Wednesday, February 1, 2012

Government is a Limited Duration Monopoly


You buy vegetables from a particular vendor. You suspect he's started charging you higher. You check at another vendor's nearby. Your suspicion is proven right. You start buying from the new vendor. The old vendor sees you buying from the other vendor and he gets what he has done.

This is typically called competition. The great part about competition is 'fear'. Fear that if I don't do enough I might not be able to convince the buyer. I might not be able to sell my stuff. I might lose money. I might lose my business. As a result, I am always trying to do things which keep me in business. Which earns me others' trust.

Competition yields results. If not immediately, then in a little while.

After a political party is voted into power and allowed to form a government, what powers do people have? Whatever bad happens, people wait for 5 long years to vote them out. If a scam takes place today, do people have the power to shift to another government in the next few days/months? For 5 years the government enjoys monopolistic powers and very little can be done about it.

If governance is the most serious business for any country, then the market structure for governance is lopsidedly skewed towards monopoly. The democratic process is invoked for a few days every 5 years. Between those days, it's all monopoly.