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Re: Monopoly and regulation



Sanjeev:  I am glad we have more agreement on this issue than I
thought -- I was a little worried there!  So we agree on the basic
democratic principle that 

  In a democracy no power is absolute and their are limits to all
authority.

All person in authority must act within the limits of his/her authority.

All persons must follow the rule of the law.  No person is above the
law.

Persons in authority can only issue lawful orders.  No person inside
or outside the chain of command is obliged to obey an illegal order.

All people within and outside will have recourse to appeal an unlawful
or an arbitrary order to an higher level within the government or to
an administrative judge (magistrate) or challenge such an order in a
court of law.   All such appeals or challenges will be heard in no
more than 60 days and a ruling issued in no more than 30 days.

The above cannot be implemented without a merits system in the
government.  The political as well as career service people will have
their job descriptions and authorities defined.   The system of
transfers in the civil service will be abrogated.  The meaningless
IAS/IFS/IPS exams will be abolished.   The Public Service Commission
(like the Planning Commission) should be abolished.  
Agencies/Dept.(Ministries) shall hire according to their need and in
accordance with the merits principles.

Public Service Commission will be replaced by a central offfice of
Personnel(responsible for setting up merit systems, personnel
guidelines but not responsible for central hiring). 
Public Planning Commission should be replaced by Office of National
Policy which can be an idependent office under the Office of the Prime
Minister or it can be in the Office of Finance and Management.

AND I HAVE SAID BEFORE THERE HAS TO BE A COMMITMENT TO INVEST HEAVILY
IN TECHNOLOGY AND PROFESSIONAL SYSTEMS.

AGE DISCRIMINATION IN HIRING AND OTHER AREAS MUST BE ABOLISHED.


I know Sanjeev, that neither of us have a personal stake in Microsoft.
 What we were discussing were not Microsoft but how to deal with
Monopolies.  As our discussion reflected that in India monopolies will
pose different kind of problems.  Please correct me here.  But most
monopolies are owned by the government.  How to privatize them is what
we have to deal with.  Many of these monopolies have prevented other
competitors from entering the market.  This is where we can get them. 
The manifesto can state that it will be illegal for any government
organization to use its monopolistic power to prevent competition.  
Indian Airlines comes to mind, where it did use its monopolistic power
to keep competition out when the government "liberalized" the airline
sector.   
The question I have is isn't there a monopolies commission or some
such organization in India?  What do they do, or what have they done? 
What is there mission or mandate?

Lastly we have still have not addressed the question of unaccounted
money (In my view the number one problem and the root cause of all
problems in India)  All political parties must be required to submit
an audited statement.  All donations should be out in the open. 
Secret or underhand donations to political parties or politicians will
be illegal.  HOW MUCH CAN INDIVIDUALS CONTRIBUTE ANNUALLY?  HOW MUCH
CAN COMPANIES AND CORPORATIONS CONTRIBUTE ANNUALLY.  SHOULD THE
GOVERNMENT OWNED COMPANIES BE ALLOWED TO CONTRIBUTE?
(IN MY VEIW NO)

Sanjeev Sabhlok <sabhlok@almaak.usc.edu> wrote:
>
> Hi Kush,
> 
> Thanks for your mail. I almost thought that everyone had gone to
sleep!
> What's the point of disucssing public policy if we do not have
> differences? What is electronic democracy for, anyway?
> 
> I will try to divide your points into two: one, one which I agree
with,
> and two, on which I think we need to think some more on.
> 
> A) I fully agree with:
> =======================
> 
> One:
> 
> > The issue is of arbitrariness and not how much regulation.   There
> > should be no arbitrariness in the system.  The government must
have a
> > valid case.   Once you have those restraints in place, the system
> > works as it has in the  U.S.   
> 
> Two:
> 
>   But should we just sit
> > and watch if a particular player uses its market position to keep
> > competition out and making things difficult for competitors.  I
think
> > there is a consensus in United States that such tactics are bad FOR
> > THE PEOPLE AS WELL AS FOR BUSINESS.  
> 
> Three:
> 
> > I think we better not make that assumption that government has
> > arbitrary regulatory powers.   Every regulatory Agency in the United
> > States KNOWS that there are limits to their authority. WHICH IS A
> > BASIC DEMOCRATIC PRINCIPLE. Compare this to India where even a clerk
> > thinks that there are NO LIMITS to his/her authority, let alone high
> > ranking officers and politicians.   Once you take that arbitrary
> > authority away, bring in accountability, and a strong independent
> > judiciary, things will work.  However, it is a fallacy to assume
that
> > in every situation markets can correct themselves or that government
> > acts because of politics. Government has a duty to protect the
> > consumer.  At least that is the mission of the FTC in this
country. In
> > cases after cases FTC has done an excellent job.
> 
> Four:
> 
> > The other part of your statement that human being cannot be
trusted is
> > true.  That is why we have the system of division of powers and rule
> > by law.  That no man could be trusted was why the American system of
> > division of powers came into being.   And that is what I have been
> > saying through out: that it is the system which keeps people in
> > government(AND FOR THAT MATTER ANY ORGANIZATION) honest.   I fully
> > believe that such systems can be put in place in India.
> 
> B) What I think we need to think a bit more about, and try to resolve:
> 
> > That brings us to quoting the heavy weights: "Stigler the Nobel
Prize
> > winner who died a few years ago, Becker states,  "The way to prevent
> > monopolistic practices, he believed, is to encourage domestic and
> > foreign competition rather than through detailed regulation  of
> > business by the Justice Department." Becker himself won the Nobel
> > prize in 1992 for his work, on one thread of which I am carrying
> > forward in my  dissertation (family economics)."       
> > 
> > I have nothing against Becker, I am sure he is a renowed economist. 
> > But the above statement is no more than generalized rhetoric.  Let
us
> > examine it.  First question:   In what way has the justice
department
> > prevented domestic and foreign competition?  Give us current or past
> > examples please.
> > 
> > You go on "  The key problem that Stigler discovered  was that
> > "instead of a single-minded devotion to improving competition, 
> > regulators responded to pressures to attack or defend 'big'
business,
> > to  protect small companies, and to appeals from political
> > constituencies."
> > 
> > Again a very generalized statement -- rhetoric, that's all.  Give us
> > examples please where this has happened.
> 
> Let me assure you, Kush, that I was not taking the side of Microsoft
and
> bringing these "big" Nobel type guys to impress you and to persuade
you to
> change "in favor" of Microsoft.  I have not studied this case, I am
a "lay
> person" making a very preliminary judgment based on a variety of
factors
> already outlined earlier. I was simply happy that some sample of
people
> agreed with my personal view, but these views are completely
irrelevant. 
> 
> Reverting to the problem we have at hand (the slight difference, may I
> say)?
> 
> In the very prominent field of Law and Economics (a new
sub-discipline of
> both Law and Economics), Stigler holds a pre-eminent position. The
> specialization of Stigler, for which he received a Nobel Prize, was,
"for
> his seminal studies of industrial structures, functioning of markets
and
> causes and effects of public regulation."  The Nobel Committee stated,
> "His studies of the forces which give rise to regulatory legislation
have
> opened up a completely new area of economic research.... Stigler is
also
> recognized as the founder of "economics of information" and
''economics of
> regulation", and one of the pioneers of research in the intersection
of
> economics and law."
> 
> More on his work is at:
> 
> http://www.nobel.se/laureates/economy-1982-press.html 
> 
> I do not imagine that either Becker or Stigler would make
"rhetorical" 
> statements, without specific examples in mind, or specific studies. I
> don't have the examples that you have asked me to submit, readily at
hand,
> but if you like, I can do that. I am confident I can trust the
founder of
> this discipline to have come out with gems of wisdom. In fact, the
judges
> that you refer to have no recourse but to consult theoretical and
> empirical economists and legal experts on this area, in order to
consider
> the logic about when a firm can be said to have used monopoly power
and to
> what extent. 
> 
> Therefore, we do not differ, I see, in the overall picture, but a
little
> bit on the details: more specifically, about a single company (and I
don't
> care about this company: how did this company enter our debates,
anyway?).
> But looking away from the company, we agree that this is an area where
> suitable (democratic) bodies need to be designed and suitable research
> needed to prove/disprove a particular case. 
> 
> The lessons to be learnt from this debate have mostly been reflected
in
> the Manifesto, in the form of the following statement: 
> 
> 	       Freedom to fix prices (of goods or of labour) should
>                not lead to profiteering. Therefore, strong (thought
>                participatory and democratic) regulatory bodies need
>                to be established to monitor cases of profiteering.
>                Regulation of monopolistic behavior should primarily
>                be through promotion of domestic and foreign
>                competition. Further, as far as wages are concerned,
>                the government would not interfere with this
>                mechanism, except perhaps to suggest "desirable"
>                levels of minimum wage. 
> 
> We can debate this statement further, if you like.
> 
> I am very impressed by the detailed account of the process that you
> described, by the use of which, this country (USA) decides such
cases of
> monopoly. I have not really studied this process in much detail.
Maybe we
> should add some "teeth" to our general agreement by proposing the
outline
> of the regulatory mechanisms we are looking to build in India.
> 
> So please propose a para or two on the points raised, and thanks for
> waking up the list once again! It seemed that I was the only guy
having
> fun, making "buttons" and all that stuff!
> 
> Sanjeev
> 
> 
> 
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> 
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> 

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