Wednesday, 28 November 2012

Economics of Bahuka and Greenspan


Rejecting the advice of Milton Friedman decades ago, the US opted to follow the economics of Greenspan, making half of American families state-dependent and dysfunctional.

Any discussion on contemporary US economy will remain incomplete without reference to Alan Greenspan, who headed the US Fed for 19 years till 2006, and was revered as the ‘Money God'. In 2007, he wrote a book, The Age of Turbulence, in which he theorised that people in developing economies needed to save, but, not those in advanced economies, because they enjoy state-provided social security.

He wrote: “Despite their lower incomes, households and businesses in developing countries save a greater share of their income than do households and businesses in developed countries. Developed countries have vast financial networks that lend to consumers and businesses, most often backed collateral, enabling a significant fraction to spend beyond their current incomes. Far fewer such financial networks exist in developing nations to entice people to spend beyond their current incomes. Moreover, most developing nations are still so close to bare subsistence that households need to secure against future contingencies. They seek buffer against feared destitution, and since few of these countries have government safety nets adequate to protect against adversity, the only way for the households to do so is to set money aside. People are forced to save for a rainy day and retirement.”

It was Greenspan's theory that directed the very course of the US economy, and of the globe, for two decades, till the 2008 crisis questioned it. See how the social security programmes celebrated by Greenspan as sparing the Americans from the need to save, and enticing them to spend instead, did the US economy in.

The ever-expanding US social security schemes, theoretically framed to protect families, practically ended up breaking them, besides bankrupting public finances of US. Even as far back as 1970, the perverted effect of social security and welfare schemes on families didn't escape watchful eyes. The National Bureau of Economic Research (NBER) in the US brought out a book titled “The US Economy in transition”, in 1980.

It contained prophetic views of experts, including Milton Friedman, on US social security. Martin S. Feldstein, Professor of Economics at Harvard University, and President of NBER, wrote, in his introduction to the NBER work, that ‘welfare programmes introduced and expanded to help poor families might weaken the family structures'; that ‘in more subtle ways, government programmes that substitute the state for the family, cause behaviour that weakens the development of future population; fewer births, more unmarried individuals, more unmarried couples and more divorced parents; that medicare and medicaid introduced to help the elderly and poor might lead to an explosion in health care costs.'

Milton Friedman declared that ‘as children stopped contributing voluntarily to the support of their parents and began contributing through a system of government fiat, a serious erosion of family values became inevitable' and saw ‘social security system as a detrimental influence on social patterns'. The NBER work also pointed out how ‘family functions such as production of food, clothing and fuel and some other staple items were taken over by business firms, and responsibilities such as education, childcare, and social insurance have been assumed by the state.' What the NBER meant here is that business firms and the state had, together, robbed the families of their functions, leaving them functionless, therefore, dysfunctional.

Conceding that ‘the market system is the most efficient, and most conducive to individual freedom yet devised', NBER pointed out that the market itself ‘doesn't provide for the organisation of the society' but its ‘success during the last 200 years is attributable in good part to the existence of strong non-market institutions such as the family; also adding that the ‘decline of the family and the growth of the government will jeopardise the market system and associated social, political and cultural freedoms.'

It concluded: ‘In the long run, a healthy economy requires a healthy society.'

Each one of these warnings came true sooner than later. Here is a look at US families before the expansion of social security in 1960s and after. US homes had an average of 4.5 persons in 1930; this came down to 3.5 per home in 1950, and now to 2.6. This alone cost 88 million additional houses, valued at $16 trillion at current prices!

In 1940, the marriage rate was 24.2 per 1000; it declined to 21.2 in 1970; 19.6 in 1990; 14.4 in 2009. The divorce rate per 1000 rose from 9.2 in 1970 to 16.9 in 2008, though less than the peak of 22.6 in 1980. Between 1970 and 2008, the US marriage rate declined from 63.4 to 37.4 marriages per 1,000 unmarried women. As compared to 1960, in 2008, households with children less than 18 declined from 49 per cent to 31 per cent; children living with single parents rose from 9 per cent to 26 per cent; unwed motherhood rose from 5 per cent in 1960 to 40 per cent.

Whatever NBER had prophesied 30 years ago — less marriages, more divorces, more unmarried women, more unwed mothers, more single parent homes — has come true. While social security programmes caused the decline of families first, later, such decline in turn led to more and more social welfare spend to support the weakening families, thus feeding each other.

US families reel under debt. The home loans of households top $10 trillion. More than a third of these loans weren't incurred to buy houses. According to studies by Greenspan himself, households borrowed $3.2 trillion against the security of appreciation in their home values (called ‘home equity cashed out') during 2002 to 2007, and splurged it on consumption! Further, the 111 million US households use 1.2 billion credit cards, on which they owe $2.5 trillion. So, not just families, their finances too are broke, thanks to the financial networks of the US praised by Greenspan, having ‘enticed' and made the US families profligate.

The state-provided social security that has replaced the families and made them state-dependent is stressed and potentially bankrupt. Richard W. Fisher, President and CEO of the Federal Reserve Bank of Dallas, has estimated the present value of future social security obligations at close to $100 trillion unrepresented by assets — meaning that the government will have no money to pay them when they fall due in future.

Tailpiece: Here is the Indian equivalent of Greenspan's economics — the economics of Bahuka. Bahuka figures in the Bhagawata Purana, and was the advisor of Jarasandha, who was Kamsa's father-in-law. Kamsa, who regarded Sri Krishna as his enemy, asked Bahuka's advice on how to make his subjects state-dependent. Bahuka told him: “Open your treasury to the people. Make the people eat, drink and enjoy themselves. Bring up children to look upon parents as old and useless. That will make them laugh at those who talk of duty, love and compassion. Like well-fed cattle at the mercy of the cowherd, the people will be completely dependent on you.”

Rejecting the sage advice of the likes of Milton Friedman and Martin Feldstein, decades ago, the US opted to follow the economics of the likes of Greenspan. The result: Half of American families are state-dependent. But fortunately, Bahuka's economics, close to Greenspan's, was ignored by Indians thousands of years ago, though, of late, some Indian politicians seem influenced by Bahuka's economics.

Source :

Tuesday, 27 November 2012

Historical development of the flood regulation systems and its impact in the delta districts

The river and the flood is the common and it is a special eco-system. It even varies with the rivers depending upon its flow. The Mekong river in Cambodia forms a special eco-system. Mekong forms a biggest lake in the delta and the people cultivate rice depending upon the rise of the water levels in the lake. If the river fails the whole densely populated Mekong delta in Cambodia will fail. Likewise the Zambezi river in South central Africa forms a dry and wet type ecosystem. The river is a seasonal river flows heavily in rainy season and forms marshy eco-system. And in summer the river delta will become bone dry with patches of ponds and will look like a desert. So, the deltas were a sensitive eco-system connected with another richest and special eco-system called Mangroves in India. Delta eco-system will as fertile as the Mangroves. The classical example of mangroves in India lies over Sunderbans of West Bengal. So all these fertility comes out of the fine materials washed from the weathering mountains and the highlands in the catchment i.e. the Silt.
Silt – The Secret of the deltas
            The Silt is the nutrition for the delta bloom. Silt nourishes the riverine eco-systems and supports the higher food chain animals like Crocodiles. For example in the river Amaravathi, a tributary of Cauvery, the inland Crocodiles were still existing. The silt is the base for the inland fresh water eco-systems of rivers, ponds, lakes and even wells. The reddish or the greyish alluviums carried over from the highlands and mountains make these fresh water eco-systems very fertile. Such silt depositions in the delta is the prime source for the nutrition in the cultivable wetlands. If it is properly managed it will yield for endless generations. India is country that has been blessed with such delta throughout its east coast from Bengal to Kumari.
Silt in the case of Thanjavur delta
Thanjavur is a town and head quarters of the district located 100 kilometres away from the sea. It is located in the Cauvery river bed, where from she divides herself in to many streams before draining in to the sea. She makes Thanjavur district along with the new today’s Thiruvarur and Nagapattinam districts as a fertile triangle. The beauty of the geography of the delta is that it travels with very gentle slope of 3 feet for every 20 km. This facilitates the river Cauvery to deposits the silt more in inland rather in to sea. The nature of the district helps the silt harvesting unlike the other rivers of India including Ganges. The Silt deposition very much high in the dividing point called Kallanai (Grand Anicut), built before 1600 years. Below the anicut (dam) for few kilometers the Colonial rulers described it as the Breast of the Delta. 

The silt deposition was aided by heavy floods from July to November in both the monsoons. The flooding is the nature of that eco-system. The people and the cultivars of the eco-system have evolves along with the flood nourished by the wonderful silt. The historical fiction novel Ponniyin Selvan narrates the borders of the mighty river Cauvery in the grandeur manner. In this fertile soil one of the greatest dynasties of India have flourished and formed a greater civilization. Their mightiness and the healthiness still existing in the form of hundreds of temples. British called this land as the Fertile Crescent in their empire, giving three harvests of rice a year.  The same is the reason that the British have invested a lot in expanding the river for increasing their revenue. Such flourishment cannot be seen in any South Indian rivers except Cauvery. For everything, the name goes to the Silt of the mighty river.
Flood regulatory systems in Cauvery
            British, the colonial traders entered India with their empire on the soils of Thanjavur in the Madras presidency. As described earlier seeing the fertility of the land the hardworking people they have got an idea and have not minded in investing huge money in building the dams and Canals to expand the irrigation to increase the state’s revenue. British have seen the flood damage as the huge loss and they have started working in the delta to regulate the flood. They didn’t realize the problems until they have built few dam in the river coarse.
Cauvery -Vennar regulators and Upper Anicuts  
            The main river Cauvery divides herself before the city of Trichy in to Kollidam or Coleroon river in to the north and the river Cauvery in the south, flowing to the east remerges at the point called Kallanai (an ancient dam built of clay and stone) forming the island of Srirangam. The South stream of Cauvery again divide in to Vennar and Cauvery and travels to further east forming the fertile crescent of Thanjavur. The excess water in the Cauvery river was drained in the Kollidam through Ullar channel in the Kallanai. Unfortunately, the silting up of the river bed in the Vennar and Cauvery have diverted the maximum amount of water in to Ullar channel and to Kollidam. The Kallanai didn’t serve the purpose completely.
            Primarily in 1835, a dam called Upper Anicut was constructed with the Iron weirs in the Kollidam river before Tirchy. It lead to the huge erosion of the river bed and resulting in the deepening of the river Cauvery and causing severe floods in the delta. Subsequently, to manage this connecting the Southern bank another Upper anicut was extended in to Cauvery and the river was brought under the total control. Even after that the colonial administration were not able to control the flood through both the weirs and have constructed a siphoning channel called 150 yards calingula, below the Upper anicut before the Srirangam town, to regulate the floods in Cauvery.

            In 1851, the investment was made to construct a regulator in the Vennar-Cauvery bifurcation of Kallanai, with the Iron shutters avoiding the silt deposition. The flood regulators were constructed in the next 50 years through out the main streams of Cauvery in the delta and were managed by the Public Works Department.
Flood embankments in Coleroon
The flood control was very difficult for them even after the flood regulators and they have built a 200 miles embankment in the river Kollidam (Coleroon) to hold the excess amount of water safely in to sea, without flooding the northeastern part of the districts. The revenue of the state was depleted by the flood reliefs, which again made the state to go for further construction of the dams in the upstream of Cauvery.
Mettur and other reservoirs in Tamil Nadu
            To control these flood the British administration have decided to built the dams in the Cauvery’s catchment frontiers and have planned for Mettur, Bhavanisagar and Amaravathi  dams in Cauvery and it s tributaries. In 1934, Sir Stanley have opened the Mettur reservoir and named it as the Stanley reservoir. The other dam project in Tamil nadu was carried out during the post-independence period.
Mysore – Madras River conflict
In the midst of the Madras presidency’s dam projects, the Mysore state under Mr.Krishnaraja Wodeiyar, the Raja of Mysore state went for a dam project of holding 80 TMC in the upstream of Cauvery in 1892. The Madras presidency told about their Mettur project and went for to the Court and the Court ordered Mysore that it should get permissions from the Madras before any construction of the dams and ordered to construct 11 TMC dam project instead of 80 TMC. But the Mysore states violated the order and have planned for the latter. This is the starting point of the Cauvery tribunal, which is still continuing after a century.
Impact of Series of Anicuts on delta
            The series construction of dams from Trichy to the upstream of Cauvery in 19th  century leads to diminishing water to delta and the delta farmers have to follow the turn system. The culture of transplanting the paddy by seeing the freshes (i.e. the silty water after the onset of South-west monsoon) of the Cauvery river have changed and the silt deposition has reduced. The farmers have to wait for the dams to be opened. According to the people of Thanjavur in the 19th Century and the district collector’s versus the delta have started deteriorating after the construction of various dam in the Cauvery. If it is properly studied the nightmare will be revealed.
Granary slowly shifted to Mandiya
            The construction of the upstream dams in Mysore state has lead to the cultivation paddy in Mandiya district of Mysore in extensive manner. The following map shows the Mandiya districts production of paddy equaling the delta districts. 

Reservoirs of silt in 2011
            The silt deprived Cauvery went to Thanjavur with insufficient silt and have depositied them on river beds instead of the banks. The most of the silts were harvested in the dam of the upstream.

Stanley Siltvoir and rised unsilted river beds in the delta
            In the mid-term Tamil nadu budget for 2011, Rs.475 Crores have been allotted for desilting the river beds of Thanjavur delta to facilitate the river flow. The Cauvery Delta farmers Association President Mr.Ranganathan said in his budget review that some dozens of Rupees have to be allotted for desilting the Stanley reservoir which contains 20 feet of silt in it 120 feet capacity.
River weeds encroaching the rivers
            The raised rivers beds have paved way for encroachment of the river weeds using its dry spells, which again promotes the silt deposition in the rivers and further rising the river beds. The weeds like Sedges, Ipomoea, Kusha grass have encroached the upto the middle of the streams and have paved the way for the floods in winter.

Ground water Irrigated Paddy cultivation in the Delta
            It may sound strange if it is told before 30 years. How come the delta region will use ground water for a season of rice cultivation? But we have achieved this with our effortless development works in a century. Kuruvai farmers cultivate the paddy with ground water these days. Without that there won’t be any Kuruvai crop in delta.

Research opening
            The PWD spends huge amount every year for desilting the rivers and channels and occasionally the dams. The desilted materials were wasted on strengthening the bunds instead of using it in the field for cropping. The agricultural department provides the fertilizers in subsidies to the same farmers who leave the desilted materials on the bunds. With the free electricity the Kuruvai crop is made possible by pumping ground water. The charging minimum amounts for electricity may turn the governments aside. These were the worst observe, which was the result of the above historical developments of the bad governmental policies. The beauty and the fertility of the delta have lost.
            The PWD can sell the extra desilted materials for a minimal cost to the farmers after strengthening the bunds. The proper desilting in the time will avoid the ground water pumping for atleast few weeks and save electricity. The desilting in time will also avoid or reduce the flood relief funds and the crop losses. The proper study and the policy recommendation are needed along with the proper functioning of PWD. The impacts of the dams cannot be reversed, for which the time have to answer. However, the ecological and the economical impacts of such constructions have to be studied in detail, especially in the important rivers like Cauvery and it shall be used for future projects of such kind.

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