12-05-2006, 08:56 PM
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<b>Confused Communists </b>
How Singur's land should have been priced
Singur's events and pictures are destined to go down in the rapidly diminishing history of communism. <b>A Marxist Government uses heavy police forces against peasants and villagers to take over land on behalf of the leading private business house of India.</b> A West Bengal Rajya Sabha member and Marxist leader, Sitaram Yechury, states on television that Government compensation of "152% of the market value" is fair for the peasants, and that peasants had been freely accepting such compensation in exchange for their land. These surely mark the epitaph of the official communist movement in this country as embodied in the CPI and CPI-M. Let us start with Mr Yechury's fresh entry into market economics.<b> While he may be personally unfamiliar with financial theories of asset-pricing required to price Singur's land, he must have some friends in the JNU Economics Department with access to standard textbooks like Brealey & Myers' Principles of Corporate Finance.</b>Â <!--emo&
--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo--> The first error he has made was to refer to the "market value" of Singur's land: that in fact has remained an unknown. Apparently, some kind of an average of the previous three years' prices has been used. That is like using "historical prices" to evaluate the value of a company's shares in the stock-market. Everyone knows that the historical "book-value" of a share is meaningless in evaluating its current market price. What happens in the stock-market is that a share-price is "marked to market" on a daily basis, i.e., its price as determined by supply and demand conditions today (not the past), based on the calculation of the sum of discounted expected cash flows. If Singur's land is to be priced by market principles for a factory to be set upon it, there should first have been some kind of fair auction process of the land ~ for example, some other business house may have wished not to produce cars but something else like telecom equipment on the same area, and may have offered owners of the land a much better price. Market economics aside, let us recall the CPI-M had broken away from the CPI largely as a result of splits between the Soviet Communist Party and Chinese Communist Party. After the end of Soviet communism, Beijing is the polestar for all Indian communists: the visiting Chinese President even had a private meeting with Indian communist leaders to give them his ideological advice. Maoism was built on an idea that "the people", i.e. the "good classes" ~ peasants, workers, petty bourgeoisie, national bourgeoisie ~ would dispossess the "bad" or "antagonistic" classes of "landlords", "comprador bourgeoisie" and other "running dogs of imperialism". The monumental cruelties bestowed upon China's people due to such Maoist rhetoric are well known. But how will our domestic Marxists square their own actions in Singur with any of that? It cannot be done. What can be done is to re-evaluate the land expropriated in Singur by proper market principles. That may well be the only way of addressing the dispossessed.
http://www.thestatesman.org/page.news.php?...ess=1&id=139017
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<b>Confused Communists </b>
How Singur's land should have been priced
Singur's events and pictures are destined to go down in the rapidly diminishing history of communism. <b>A Marxist Government uses heavy police forces against peasants and villagers to take over land on behalf of the leading private business house of India.</b> A West Bengal Rajya Sabha member and Marxist leader, Sitaram Yechury, states on television that Government compensation of "152% of the market value" is fair for the peasants, and that peasants had been freely accepting such compensation in exchange for their land. These surely mark the epitaph of the official communist movement in this country as embodied in the CPI and CPI-M. Let us start with Mr Yechury's fresh entry into market economics.<b> While he may be personally unfamiliar with financial theories of asset-pricing required to price Singur's land, he must have some friends in the JNU Economics Department with access to standard textbooks like Brealey & Myers' Principles of Corporate Finance.</b>Â <!--emo&
--><img src='style_emoticons/<#EMO_DIR#>/biggrin.gif' border='0' style='vertical-align:middle' alt='biggrin.gif' /><!--endemo--> The first error he has made was to refer to the "market value" of Singur's land: that in fact has remained an unknown. Apparently, some kind of an average of the previous three years' prices has been used. That is like using "historical prices" to evaluate the value of a company's shares in the stock-market. Everyone knows that the historical "book-value" of a share is meaningless in evaluating its current market price. What happens in the stock-market is that a share-price is "marked to market" on a daily basis, i.e., its price as determined by supply and demand conditions today (not the past), based on the calculation of the sum of discounted expected cash flows. If Singur's land is to be priced by market principles for a factory to be set upon it, there should first have been some kind of fair auction process of the land ~ for example, some other business house may have wished not to produce cars but something else like telecom equipment on the same area, and may have offered owners of the land a much better price. Market economics aside, let us recall the CPI-M had broken away from the CPI largely as a result of splits between the Soviet Communist Party and Chinese Communist Party. After the end of Soviet communism, Beijing is the polestar for all Indian communists: the visiting Chinese President even had a private meeting with Indian communist leaders to give them his ideological advice. Maoism was built on an idea that "the people", i.e. the "good classes" ~ peasants, workers, petty bourgeoisie, national bourgeoisie ~ would dispossess the "bad" or "antagonistic" classes of "landlords", "comprador bourgeoisie" and other "running dogs of imperialism". The monumental cruelties bestowed upon China's people due to such Maoist rhetoric are well known. But how will our domestic Marxists square their own actions in Singur with any of that? It cannot be done. What can be done is to re-evaluate the land expropriated in Singur by proper market principles. That may well be the only way of addressing the dispossessed. http://www.thestatesman.org/page.news.php?...ess=1&id=139017
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