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Bureaucrats and white elephants

In his book Liberty or Death, Patrick French remarked that in India, China and the United States, visitors get the impression that the rest of the world simply doesn't matter. Right now, I know exactly how he felt -- the super-cyclone in Orissa barely rates a mention and all I know about events in Uttar Pradesh is what I can get over the Internet. The average American's ignorance was dramatised when George W Bush, a potential president, couldn't name the leaders of India and Pakistan when quizzed...

So what is America talking about? Well, since Friday, the fifth of November, it has spent considerable time talking about Judge Thomas Penfield Jackson. I am fairly certain that this is a name as unfamiliar to the average Indian as that of Atal Bihari Vajpayee was to Bush Jr.. The ignorance, in both cases, is a mistake.

Jackson is the presiding judge in the anti-trust suit filed by the United States Department of Justice against the computer software giant Microsoft. On Friday, he released his "finding of fact." Jackson found three reasons to believe Microsoft fits the classic definition of a monopoly: a. Its share of the market for operating systems is gigantic. b. It took steps to protect that share by actively hindering competitors, and (c) as a result the consumer lacks a viable alternative.

It isn't my place to argue the merits or otherwise of the judge's findings. Nor am I qualified to debate the respective qualities of the dozen or so operating systems on offer. What do interest me are two related topics that came to the fore during the course of the two year-old trial. First, what precisely constitutes a monopoly? Second, to what extent must governments intervene to ensure fair dealing?

These are not idle musings. Think about it: when you look around in India you suddenly find that you are surrounded by monopolies. The problem is that these aren't private corporations, but those owned by the State. The minister-bureaucrat complex controls an enormous range of goods and services -- electricity, water, banking, insurance, railways... The list just goes on and on.

There is, however, one difference between Microsoft and these monopolies -- the software giant is immensely profitable. Incredibly, despite having the field entirely to themselves, almost all the major public sector units have succeeded in running up enormous deficits. (If you gave the State the sole concession to sell bhelpuri on Chowpatty, our blessed bureaucrats would probably still find some way to drown in red ink.)

Why? Well, take a look at the Delhi Transport Corporation. When the government of Delhi recently doubled bus-fares, some interesting facts came out. It turns out that the bloated DTC has ten men for every bus in its fleet. Private bus operators (who have been allowed to operate for just a few years) have just four to every bus.

The interesting thing is that the DTC has only one driver and one conductor in every bus, whereas the private operators have a driver and two conductors. In other words, the DTC has an army of clerks, all drawing (relatively) high salaries, but doing precious little to provide any service to the consumer. Nor, in all honesty, are DTC buses any better maintained than their counterparts, so the DTC can't even claim that the extra staff consists of mechanics and so forth.

The second part of Judge Jackson's findings -- about using unfair practices to protect a monopoly -- could also be applied to India. Look at the telecommunications sector, the backbone of information technology. There may be a couple of Internet Service Providers from the private sector. But the public sector firms still control the basic telephone services as well as the actual portals. What is to stop the Department of Telecommunications from using the revenues from these monopolies to offer lower prices for ISP services, thus eventually driving the private sector out of business?

Am I being paranoid? No, that is precisely what the Mahanagar Telephone Nigam Ltd. is allegedly doing. The private operators complain that MTNL is using its resources from basic services to offer customers a special deal if they opt for MTNL's own Internet service. Simultaneously, cell-phone operators are complaining about the same thing. Lower prices right now may sound like a good thing for the consumer, but what happens when everybody else is driven out of the market?

That was precisely the point on which Microsoft was taken to court. It undercut Netscape by offering a free web-browser. Netscape, which owned a 60 per cent share of the market two years ago, has now been taken over by another firm because it lacked the resources to keep up...

There are other, more subtle, methods of monopolies behaving badly when they have government patronage. I have often tried to call up the airport in Delhi to find out if a flight is on time -- but the people on duty generally refuse to give out the information unless I am asking for details on an Indian Airlines plane. But the Airports Authority is supposed to be unbiased isn't it? I guess that habits are hard to break -- and one wing of the government scratching another's back is just another of those.

Microsoft couldn't get away with such behaviour since the US government took it on. But our monopolies are part and parcel of the government itself. What will it take for us to be liberated? Must we also look to the courts for relief?

T V R Shenoy