Robin Hood economics Article fact check
Tavleen Singh's article argues against what she perceives as Rahul Gandhi's inclination towards taxing the rich and redistributing wealth, advocating instead for policies that encourage wealth creation. However, her arguments overlook the detrimental effects of monopolies on markets and society. Here's a critique of her points:
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Misrepresentation of Wealth Creation: While entrepreneurship and innovation are indeed drivers of economic growth, she overlooks how monopolies distort this process. Monopolies hinder competition and innovation by restricting entry into the market, stifling potential wealth creation from smaller players.
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Neglect of Monopoly Power: Singh fails to acknowledge the negative implications of monopoly power. Take for example pharmaceutical patents. By granting exclusive rights to produce and sell certain drugs, monopolies like GlaxoSmithKline can inflate prices significantly above production costs. This artificially high pricing limits access to essential medicines, leading to adverse health outcomes for those unable to afford them. Under the Congress government, we had about 12 internet service providers, but now we have just two or three.
The mystery of the Adani coal imports that quietly doubled in value
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Ignoring Economic Inequality: Singh's focus on preserving wealth creation without addressing the widening wealth gap overlooks a critical aspect of economic prosperity. Monopolies exacerbate inequality by concentrating wealth and power in the hands of a few, rather than fostering broad-based economic growth that benefits society as a whole.
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Monopolies provide taxes:Singh's argument that Adani and Ambani bring in more taxes is also incorrect. Decentralized systems without monopolies tend to collect more taxes than monopolies. Monopolies discourage entrepreneurship, and unchecked monopolistic practices also pose significant threats to economic freedom and prosperity.
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Lack of Regulatory Consideration: Singh's argument against taxation and wealth redistribution overlooks the role of government regulation in curbing monopolistic behaviors. Effective regulation can promote competition, innovation, and equitable wealth distribution, thereby fostering a more dynamic and inclusive economy. Effective regulation also decreases negative externalities, especially in times of rampant pollution that impacts our health and leads to climate catastrophe.
Overall, while Singh advocates for policies that promote wealth creation, her arguments fail to address the detrimental effects of monopolies on market competition, economic inequality, and societal welfare. A more nuanced approach that acknowledges the need for both entrepreneurship and effective regulation is essential for fostering sustainable and inclusive economic growth.
Wealth creation requires better wealth distribution and a free market without monopolies, rather than handing over everything to a few companies. The current government is running on rampant loans rather than focusing on wealth creation. The Congress government (Or the past UPA coalition government) has been better at achieving this than the current government. An economist as a Prime Minister is far better than an uneducated Prime Minister.
Tavleen Singh Article
INDIANEXPRESS.COM APRIL 28, 2024
Fifth COLUMN
TAVLEEN SINGH Twitter @tavleen singh
Robin Hood economics
JUST BEFORE sitting down to write this piece, I spotted Rahul Gandhi's latest campaign video on social media. The video began with a poster of Gautam Adani's face on which the word 'BAN' was written. After this Rahul appeared and declared in an angry voice that he promised to give farmers, workers, and the poor as much money as 'Modi has given Adani'. This is only one of many campaign videos in which the inheritor of the Nehru-Gandhi legacy speaks of how when a Congress government comes to power, it will take money from the rich and distribute it to the poor. It is time to remind the man who seeks to unseat Modi in this general election that it is not his personal wealth that he is threatening to hand out. It is taxpayers' money. It is not just the money of men like Adani and Ambani, but money given in taxes by all of us who pay taxes. What I find disturbing about Rahul's rants against rich Indians is his unconcealed contempt for those who create wealth. The private sector has survived and thrived despite socialist policies like the license raj, de- spite debilitating taxation. It deserves to be respected and not disdained. The wealth that is owned by men like Adani has not been 'given' to them by Modi or any other politician. It is wealth that they have created for the country, some of which is already being paid to the govern- ment in taxes. Why is this so hard for Rahul Gandhi to understand?
The Congress Party has repeatedly in- dicated that if it comes to power it has plans to introduce crippling new taxes on rich people. Sam Pitroda, famous for dam- aging the Congress Party's 'secularism' in the last general election, damaged its economic philosophy last week by announcing that it was time to bring back an inheritance tax. Congress spokesmen quickly distanced the party from Pitroda's statement, but redistribution of wealth Robin Hood style is something that Rahul Gandhi has talked about often since the campaign for this election began. It is time for him to be reminded of what India looked like when taxes on the rich were so insane in his Granny's time that businessmen were ordered to pay 97% of their earnings as tax. The result was that not only was the private sector nearly de- stroyed but government itself had no money to distribute to the poor. It was a general redistribution of poverty that re- sulted. India has taken decades to recover and to prosper enough for a middle class to emerge and for a hesitant celebration of prosperity to begin. In the past ten years it is to Modi's credit that he has continued with economic policies that encourage the creation of wealth. In the opinion of those who would like to see the Indian economy really soar, he has not done enough to end socialism. He needs to do much more to totally rid us of an economic ideology that kept India mired in poverty.
Robin Hood Rahul also announced last week that he was so committed to order- ing a caste census that he has made it his life's mission. There can be compromises in politics, he said, but no compromises when you make something your life': mission. He has clarified more than once that the purpose of this census is to en able the redistribution of wealth. So castes that fall into the poorest categor will be the first to benefit. This is revers casteism at a time when the divisions caste in urban India have blurred. In vilages higher caste bigots may choose n to eat at the same table as those they com sider lower than them, but this is not po sible in a city restaurant.
Monopoly educational video
Monopoly. It's not just a game. In this video we'll talk about how a firm uses market power to maximize profit. We'll begin with a controversial example.
This is the AIDS virus. Worldwide, it has killed more than 36 million people. In the United States, however, AIDS is no longer the death sentence that it once was. Beginning in the mid-1990s, death rates from AIDS began to fall dramatically with the introduction of new drugs such as Combivir. These new drugs are great, but they're expensive, and they're expensive not because it costs a lot to manufacture these drugs. The per-pill costs of production are actually quite low. Instead, these drugs are expensive because they're the subject matter of this chapter -- Monopoly.
GlaxoSmithKline, or GSK, owns the patent on Combivir and that means that it has the right to exclude competitors. Only GSK can legally sell Combivir. The patent gives GSK a monopoly, or more generally we say it gives them market power. Market power is the power to raise price above marginal cost without fear that other firms will enter the market. Now how do we know the price is above marginal cost? Here's a simple test -- in the United States, Combivir costs around $12 to $13 per pill. India, however, does not recognize the patent on Combivir. So in India, there are many producers of Combivir who sell in a competitive market. As we know, in a competitive market, price will fall to marginal cost and in India the price of Combivir is about 50 cents per pill. Thus, in the United States, the price of Combivir is about 25 times higher than the marginal cost.
Let's say a few words about the sources of market power. The basic idea is that a firm has market power when it's selling a unique good and there are barriers to entry, forces which prevent competitors from entering the market. Barriers to entry could include patents, as we've already discussed. There may also be other government regulations creating barriers to entry, such as exclusive licenses. Economies of scale can mean that a single big firm can sell at lower cost than any of many small firms, making it difficult to establish a competitive market even with free entry. Exclusive access to an important input.
Diamonds, for example, are found in only a few places in the world. If you control a number of these diamond mines, you can monopolize the market for diamonds, where you will have market power in the market for diamonds. Technological innovations can give a firm temporary market power. A firm with knowledge or abilities that other firms don't yet have will have some market power, for example. Now we'll say a little bit more about these later. What we want to do now is to focus on how a firm with market power chooses to set its price. What is the profit maximizing price?