India works on the philosophy of,”Everybody is a crook. Design systems such that nobody is able to do anything wrong. But, but if anybody still manages to do something wrong, do not punish him.” Unlike in the west where they assume that every citizen is out to do things the right way, and if anybody is caught doing wrong, he is swiftly punished. It is ridiculous, this whole talk of squeezing black money out. Those who create black money will find thousand ways to spirit it away wherever they want to take it. Only, officials will get hundreds more handles to harass the common man. I admire socialist thugs. For every problem created by socialism, as a solution they manage to increase government size and government presence in our lives, leading to even more problems, for which they have similar solutions. Black market, and hence black money, are the first consequence of socialism every where. When Lenin took over in Russia, economy came to a standstill. He had no clue what to do. But life always finds ways to continue. So a black market quickly developed all over Russia. Lenin knew it, but he looked the other way, because alternative was to accept failure of socialism. So black market was one thing that thrived in USSR through all its life. Black money in India is generated because government regulations have made it impossible to do business the legal way. Government having powers to change business outcomes will always mean that there would be people out to bribe government officials which would all be cash. So there would be huge off-the-book economy. But not a single voice has been heard advocating dismantling of government regulations of economy. They will talk of band-aids, but would make sure that the cause of the festering wound is never addressed. After all, their bread and butter, and power, comes from those wounds.
Separation of economy and State will eradicate black money the way the pesticides finish pests. And no other measure will make any dent.
Compliance with regulations in itself has huge direct costs, in the form of record keeping and return and report filing, etc., even if everybody becomes teflon honest. And then we need a huge government army to scrutinise those records. Add to that the cost of slow speed of doing business. On this account itself, we have full justification of complete separation of economy and state.
(Anang Pal Malik has written at length about the problem of black money and its solution in his book Corruption In India. To download your free copy, go here.–Ed)