Why the “Level Playing Field” argument is Wrong!

Thomas Friedman’s seminal book “The World is Flat” eloquently brought out the changes in the way competition in an increasingly globalized world is/was being played out. The essence of the book was that technological change is turning the world into one large market place. And, it is in the interest of everyone to adapt and play along.

The superiority of a free market (over a controlled economy) has been fairly well established. Over a period of time, the free market evolved to mitigate the pain that an unfettered free market can create for the under-privileged, by weaving in the concept of welfare economics. Besides this one adaptation, every other attempt to distort a free market has questionable benefits and motives.

Self interest always trumps independent thinking!

If it doesn’t, then you are either a statesman or a philosopher. And frankly most of us are neither statesmen nor philosophers. Therefore, there is nothing wrong in anyone pleading for erecting barriers to a free market. Articulation of self interest, and lobbying, in a democracy, is a legitimate process. Equally, there is nothing wrong in those without a vested interest seeking to expose arguments and proposals that are neither based on a sound – or a consistent – logic, nor serve the interest of a larger group of under-privileged.

There are two tests to evaluate such arguments:

• What is the motive: Is the individual propounding this argument directly and adversely impacted by the current situation? If the answer is an unambiguous ‘yes’, and in addition, if very few others are impacted – and if those that are affected are not under-privileged – then you can significantly discount the value of this argument.
• Is it consistency or convenience that is driving the argument: If you have used the free market to get to where you are by trouncing smaller, and less moneyed, rivals and are now crying foul when you are being trounced by bigger, and more moneyed, rivals, then it is convenience and not consistency that is driving the argument.

If you put the current arguments by the likes of Flipkart, Snapdeal, and some of their more articulate & intellectual investors, through these two tests, they sound motivated, inconsistent, and selfish.

These companies too employ foreign capital like the ones they seek protection from – as an aside, foreign capital creates as many jobs as domestic capital! So, the argument is incorrect on all grounds. These companies employed a discounting strategy using foreign capital to drive the smaller and less moneyed players out of business. And those driven out of business were a) run on Indian micro capital and b) were relatively under-privileged. If these smaller and weaker players had argued for imposition of restrictions on these foreign capital backed companies, it may have been justified to some extent. But they didn’t! Since the foreign capital argument cannot be made, the proponents of "protection" resort to the Indian origin of the entrepreneurs! How silly! Amit Agarwal is as Indian as the Bansals! So, it seems to really boil down to Jeff Bezos, who isn’t obviously an Indian! This would have to be the ultimate in clutching at straws! And since asking for "protection" is a sign of weakness and failure, these arguments are couched in a lot of pseudo scientific and intellectual mumbo-jumbo which even a hare-brained individual can figure out is disingenuous! There is, therefore, really no difference between Amazon and the likes of Flipkart. Let the better player win. Let market forces decide how the end game is played out. For the Indian consumers, it doesn’t matter one bit!

The China analogy that spokespersons and investors of these companies refer to (in the way China has made it difficult for foreign companies to do business in China) is outright silly. And those that are demanding this are foreign companies in India (they have come in via the FDI route!!). Irrespective, India has never been, and never will be, like China. Anyone that knows their history would know this. We've always been a liberal and open society. We have accepted the English language as our own – what better indication of openness can there be? We’ve assimilated immigrants from across the world for millennia. This is who we are, and this has always been our foundation and strength. These same proponents of the China argument consume Google and other MNC products/services without as much as batting an eyelid. They’ve never argued for an imposition of a ban on Google!! Therefore, they totally fail on the “consistency” test too!

In Conclusion

I have been a great fan of Sachin and Binny Bansal (and many other entrepreneurs) and have said so. However, I am a greater fan of reason and fair play. One can’t but conclude that the plea for imposing some kind of restrictions on Amazon, or Uber, is motivated, selfish, and does not serve a broader interest. If you read some of the articles put out by otherwise reasonable and clear thinking individuals you wonder how they can be so blatant in arguing this case – actually there are not too many of them who are articulating this position. The simple answer is that the Human Mind is great at Rationalizing when self interest is involved. After a while, you start believing your own specious arguments, and what starts off as a slight guilt (because what you advocate doesn't sit well with your logical side of the brain) eventually turns to a full blown exercise in self hypnosis and justification. 

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Disclaimer: These are my personal views