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Thu, April 18, 2024

Everybody loves Monopoly, Nobody likes Competition

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These days Monopolies and competition are on the news. Rattled by a number of bus accidents with great many fatalities, we as a nation seem to have suddenly woken up to the sorry state of our transportation system. We have identified the villain, the dreaded Syndicates that decide which vehicle is allowed to ply and in what time and date. All of a sudden it seems, we have realized the syndication or monopoly in the transportation system is bad and causing immense harm to the nation and her economy. The media is awash with reports of how the syndicates or ‘transport management committees,‘ as they are popularly known in Nepal, are keeping buses and other vehicles in operation that should have met the hammer of a scrapper decades ago, and how they are ensuring that new vehicles (as they are supposed to be safer and more road worthy) do not get route permits, necessary to ply on a particular route. The parliamentarians are calling for the end of the syndicate system. Our ex-chief bureaucrat was seen on TV screens, saying, these associations can and do buy the politicians, the police, the district administrator and what not. It has been proved that in this country, the transporters associations are mightier than the laws, government and courts. The law explicitly prohibits monopoly. The Supreme Court has passed a judgment to act against syndication in transportation. Ensuring competition has been the stated policy of all governments. The ‘learned‘ economists will explain that monopoly is a situation where there is a single or a dominant seller of goods and services, who can dictate the condition of sale and the price. In contrast, competition is defined as a situation where there are multiple sellers, and not they (the sellers) but the ‘invisible‘ hand of the market decides the conditions of sale and the price of goods or services concerned. But in our case, we seem to have proved all this theory wrong. Let us take the transportation business itself. The sector is dominated by operators who own a single or a few vehicles. Even the so called larger operators formed as companies do not have a commanding share of the business. Rather they often complain that they cannot sustain the competition coming from small operators, who pay lower taxes and have fewer overheads. Not a single known business house of Nepal seems to operate a large surface transportation company. (Of course, air transportation is different as you need much larger resources to own and operate aircrafts). If there is no dominant player, then how is the sector monopolized? The answer comes in the form of associations or committees as often termed in the sector (in yesteryears, they were simply called ‘syndicates‘). These committees or syndicates, not only decide the fares and the procedures to be followed by the operators, but also actively use their money and muscle forcing everybody to fall in line. There may be competition among various dons on who will be at the helm of these committees, or sometimes which committee will be the supreme power of the route, but competition among operators for attracting greater number of clients is unheard of in our homeland. The monopolistic situation is not confined to transportation alone. The government owned oil company with its dealers (they are also organized into an association) creates havoc in the market from time to time. The associations representing the hoteliers, retailers, the doctors, the lawyers, the auditors all seem to fight for the monopoly. Take any sector, the organization which claims to represent the sector would like to have a monopoly in the sector. The difference is that only some like the transporters can effectively impose it, while others are unable to enforce it. After all, Adam Smith, the father of modern Economics, had realized this and wrote in his famous treatise called ‘An Enquiry into the Nature and Causes of the Wealth of Nations,‘ "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” The associations, chambers, committees, councils and unions seem to be the vehicles for enforcing monopoly as they are created to protect ‘the rights and interests‘ of their members and the members view monopoly as their interest. The desire of having a monopoly on one‘s own trade is not confined to the business sector alone. The same is true for professionals, politicians, trade unionists, employees and everybody else. If an employee is asked, "what sort of job she or he would like to land on?” The obvious answer would be one with high pay and full security. Full job security for an employee means nobody can fire her or him, even when she/he does not do a damn. This is nothing less than a complete monopoly over a position. The trade unions are the living example of monopoly. It is only with their monopoly over the workers that they can strike a bargain with the management. A trade union which cannot exercise control over the workers, at least a critical mass of them, is not worth a penny of consideration by the management. Our political system is also a living example of monopolistic tendencies. We have always witnessed, our leaders, once occupying a position of power, would never like to relinquish it. It is not only concerned with the state authority, but authority within the parties. We may have frequent changes of governments, but the people who are likely to occupy the positions remain the same. So it may not be a monopoly of a person but a monopoly of a clique. The scene looks strikingly similar to the continuous fights among gangs for control of the streets in various cities and town around the world. The fight itself may be a fierce competition; however, it is not for having an environment of competition, but for gaining a monopoly of control. Currently, the topic of discussion in our political circles, if not about the ministerial positions, seems to be on the number of local bodies the country should have. Everyone seems to agree that the number should be set at a manageable limit, which is economically viable. But the top leaders of the political parties have to accommodate their mid-level cadres. So for maintaining their hold (monopoly) on the parties, they will end up increasing the number of local bodies, like they did with the number of CA members (otherwise how can you explain that the current number of members of the legislature of Nepal is more than that Indian Lok Sabha or American Congress). Securing a safe seat (and that is monopoly) seems to be the overriding rule of the game in our politics. The environment of monopoly and competition in the economy are similar to democracy and autocracy in politics. As we see in our transportation business, it is not necessary that there be a single operator to have a monopoly in the sector. The same is true for politics; it is not necessary for a single person or a ruler or a party to have an autocracy. This writer had read somewhere about the strikingly different plights of western and communist leaders after retirement. The essence was, when western leaders loose power, they can pursue their hobbies, make money by delivering lectures and writing memoirs, or return to their earlier profession; but when the communist leaders retire, they lose their guards, their limousines, their summer houses and the plethora of sycophants accompanying them. The later seems to be true to our situation. There is no profession that Mr. KP Oli can go back to because he had none; and in the trade of stand-alone comedy he cannot compete with the likes of Mr. Manoj Gajurel. Mr. Deuba cannot deliver lectures as nobody will be willing to pay to listen to him. Mr. Prachanda cannot write a real memoir of how he made his followers kill those who were, in his perception, the enemies of the people; this may stand as proof to land him in a criminal court. So, they are likely to continue striving for their own monopoly at the helm of state affairs of the country. Although we strive for monopoly in our actions, but in our public deliberations, a ‘monopoly‘ is a dirty word whereas competition is respectable and virtuous. Taking cue from sport contests, we say that the competition allows us to reveal our true potential. We praise competition in the same vein, as we say that there is no better alternative of democracy or of a government elected by the people. The politicians say they are all for democracy and election (provided the election is ‘free‘). The professionals and businessmen say they are all for competition, provided the competition is ‘fair‘. Free election for a politician means he should win that election. A ‘fair‘ competition for a professional or a businessman is equal to having their own sway in the sector concerned. So the golden rule is, eulogize the ‘competition‘ but fight tooth and nail for your own ‘monopoly‘.
Dr.-Hemant-DawadiDr Hemant Dabadi is a Senior Fellow at Samriddhi, The Prosperity Foundation, well-known expert writing and researching on economic aspects of federalism in Nepal.
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MARCH 2024

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