Just to stay in the game, a couple of mini-fisks, of bloggers whom I otherwise look up to.
1) Ravikiran, theorising about Indian democracy, says (among other things)
If we are honest with ourselves, we will have to admit that no one has a clue about which way the Indian voters vote, and once they have voted, the process of translating the votes to seats makes it pretty much impossible to draw a causal chain between the intention of the voter and the “Popular Will” as expressed via the seat position in the legislature.
If pollsters and pundits cannot call an election a month in advance, it is very likely that those in the government will be unable to take a guess as to which policies will win them the next election five years away. If democracy means that rulers govern according to the will of the people, then India’s democracy is broken.
Now this statement rests on the assumptions that
1) Politicians are not significantly more competent in knowing the popular mind than pollsters, and do not understand the votes to seats translation better than the average citizen.
2) Policy making and implementation in the government are a fucntion of five-year (or similar medium term) strategies of political parties, strategies optimized to give them votes.
Both are wholly unreasonable assumptions. Pollsters survey people, extrapolate data and make predictions on that basis. The sample sizes are typically so small as compared to the size of the elctorate that statistically the interval of confidence should prevent you from making any estimates. However, the TV demands a number. Hence, the pollster quotes a mean, neglecting the variance. Political parties have teams of workers working at multiple levels - they do not need to understand the scientific model or the mean or the variance for their data is far more representative and most parties know what is going to happen in the election, irrespective of what they may claim on TV. Plus, a Brahman+Dalit combine in the Up sweeping the legislature elctions there was pretty much predicted by everyone, wasn't it?
Anyone who has any close relative working in the steel frame will tell you why assumption no. 2 is false. On a daily basis, the work of the government is largely independent of the strategy of the party. The issues and stands that highlight the ideological(?) differences in the parties and become controversial are largely tactical in nature, and far lesser bearing on policy formulation and implementation.
2) Shruti Rajgopalan talks about how the market itself corrects market failures far better than governments, even in the case of public goods. The crux of the matter - people used to crowd in to listen to tour guides in Prague, even those people who hadn't really paid for their services. This is a nuisance because it is free-riding, and it can even cause legitimate tourists to miss the guide's detailing due to crowding. To solve the problem, tour guides now use small microphones and headphones are given to the touring group, thus preventing the free-riders from listening in.
Shruti believes that this is a wonderful example of a market corecting a market failure, and shows us the following dystopian situation as the government's possible solution
"How would the government deal with this problem? They would regulate the number of tourists each guide can have in a group. Furthermore they would regulate the distance each group must maintain and each individual must maintain from the groups. Then they would issue licenses to guides and have Tourist Inspectors for enforcing the regulations and ensuring the correct distance is maintained."
Oh dear god.
She calls the tourist guide's service a public good because it is "non-exclusive" and rival.
"It is difficult to exclude other tourists who are also at the monuments and the consumption may be rival as those who paid for the guide get crowded out"
1) Excuse my pedantism, but the term is non-excludable, and not non-exclusive(trust me, there's a significant difference)
2) A non-excludable, rival good is called a common property resource, not a public good.
3) The fact that a tour guide finds it difficult to physically exclude the non-paying tourists does NOT mean that his services are non-excludable. He is charging a fee for his services, and can easily deny his service to anyone. This by definition implies that his service is excludable. The problem, thus, is one of logistics (the fact that denying the service is physically difficult), and not economics and market failures(where denying the service is practically impossible, for example fishing in a sea).
The tour guide's service is in fact rival and excludable, a pure private good if there ever was one. It is a smart solution to a problem of business logistics, and not a romantic success of the market against its own shortcomings (atleast not in the free market vs government context that Shruti tries to provide her text).
I am now convinced of two things. One, ideological extremism, of any form whatsoever, is such an over-riding factor that it can totally impinge upon reason. Centrism is pretty much the only way out. Two, very few people have truly internalised what they learnt in their microeconomics course. People choose convenient bastardizations of a sound theory to criticise at will. I am reminded of Prof Deodhar's remark to us about trying to avoid the abuse of terms like moral hazard and adverse selection.
p.s : Some problem with blogger. Wll put up the links to their respective posts a little later.