MGNREGA Is A Fraud; Both On Constitution, And On Economics

By Anang Pal Malik

In an edit page article in the Indian Express(02-07-15) , Jean Dreze, one of the chief architects of MGNREGA, and a former NAC member, writes, based on some recent studies he has cited, that MGNREGA’s criticism as a ditch digging programme is wrong, and that it is creating useful permanent assets. Though his conclusions themselves can be faulted because of the very small sample size in the case of studies he has cited, but MGNREGA is not wrong and unconstitutional because of its results, but because of its very concept.

The intent of its architects slips out in the very first paragraph of the article when he writes: “one of the primary aims of the MGNREGA is to empower workers and reduce their dependence on private employers.”

It has been the original dream of the Leftists that government should be the only employer in a country. That all working age citizens should be the employees of government. MGNREGA is just the watered down version of the same dream. But even if we leave aside its absurdity in theory itself, now we have some practical results. Three jurisdictions just gone bankrupt: Greece, Puerto Rico, and Detroit; all had just 10% of the working age population as government employees, and they could not sustain even this ratio and went bankrupt.

Leftists, in many countries, first tried to have all industries and factories  as government owned only, so that people could all be government employees in an industrial economy. But government owned factories and industries themselves became a drain on tax revenue, instead of contributing to the coffers of the government. So, slowly but reluctantly the Leftists gave up this idea, reconciling themselves to the fact that government can not run factories and industries. But the idea of making people government employees never went away.

MGNREGA is just the latest try out of this idea of the Left. They have so designed it that wages stay barest minimum, so that the tax revenue of the government can sustain them. That this will mean a population in subsistence economy dotted by a minuscule population enjoying the fruits of an industrial economy has not occurred to them. Or may be they know this, but want this only, because then they will have a continuous supply of resentment and hatred-their staple.

But even its cost may not be sustainable. Already a PIL is under consideration demanding wages of MGNREGA to be equal to minimum wage in each state, and not the wage defined in the act passed by the parliament. Courts may indeed go by their ideology, and not by law, and may “legislate” minimum wage to be MGNREGA wage. That would itself increase the cost threefold at least. Then there is the matter of number of days. Currently it guarantees only 100 days of work. In the last UP elections, one of the political parties had promised to increase these to 300 days. Fortunately it lost the elections. But elections happen every five years, and politicians are always desperate to win them, so it is only a matter of time that 100 days are increased progressively to 365 days. And even if the Courts decide to go strictly as per law, and refuse to increase wages under it; politicians may do so to win elections. So with 365 days guaranteed employment at minimum wage under MGNREGA, every working age Indian in rural India will finally become a government employee. The country will of course go bankrupt within years of that, but politicians and activists will have earned enough during the period for a life in Europe for many of their coming generations.

MGNREGA is unconstitutional because nowhere in Constitution it is given that it is the duty of government to arrange livelihood of the citizens. Work is not something that government can generate out of thin air. It in fact gets all its revenue because citizens themselves work and pay it taxes. Citizens work because it is innate in human nature to arrange food and shelter for themselves. All commerce and industries of the world are the results of this innate need of man as a living being. And man has been successfully meeting this need of his since his existence, without any assistance from the government. Men were independently meeting this need initially, later they discovered that division of labour leads to more efficiency, so they went for it, and employers and employees were born. With the industrial economy, contrast between employers and employees became stark, and the Left’s desire to eliminate private citizen as employer of another private citizen took shape. System of government as the owner of all means of production was born, but failed miserably wherever tried, and the Left gave it up quietly. But they never gave up the idea of government as the sole employer as evident by MGNREGA.

MGNREGA is unconstitutional even at far more basic level. Government is nothing but a group of human beings assigned to govern the country for which they can raise revenue through taxes. MGNREGA means that government can force a citizen to work so that it can pay another citizen for a work it purportedly assigns the latter, making the former a slave of the latter.

MGNREGA is a anti-economics because it completely misunderstands the concept of job and employment. No economic activity can be undertaken to generate employment. Economic activity is undertaken to produce something that fulfils the need of men able to pay for it. Jobs are the byproduct of economic activities, not their objective. Because if job is the objective, the product will not sell, and the economic activity will disappear because of lack of revenue.

If MGNREGA is claimed to be creating public works, there was no need for it, because if public works are required in a community, and community has funds for them, they will be undertaken in any case. If it claims that public works were required, but were not being undertaken for want of funds, it becomes a budget allocation in perpetuity, making mockery of annual budgeting exercise, undermining authority of the elected parliament of the day. It also inverts the whole concept of public works. Public works are undertaken after a community sends its demand for them as proposals, which are then discussed by parliament and voted upon. MGNREGA is a mockery of this constitutional requirement. If it claims to know the need of public works, it is nothing but Central Planning by another name: Central Planning is another experiment of the Left, failed and given up long ago.

MGNREGA is unconstitutional and anti-economics. It is the latest attempt of the Leftists to make every citizen a government employee, via the backdoor this time, and will have the same effect as oversized governments have always had- it will bankrupt India, without having to show anything in return. It should be straightaway scraped, before it becomes too big to fail without bringing down the whole country.

(To read an earlier discussion of MGNREGA by Anang Pal Malik, click here.-Ed)