Prosperity is Downstream of Freedom
To understand why freedom matters for prosperity, we have to recognize that nobody is simultaneously all wise, all knowing, and all prescient. Our altruism, rationality and foresight are severely bounded.
Therefore we cannot predict with any certainty what people will figure out if they have the freedom to experiment in whatever field they are naturally inclined to do so. The progress that humanity achieves is a result of trial and error by people who could not have been identified in advance. We get to know of the eventual successes but only ex post; ex ante we can’t. We don’t learn about the failures but we can be certain that there must be many more of them than the successes.
That fact requires the philosophical stance of epistemic humility. We have to be humble because our knowledge is limited, not just about the future but about the past and present too.
Material prosperity requires advances in the sciences, engineering, and technologies. Each of those advance in the final analysis is done by people who are from coercion and have no restraints on their actions other than the simple principle of not harming others.
To the extent that societies allow individuals freedom, to that extent societies flourish. The correlation is easy to note if one cares to look at the data. The people of free countries are richer than people of repressive countries. Analytically it is a simple exercise to figure out the direction of causality — it goes from freedom to prosperity.
Indians Lacked Freedom
Freedom is a big word that packs all sorts of meanings. It comes in three major varieties: civic, political and economic. The object of attention in the context of freedom is the individual. The concept of freedom when applied to a group only derives meaning if each individual — without exception — is free. It is meaningless to call a group free if some individual or individuals within the group are not free.
An individual is not free if he is subject to the coercive will of another without his prior consent. Coercion is justified only if the individual gives explicit prior consent. Meaning, if I have agreed to be coerced by you for some reason, only then are you permitted to coerce me.
Indians, prior to Aug 15th, 1947 were subjects of the British Crown. They were not free because they had not consented to be ruled by the British. It is widely reported and believed that Indians became free after “independence” in 1947. I have come to doubt that.
I agree that India became independent of the British crown, and that Indians stopped being British subjects, (at least nominally since Nehru boasted that he was the “last Englishman to rule India”) but it is simply not true that Indians became free. It is generally acknowledged that Indians were not free under the British Raj. If that is a fact, then it must also be true that Indians are still not free post 1947.
During the period 1857 to 1947, the British created all the rules, laws and regulations that Indians were subject to. It’s those rules that defined and constrained what Indians could, could not, may and may not do. Those laws provide the context and justifies the claim that Indians were not free. Those laws clearly defined that the British were the masters and Indians were the servants. Indians had to bend to the will of their British masters. The relationship between the British government and the Indian people was clearly a master-slave relationship.
The British decided to give up control of India for various reasons, not the least of which was that colonialism was falling out of favor. Beside, the British Empire was in decline and the US was in ascendant as the major world power. The US didn’t quite like the idea of the British lording over such a large population. The US had other plans.
Indians Continue to Lack Freedom
I don’t claim to know history but this bit I do know: India gained independence but Indians never became free. Indians continued to be subject to all the laws, rules and regulations that the British had created. The only difference was now the government — remember the government was the master and Indians were slaves — was constituted mostly by native-born brown-skinned Indians.
India failed to progress economically under British colonial rule. Why? Because Indians were not free under the British, and the British government was a predatory force. It exploited Indians (sent Indians to die defending British interests in various wars with the help of M. K. Gandhi) and extracted wealth from the Indian who were anyway reduced to poverty.
I cannot fault the British. They were foreign occupiers, not invited guests, and their predatory behavior can be understood even if it is morally reprehensible. If I had been born a Britisher in the 19th century CE, I am sure I’d have happily become a functionary of the British raj — it is fun to lord it over the natives as the bow and scrape in front of you.
Let me repeat myself for emphasis. Indians continued to be poor and not advance materially because Indians were not free under the British. The British government was predatory, like most governments are. Nothing remarkable in this at all.
What’s remarkable is that Indians continue to be poor under the government that took over from the British. The reason? The same old repressive laws, the same old predatory government that continued the exploitation and extraction, the same old denial of meaningful freedom to Indians.
British Predation vs Indian Cannibalistic Predation
I cannot fault the British for what they had done to Indians for nearly two centuries (starting with the crimes of the British East India Company.) They were superior predators, and to their minds Indians were their racial inferiors and therefore justifiably their prey. But predation (the killing of one living organism by another for food) as a crime pales in comparison to cannibalism — the eating of one’s own kind. Predation is reprehensible but cannibalistic predation is a heinous crime.
Cannibalistic predation is not just a moral crime. It’s an economic crime arising out of greed and stupidity. Elsewhere I have calculated that Indians collectively lost around $125 trillion over a period of 70 years or so because of the malfeasance of the Indian government post 1947.
Incalculable Losses from Cannibalistic Predation
It is stupid. It is hard to imagine that the politicians and bureaucrats who imposed that unbearable cost in treasure, and imposed incalculable grief and suffering on a desperately poor population of scores of hundreds of millions, collectively gained even $1 trillion. Let’s just assume that they did gain $1 trillion. But at what cost? By robbing Indians of $120 trillion? That’s stupid.
[See the note at the end of this piece for a few details.]
It’s a crime if a robber breaks into your house and steals your laptop worth $400. Your loss is $400 and his gain$400. Your loss is your gain. But if the burglar sets fire to your house to steal $10 worth of silverware from the kitchen, he’s imposed a $500,000 loss on you while gaining a trivial amount himself.
The Indian government is guilty of imposing disproportionately immense losses on Indians through its predatory behavior. It’s been — and continues to be — a cannibalistic predator.
The government of India is the greatest enemy of the Indian people. Not the Chinese or the Pakistanis or their governments, although they can harm Indians. The harm they could do comes to nothing compared to the harm that the governments of India have to Indians.
The Chinese can at most steal your laptop; the Indian government has set fire to your house to steal your silverware.
Indians are nothing special. They are of average competence, average endowments, average everything. Except that they are exceptionally unlucky in the kind of government they have been forced to live under. Of course, I will not excuse their stupidity because as I say, “It’s all karma.” What one suffers or enjoys as a collective is largely the collective’s doing. Indians as a collective play a major role in their predation today, just as they did during the period of British predation.
In the next bit, I will examine one specific policy of the Indian government which has done the most harm. The Indian government has been most true to its British predecessor’s aim of keeping India impoverished by denying education to Indians.
[The following is an excerpt from a 2018 post, “Did Britain Impoverish India.“]
Nehru and gang imposed socialism on India. How much was lost? That loss is easier to estimate. In fact, I did a simple exercise in 2012 and concluded that —
Over the last 60 odd years, India has lost income estimated at $120 trillion by growing at the Nehru rate of growth instead of the easily achievable 6 percent rate of growth. Part of that income would have created infrastructure and other durable assets by now. We would have probably had the best and biggest high speed railway system in the world. We would have had the largest and the most productive educational system in the world. Even things we don’t consider very important – number of Nobel prizes, gold medals in the Olympics, number of world class movies – would have been a reality because all those things require disposable income.
Always remember that India is a large country. Large countries have the potential to affect the world. … Given its large population, India could have been the world’s factory, producing cars, computers, TVs, white goods, furniture, and everything. India could have been the home of huge multinational conglomerates, producing big things such as container ships, and commercial jetliners. It could have been one of the world’s great trading nation – with its share of world trade around 25 percent, instead of the around 2 percent “Nehru rate of trade.” (Nehru’s brilliant autarkic economic policies closed India to international trade.)
Wealth buys many things, not the least of which is influence and power. Had India been a middle-income country, given the size of its population, it would have been a formidable military power. Culturally and historically, since Indians are not belligerent and don’t have extraterritorial ambitions, India’s power would have been a force for global stability. Instead of being one of the worst victims of Islamic terrorism, India would have been the one to bury Islamic terrorism for good.
The bottom line is this: if India’s economic policies had been different, not only would we have had an absolutely different India, we would have had an entirely different world. But India’s policies were brain-dead. A brain-dead leader’s brain-dead policies.
The British looted India. However India could have recovered rapidly from that. Factors affecting growth had changed in India’s favor in the modern world, primarily technology. Contemporary India’s poverty is entirely the fault of the governments of the last 70 years. However much the British damaged India, the leaders of India have done far worse.
What India needs is a bit of soul-searching, and admitting that their sainted leaders are a bunch of incompetent ignorant fools.