Airfares and Socialist Proclivities…


On the issue of the so-called disinterest from Government on non-airfare items, I disagree with the author on this blog – Well written but flawed nonetheless. The issue was not higher air fares, rather it was the sudden rise that cannot be explained by any change in economic drivers as well as the clearly visible cartelisation. There is also some faulty economic analysis in the blog – That associated with Price Elasticity and Supply Elasticity. Managing or controlling high volume low price items non homogenous class of items, especially perishables like food, through government intervention ,is not practical. However, cartelization is a common risk for homogenous items like Airline tickets -Government intervention is needed and helpful.For certain classes of food items, the government anyways intervenes through support price mechanisms as well as PDS. I know these are flawed mechanisms. I have no sympathy for Jet , Kingfisher or even Air India -They chose to be in the business and spent millions on aircraft purchasing sprees.. How can they keep complaining about their economics and decide to make the customer pay for their poor decisions. If they cannot survive at the current prices, let them fall.I know , that may push prices..But I’d rather pay for real demand-supply driven costs than to whining billionaires who made poor business decisions.

Now for a non-perishable item like Land, prices should be allowed to float.If demand and supply equations are allowed to continue, an equilibrium can be reached. The government cannot intervene on price. Instead it must intervene through standards and regulatory requirements,something sorely missing in the Indian context. A point that is made well in the Livemint article here.

I dont think the topic is worth a debate on moralistic grounds – The state is accountable to all of its citizens and it is unfair and incorrect to paint a ‘class-centric’ picture of the issue.This is not an issue that merits the ‘ If you cant have bread, get cake’ debate. I dont want to take away from the fact that the government needs to do a lot more for people from other classes, but should that have to be with a disregard to the richer classes?? I dont think so.

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~ by exploreamaze on December 7, 2010.

One Response to “Airfares and Socialist Proclivities…”

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