Some say that inflation is a tool for redistribution of income between profit and wages while others say it erodes the past wealth. While, economics, economist, and market talk about marginal products and factor rewards.
The main problem is who is deciding the factor rewards be it labor or capital, and the prompt answer that comes to sharp minds advocating capitalism is MARKET!!
But when it comes to market very few and mainly classical economist know that market work through its hands and moreover with invisible hands. Then a natural question that comes to mind is then why there is so much inequality in the distribution of the rewards of factors of production. A common man will, as they naturally do, ask that look! we have two physical hands are we are not able to take care of ourselves then how market with its invisible hands is considered so efficient that we should leave our worries to its shoulders, and invisible too, to perform the task every body has entrusted it. Actually, this is not a common man’s question, he is a never allowed to ask questions, but question being consistently asked by great minds like Marx and Lenin. And, even they could not find a solution and resorted to revolutions that history and its students would not forget.
Coming to our main point, distribution of income, and especially when we are in an introspective mood like this one the whole life comes to a stand from where we can only see our past and the poverty, instead of prosperity, we have accumulated around ourselves in countries like INDIA. By the way it is a mixed economy. We know that when we read the preamble of our constitution. We will see words like …Socialist, Republic… (and all that). As a whole, we are a Democracy (multi-party), an institution that is of the people, by the people and for the people. By the way a democracy has real hands, our elected representatives. In strict sense economic sense, “democracy has an advantage over market and capitalism, as far as hands are concerned”. At-least, somebody is responsible. Poverty is nothing but the result of failure of any mechanism that is entrusted with the task of redistribution of national income and INDIA has no such mechanism except a Central-Bank which is only responsible for managing business booms and swings and is only indirectly responsible for employment and the prosperity it brings to a common man’s life by regulating finance of the economy.
Actually, in real terms, as far as distribution of national income is concerned employment generates real wealth, if inflation is properly anchored, than mere regulating the finance which is subject to inflation. Everytime when central banks increases finance to the economy it generates inflation depending on the real supply of goods and services. By real supply we mean physical/core supply of real goods and services.
The main problem is we do not have any mechanism to ensure skills and employment to the poor population. We are not only concerned about any particular geographical region and inequality since we are living in an interdependent world where prices and incomes of one region affect the demand and supply of necessary goods and services in some other location. And, the problem aggravates with an illiterate population.
As far as, illiteracy is concerned it is at the backbone of all our problems because the poor man does not know what benefits the government is accruing to pull them out of poverty, be it skills, finance, employment, food, civil rights…… The list goes endless but it stops at the very first stage education.
I hope we are prepared to ensure education, skills, and finance to our poor population with inflation being properly anchored to lowest to keep them and our economy away from inequality…
The main problem is who is deciding the factor rewards be it labor or capital, and the prompt answer that comes to sharp minds advocating capitalism is MARKET!!
But when it comes to market very few and mainly classical economist know that market work through its hands and moreover with invisible hands. Then a natural question that comes to mind is then why there is so much inequality in the distribution of the rewards of factors of production. A common man will, as they naturally do, ask that look! we have two physical hands are we are not able to take care of ourselves then how market with its invisible hands is considered so efficient that we should leave our worries to its shoulders, and invisible too, to perform the task every body has entrusted it. Actually, this is not a common man’s question, he is a never allowed to ask questions, but question being consistently asked by great minds like Marx and Lenin. And, even they could not find a solution and resorted to revolutions that history and its students would not forget.
Coming to our main point, distribution of income, and especially when we are in an introspective mood like this one the whole life comes to a stand from where we can only see our past and the poverty, instead of prosperity, we have accumulated around ourselves in countries like INDIA. By the way it is a mixed economy. We know that when we read the preamble of our constitution. We will see words like …Socialist, Republic… (and all that). As a whole, we are a Democracy (multi-party), an institution that is of the people, by the people and for the people. By the way a democracy has real hands, our elected representatives. In strict sense economic sense, “democracy has an advantage over market and capitalism, as far as hands are concerned”. At-least, somebody is responsible. Poverty is nothing but the result of failure of any mechanism that is entrusted with the task of redistribution of national income and INDIA has no such mechanism except a Central-Bank which is only responsible for managing business booms and swings and is only indirectly responsible for employment and the prosperity it brings to a common man’s life by regulating finance of the economy.
Actually, in real terms, as far as distribution of national income is concerned employment generates real wealth, if inflation is properly anchored, than mere regulating the finance which is subject to inflation. Everytime when central banks increases finance to the economy it generates inflation depending on the real supply of goods and services. By real supply we mean physical/core supply of real goods and services.
The main problem is we do not have any mechanism to ensure skills and employment to the poor population. We are not only concerned about any particular geographical region and inequality since we are living in an interdependent world where prices and incomes of one region affect the demand and supply of necessary goods and services in some other location. And, the problem aggravates with an illiterate population.
As far as, illiteracy is concerned it is at the backbone of all our problems because the poor man does not know what benefits the government is accruing to pull them out of poverty, be it skills, finance, employment, food, civil rights…… The list goes endless but it stops at the very first stage education.
I hope we are prepared to ensure education, skills, and finance to our poor population with inflation being properly anchored to lowest to keep them and our economy away from inequality…
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