Price Controls Everywhere (Satire)

A couple of weeks ago I posted an article looking at how price controls are detrimental to high-end medical tourism in India. While it received thousands of views and hundreds of likes and positive comments, there were a few people who posted unprofessional, unsubstantiated or, quite frankly, meritless arguments.

It would have taken me too long to try and explain how ecosystems work, and the fine nuances of the argument I was trying to make. Instead, out of a misguided duty to try to please all my readers, and in order to appease the masses that love price controls and free things, I would like to propose that we place price controls everywhere. 

Just as the Indian government forces price controls on pharmaceuticals and demands that educational institutions teach 25% percent of students free of charge, regardless of whether they have received funding or land, there have been many populist price control opportunities that have been missed which could win elections and online popularity contests. 

1) Smartphones - with Digital India and other digital payments, smartphones are now an essential component. Companies like Samsung and Apple are profiteering from the masses with more than 200%profit margins on many of their products. Corrupt online websites, corrupt media, corrupt friends, and corrupt stores are misleading consumers into buying these phones. The government should pass the Right to Digital Act (RD Act), and issue market-based pricing where the average price of all smartphones is taken and then set as the ceiling (let’s say around 20,000 rupees - 300 USD). This will ensure that all Indians have access to high-quality affordable smartphones. And as we have apparently seen from price controls on medicines, there will be no drop in manufacturing quality or innovation at all! These price controls will have the added benefit of promoting ‘Make in India’ as companies including Apple and Samsung will clamour to come to India and sell their phones at the new price controlled prices. Everyone will win, and the Indian common man will benefit. 

2) Clothing - while clothing is an essential everyday necessity, the government has failed in its ability to provide cheap and ready-made clothes to the masses. Therefore all private designers and shops should, by a national law called the Right to Clothing Act (RC Act), be forced to sell 25% of their inventory to the EWS (Economically Weaker Section) quota at fixed government prices. This will dramatically increase social justice all across the country. Further, since the prices of designer goods have been going up year on year, as they have in education, a Charge Committee will be instituted to ensure that designers cannot increase their prices by more than 10% every year. The government shall have the right to audit each designer to make sure that they are not profiteering from the neediest people and that there is adequate well-designed clothing for all the masses. A committee of one retired high court judge, two retired IAS (Indian Administrative Services) officers, and three state government nominees shall be on this audit committee to ensure impartiality. 

3) Software Services - software has been declared an essential need by the government with the launch of Digital India. Unfortunately, custom developed software is not available for use by or to solve the problems of the poor and needy due to the corrupt nexus of development companies, software engineers, ISVs, system integrators, government cronies and international MNCs,. They are price gouging the country with some corrupt people and organisations making more than 200% margins and taking advantage of the ill-informed consumer and small businessperson. An Act - Right to Software Services and Products Act (RSSP Act) will be passed where all software companies and freelancers will have to create software at a market-based pricing rate. This market-based rate will be found by using the average of rates across freelancer sites. This would also apply to all pre-packaged software, so a SAP installation will be compared to a Tally ERP installation. Payment and import of all software and services which do not comply with these pricing norms will be banned. A further special rate of 25% of services would be reserved for the poor and backward classes, which would be charged as per government notification and updated from time to time. For these special services, since this right only belongs to the backward classes and poor and needy, the software will not be open sourced, to prevent the rich and corrupt Indians from accessing it. This is the best way to have high-quality affordable software for everyone. 

4) Hotels - the government has not been able to provide adequate accommodation for traveling Indians due to a shortage of government guest houses. A new Right to All Accommodation Act (RAA Act) will be passed. Therefore using reservation and marketing-based pricing, all hotel room rates will be averaged and the pricing will be set accordingly. Furthermore, 25% of hotel rooms will be reserved for the EWS category, charged at government guesthouse rates. This will ensure all Indians have access to affordable high-quality hotel rooms. The corrupt nexus of travel agents, hotel owners, travel websites, and tour agents will be broken and innovation and research in the hotel industry will definitely increase. All the top brands of hotels from around the world would love to address the Indian market, and they will start promoting pro-rural and pro-poor policies immediately. This would also create a high volume market that will do wonders for ‘Make in India’ and bring travel accessibility to the neediest. 

5) News Media - the right to free speech is a fundamental right but due to the corrupt media, corrupt reporters, government, and greedy industrialist nexus, the poor and needy do not have a way to make their voice heard. The government shall pass a Right to Be Heard Act (RBH Act) in which 25% of all news stories and advertisements shall be reserved for the backward and poor classes at government-set prices by averaging the rates across the industry. This would not only apply to newspapers, magazines and online websites based in India, it would also apply to all imported news from around the world. If an international organisation does not comply with this, the Department of Telecom would be instructed to block the anti-poor and corrupt news source from India. 

These are just some of the missed opportunities. Others include: Right to Essential Housing Materials Act, Right to Swimming Pool Act, Right to Car Act, Right to German Auto Act (known as Right to BMW Act), Right to Solar Act and many more, which will stop the high margin looting of the private sector and give poor people great benefits with no cost to the government. 

Price controls, according to some, are the solution to all ecosystem problems and evils. They magically cut down on corruption, and overnight solve all the problems faced by consumers, the government, and Indian industry. They also magically make R&D more optimised, keep government spending low and increase innovation for everyone.  

After all, India is a nation of poor people and we don't need all these ‘luxuries’.

“The problem with socialism is that you eventually run out of other people's money.”

― Margaret Thatcher

(Please note: The author is being sarcastic. To make it abundantly clear, the author is not an advocate of price controls.)

India needs affordable products and services across the board, and especially in the essential sectors. Promising them free of charge or using price controls as a heavy-handed tool is not the right answer. These just distort ecosystems, leading to terrible side effects.

There are many alternative solutions worth pursuing that enable a more nuanced, reasonable, realistic, sustainable and compassionate way to achieve the same objectives.   

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(Aditya publishes a new article every ten days or so, click follow to get updates)

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