Econ-ity » October 22, 2014

Daily Archives: October 22, 2014


interest groupsIn the year 2000, the government of Nepal said there were too many taxis plying on the streets of Kathmandu and so it banned the registration of new taxis. This has meant that for almost the last 15 years, no new entrepreneur has been able to register new taxis—and the result has been that the market has run as per the whims of whatever limited entrepreneurs exist. All this has led to regular complains from the consumers who agree to have paid more for mediocre taxi quality in the lack of better alternatives and an absolute dearth of choices.

Similarly, there was a time when the phrase ‘mushrooming of schools’ was probably a favorite in Kathmanduites’ lexicon. Needless to say, mushrooming of schools was brought to a halt—the government did what it does best—it banned the registration of new schools as well. No private schools can be registered in Kathmandu valley and such has meant that whatever schools exist are as much choices that people have.
And very recently, the government decided to move beyond Kathmandu valley and stopped the registration of Paragliding companies in Pokhara. Civil Aviation Authority Nepal (CAAN), citing air safety as a reason has stopped providing licenses to additional paragliding companies for operating their businesses in Pokhara and is infact preparing to issue directives for no more paragliding companies to be based in Pokhara.

In all the instances, it would be naïve to assume that the government brought about the restrictions just to ensure greater good for all its citizens by curbing the possibilities for young and aspiring entrepreneurs. Sure there must be other reasons—say you are an entrepreneur with a few taxis plying on the road in a very competitive market and if you could cut your competition, you would do that to ensure that nobody else gets a cut from the profit that you alone could make, would you not, now? And there sure are benefits for the already existing entities in all the cases mentioned above in case they are able to keep the possible new entrants at bay. And there is much more to this than what appears to a normal eye—why does the government legislate as per the interest of certain groups? George Bernard Shaw had the answer when he said that a government that robs Peter to pay Paul can always depend on the support of Paul. So a government in a society like ours can be seen to represent the organized interests of the most dominant groups (or Pauls) that wish to live at the expense of others (the Peters) and so can always depend on the backing from Pauls. Political support from businesses or strong groups afterall holds much for the government in question.

For those who blame capitalism, crony capitalism in Nepal then has been able to find expression through—not despite—government policy. There are many who argue that no particular interest group can monopolize power because there are always one or more groups working against it. To them a countervailing power exists in all societies—there are entrepreneurs who, needless to say, organize themselves and say that ban on registration in either of the cases mentioned above is not the way to go about and in an ideal society that would indeed create a sense of balance—keeping the essence of a free and democratic society alive and kicking.

Perhaps here’s where the assumption is wrong—interest groups like the political parties try and influence public policy but unlike the political parties they are not responsible to the public. Interest groups usually focus on specific programs and issues and are rarely represented in the formal structure of government and such groups in a weak state are often characterized by coercion—the activities depend on the groups’ willingness of operate within the law and so has not always been the case. Are we missing the balancing act between the twins then? Perhaps the answer is a definitive ‘yes’ and not a ‘may be’.

Anita Krishnan

About Anita Krishnan

Krishnan holds dual degrees--in law and sociology. Currently, she works as a Research Associate at Samriddhi, The Prosperity Foundation.

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