A couple of days ago famous industrialist
Ratan Tata commented about the lavish life style of another billionaire business tycoon Mukesh Ambani quoting his 27 storied Mumbai house viz., Antilla. Tata said that Mukesh Ambani's house Antilla represents the rich Indian's lack of empathy for the poor. His remarks:
"The person who lives in there should be concerned about what he sees around him and [asking] can he make a difference. If he is not, then it's sad because this country needs people to allocate some of their enormous wealth to finding ways of mitigating the hardship that people have."
Is Ratan Tata right in his remarks or is he misguided in his judgements? Is he aware about the role of an entrepreneur in an economy or is he ignorant of this basic economic fact? Or is his remarks has some underlying assumptions which make those remarks perfectly apt for Mukesh's lifestyle? Let me deal with these questions one by one. I take two scenarios to carry out my analysis. In first scenario we assume that Mukesh Ambani is an honest entrepreneur and his profit comes from the market competition. In second scenario we assume that, Mukesh is not an honest entrepreneur and his profit comes from his business ties with government officials and his manipulation of the system of State. We see the implications of Ratan Tata's remarks under both these scenarios.
Scene 1: Mukesh is an honest entrepreneur
I first make an assertion and then go onto prove it. If Mukesh is an honest entrepreneur then his profit - which he earned in the market competition - is absolutely legitimate, and if he don't desire to do a philanthropist work then that is his voluntary choice. Ratan Tata has no right whatsoever to advise Mukesh about allocating his honestly hard earned wealth amongst the poor people or to comment on his lavish lifestyle.
As Ludwig von Mises explained, the only way in which an entrepreneur can make profit in the market competition is by serving and fulfilling the most urgent wants of his customers in the best possible way, and that best possible way is of providing top quality goods at the lowest possible price. Only those entrepreneurs succeed and make profit in the market process who can ascertain and fulfill the subjective wants of customers in the best way compared to his counterparts.
By producing and selling top quality goods at a lowest possible price successful entrepreneurs allow even the very poor people to buy his products. By allowing them to buy his products he lifts their standard of living; he lifts them out of their poverty even without raising their nominal meager income. That happens because with the falling prices in the market with the same amount of nominal income people can now buy more goods and services i.e., their real income rises. And no sane person will deny that this is the real way of increasing prosperity in the society; this is the true way of eliminating poverty and lifting the standard of living of millions of poor people.
Philanthropy, about which Ratan Tata is advising Mukesh, will only help poor people in a very short run i.e., for the urgent immediate consumption purposes. Such help to poor people will actually harm them in the long run by making them dependent on such easy free money. It will not cultivate any habit of hard work and independent living in those people. Redistributing the income will only exacerbate the problem of poverty because human nature is such that most people will always prefer the free goods. Such allocation of rich peoples' income will make everyone of us poor too because rich people play an important role of providing essential savings for the economy. And without savings it is impossible to sustain a labor population in present time which is involved in production of intermediate capital goods. And without capital goods it is impossible to increase the future production of final consumption goods, and without that progress (so-called growth) is not possible. Capitalist class - which includes people coming from all strata of society, and not just rich - plays a pivotal role of supplying this saving. If they are forced to allocate their saving to poor people, who will mostly use it for immediate consumption, then society and economy cannot progress and without progress everyone of us will be poor one day for sure.
And people should not forget another vital economic truth that, honest entrepreneur do not become rich by exploiting the public, but they are made rich by their consumers i.e., the same public. Consumers voluntarily buy the products sold by such sellers because they prefer their products over other sellers. And in this process they give their portion of income to these entrepreneurs making them rich in turn. Profit is a signal that the businessman is fulfilling the most urgent wants of his consumers in a best possible way, and that's why he is rich. On the other hand those entrepreneurs who make losses are not fulfilling consumers' wants properly and so they remain poor in turn by going broke! (to deeply understand the beautiful system of profit & loss I will advise my readers to read Mises' wonderful book, Profit and Loss).
So, if Mukesh is an honest entrepreneur then he has all the rights to keep and use his profit in whatever way he wants to.
Scene 2: Mukesh is a dishonest entrepreneur
But, if Mukesh Ambani is a dishonest entrepreneur and his profit comes solely from his friendships with the government bureaucrats and politicians then he has no right whatsoever on his wealth. Profit generated by such dishonest political maneuvering is immoral. In a system of government such businessmen are working not to serve their consumers but only to serve the politicians and bureaucrats who help them in restricting the market competition. They actively lobby government so to establish their monopolies in the market. Through these monopolies then they fleece the consumers. And because their profit depends on exploiting the political system they don't care about their consumers. In fact they go to any length to harm their consumers for making such illegitimate and immoral profits.
This type of system is historically known as 'fascism' and sadly in today's world most of the businessmen, especially the big business houses are making their fat profits by this way only.
If Mukesh Ambani (also Ratan Tata and all others) is doing his business in cahoot with the government officials then his profit is illegitimate. If one day India becomes truly a free country then he should be stripped of his illegal profits (property) and should be convicted and punished for his crimes against the people. He and all such dishonest business tycoons should be incarcerated, may be hanged.
Conclusion
Looking at these economic facts, if Tata and Mukesh both are honest businessmen and they really want to help people of this country then instead of allocating their profit to the poor people they should use that capital in producing top quality goods at the lowest possible price. They should try to provide as many economic goods as possible to people of India through market competition. Tata and Mukesh both can profit by serving the needs of poor people. There exists a thriving market even in remotest rural poor areas of the world as C. K. Prahalad has shown. All capable entrepreneurs (existing and new ones) should provide top quality private schools, hospitals, private roads, electricity, water works, sanitation, home etc. goods in these areas at the lowest possible price. That will be the best possible moral way of making a difference in poor peoples' lives; that is the only way in which these entrepreneurs can help the poor in mitigating their hardships. Allocation/redistribution of wealth will only result in misery for all of us.
Microsoft chairman Bill Gates would meet UIDAI chairman Nandan M Nilekani to discuss the Unique Identification project.
The world’s largest software company has expressed its willingness to partner India in a project to issue Unique Identification to each citizen.
Bill Gates said that Microsoft wants to be part of the Unique Identification Authority of India (UIDAI) project.
The statement came during joint event with Nasscom.
Nilekani assumed charge of UIDAI on Thursday and expressed confidence that his team would be able to roll out the first set of identity numbers within 12-18 months.
It should be interesting to see the platform stack and the solution used for uidai.
i wouldn’t be suprised if every major identity vendor offers their solutions for negligable costs, given the referencability of the largest national level id installation on earth.
I hope the authority will take an open approach and satisfy the natural curiosity of the internatinoal IT identity community.
um36yrdhqn
visit http://www.itvision.in
The UID project can use a on-line KYC software like Hyper-KYC to achieve the data collection real fast and widely. The financial industry is looking at Hyper-KYC to meet all KYC compliance.
um36yrdhqn
http://www.itvision.in
Hi,
I learnt about this Project. Working as techie with this country has always been a dream of mine to be part of some goverment project.
Can I be aprt of this movement.
I am at present working with IBM.
Thanks
Nishant
9959977257
Dear All,
I am Satyanarayana from Andhra Pradesh, working as Specialist ( Monitoring & Evaluation), Mission for Elimination of Poverty in Municipal Areas – Indira Kranthi Patham – Urban, Hyderabad ( Mobile No.98499 08567)
Glad to say that Regional Office ( Hq : Hyderabad) will be opened and the programme will be launched 1st in AP – Thanks to the Chairman and our Hon’ble Chief Minister of Andhra Pradesh
if this really work out than life will be more easy…
Join Hand to become India corruption & crime free. Vote at here..
http://wagonrsmartideas.com/index.php?option=com_comprofiler&task=userProfile&Itemid=53&user=%201325
Sir,
I am very much happy that Govt. of India is going to provide a UID number to each & every citizen of india.
But I never seen & read about Blood Group you are going to provide on card. If we provice Blood Group on that card in emergency cases like an ex. in case any accident happen with UID holder. With the help of Blood Group which printed on UID the hospital can start his treatment without any delay.
C N Rao,
Hyderabad
+919440238748
I had answered my response on UDAI cards yesterday, but it was not accepted..
This is a wonderful thing, but there should be political will.
Let’s see, what happens, time will only prove.
I am afraid, this should not have the fate of MNIC Cards!
Jau Hind!
we can also use UIDAI to curb corruption from ndia in a much efficient way…….
Hey i am a graduate from engineering backgound. I want to work with this prestigious and challenging project. so can any one tell procedure for it??