Economic Choice and Political Consequence

The title for the blog post is inspired by the book “Choice and Consequences” by a Nobel Prize winning Economist Thomas C Schelling. The idea flows out of a discussion I had with a few friends on twitter.
While typing the heading, a thought struck me. Maybe the article should be titled “Political Choice and Economic Consequences”. Would leave it to the reader to decide that 
There is a good conundrum that explains “Economic Choice” as I understand it in a nutshell. Indians might call it *Dharma Shankat*. A link to the original post.
Extract of the relevant portion:
Sunday, June 15, 2008
What’s Right Isn’t Always Popular
A group of children were playing near two railway tracks, one still in use while the other unused. Only one child played on the unused track, the rest on the operational track.

The train is coming, and you are just beside the track interchange. You can make the train change its course to the unused track and save most of the kids. However, that would also mean the lone child playing by the unused track would be sacrificed. Or would you rather let the train go its way?

Let’s take a pause to think what kind of decision we could make…….. ……..

The viewer is free to decide which upon which ever choice he feels is right in his perspective. Fortunately this is a hypothetical question. No one would be in this unhappy position. But there are other equal if not more dramatic decisions that are taken everybody by most people.
The twitter discussion I referred to was on one such topic. In the chain of distribution of food there are 3 interested parties. The farmer who is the producer, the agents or middlemen or processors who add value and the ultimate consumers. There is a “Zero Sum Game* involved here. One man’s gain is obviously somebody else’s loss. The farmer needs to be rewarded and that reward is at the cost of either the consumer or the middlemen. The consumer needs to get food at affordable prices and this has to be at the cost of farmers or the middlemen. And the middlemen? Oh! Don’t bother they don’t have enough votes. This is in an ideal situation when middlemen are very professional and are interested only in fair returns. But then this conundrum is not limited to just agriculture. This is true in many situations.
Take the case of Trade Barriers. If say, the Battery Manufacturers get together and complain that a foreign manufacturer, say a Chinese manufacturer is dumping batteries into India, the Government would be in a tight spot. They need to protect the Battery Manufacturers on one side. On the other hand, the consumers are getting a good deal. Why should they protect the few manufacturers by penalising the consumers? But then this is a short term view. In the long run the manufacturers would slowly die, leaving the consumers to be exploited by the predator. That is the conundrum that the Government would face. Real life examples that has touched most individuals would be say the Aligarh or the Dindigul Locks. The industry is dead now thanks to the surfeit of imports.
The Government would have to weigh the economic consequences of a completely free market or a completely protected market. Obviously both are detrimental. Only a free market with a certain degree of protection would ensure a semblance of fairness to all interested parties. But then that is a decision taken on the run with limited facts. A further complication would be the tug of war between the *Vested Intersts* and their ability to lobby.
Hence the minor conundrum. Should this article be titled – Economic Choice and Political Consequences or Political Choice and Economic Consequences.


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