Demonetisation coated with nationalism is Voodoo Economics in a way
‘Reaganomics’ pushed the US to the brink of debt
The USA, once the world’s largest creditor nation, has now become the world’s largest debtor nation. The cause of this effect was called ‘Reaganomics’ named after Ronald Reagan, an actor, who became the president of the US. He eroded the wealth of that country by spending on grandeur projects like star wars and nuclear missile systems which are never used. His economic policy, at that time, was hailed by the Right Wing Party, called the Republicans, as nationalism. He was a man who used patriotism as a tool and created an unequal economy where the rich got richer and the poor got poorer. This was another form of demonetization, which took money out of circulation and put it in the hands of large business corporations which hurt the entire middle class and poor sections of the American society.
Reaganomics meant cutting taxes and spending money. In hindsight, today economists, all over the world, are in agreement that this triggered the longest recession the USA ever had. Reaganomics is a theory where money trickles down from the rich to the poor. This theory was called ‘Voodoo Economics’ by George Bush Sr., who succeeded Ronald Reagan as president.
This decision of Voodoo Economics, as enforced by Ronald Reagan, was done in the name of patriotism and as a fight against communism. The USSR was a crumbling economy, where innovation and private small entrepreneurs, the driving engine of any economy, was non-existent.
Stockman, Ronald Reagan’s economic advisor, on asked what went wrong, said “the whole thing is premised on faith and on a belief about how the world works. We didn’t add up all the numbers, we didn’t make all the comprehensive calculations about where we really needed to come out and how much to put on the plate the first time.”
This sounds very familiar to what Prime Minister Narendra Modi had to say about demonetization — that we should have faith and that demonetization is good for all patriotic Indians.
Economics is not about faith with a hope that the nation will become great. Faith has created a monumental mess with people standing in long queues and the ultimate price of 55 people declared dead to exchange a few 500 rupee notes.
Narendra Modi has resorted to another form of Voodoo Economics, whereby he is following exactly the same economic policies of taking away wealth from the middle class and poor sections of society, who do not even come under the income tax radar. Non-performing assets is at an all time low in India. He is replenishing the banks to lend to the big companies in India, which control 60 per cent of the wealth. We have a trade deficit, employment deficit and the rupee has reached an all time low against the dollar. Modi also, like Ronald Reagan, is using the words patriotism and nationalism as a defence, which is stealing from the poor and giving to the
As in the USA, the Right Wing Party is in power today. It has always been a party which helps the rich at the cost of the farmers and the gullible middle class, in the name of nationalism.
If we do not appreciate and understand historic economic blunders, we in India, as citizens, will harvest the seeds of recession, unemployment and poverty on an unprecedented scale, which we can ill afford.
Demonetization is not a ‘Robin Hood’ policy of taking from the rich and re-distributing it to the poor. Any economic policy that sucks money from the poor and needy is an economic policy which can safely be termed as Voodoo Economics.