yazadjal.com

I had mentioned to Yazad that I would do a post on sweatshops, but I haven’t done so. Instead, I’ve written about Ayodhya and something about mechanisms.

Now I think I will post about malls and multiplexes.

You know we have a lot of them coming up all over Mumbai. All of them are being built on land freed up by closed-down mills and factores. In their place are coming up malls, multiplexes and housing complexes (which I did not include in the title because it did not alliterate)

We capitalists cheer this phenomenon as an example of creative destruction, but the fact remains that the closing down of these mills and factories was tragic for those who worked there. I know, because I saw it first hand in my family.

Mostly, this shift out of Mumbai was inevitable, but I saw second hand how the unions and the government made it worse.

The unions made it worse by going on strike at the drop of a hat, asking for astonishingly exorbitant bonuses, refusing to let the management discipline anyone, squabbling among themselves, often murderously, refusing to let the company lay off anyone, refusing to give permission to close and when they eventually did, asking for unreasonably high compensation. These tactics made companies unprofitable, delayed and often permanently denied workers any compensation and often frustrated the management so much that they simply stripped from the company what they could, abandoned the land, buildings (and of course the workers) to their fate and made what fresh start they could outside Mumbai.

The government played along with the unions and labour laws being what they were, they essentially turned over Mumbai’s industry to the unions. They refused to let the management sell off mill land, citing workers interests, but in the process delayed the sell-off so much that the workers actually got too little, too late.

If the market mechanism had ever failed so badly, we would never hear the end of it, but how many people talk of the failure of the government protection system for workers? How many people talk of the failure of the union system?

More importantly, why did these failures occur?

Simply because both union leaders and government officials are human beings like you and me.

Update:
Not again! Who keeps publishing all my drafts? Anyway, to be continued…