Wrong-headed policies condemn millions to misery

Continuing from where I left off the last time, I quote again Mr A B Bardhan:

I am against privatisation of the state electricity boards. I simply do not understand the merits of the decision of setting up state regulatory commissioners even as private distributors increase costs repeatedly. In a state like Delhi, for instance, can any private power distributor without an established work force be able to carry out electrification?

I am not sure what it is about Delhi that makes it so unique in the whole universe with regards to the generation and distribution of electric power. From what Mr Bardhan says one can only conjecture that there is something astonishingly unique about Delhi that it is not subject to the usual laws of the known universe. In the rest of the universe, the generation and distribution of electrical power can be, and has been, handled quite competently by the private sector. Perhaps it is the bit about “private distributors increase costs repeatedly”.

That is certainly most unique. In the rest of the universe, firms try to reduce costs so as to increase profits. Going by Mr Bardhan’s assertion, it must be something in the air in Delhi that makes power distributors increase costs instead of reducing them. Be that as it may, the fundamental point is that there is no reason on earth to believe that the government has been or even can be better at providing power than the private sector. Any undertaking by the Indian government is plagued by bureaucratic corruption, political interference, nepotism, and plain old fashioned idiocy. Which explains why most of the public sector units are national resource sinks, not centers of excellence and profits. Do we really want to give more responsibilities to someone who has repeatedly demonstrated in the most stark terms that he is totally incompetent?

Talking of responsibilities, it is important to recognize that there are things that only the government can do and these things have to be done. Any government which fails in those things cannot be trusted to do things that it has no business doing. Take for instance, primary education. It cannot be done by the private sector. The public sector has to finance primary education, if not actually be in the business. So also the government has to provide an efficient legal system, public safety and security, and other such public goods. If a government is unable to even provide those basic public goods, how in the name of god almighty does one propose that the government get into areas that it has no particular advantage in and has no business in?

I believe that ultimately the universe is comprehensible. That implies that whatever happens, however bizarre on the face of it, can be explained. Now our task is to explain how seemingly rational people can hold totally absurd notions in their heads and influence policy which could doom hundreds of millions to a miserable fate.

That question I will take up tomorrow. For now, let’s have a moment of silence to remember that asinine policies have condemned many hundred millions of Indians to a miserable existence for decades. Sad part is that there is more to come given the unholy alliance that is directing the ship of state.

{Contined in “The Government’s Anti-Midas Touch“}

Author: Atanu Dey

Economist. View all posts by Atanu Dey