As is obvious, I am fully in agreement with the aims and desires of this newspaper -- we all do want a richer, freer, Bangladesh. One with markets which work better to the benefit of Bangladeshis. There are, sometimes and occasionally, slight differences in tactics though. As here, when we are talking about inflation bottlenecks in the economy.
Some of those are about the basic infrastructure, the plumbing to say, of the market system itself. From the ability to import with, or without, requiring a permit through to the existence of cold storage, suitable transport and so on. These are all things that the government can and should work upon.
However, we also have -- and a sadness is that these will always be with us -- those who try to manipulate the economy to their own benefit. Perhaps collusion between local merchants will create a small cartel, a monopoly, which can overcharge their customers. Sometimes that will happen on a larger scale too, possibly even in the context of the whole country.
This newspaper's suggestion is “mobile court drives” to “monitor and prevent price manipulation” and prevent “nefarious actors from finding loopholes and exploiting the system.” And, well, yes, I am a strong believer in those taking advantage of others feeling that firm thwack of the law. I've even been known to suggest more free market law that malefactors can be thwacked by.
However, I'd also like to suggest that we employ one of those human attributes even more effectively than mere law -- greed.
We are, after all, really pretty sure that most humans can be relied upon to be personally greedy when that final push comes to shove. We will all benefit ourselves and our own family when there's a choice in the matter. This is, of course, what we're all complaining about when those businessmen commit the nefariousness of combining to rip off consumers. So, we're really pretty certain that this exists because it's the very thing we're complaining about.
My suggestion is that we use this very problem as our solution.
As we all know, the Bangladeshi economy is full of the necessity for permissions, licences, and allowances. It's rare that we're allowed to simply wake up one morning and decide to enter a particular line of business. Some aspects of that Licence Raj -- that most vile of the British impositions upon the entire sub-continent -- still exist. Too many still exist in fact. So, the solution is to remove the necessity for those -- have an actual and really free market economy. It is indeed possible to wake up one morning and decide to be whatever in any line of business.
Collusion between local merchants will create a small cartel, a monopoly, which can overcharge their customers. Sometimes that will happen on a larger scale too, possibly even in the context of the whole country
Yes, of course, we all face real barriers -- knowledge, skill, customers being willing to trust us, and so on. It's also true that most of us would prefer the regularity of receiving a simple wage for our work. But we've also got that set of businessmen who are greedy for profit -- the very thing we are complaining of.
There are more such businessmen in general than there are in any specific line of business. These cartels, these “arrangements,” have to be among those working in the same line of work. That's what makes them work.
But if any other businessman is free -- in law, by permission -- to enter that same line, then what happens? Any cartel, any grouping, which gets a bit too greedy in the profits it tries to make from its nefariousness -- what happens? Other, equally greedy, businessmen, look at those lovely, excessive, profits and decide that they'd like to have some of those themselves. So, competition arrives and the extra profits disappear.
This is, of course, the entire argument in favour of how free markets tame and modify capitalism itself. The joy of this argument is also that it works. If there aren't any arrangements by which crooks can keep competition out of their markets then competition cannot be kept out of their markets.
It's often said that capitalism is just greed. If that's the way you want to put it then you can do exactly that. But the thing that makes free markets work is greed for profit -- the greed destroying the excess. Again, the joy of this is that it does, in fact, work. So, why not do more of what works – force businessmen to compete with each other by allowing greed to tempt them to do so. For, and after all, we know that greed exists so why not employ it?
Tim Worstall is a senior fellow at the Adam Smith Institute in London.
