Tale of two people selling two different things.
Person X sells medicine from a shop in the local market. Person Y sells taxi service on a mobile app. Consumer goes to Y, “I need taxi.” “Sure, I got taxi, but see there are too many people wanting taxi, I have limited supply. So I have increased the prices, you pay higher price, you get taxi. Otherwise I give it to others.” Consumer says, “no problem,” pays 3x normal rate and happily rides to destination. “These new app based services really solved our public transportation problems, what a splendid idea, free market is beautiful” She tells herself.
Next day consumer goes to X to buy medicine. X says, “Sure I got meds, but too many patient want same meds, I have limited supply, so I am charging surge price on meds. Consumer perplexed, “What the eff? Just gimme my damn meds at MRP.” “No can’t do, pay 3x surge price or leave. No compulsion to buy from me. There are other pharmacy shops.” Consumer mighty pissed, calls it unfair, unethical, exploitation, gouging and calls the CM to lodge a complaint. CM intervenes promptly, threatens the pharmacies charging surge prices to cancel their license if they don’t withdraw immediately.
CM also intervenes in the case of app based taxi services charging surge prices. Same consumer calls it ‘the death of free market.’ “Commie CM catering to vote bank politics, why don’t the CM control his vote bank, the rogue autowallahs who never go by meter?” She rants. “Dear CM pls stick to your job, don’t meddle in free market.” She advises.
CM wonders, what is my job?
Surge prices charged by app based cab services like Uber and Ola is capitalism in its most brutal form. The message here is, “more power to the free market, leave no space for government’s intervention, price regulation is an obstacle to growth, eventually leads to rationing, just let the demand and supply decide prices.” This cannot be allowed in law.
‘Death of free market’ they lament. Do they know what is this free market? Where does it lead us? Does India has absolute free market? Will we have one? Why do we have this thing called MRP (Maximum Retail Price) on all products? And why shouldn’t MRP apply on app based taxi services?
Let’s apply surge pricing to the pharmacies. Or hospitals. Limited beds, too many patients, increase the price, rich gets the bed, poor dies. If CM intervenes, call him a commie and anti-development maniac.
Everything has a fixed price and it doesn’t fluctuate at each instance of purchase. Imagine you go to the movie hall and buy a tub of popcorn for Rs.100 before the movie started. In the interval, you go again and the guy at the counter says, ‘same tub now available at Rs.300.’ Does it make sense to you?
Why do we complain about the auto wallahs who won’t ply by meter, or charge extra for certain destinations, or simply refuse their service because they won’t get any commuter on return, or charges extra over metered bill? Aren’t they simply following Uber’s logic, asking for more incentive, more than the metered bill, to offer you the service?
Imagine two people hail for same auto, one needs to go to hospital, other to the shopping mall. Auto wallah sees high demand low supply, demands surge price. The one who needed to go to shopping mall was richer, paid surge price and went. Poor person died on the road.
That’s free market for you. That’s capitalism. Evil and inhuman.
Ola and Uber have simply taken this practice of demanding extra money at random to exploit your crisis and vulnerability and made it mainstream. We don’t like it when people are random. You buy milk for Rs.30/liter in the morning, but if the same milkwoman asks Rs.90/liter in the evening you’d be like “WTF! How random.” But when the mobile app does it for you, you trust the algorithm. Algorithm is the new hand of God. We don’t question the algorithm, its transparent, honest, divine. And we are morons.
We have metered billing for water, electricity, we pay phone bills by calls/hours. We pay for gas cylinders as per consumption. Imagine for all these things you had algorithm based random billing thrown at you. Aren’t all these commodities coming to us in limited supply?
Those championing for surge pricing in the name of free market, will they please start respecting the auto wallahs demands next time they hire one? No, that won’t be necessary. They don’t hire auto and they don’t care about the auto wallahs. They are the white collared middle class in MNC offices who can afford a surge price. They are the much celebrated stooges of the capitalist regime. They are the voice of the nation, they vote, they decide, they compete, they love growth and development.
But they forget one thing, siding with capitalist forces is not only cruel but also stupid. Rule of the free market is that big fish will bloody eat small fish. Bottom line: No fish is safe.
In the above tale of two people selling two different things, if you allow surge pricing to one and deny it to other, it would be unconstitutional as the policy would fail the right to equality under Article 14 of Constitution. If at all we have to come to terms with surge pricing we need a whole new legislation to logically decide what kind of products and services, what kind of business are allowed to charge surge prices. Until we do that, allowing it to Ola and Uber is just unfair, unethical, unconstitutional.
I applaud Karnataka and Delhi government for taking the right actions against surge pricing because it is indeed the job of the government to intervene.
Featured photo source: CBS News