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Re: wisdom? Whose?



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[Topics under debate]: GOOD GOVERNANCE
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"Dr.S.Sabhlok" wrote:

> > > Charu wrote:
> > >
> > > > In theory, because the private sector is driven by profit,
>
> THAT SHOULD BE THE ONLY MOTIVE - THAT AUTOMATICALLY LEADS TO OPTIMUM
> SOCIAL WELFARE IN ALL EXCLUDABLE AND RIVAL GOODS (CF. ELEMENTARY ADAM
SMITH)

Proof by eminent citation?
I don't find that particularly convincing.

>
>
> and the
> > > > conventional wisdom is that with the low densities phone
> > subscribers  in rural
> > > > areas, there is not much profit to be made in bringing telecom
to
> > rural areas, so private companies won't do it.
>
> VILLAGERS, WHO PAY NO INCOME TAX IN INDIA, AND SOME OF WHOM ARE QUITE
> RICH, ARE USED TO PAYING HIGH BLACK PREMIA FOR 'GOVT. ORGANIZED
SUPPIES'
> LIKE K.OIL TO GOVT. VENDORS - A SYSTEM THAT - AMONG MANY SUCH SYSTEMS,

> FUNDS THE ELECTORAL PROCESSES OF INDIA, THROUGH BRIBES UP THE LADDER.

Interesting, but irrelevant to this discussion.

>
>
> JUST LIKE WE ARE USED TO, AS CITIZENS, TO PAYING HIGH BLACK PREMIA FOR

> GOVT. ORGANIZED TELECOM IN URBAN AREAS. SUCH 'WISDOM' AS YOU CITE IS
> ULTIMATE FOLLY. WAKE UP!

Perhaps you could explain the 'ultimate folly' of the following
reasoning:

Suppose a village has 50 potential phone subscribers.
Since the cost of laying cable/fiber from the central office exchange to
the
village exchange will be divided among 50 customers as opposed to 50,000

customers, in an [urban] area of higher population density, the initial
cost a
non-subsidized operation needs to charge subscribers is then 1000 times
what
an urban subscriber would be charged. This would cut the the pool of
potential
subscribers to 5 from 50, driving up the cost to 10,000 times an urban
line,
thereby reducing the potential traffic to the point that it is now
unprofitable for a non-subsidized operation to provide phone service-
and
phone service thus never becomes widely available in rural areas.

The same argument applies to electric supply, and governments worldwide
do
subsidize rural electrification- possibly because it is considered
socially
desireable to provide an incentive for some people to continue to live
in
rural areas and grow food for everyone else even though there is not an
immediate and tangible 'profit' that any accounting course could help us

calculate, though I suppose we could dispense with this 'ultimate folly'
and
allow food prices to rise to the point that people move out of the
cities and
back to the villages and we revert to being an agrarian society with no
use
for things like electricity, telephones, and technology in general.

> COMPETITION WILL - AS IT ALWAYS HAS AND ALWAYS WILL - ENSURE LOWER
PRICES,

.............

> ALL OTHER TALK IS MERE RUBBISH. FOR PUBLIC GOODS THE SITUATION IS
DIFFERENT.
> BUT TELECOM IS NOT A PUBLIC GOOD.

I do not consider the argument of dismissing something as 'mere rubbish'
any
more convincing than 'proof by eminent citation'.

-Charu



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