competition of projects where money is invested is a good check to inflation. At east completed projects will benefit some people so even if there is no return on investment, there will be some satisfaction to the people using and benefiting from the project.

2. Raising taxes has the same effect as borrowing larger amounts from the private sector because in essence higher taxes takes more money away from the private sector and keeps more money in the hands of the government to waste. In addition, higher taxes are a


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disincentive, they make people less productive. Why would anybody want to work harder and earn more money so that the government could take away a larger portion of his income? Higher taxes make people want to avoid taxes, even to the point of cheating. Higher taxes have been proven to cause a slowdown in economic growth every time, yet some politicians choose to raise taxes so they can fulfill their promises to the people who voted them into power, no matter what the cost to the rest of the people. But increasing taxes to raise greater amounts of money from businesses and people is detrimental to the politician's career. Politicians could lose a lot of votes from people who do not like to give away their hard-earned money to the government. This includes most of us. Businesses that do not like higher taxes would not be too willing to support these politicians financially in their next election campaign. Smart politicians who are not ready to retire will avoid this method.

3. The easiest alternative for promoting higher spending is to increase the quantity of money, or in simple words print more money. This is a highly desirable alternative for the politicians, because it allows them to increase government spending without borrowing and

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having the worry of repaying back, this method provides money for their causes without having to vote for tax increases or loose precious financial support and votes.

This looks like the best alternative since nobody is having to give up anything in order to get something. The only side effect of this method is inflation, which in its own way is actually desirable to the government because it raises the taxes without a fight and, since government is the biggest debtor, it wins in that process too. It gives devalued money to its creditors, the people. In fact, the most prominent cause of inflation is the rapid growth rate of money supply, far above the growth of the economy.

HOW TO CURB INFLATION PERMANENTLY

Most of the policies outlined in this book are useful in curbing inflation. Here are some important points:

1. Having a monetary policy with a steady growth rate of money supply equal to or less than the previous years average GNP. This alone would keep the inflation rate fairly low. With the C-S tax system this will have very small margin of error.

2. Reduce government spending to a minimum; let the private sector take care of most or all of the products and services needed in the economy.

3. Have an open market, local and international. Do not have any kind of trade restraints, tariffs, or quotas, or charge them only to the tune of what they are charging us to export products to their country. With the FETA countries the above should not be a problem at all.

4. Do not subsidize anything except education and handicapped people. The higher prices would be a signal to the producers to be more competitive or consumers will find a substitute product, or use lesser quantities of


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higher-priced products.

In order to permanently curb inflation, the above four points should be incorporated into the constitution so that politicians would not have the power to create problems for which somebody else has to pay.

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CHAPTER 12

PATENTS

Patent laws came about to protect the inventor's property rights over his inventions. In other words, patent laws (try to) guarantee that the inventor will be the only one to have the legal right to either produce the invention or sell the production of the invention in the form of a license. Patent laws do not dictate that the invention has to be produced by the inventor or if the inventor has sold the patent to somebody else, even if it were for the benefit of all mankind. Herein lies a big disadvantage in the patent laws.


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There are many inventors that may not have the capital to produce the product himself. The inventor may be too proud to sell his invention, or if he sells it to some big industrialist then he may be concerned that the industrialist will buy his invention and never produce it, because the new product may outdate all his existing plants, equipment, and investment if this new product came on the market. So even though the new product may benefit the nation and mankind as a whole, it never reaches the market.

Another characteristic of patent laws is that the inventor can limit the supply of his product and make huge profit margins for several years, because he has no competition until his patent rights expire. Is that fair to the consumer? No!

On the other hand, if there were no patent laws at all, then many of the high-cost inventions (like satellites, computers, and robotics) would probably not come about easily, because big firms that have the capital resources to develop these inventions would not undertake these projects if they were not guaranteed property rights under the patent laws. For example, would a farmer plant and nourish fruit trees if anybody could come and pluck the fruits away without compensating him for his time, effort and investment? Naturally not!

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Unprotected property rights would lead to a drastic drop in production, especially of new products. A much smaller percentage of capital would be spent on inventing new and expensive products because the incentive would not be there.

So in one case, with the patent laws the consumer gets stuck with the high cost of the product. In the other case without patent laws the inventor may get stuck with the high cost of research and development and not be able to regain his investment and earn a decent rate of return, because another firm can copy his product and produce it for a fraction of the cost, not having spent the time and money on the research. Here is the solution by which the consumer as well as the inventor would benefit.

Patent laws should be made stricter to ensure the property rights of the inventor. The patent office should have the power to be the enforcer of the patent laws. The revenue for enforcing patent laws would come from three sources:

1. The fees collected for registering the patent.

2. Penalties collected from patent infringing firms. If a firm infringes on the patent rights of another, there should be a heavy penalty: (a) part of the penalty should go to correcting the wrong that was done to the patent-holding firm, and (b) the remainder should go to the patent office as revenue. Think of it as a charge for protecting the property rights of the patent holder. The penalty to the infringing party should always be at least enough to cover the above two expenses.

3. The Patent holder should be made to pay one percent of his of his turnover on the sale of his patented product to the patent office. Think of this as a license fee in which the patent holder pays only if he is selling the patented product.


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In order for the general public to benefit from the patent, the patent holder can manufacture the product himself but if any other firm wants to produce his patented product then the patent holder must grant any and all firms to produce the product under his patent license. This would ensure that the product would come in the market at a reasonable price. The patent holder should get a fixed percentage of the gross sales from the licensing of his

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PATENTS


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patentholder (licensor) and the other firm wanting to produce the product (licensee). The licensor could not charge different percentages from different licensees for the same product, as this would put the ones with the higher licensing fee at a disadvantage to compete. However, the licensor should have the right to reduce or increase the fees to all of his licensees at the same time. A maximum of 10% license fee on turnover of the licensee sale of the patented product should be allowed. The licensee would also pay one percent of his turnover to the patent office since he is also benefiting from the patent offices services.

This type of patent structure would encourage an organization of government, with a potential of making profits. It would provide a service to the small inventor and to all patentholders, as well as a means of seeing that the consumer gets the product at a competitive price.

The nation as a whole would also benefit, new, efficient products would be allowed to come on the market easily. It would also allow foreign inventors, who may not have much opportunity in their own countries, to come here and register the product, manufacture and market it.

Patent laws should be made stricter to ensure the property rights of the inventor. The patent office should have the power to be the enforcer of the patent laws.

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CHAPTER 13

DYING INDUSTRIES, UNEMPLOYMENT,

TARIFFS, AND SUBSIDIES

As mentioned earlier, nothing under this system should be subsidized, except handicapped people and education. So my answer to dying industries is to let them die a natural death. It is just not fair to new growing industries to be taxed heavier, so that a dying industry can be subsidized to live longer. I believe industries have a life cycle in an economy, just as a product has a life cycle in an industry; when new products come, the older products may lose their utility value to the consumer, so prices of the less desirable product have to keep falling in order to make it appealing. This can continue to the point where consumers may not want to buy the product at any price—the consumer may have to be paid in the form of a bonus to get rid of the less desirable product. An example, the producer of an undesirable product agrees that he will give the purchaser a 25% discount if he buys one of the old products for every new product he buys. This he can do if he is manufacturing both the products, but no manufacturer wants to subsidize another manufacturer's products. So why should one industry be


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made to subsidize another industry's product?

PRODUCING JOBS IN DYING INDUSTRIES BY

TARIFFS AND SUBSIDIES

Taxing the new industry to subsidize an old one is making the new industry grow at a slower pace, hence creating new jobs at a slower pace at the cost of maintaining the jobs of an old industry (or product), which is losing its demand or is no longer competitive

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DYING INDUSTRIES, UNEMPLOYMENT, TARIFFS, AND SUBSIDIES


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with producers from other nations. This may sound product. The exact percentage would be agreed upon by the attractive to politicians interested in votes, in that they look as if they are doing something humane.

The politicians would be doing a humane thing if the following were true: 1. The consumer was not important at all. 2. Jobs saved in the dying industry were far greater than the jobs lost in the new industry. 3. We had a closed economy to protect our jobs. Since none of these criteria is true, the politician would be creating a much bigger problem than the one he is trying to solve. Let's consider the example of the horse-buggy industry since it is completely dead in most countries and almost out in most third-world nations too.

1. The consumer is the most important of all because he represents all human beings, including the ones that may be laid off from a dying industry. Is it fair that all consumers be taxed at a higher rate so that the government can use this money to keep a few hundred people employed? In other words, would it be fair if millions of consumers would have to send in some money each month so that a few hundred or a few thousand people could stay employed and produce thousands of horse buggies that nobody wanted to buy? Would it be fair that millions of consumers be taxed at a higher rate so that the government could subsidize the price of a horse buggy by half so that they could export these horse buggies to some third-world nation that may or may not need them?

Yes, the politicians have saved a few hundred jobs, but at what cost? The same money that the consumers gave up to employ people in the horse-buggy industry and more money they gave up so that somebody else could buy it for half of what it cost to produce could have been used by the consumer to buy something that he could use for himself, either to be more productive and earn a higher income or something just for pleasure or as an investment in his future. Spending money for products and services one desires would create many more jobs than the ones that were saved in the dying industry.

By taxing millions of consumers at a higher rate and depriving them of their money, the politicians are violating the consumers' property rights. It is the same as


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taking your money

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and giving it to somebody else. Suppose you lived in a town with a population of 500 people and there were only one government owned monopoly store that sold everything to all the consumers of the town. On a typical day 50 people go shopping. You buy products worth Rs500, and some people buy products worth Rs10,000. The store's policy is that, at the end of the day, they add the total amount of products sold and send a bill to all 500 citizens depending on their income not on what they have purchased. Do you think it is fair that you receive a bill for Rs3000 for the Rs500 item you purchased while another person receives a Rs 1000 bill for the Rs 10,000 worth of products he purchased, because his income is lower?

The rationale here is that you are a hard-working citizen and earn a higher income so you are forced to subsidize the lower-income person. But the lower-income person


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now has no incentive to work harder and come up in life because somebody else is paying his bill. On a much larger scale this is how government subsidizes people and industries: It takes money from a larger population and gives to a few so they can lead easy lives thereby reducing the incentive for them to work hard and come up in life. And the person who is already working harder will also feel cheated out of his income, he will also feel why should I work hard if somebody else is going to spend my money. So both parties loose and the government also looses.

2. Are the jobs saved in the dying industry far greater than the ones lost in the new industry because of the subsidies? Going back to our example of horse buggies, they can either be sold at half price to a third-world nation or be stored in warehouses until they rot because nobody wants to buy them at any price.

When they are sold at half price, it is like giving away half of our taxpayers' money to the other nation. This money could have been used by our consumers to buy products or services provided by our own economy, or foreign products and services. This in turn would have employed more people in their economy. Even if our consumers had bought products and services from another economy, this would have had more people employed in their economy. These employed people in the foreign countrywould have money to buy products and services from of their own economy or from us or

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some other country and the employment cycle would have remained stable in all the trading countries.

Since we undercut their market by supplying the horse buggies at half price, the people in their horse-buggy industries are unemployed. These unemployed now spend less on buying products and services from their economy as well as others and ours. This has triggered the unemployment cycle in their economy as well as ours and others. To sum it all up, by trying to save a few jobs in a dying industry the politicians have lost a lot more jobs in our economy as well as others.

Now let's see what happens if we decide not to spoil the above explained employment cycle and instead just store the buggies in the warehouse until they rot, because nobody here wants to buy them and we don't want to hurt the other economy by selling them the buggies at half price. The people in their buggy industry will still be employed and their money will still be spent to keep part of our and other economies going. But this is even a worse case than the previous ones because now our consumers have paid taxes to keep a few of our people employed in the buggy industry and the product they


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have produced will not even fetch half of its value!

The money for the whole cost of the buggy is lost forever. Nobody in our economy or other economies will ever get that money to spend again because it is locked in the warehouse in the form of horse buggies to rot. Since nobody has ever received the money from those unsold horse buggies to spend, a lot of products and services desired by the taxed consumers have remained unsold. This creates a lot of unemployment in several industries here and in other countries. The only small positive gain is that money was used to employ a few people to produce the horse buggy once and they would buy some products and services, but that is only the labour part of the value of the horse buggy that is being recycled. The major part of the money is locked in the warehouse to rot. (doesn't this sound similar to making bombs, money wasted forever)

So here again, many more jobs have been lost than saved. This same analogy can be applied to the modern world when

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governments say they are creating a lot of jobs in the defense industry when they make bombs, warplanes, and ships. It is true they have created some jobs, and part of the money that goes into the labour cost is re-circulated in the economy but the major part which is the hardware is become useless economically because the bombs are stored away for a long time, or they can be used to destroy life and property of other countries and they would do the same to us. With bombs and weapon it is money lost if you use it or not. Weapons cannot be used for any productive purpose. This is the same as money stashed away for nobody to use. No further employment is created by spending money on bombs and weapons.

The warplanes and ships are even worse. They require people, maintenance, and fuel until they are used. So here we have the cost of people and fuel, in addition to the money spent on the hardware, for unproductive purposes. All the money and resources spent in the so-called job-creating defense systems is money lost forever.

This money could have been very easily used by the consumers who worked hard in the first place to earn it, to make life easier for themselves. Here again politicians are wrong when they say they are creating jobs in the defense system because with the same money a lot more productive jobs could have been created in the private sector. The politicians are not doing a humane deed by saving a few jobs in the dying industries or creating new jobs in the defense (destructive) industry, just so they may look good to win votes in the future.

3. Let's analyze the "Protectionist Policies" that some politicians like to use as a tool to protect jobs indying industries in their nation. Protectionist policies call for a closed economy but they would like to maximize exports and minimize imports. Let's assume that you are only exporting and not importing at all. Even under these conditions you are losing by supporting dying industries because you are producing products that are


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no longer in demand, or those products are being produced by others at a cheaper cost.

With protectionist policies the politicians have taken away

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from new, fast-growing industries whose products are in demand by the rest of the world to produce something that is not in demand or something we cannot be competitive in. You cannot survive in business if you continue to produce something that nobody wants or that costs you twice as much. Eventually you'll have to stop because you will be losing a lot more jobs in the new industry than you are supporting in dying industries. Here again politicians are not doing anything humane.

On the other hand, by letting the old industry die a natural death, you would be giving that industry a signal


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not to hire any new workers. The layoffs that begin would give a signal to the newer employees who are younger and easier to train and change over to a growing industry. And by the time the industry were completely dead, most of the old employees would be ready to retire and the younger ones would be trained in growing industries. So the suffering from unemployment would be reduced to a minimum.

In some cases it may be beneficial to kill a dying industry so that resources may be directed to high-growth industries faster, which could yield a much higher return than dying ones. In such a case, the older employees could retire early and be compensated accordingly. The younger employees could also be compensated and retrained to work in other growth industries. This process would be less expensive than trying to keep dying industries alive.

Tariffs or quotas on imports, to protect either an old or new industry, have an effect on unemployment similar to that of taxing or subsidizing. There are some additional effects of tariffs:

1. If a country cannot export to you, it will not want to import from you either. It would rather trade with another country where there are no (or lesser) tariffs, to keep the balance of payments straight.

2. By not trading freely, a country is not using its comparative and absolute advantage to the fullest. This in turn reduces its standard of living, compared to what it could have achieved if it had complete free-trading policies as explained under "International Trade and Import-Export Policies."

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CHAPTER 14

EDUCATION

Should education be subsidized in one form or another or not at all? To arrive at an answer, one must analyze the concept of education and the relationship it has to an individual and to the general economy.

Education helps an individual and a nation prosper economically and socially. These two go hand in hand. A better-educated person will be more productive and is likely to prosper financially. A financially prosperous person can have a better lifestyle for himself and his family. This will keep them busy enjoying life, touring places, purchasing better material things for family and himself, this automatically translates to improvement in the nations economy. A financially sound and satisfied family is less likely to join in demonstration and riots to demand more from the government. So as more families are prosperous there is more social harmony. Studies show that on an average a college graduate earns 50% or more in his lifetime than a high school student who doesn't study further. The other social benefit is that the


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individual can be a happier person if he feels he is useful and productive to society's needs, which translates to the larger population being productive and useful. This is the best means of achieving social rest and peace in a nation.

The difficult part about education is that it is such a long-term and expensive investment that, if not subsidized, it would be out of reach of a majority of the population in India. Or the same level of education would be achieved over a much longer period of time. For example, if today an average subsidized student gets a degree at the age of 25, without any subsidy it would be at age 35 to 40. Because the student would have to pay a very high fee for his education, he would have to work while going to college and very slowly gain his education.

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Take the example of two students who are the same age, studying in the same field, pursuing the same career, and are paid according to the level of their education throughout the first 40 years of their lives. Their incomes will vary depending on their job performance and which company they worked for. But generally it would start at a higher level than the student without the college degree. Suppose each went a difference route in life. One of them, Student A, got a loan for the amount of money it would take him to get a degree without working and used all his time and resources to get his degree within 4 years. He then started working, perhaps, by the age of 20. Now he has 20 straight years to work and pay off the loan. Student B decided to start a full time job and study part time throughout his 24 years. He did not get a loan and he worked straight after high school and earned an income for 24 years. But since he was paid according to his level of education, he was paid a lower salary than student A throughout his 20 years. Suppose he graduates after 10 years. Assuming a zero percent inflation, Student A could be much further ahead financially, i.e., earn more money than Student B.

Student A has a higher income from the age of 20, and it will now take him approximately five years to pay off the loan, if he spends only on the necessities of life. After that, he can either save a major part of his income or consume it for necessities and luxuries. Higher savings is a benefit for the economy; higher consumption is also a benefit, as well as a source of tax to further the economy. Therefore, some of this extra tax that a higher educated and more productive individual would give to the economy should be used to subsidized schools. When the general population has a higher level of education it will be more productive and stable.

HOW DO YOU SUBSIDIZE EDUCATION?

The best form of indirect subsidy that can be provided to the consumer is to have a competitive free market in the

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education system. Let the schools and colleges be run as profit-making business organizations and not be taxed at all. This will encourage more businesses to enter the education system. With competition among the education providing businesses there will be better facilities and better staff for the students. Along with better education, competition will keep the cost to the student lower.

The words "schools" and "education system" used here mean the same thing; they include elementary, intermediate, high, colleges, polytechnics, trade, business, arts, and any other type of education that a society offers. The words "teacher," "professor," and "instructor" are used interchangeably.

When you have competition between schools, the cost of providing education will be relatively lower, depending on the supply of and demand for it. The quality will improve, as schools will want to build a good reputation in order to attract more students. Undesirable and inefficient schools would either shut down or be bought out by the better school companies.


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One form of subsidy would be for the government to pay a bonus of 50% on the instructor's base salary if the following conditions are met: Students should be allowed to select their own teachers with whom they would like to enroll with. There must be a certain number of enrolled students who complete the course with a certain standard of grade. The exams would be set and evaluated by different instructors to avoid partiality. The instructor should have the required qualifications and teaching experience in order to get the 50% bonus. The instructor should be current in his continuing education so that his knowledge and teaching skills are updated regularly.

All of the above standards and criteria would be set by the Education Board which would consist of retired as well as active professors who would have a minimum of about 20 years of teaching experience. The members of the Education Board would serve voluntarily (no salary) for a maximum period of five years. This would ensure a turnover of board members so that the decision-making process would not be biased and would be constantly

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EDUCATION

rejuvenated. In order to maintain continuity in the decision making process, 20% of the board members who had served their five year term would be on their way out and each year the board would have approximately 20% new members. With this process you would have a corruption-free Education Board that would work in the true interest of the society.

By directly subsidizing the instructors' salaries through the government bonus program, schools would be able to attract good professional teachers who would otherwise have worked in another industry to earn a higher salary. Instructors who were not good enough to qualify for the government bonus program would move on to other professions. Schools would hire only the finest teachers in order to keep up their reputations and to minimize their costs (good instructors would get bonuses, so schools would not have to pay them less out of their pockets. This would bring their costs down and with competition they would have to pass the lower cost to the students). New, inexperienced teachers would have to work harder to build their own reputations in order to get enough students enrolled to qualify for the bonus.

Let the students decide which teachers class they want to be in.Logic dictates that all students would want to sign up for the better instructor's class. I recommend the Education Board set a limit on the number of students that a qualified instructor on bonus can enroll. Students with higher grades should be given enrollment preference. This would give students an incentive to study harder and get better grades. This process would ensure that the new teachers have some students enrolling for their classes to build their experience and reputation.

Professional teachers who have confidence in becoming successful would take the trouble to go through the initial hardships to qualify for the bonuses and make decent futures for themselves, just as doctors have to work hard through college and work long hours through


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their internship programs for very low or no pay, but once all of that is completed their futures are bright, in most cases, and brighter for some doctors who specialize and reach the top.

In order to keep the really good instructors in the education system, government should give them incremental subsidies

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of 50%, 75% and 100% bonuses. For example, if an instructor has qualified for five years on the 50% bonus program, then he should be moved up to the 75% bonus program. After five years at the 75% level, he should be increased to the 100% bonus level. To safeguard the bonus subsidy to the instructor, there should be a law that that school cannot reduce the base salary of the instructor once he starts qualifying for the bonus program. The base salary may be kept the same or increased, if market conditions demand it. For example, if an instructor has a base salary of Rs20,000 per month when he starts off, once he qualifies for the 50% bonus program his salary would be Rs30,000 per month. Eventually this instructor would have the opportunity of making a total of Rs40,000 a month on the 100% bonus scheme even if his base salary were never increased.

Since the school system would be run on a free-market competitive basis, as demand for the instructors increases, other schools would be willing to pay a higher base salary to attract good instructors. Schools that have good instructors would increase the base salary of these instructors to make it attractive enough for them to stay. When the supply of education catches up with the demand and as the demand for instructors decreases, the new instructors entering the system would be offered a lower base salary; this would be a signal to the new instructors and the not-so-good ones already in the teaching system to look for jobs elsewhere in other industries. By this process the best professional teachers would remain in the education system and an abundant supply of education would ensure lower cost and better quality to the students.

Subsidizing the student directly by giving him grants or vouchers so that he can use the grant money or vouchers to pay for his fees is not very fair or equitable because not every student has equal access to that money, verification of income can be a problem and it leaves scope for corruption with the officers who deliver these grants. It's true that the lower-income people need such grants more than other. But just providing money for the lower-income people does not mean that the real needy will get the maximum advantage of the funds made available from the taxpayers money.

There will always be a lot more students than teachers.


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EDUCATION

Subsidizing the students means a lot more paperwork, so you need more people to run this kind of subsidy and it becomes less cost effective because a lot of money is drained for the administration and processing of a student subsidy. Also, the students receiving the subsidy do not really appreciate it since it is free of cost to them therefore students will waste public money. They will take classes, which are enjoyable and easy because somebody else is paying for it. It is not fair that hard-earned taxpayers' money be used to pay for students who do not make the best use of it.

A better way of subsidizing the lower-income student is to encourage the schools and colleges enroll 50% of students on loan tuition fees basis to the promising lower-income students. The student would never receive any cash in hand; the loan from the school/college would be used directly to pay his fees. Upon graduation these students would be given a conditional degree of


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completion. When these students pay off their tuition fees with interest, then they would be awarded the degree. Since it would be a loan the schools would have the right to attach the wages of the student until his loan is paid off. With this process only those lower-income students who are serious about getting an education would qualify for and receive such loans from schools.

This method of subsidizing education would be fair and equitable. Everybody would have equal access to it. It would subsidize education for every individual, regardless of his financial status. It would provide an opportunity for lower-income people to educate themselves and come up in life if they choose to do so. Since it would not be just a handout to the lower-income people, they would learn to appreciate it and feel proud of their accomplishments.

Education is the basis for the advancement, economic well-being, and stability of a society. The higher the general level of education in a society, the better off everybody will be. Considering all the advantages of education, high school teachers and college professors should be given the opportunity to earn incomes similar to those of doctors, lawyers, and engineers, so that the best teachers would have an incentive to enter and stay in the educational system.

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HANDICAPPED

It is a moral issue whether we should subsidize the handicapped. People do not choose to be handicapped. I believe that the fortunate people should help the handicapped because it could happen to anyone at any time. We just have to be careful that only the truly poor handicapped who are in need receive the help and that the rich and not-so-handicapped do not take advantage of this subsidy.

Let's first define a "truly handicapped person in need of the subsidy". First he would have to prove he is poor and needs the money for survival. A rich handicapped person could not get this subsidy. 2. It would have to be certified by a doctor that he cannot perform any kind of work to make a living. 3.He would not have any kind of insurance or family or savings that can pay for his food and shelter and medical expense while he is unable to work. The doctor would also certify whether the person is temporarily or permanently handicapped and also state the approximate duration the handicap will last. If the handicapped person became able to work, his subsidy would stop and he would go back to work and support himself. (Optional) Maybe a temporary handicapped person should be made to pay back the money he received, after he goes back to a job.

HOW TO YOU SUBSIDIZE THE

TEMPORARILY HANDICAPPED?

Strictly from an economic point of view, subsidizing the handicapped is not justifiable because money spent on them would probably never be paid back. But some things just need to be done for fellow human beings and require no financial justification. Money should not just be handed to the handicapped so they can live a better lifestyle than the fortunate, hard-working people who


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are paying for it. Helping the handicapped is one thing; supporting grand lifestyles at other people's expense is not fair.

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EDUCATION

Here is a method whereby we can get most of the money spent on temporarily handicapped (T.H.) to be paid back. The T.H. would be given a credit card which could be used for medical purposes only, and he could withdraw a certain amount of cash per day to pay for his food, traveling, etc. All the money that the T.H. person spends would be charged to his credit card. When the T.H. person recovered and went back to any kind of work, he should be made to pay back the full amount plus the normal market interest rate on an affordable monthly basis. This would deter T.H. people from overspending on their credit cards since they would have to pay it all back with interest. These credit cards would be taken away once they start on a job.


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HOW DO YOU SUBSIDIZE THE

PERMANENTLY HANDICAPPED?

First each permanently handicapped (P.H.) person should qualify for the subsidy on the financial need basis. Since each P.H. person would require different kinds of medical treatment, the cost would be different for each person. The government would pay all the medical bills, to the doctors, hospitals and drug stores directly. Each P.H. person would be paid a certain amount for clothing food and rent and other normal living expenses. The government should encourage private organizations to set up facilities to take care of P.H. persons. The government would get three to five bids from these organizations to set up facilities to take care of P.H. persons. The government would then grant the responsibility to the most attractive bid. The government could check to make sure that certain standards were kept by these organizations. If the handicapped person were not satisfied with the care given, then he could ask the government to pay him that amount directly. He could then go and live anywhere he wanted.

The organizations should bid high enough to keep the P.H. persons satisfied, yet if they bid too high, they could lose the business to a lower bidder. If the lowest bidder is also too high, then the P.H.

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person would be tempted to get paid directly and live in a small private nursing center and still save money. Since the organizations would have to meet certain standards, they would not bid too low and lose money. So by this competitive process the price and service for the handicapped would be reasonably fair.

WHERE WILL THE SUBSIDY MONEY COME FROM?

Since the temporarily handicapped would be made to pay back the full amount with interest, this would help to reduce the cost to the public. The interest payments should be able to cover the administration cost and bad debts. Small amounts of money would have to be pumped in to keep the temporarily handicapped subsidy afloat. The PH money could come in from the C-S tax .

The major expense of subsidizing education and the permanently handicapped could come from several sources:

1. When money is received by the C-S Tax agency, a certain amount should be set aside for the subsidy before reimbursing the city, country, state, and central governments. But this would be a temporary solution, because within a decade when the C-S Tax is eradicated, this source would be cut off. An amendment could be made at that time to continue to charge 25% C-S Tax on imported items and all luxury items only. This money could be used for the subsidy.

2. An alternative would be to charge a flat amount to every individual between the ages of 30 to 60 (except the handicapped). This would be like an insurance that anyone, regardless of age, would be taken care of if they were to become permanently handicapped. Also, everyone would have access to subsidized education to


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further their goals. This alternative could work but it wouldn't be very cost effective, because a very small amount would have to be collected from a large population on a frequent basis. Therefore, the administration cost would be very high in relation to the money collected.

3. The efficient and effective alternative would be to use the increase in money supply each year directly for subsidizing education and the handicapped. Part of the increase in the money supply

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EDUCATION


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could go toward the cost of providing the road system. As mentioned in the section "How to Curb Inflation Permanently," the money supply would be equal to or less than the previous year's GNP. This new money printed each year would be spread over several interest-bearing accounts and spent as needed for the subsidy. So in this case nobody would be directly paying for the subsidy. Indirectly, the expansion of the economy would be absorbing the cost.

What better way to use the increase of money supply than for subsidizing education and the handicapped? If there were any excess money left over from the money supply (after providing for handicapped, education the road system), it should be reinvested so that there would be enough money in the years when the economy grew at a slower pace. The economy would grow at a rapid but fairly stable pace if all of the policies recommended herein were simultaneously implemented. If not all at least the first 4 chapters should be implemented.

BRICKS

This topic I have included here because in most parts of India bricks are made from the top soil. This is a big waste of our precious resource which cannot be replaced easily. We have to stop wasting this resource immediately by banning bricks to made from the top soil. Only sand, crushed stone, and cement bricks should be allowed. These materials are naturally available all over India and there is no big environmental damage by using these materials. Infact big ponds can be created in places where they are removing rocks from the ground. Hills and mountains should not be allowed to be used for this purpose. Sand is used from river beds or sea or from the desert. This is a good effect because it will make the rivers and sea a little deeper and big ponds can be created in the desert for water storage. Some kind of subsidy should be given to the manufacturers who make bricks from sand and cement.

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SAMPLE LETTER

FOR YOUR CONVENIENCE, HERE IS A LETTER

THAT YOU COULD USE AS A MODEL FOR THE ONE YOU SEND TO THE MP WHO

REPRESENTS YOU.

Dear MP :

I have read Changes Needed in Economic Policies and I agree with most [or] all of the policies recommended in the book.

I am enclosing an Order Form for the book. Please take the time to read the book. I would re-elect you if you would start introducing the policies before the next elections. If no action is taken by you I will consider that you do not agree with my position on these policies, in which case I will have to vote for someone who does.


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Thank You,

Sincerely.

Citizen of India

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To order your copy of Changes Needed in Economic Policies, fill out and mail this coupon to:

Freedom Publishers

Freedom Farms

Dahanu 401602

Please include a Demand Draft or ICICI or HDFC check for

Rs. 100 per book, payable to "Freedom Publishers" Mumbai


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clearing.

Please write clearly in bold letters.

Please send____ copies of Changes Needed in Economic Policies to:

Name ___________________________________________

Adress________________________________________________

City __________________ State ____________________

Pin _____________

ICICI or HDFC Check or demand draft from any bank for

Rs ________________ is enclosed.

Please pass a copy of this page to your friends who would like to order this book. or tell them to visit our websites at

www.ffit.in

or

www.freedompublishers.com

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Taxing people in the civilized world has been the oldest and easiest way of operating the government system. The Egyptian pharaohs did it, the Romans did it, medieval kings did it, and today practically the whole world is doing it. Throughout the centuries, taxes have always been collected by force and threats; taxing income or production has always led to slowdown in economic growth, an underground economy, corruption, and eventually a collapse in the whole system. Are we moving in the same direction?

Changes Needed in Economic Policies, by Economist Firdos J. Mubaraki, explains in very simple language how and why the intrusive taxes such as Income, Excise, Sales, Octroi, Vat should be abolished immidiately and initially replaced with one simple non-intrusive Consumer-Service Tax. By implementing all the other policies explained in this book, the government can within a decade raise enough revenues from our joint public resources to be able to run our country by collecting almost no taxes from us. The book also explains how to eradicate corruption, balance the budget, pay off the national debt, curb inflation permanently, and best of all attain true and lasting peace with all countries.

You can make a difference in the economic policies that


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govern and control our lives.After reading this book, all you have to do is write the sample letter drafted in this book to your MP and tell all your friends and relatives to read this book and they should do the same and this process should carry on till we get the policies in this book implemented.

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