Archive for the ‘Tragedy of commons’ Category
There is one thing I don’t understand about the Socialist utopia. Everyone will have food,clothes, houses, the morning Hindu, free IPL tickets etc etc. But think about the average dweller. All around him he sees the same kind of houses. Every month he gets the same pay, same as everyone else, same always. Every girl around is wearing the same damn dress. And of course everyone loves all his fellow men and loves to kiss all their a##es.
Seems heavenly indeed. But I want no part of that. Let me rot in this greedy capitalist hell. I love differences. I appreciate inequality. And more than anything else I always love a good debate. So let me go ahead and start a few on the issues where I feel there is a mind numbing confromity of views. In fact to make matters easier, I would play the Devil’s advocate.
1. The %$%$%$%$ Rupee Spectrum scam:
Before discussing the issue, we need to know the data first. So what is the issue here. A corrupt central minister cost the exchequer nearly 10,000 Cr. No wait it is 30000 Cr. No no 60000 Crore. Well can someone give me a number? No? Of course no. One thing I don’t understand is, who came up with all these numbers? The logic seems to be, now that the government has garnered for itself funds to the tune of 67,000Crores from 3G allocation, if it had done the same for 2G too, we would all have been richer by some 60,000 Crore. (Again this linear reverse calculation of possible price is senseless )
Wrong. We would have been all the more poorer. 3G is going to take a real long time to establish itself in India and even if it does it is going to be quite costly. All the mobile operators have emptied their pockets out for the auction. They had to. Business logic dictates that a failure to get the lucrative portion of the spectrum, however high the cost may be, would convert into a huge loss in market share. So most of their bottomlines are hurt. Now who is going to bear these costs ultimately? The consumer of course. The competition towards zero tariff that we are all enjoying in voice and messaging services may never happen or might take a long time to happen in 3G services. Companies will try to maintain a lower bound. But there are still a dozen players in the market and competition is inevitable. So they would look to cut costs in other areas. One possible effect could be a freeze in expansion of infrastructure. This again would only hurt the consumers.
Oh my God. Why are you whining so much like you own these companies, I hear you say. Doesn’t government get all the money. Isn’t it our money? Well you wish.
How can one be happy about wealth being transferred from the private economy to the government? The only aim of the politicians is to win the next elections while making some money for themselves. So a part of these funds would disappear into a black hole and the rest would go just to bridge our deficit. Our profilgate, over spending politicians just got a relief for themselves, without changing their habits a bit. And we are celebrating that our deficit is wiped a little. But at whose cost?
Do I have a solution? I hate proposing solutions. I believe it is immoral to tell others what to do with their lives. But I would just postulate what would have happen if a free market lover ( definitely not our current Prime Minister ) comes to power. He would decide that the government played no role in the creation of wireless technology. So it is wrong to claim the wireless spectrum as it’s property and levy ownership tax for it. The dozen or more telecom companies would then be in a bit of a spot. How to settle the ownership claims among themselves. Well they would have probably formed a consortium (like FICCI ) and worked out property arrangements among themselves through contracts. Any company that owns a part of spectrum would pay all others some amount for their sacrifice of ownership. In this way all the funds would have stayed within the telecom industry and no one would have lost at net. But I am just theorising ( a fancy word for dreaming ). One or other of our businessmen would have sent a delegation to Delhi complaining of foul play by competitors and requested the government to intervene. Isn’t it more important that your rival suffers, even if it means you suffer a bit too?
(Check Swaminathan Iyer’s views on this topic here. He is my favourite Indian economist- one who actually understands economics as something more than statistics)
2. A tale of two brothers:
Media loves villains. And our political establishment keeps providing them some. Two brothers from Karnataka are the latest and the scariest of the lot. Here are two corrupt politicians who are stealing all our natural resources. If only we could get a few honest bureaucrats to kick them out, our country would be richer.
Well exports are a very funny issue in economics. Sometimes people bereave that the country is exporting less than it imports, we are becoming poorer etc. At other times people complain about resources leaving the country as exports. Both these views have a fundamental flaw. They view the country as one big grocery store. I would love to discuss this particular notion in detail. But in a latter post.
Now to the issue at hand. I am not a paid agent of these people. I do not know them. I have never visited that place and hell I have never been to a mine. And that’s precisely my point. People may be right in saying that these two men have no right over those lands. True. But you and I don’t either. How can we complain that someone is stealing something from us, when we don’t even know what the thing is. To say that all ores are national resources is simply, well to put it mildly Socialistic ( Atrocious is the correct word ). Why should anyone particular resource be classified as national resource? How would you like it if your industry were declared a national resource and all those who profit from it declared criminals. Now don’t say, this is different. Iron ore is a raw natural resource. It is crucial to safety, etc etc. You can come up with any reason you want if you have passed judgement beforehand. Recently Tamilnadu government nationalised ( Yes, that’s the word ) all the schools. How does that sound?
So are these politicians faultless? Most probably not. With the huge power they enjoy, they could have scared competitors out of business. Illegally appropriated someone else’s property etc etc. But are these the reasons they are being hounded? No. Do the rival politicians who hound them want to correct these wrongs. No they want to nationalize them so that these resources will forever stay the personal fiefdom of their sons and daughters. Infact the prime reason why only corrupt people flourish in mining business in this country is the immense number of regulations. We have denied private players a proper chance for decades. It is foolish to believe that in the absence of an owner, a property will stay in public hands. If you believe that, you are under a socialist delusion. Any so called common property is always exploited by the most powerful man around. So nationalization simply transfers wealth from private players who frugally administer the wealth, to corrupt men who do not care heck about it. Why would these politicians care not to mine every tiny bit out without saving for the future, when they know that the mine is not theirs.
In all the history of the world no one has ever washed a rented car. Just remember that.
(To be Continued)