Idea Architecture

A positive sum game according to game theorists is a transaction where both parties in their own estimation, are better off as a result of the transaction.

Walter E Williams, a distinguished professor of economics at George Mason university quotes in a lecture titled Markets, Governments, and the Common Good. This is the essence of free markets, where there is a good-good exchange. I am a firm beleiver in the goodness of the free market; but one situation which I face daily seems to contradict this. In the evenings, I can’t get autorickshaw drivers in Mumbai to drive me home from the local suburban train stations!

The drive from the nearest suburban train station in Mumbai to where I live is around five kilometers. If I travel this distance by autorickshaw which is running on a meter that has not been tampered, it would cost me Rs. 17, an amount I am more than willing to pay; if only I can convince the autorickshaw driver to take me there in the first place. But this is the most difficult negotiation. The reason; in this transaction, going by the meter in the direction of my residence, may not be in the auto driver’s estimation a transaction which will leave him ‘better off’.

So, am I right in cursing the free market system which allows the auto rickshaw driver to deny me the comfort of travelling to my residence on the autorickshaw, by being willing to pay the requiste fee, when he finds it not to his benefit?  Well, I think it would be a premature decision. One must always examine the system’s constraints before deciding if it is a bad one.

Firstly, to blame on the free market system in this situation would be wrong since the autorickshaw-commuter transaction is not a free market transaction. The autorickshaw driver is able to ‘deny’ me conveyence becuase the system is subsidized in his favor becaue of the monopoly of individual public transport that he commands. He leverages on the fact that there is nobody else who can offer me the same conveyance without any run-ins with the autorickshaw owners union! The system is not operating in a free market.

I cannot for instance, decide to purchase a fleet of small cars or private autorickshaws and offer a taxi service to commuters at similar prices without being registered under the union. Also, if I wish to do something of this nature I also stand the danger of being attacked for trying to rob the poor autorickshaw driver’s income!

Hence my friends, its not the free markets that need to be blamed; it is the opposite of free markets which is a cuase of this problem! Restrictive trade practices!