Sunday, 22 April 2012


I recently heard someone use the phrase “asymmetrical business relationship”. He was talking about the relationship between The United Kingdom and its people and his opinion that the relationship between them wasn’t balanced. He suggested that the British State take Brit’s money in the form of taxes and doesn’t give anything in return.

He’s wrong of course. In any democratic state like the UK or Botswana, the people, like us, DO get things from the State.

We get policing, education, basic health care, roads and military protection. We pay for that in taxes, every one of us. Even those of us who don’t pay income tax pay something in VAT whenever we buy something that isn’t an essential for life. That’s what they call the social contract. You and I agree to obey the law and pay our taxes and the State agrees to offer us the protection of the law and offer some basic facilities. I think that’s fairly balanced, even though both sides fail occasionally. Many of us deliberately avoid taxes and the State often neglects some of its responsibilities but we both have the right to criticize the other until they honor their obligations. They can prosecute us and we can, in principle, vote against them at the elections. That’s the democratic deal.

But it’s not symmetrical. Each side has a different set of responsibilities and benefits. But it IS balanced even though balance is more complicated to explain and prove.

In any commercial dealing, whether it’s buying bread, a cellphone, a car or a house both parties should walk away equally happy. Both party’s level of contentment should be balanced. I walk away with a new shiny cellphone, feeling 8 out of 10 on the happiness scale. The store manager should also be feeling an 8 out of 10 happiness level. If one party is happier than the other then you know something has gone wrong. That wasn’t a balanced deal.

That’s how it should work in a free market. You and I, if we don’t like the prices at Store A, can shop instead at Stores B, C, or D. We can move to a store that offers us a more balanced deal. We have that freedom, a freedom that some people and political movements have tried to take away from people in the past in other countries. Instead of allowing their people to take the decision, their States have intervened and set prices for consumer goods. The problem with this is simple. Every time it’s been tried people have ended up either starving to death or overthrowing their government. Intervening in a balanced relationship is like introducing a mistress to a marriage, it unbalances everything.

Unlike many people on the radical political left I think most people are perfectly capable of seeing when they’re not getting a service that balances their payment. They’re also capable of recognizing that it’s not just the material things that matter. We value emotional elements as well. In a restaurant, for instance, it’s not just the temperature, quality and taste of the food we buy that matters. It’s also the welcome, the attention and the friendliness of the waiters and management that add to our sense of value. That’s why we choose to go to one of two superficially identical restaurants that both deliver identical quality food, the one with the happy staff that make us feel welcome.

That’s fine in principle but does it work like this in practice? Not always.

The obvious situation when this doesn’t work is when the consumers are poor, educationally disadvantaged and geographically remote, just like a significant proportion of our population. Such people don’t often have choice, they often don’t have two stores to choose from and, let’s be frank, many disadvantaged people are so ground down by poverty that any assertiveness they might have once had has long since evaporated.

But the solution is not to abandon the system that works for the majority. The solution is to allow people to get themselves out of poverty by getting work and the only way to help them do that is to allow, perhaps even encourage, companies to get out there and offer them paid employment. The solution is to allow everyone access to the system that works for almost everyone who joins it.

The other problem we face is those organizations who either take themselves out of the free market or who were never in it. The monopolies. Monopolies don’t have to care because nobody forces them to. Our power producer and water company can get away with delivering dreadful service because nobody is going to stop them. I don’t mean the State, that’s not their job. I mean that consumers can’t move away from them because they all have a legally enforceable monopoly that protects them from the only thing that will improve their service: competition.

Some may argue that with only one power cable and only one water pipe entering our houses there can never be a competitor to BPC or WUC. Not true. Just because there’s only one set of cables and pipes that doesn’t mean there can’t be more than one company pumping power and water into them. There’s only one road from Gaborone to Francistown but that doesn’t mean we have to use only one bus company. The infrastructure can be rented out, just like BTC rents out it’s cabling infrastructure to the three cellphone companies. Power can be done in exactly the same way. Two or more companies pump power into the grid, we choose who to pay for it.

Maybe that will add a bit of balance to our lives? Maybe that’ll encourage BPC not to be quite so monumentally monopolistic and arrogant?

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