Chai Point, H.D. Kumaraswamy and competition

Earlier this week, I was at Narayana Health city. On the first floor of one of the hospital buildings, there were two providers of hot beverages to patients- Chai Point and Cafe Coffee Day. Suddenly, I thought of what Nehru would probably say about this. Something along the lines of “Why do we need two outlets on the same floor? This is a waste of resources.” After all, he was once said to have exclaimed, “Why do we need nineteen brands of toothpaste?”

Well, we need multiple providers of goods and services even when the product/service is almost exactly the same (homogenous goods) because it is a very efficient way of keeping the producers in check. A company cannot simply jack up the prices or cut corners on quality and get away with it. If it does something that displeases the consumers, then there is the very real threat of competitors swiftly eating up their market share. So, in essence, competitive markets regulate themselves even if there are no government bodies closely monitoring their activities.

Next, this is from yesterday’s TOI:

Chief minister HD Kumaraswamy’s fiery temper was on show on Wednesday during the run-up to the village stay at Karegudda, Raichur district. During the bus journey, he lost his cool thrice in about 30 minutes after a group of employees from the Yermarus Thermal Power Station, Raichur, blocked his vehicle to draw attention to unpaid dues.

When they shouted ‘Shame, Shame!’, he reportedly yelled back: “You voted for Narendra Modi and want me to get your work done… Should I order a lathicharge?” This enraged protesters who staged a dharna in front of the bus.

The BJP seized on his remarks and threatened a statewide stir if he didn’t issue an apology. Later, in Karegudda, the CM said: “I lost my cool and reprimanded protesters as I was hurt by their behaviour. I’ll be careful in future and won’t become fodder for the media.”

Even if the BJP wasn’t bothered by whether the CM can be undermining democracy by such making nonsensical statements, it was still in their interest to bring this incident to light and demand an apology. Political competition kept HDK in check.

More generally, parties in the opposition play a big role in unearthing scams and checking other State excesses. Even when we talk about reforms, the dynamics of political competition are useful to keep in mind. I had once heard Karthik Muralidharan say that the low-hanging reforms, say in the agricultural sector, are best started off in states where the majority of the rents are controlled by the opposing party. In other words, a ruling party is likely to start reforms in regions where the opposition party has control/power over bribes as opposed to starting reforms in regions where their own members are the money extractors.

In markets as well as in politics, competition is a beautiful thing.

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