Stumbling to Greatness

Observing recent surges in capital appreciation of real estate, spurts of natural disasters, slow down of judiciary systems, volatile markets and rising tax bills, one can't help but wonder if we aren't unwittingly committing ourselves to suffer from the following:
a) Natural restriction in labour mobility - who would want to move to places where rates are shooting through the roof?
b) Large losses in personal financial holdings - with claim processes in Insurance companies set to be choked for ages and litigations bound to increase, the individual / corporate owners are likely to bear large burdens (economic and emotional) for a long time.
c) Tax evasions that will continue to be on the rise as larger proportions of people will continue to figure out ways to avoid / evade taxes.
d) Poverty, lack of access to basic human rights etc. will dominate the landscape.

As we grunt towards mediocracy, attendant problems will make themselves more evident:
a) Higher crime rates.
b) Disproportionate levels of development (and therefore population densities) across the nation etc. etc.

Instead of untangling the Gordian Knot, one way to cut it could be as follows:
Dismiss this bogus concept called "Public - Private" Enterprise. The Govt needs to focus solely on social areas that are unviable for any private enterprise e.g. railways, education etc. As these become viable, they then need to be mandatorily parcelled off to private enterprises. Subsequently, the Govt would need to play the role of a regulator ensuring that the private sector makes essential services easily available at affordable levels. This way, borrowings and taxes would go down to hopefully, near-zero levels. Naturally, the consequence of that would be shifting of expenses from the Government to the private sector, but competition should hopefully reduce those prices. Look at the communications sector.

We need to return to the village to run a city or a nation. Small scale entrepreneurship is the way forward. This however, will lead to the necessity of creating strong Intellectual Property regimes.

Scale has a natural limit where the products being created stop serving any use. Hence, organizations will need to seek ways of acting as loosely bound units, where each unit is a stones throw away from customers. How these units share infrastructure and services to reduce transaction costs would become an area of competitive advantage. If we keep producing stuff beyond a useful level, we enter a dangerous terrain of mathematical functions where more junk is produced at lower costs. Lower costs do not justify creation of junk.

One curious contradiction to the above point is this: Human beings are essentially social animals. Hence, the need to stay in contact will remain an essential way to preserve the psyhce. The ability for organizations and people to stay in touch in an effective way will pretty much drive society to the next era. Thus, organizations will need to deliver communication services at a mass scale and at reasonable prices, with the express mandate that prices for the same services must drop. Scale does have its advantages.

Banks as custodians of society's savings (and therefore wealth) will need to become less important. Disintermediation in all markets will become a sign of the times. All economic crashes have been preceded by flawed bank policies. Thus, the role of a bank as an intermediary between lenders and borrowers will diminish. People will start asking the same question, "If I earn less than 2% (effective) on my bank savings, why not lend directly at 9% to a credit-worthy borrower, and pay 2% to a person who monitors credit-worthiness and ensures repayment?" This would force financial institutions out of comfortable, profitable metros and into rural markets - which would aid Micro-finance. Isn't that a good thing?

As development becomes more uniform, real estate rates, octroi, duties etc. will become more rational, leading to an environment where labour can be more mobile. This will improve the market for rentals, where fewer and fewer people actually own any assets and more and more people start utilizing assets on rent. However, the number of people with access to all these services will go up, which is a sign of good times. After all, who wants to be rich in a poor country?

I'm not sure if India will become a great country in my life-time. Maybe it will be achieved in my kids (or foster kids) times. After all, education is the only real cure to our ills.