Re: trade liberalization

[Rohit Sharma <r_j_sharma@yahoo.com>]

---------------------------------------------------------------------
Please help make the Manifesto better, or accept it, and propagate it!
---------------------------------------------------------------------
IPI_Marker

--- MV <maxv@vsnl.com> wrote:
>
> > From: "Ashish Hanwadikar"
> <ashish_hanwadikar@yahoo.com>
> >
> > Hi MV,
> >      After going through your email I didn't know
> whether to laugh or
> > cry. When I read your sentence numbered 1.) I was
> shocked with
> > disbelief! Where did you get the idea?
> > Value of currency linked to
> > energy?
>
> We had some discussions about this topic some time
> back you
> can read it, in the list archives.
>
../lists/india_policy/2001/Apr/threads.html
>
> It will be interesting to know from your view point,
> how do
> you define currency? How do you assess value of
> goods and
> services with reference to definition of currency?

Currency is denomination or unit of wealth.
So essentially your argument is that
wealth = stored energy or energy mobilization.

Let us look into this and see how to evaluate Dr
Reddy's wealth.(major share holder in Dr Reddy's lab).
He is currently estimated to be worth $430 million.
What is the energy mobilization that he did?

How will you evaluate the value of a computer which
performs mundane tasks consuming mush less energy than
anything of equivalent productivity that mankind has
invented.

How will you evaluate intellectual proprty?
An IP which has no energy mobilization.

What happens when energy becomes abundant and is no
longer a scarce resource (Like water in Dubai after
desalination plants).

I am a proponent of using gold as measurement of
wealth

Why?

Any denomination of wealth (remember currency is a
denomination of wealth - so in your scenario if I want
to convert my wealth into liquid assets - what will I
get? xJoules/$ ?)
so any representation of wealth has to have following
properties
1. It should be sufficiently scarce. (To maintain it's
value) but not very scarce.
2. It should be homogenous. (I can divide my wealth
into 10 equal parts).
3. It should be transportable. (I traded in America
and got my wealth in India).

What is wealth? Wealth is surplus productivity. If I
can survive working just 2 hours a day and I work 8
hours the 6 hours worth of productivity is my wealth.

Going back to barter days the concept of wealth =
surplus production becomes very clear.

So why do I use gold as a basic measure of wealth?
We could use any concrete commodity. (cigarettes, oil,
cloth, chopped wood etc).
But
1. gold has the above mentioned properties.
2. Gold has been (or had been until 1970s) used for
centuries as medium and unit of exchange. It is not
economically right to change a basic unit of
measurement to some arbitary unit because it affects
the valuation of wealth. Imagine what changing the
meaning of an inch or centimetre would do to
physics/engineering world?

So I am obviously against current system of tying
currency to GDP or any other arbitary system/value.

To sum up - I believe wealth measurement and hence
currency needs to be tied to gold standard once again.

Tying it to anything other than that is bad enough and
tying to energy is preposterous (at best).


>
> If you scoff at the idea of universal currency
> system,

I dont think he scoffed at universal currency system.
He scoffed at the idea of using energy as basis of
measuring wealth.
Infact there is a universal currency today - the $.
Accepted all over the world - with premium in some
places :-) - I bet it will work even in Afghanistan.

>why
> do you think the European union single currency
> across
> multiple countries came into existence?

EU single currency is a good idea - they should have
simply adopted the $ (Like Peru where 1 peso = 1$ is
the stated goal of the govt).

Your defense now.

Thanks
Rohit

>Should they
> also
> take a chill pill and go see a shrink?
>
> MV.
>
> > Are you nuts! Take a chill pill and go see a
> shrink!
> > Regards,
> > Ashish
> >
> > >
> > > The above scenario will work only under certain
> conditions.
> > >
> > > 1. There is a universal currency system so that
> the value of
> > >    currency is same across countries, and the
> value of currency
> > >    is directly linked to energy. The only way we
> can define
> > >    currency with any meaning is "representation
> of potential to
> > >    mobilize energy" which was true from the
> beginning of trade
> > >    until fossil fuels, coal and petroleum (pre
> stored energy)
> > >    were discovered.
> > >
> > >    Today under the floating currency system the
> value of currency
> > >    is determined by very complex equilibrium
> dependent on umpteen
> > >    variables which can easily be manipulated by
> vested interests,
> > >    and it is happening every day.
> > >
> > >    Under a energy based universal currency
> system the hourly
> > >    unskilled labour cost will become uniform
> across countries,
> > >    and the scenario you described above may be
> possible.
> > >
> > > 2. People should be adaptable. Which again
> requires minimum
> > >    education, i would say equivalent of Indian
> ICSE syllabus 10th
> > >    standard that will equip people to absorb new
> agricultural or
> > >    industrial production techniques and enable
> them to market
> > >    the resulting products nationally and
> internationally.
> > >
> > >    A good illustration is our traditional
> craftsmen who make
> > >    products that have good market in India and
> abroad, but the
> > >    craftsmen do not get to enjoy the benefit of
> that market
> > >    since they do not have the marketing
> capability which
> > >    requires decent command of english the
> language of Indian
> > >    and international trade. What is happening
> today is the
> > >    profits are suctioned by the middle men or
> traders and
> > >    in the process the craft becomes non
> profitable for the
> > >    craftsmen and they look to other avenues, in
> process the
> > >    product and the market disappears and the
> skilled artisan
> > >    becomes unskilled labourer.
> >
> > --- MV <maxv@vsnl.com> wrote:
> > >
>
---------------------------------------------------------------------
> > > Please help make the Manifesto better, or accept
> it, and propagate
> > > it!
> > >
>
---------------------------------------------------------------------
> > > IPI_Marker
> > >
> > > > From: "Ashish Hanwadikar"
> <ashish_hanwadikar@yahoo.com>
> > > > Hi Prakash,
> > > > > How would that happen ? what changes would
> the unilateral
> > > droppping
> > > > > of
> > > > > indian (or develping country) tariff do to
> the US econmy to make
>
> > > them
> > > > > shake from its impact ? My guess is that
> they would prosper
> more.
> > > > > (and
> > > > > so would indian consumers - no denying that)
> > > >
> > > > Just imagine for a second we drop tariff on
> imported goods. Those
> > > goods
> > > > will be very cheaper. Not all goods are
> consumables. Some like
> > > > Computers, and other electronic equipments,
> heavy equipment like
> > > Cars
> > > > are both consumer as well as capital
> equipment. Depends on how you
>
> > > use
> > >
> > > > it. If you use Car for transporting goods then
> it is a capital
> good
> > > > (because it is used to produce other goods and
> services). Since
> > > cost
> > > of
> > > > such capital become less our productivity will
> increase. Since,
> > > those
> > > > items that can be produced efficiently by
> other nations can be
> > > easily
> > > > imported by Indians we will direct our
> resources to production of
> > > those
> > > > goods and services which are costlier to
> import (even after making
>
> > > > tarrifs negligible). This will again increase
> productivity of our
> > > > resources. I will give an concrete example.
> Let's take the example
>
> > > of
> > > > wheat. Let's say that imported wheat after
> removing high tarriffs
> > > will
> > >
> > > > cheaper compared to what can be domestically
> produced. Because
> > > wheat
> > > > now will be imported by Indians the
> Agricultural land that was
> used
> > > to
> > >
> > > > produce wheat before is now available for
> other purposes (building
>
> > > > factories, houses etc.). Thus because of
> increase in the supply of
>
> > > land
> > > > the cheaper land can be used to produce other
> goods and services
> > > for
> > > > which India has competitive advantages. Now
> because of increase in
>
> > > the
>


--------------------------------------------------------------------------
This is the National Debate on System Reform.       debate@indiapolicy.org
Rules, Procedures, Archives:            ../debate/
-------------------------------------------------------------------------