06 June, 2007

Where your taxes go: 21

Building malls.

You have to wonder what we have learned in the last 60 years. The BMC is reportedly planning to “construct ‘municipal malls’ at various spots in the city,” where “prices of commodities would be regulated ... so that they could ‘cater to the masses’.” Mumbai Mirror rightly lashes out:

All this focus on a ‘business enterprise’ comes at a time when hundreds of roads across the city are still dug up, a large part of the Mithi river is yet to be cleaned up though the monsoon is already here, the city’s massive parking problems need urgent solutions, the Jijamata Udyan needs a thorough clean-up, octroi evasion is depriving the BMC of crores of rupees, the question of adequate and 24/7 water supply is still to be resolved, most BMC schools are on the verge of closure, and Mumbaikars on the whole want the city’s crumbling civic services to be improved.

The populist rhetoric accompanying the proposal is startlingly naive. These malls, a ‘civic official’ is quoted as saying, will “accommodate small shops that have been forced to shut because of big malls and also the BMC’s development projects.” The BMC should ask itself a few basic questions: If some small shops have shut down because of big malls, why is that so? When they don’t regulate prices outside those malls (with good reason!), how will regulating them inside the malls help? If those shops could function at a price lower than the market, wouldn’t they have destroyed the big malls, instead of the other way around? Isn’t the whole point of a market to satisfy the needs of the consumer, and is there any point accommodating stores inside government malls that the consumers have rejected outside them?

My prediction: If any such malls come up, they will become vehicles of enrichment for rent-seeking officials. Space within the malls will be allocated to merchants at the discretion of municipal officials, and corruption will be rampant. These malls will not turn a profit. You and I, again, will end up as shmucks. And the roads will still have potholes.

(Where your taxes go: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20. Also see: 1, 2, 3.

My essays on taxes and government: Your maid funds Unani, A beast called government.)