Are you left-leaning or right-leaning? Is it important to answer this question?

Before going any further, let’s see where you stand. Take this test and create a graph of where you stand : Political Leaning Test.

Based on these questions, you might think that this is not what you understand by left or right. Isn’t the BJP considered right-wing? Isn’t Congress considered left-wing? And if you think deeply based on the questions you answered, if their election manifesto took the same test - both would stand at the left of the center.

Now we have 2 left.

  1. Economical Left - This is what the test is about.

  2. Social Left - This is what we generally understand by left and right.

Origin of Left and Right

The terms left and right originated during the French Revolution, and referred to seating arrangements in the French parliament. Those who sat on the left generally opposed the monarchy and supported the revolution, including the creation of a republic and secularization. Those who sat on the right supported the traditional institutions of the Old Regime.

This left and right divide came from the fact that those sitting on the right side were generally rich and wanted to avoid sitting with the commoners, some say due to the stinking smell that came from them.

The commoners wanted a welfare state, as they wanted the community to grow together. The rich wanted to create a society where they could grow individually. One is a collectivist approach, the other is an individualist approach. This is exactly what socialism and capitalism would mean. You can see that the economic left and right are the same as socialism and capitalism. If you stretch the left furthermore left, you get communism.

World view

By now, you should have gotten the result of the test. You might be surprised that you are not as left or right as you thought you were.

You might also be surprised to see that our country is not as capitalistic as you thought it was. And while the BJP is not as open to giving out free money as the Congress, it still does have a lot of socialist policies in place. The Modi 2.0 government gave away more free houses to the poor than the UPA government did. They built out a total of 3 Crore houses by 2024. And as soon as Modi 3.0 came to be, they planned another 3 Crore houses. Considering an average family size of 4 which is quite conservative, that is 24 Crore people getting free houses. That is 20% of the population.

Now, based on some case studies, where different countries have adopted different economic model, let’s write down the names of the countries and their economic model.

  1. USSR - Communism
  2. China - Communism / Capitalism
  3. Sweden - Socialism
  4. USA - Capitalism
  5. India - Socialism
  6. Singapore - Capitalism
  7. Venezuela - Socialism
  8. Cuba - Communism
  9. North Korea - Communism
  10. UK - Socialism
  11. Germany - Socialism
  12. Japan - Capitalism
  13. France - Socialism
  14. Brazil - Socialism
  15. Canada - Socialism
  16. Australia - Socialism
  17. South Korea - Capitalism
  18. Russia - Capitalism
  19. Mexico - Socialism
  20. Italy - Socialism

Now, let’s see the GDP per capita of these countries. And rank them in order of GDP per capita.

  1. Singapore - Capitalism
  2. USA - Capitalism
  3. Germany - Socialism
  4. Japan - Capitalism
  5. UK - Socialism
  6. France - Socialism
  7. Australia - Socialism
  8. Canada - Socialism
  9. Italy - Socialism
  10. South Korea - Capitalism
  11. Russia - Capitalism
  12. Brazil - Socialism
  13. Mexico - Socialism
  14. Sweden - Socialism
  15. China - Communism / Capitalism
  16. India - Socialism
  17. Venezuela - Socialism
  18. Cuba - Communism
  19. North Korea - Communism
  20. USSR - Communism

If you look, all the capitalistic countries are at the top. And all the socialist countries are in the middle, and clearly, communism just doesn’t work.

Even with adding purchasing power parity in the play, the order won’t change much but a few places here and there.

This makes capitalism look very good. Most of the capitalistic countries are doing absolutely great. But is that all that matters? GDP per capita? Is there more to it?

While capitalism definitely makes the money work in the favor of society, and the average does go up, it also creates a huge gap between the rich and the poor. The rich get richer, and the poor get poorer. Our metric to see that would be the median salary of the country, and median spending. Not average.

This is where we see that a lot of socialist countries have a higher median salary than the capitalistic countries. And the median spending is also higher. This is because the rich are taxed more, and the poor are given more.

Absolute Capitalism

Recently, there has been an introduction of a new term in our society, “Chrony Capitalism”. This is where the rich get richer, and the poor get poorer. This is where the government is in the hands of the rich, and they make policies that benefit them.

This is what happens when capitalism is stretched to the extreme. Maybe it’s not always this bad in all the countries, but it is a possibility.

Equal opportunity is a good idea, but when we bring it to reality we see that it is not possible. The rich have a lot of resources, and they can make sure that their children get the best education, and the best opportunities. The poor don’t have that luxury.

A poor person living in a remote village will never get as good internet as a rich living in Bengaluru. Reason? It just doesn’t make financial sense to install a 5G tower in that village, as it is not profitable.

But does that make sense?

Is Socialism the way?

A person only grows when there is greed. When there is a need to grow. When there is a need to be better than the other. This is what capitalism does. It makes sure that the rich grow, and the poor have the opportunity to grow.

While socialism does make sure that the poor are taken care of, it also makes sure that the rich are not able to grow. This is because the rich are taxed more, and the poor are given more. This is a good idea, but it also makes sure that the rich don’t have the incentive to grow.

Always punishing the rich would mean that the rich would not want to grow. There would be two outcomes:

  1. Rich would stop growing, and government income would stall
  2. Rich would move to another country where they are taxed less

Do you see India here? We have a lot of rich people who have moved to other countries. Reason? They are taxed less there.

The revenues of the government are not growing as much as it should. In a previous article Do we pay fewer taxes? - An Analysis, I showed that the tax collection is very low for a country like India. So low that we are not able to provide the necessities to the poor. Should we be indulging in socialism then? With such low numbers of taxpayers, do we want development like the capitalistic countries?

Midway

The best way to go about this is to have a mix of both. This is what most of the countries are doing. They have a mix of socialism and capitalism. They make sure that the poor are taken care of, and the rich have the opportunity to grow.

But here is a catch - the mix has to be well thought out.

I will give an example. Consider two different policies of governments within India.

  1. Karnataka’s Gruha Jyoti Scheme - This policy was brought up by the Congress government of Karnataka. They gave away free electricity to the poor. This is a good idea, as it helps the poor. But the rich also got the benefit of this. Here the problem is not who is getting the benefit, but after running this scheme for 5 years, do we get in a better state than today? No, right? Shouldn’t this be a consideration when our policymakers make a policy? They are not able to spend on upgrading the power grid as the state electricity board is in huge losses.

  2. Centre’s PM Surya Ghar Muft Bijli Yojna - Here also, something is being provided for free. But it’s not electricity. It is solar panels. After about 5 years of running this scheme - a lot of people will get free electricity, not only for 5 years but for the next 25 years. This is because the solar panels have a life of 25 years. Even if the government shuts down the plan, the people will still have free electricity. Net energy imports for our country will be reduced. We will not need as much coal, and we will not need as much oil. This is not just good for people, it’s good for the government as it’s a one-time spend - not recurring, it’s good for the environment, and it’s good for the country’s overall macroeconomic health.

How to evaluate socialist schemes?

It’s very easy, think let’s say after 5 years, the scheme is stopped. Will the people who were getting the benefit of the scheme be in a better state than they were 5 years ago? If yes, then the scheme is good. If not, then the scheme is bad.

The people who got free homes will keep it forever. In Karnataka’s case, the people who got free electricity, will not have it after the scheme is stopped.

In general, recurring expense schemes are bad.

The government should spend on welfare, but more cautiously. There are a few sections where it is better with socialism in place:

  1. Healthcare
  2. Education
  3. Sewage
  4. Water
  5. Roads

Here also, while we are setting up AIIMS and IITs at record numbers, we need to spend more on primary education. This is a one-time spend on a person. But then, of course, we definitely do need more AIIMS and IITs.

It’s worth thinking if free transport is better or spending that money on safe transport is better. We can make transport free once we are satisfied with the system that we have in place. Not spending on the transport system, and rather making it free, just adds up to the infrastructure debt that we have. This increases transportation costs, and things end up getting more expensive.

Conclusion

Capitalism is good in many places and Socialism is necessary in many places. But the mix has to be well thought out.

If not, a country can end up in a difficult situation.

The government should spend on welfare, but more cautiously. We should cast our vote thinking about the long-term effects of the policies that the government is making and parties are promising.

We should not be voting for freebies but for a better future.