From a Day in the Life of Driver Gopal to Price Controls?
My family and I were scheduled to take an all-day trip in a private car while visiting India. We had been informed Driver Gopal would call us the day before our trip to confirm the arrangements. I messaged when no call came late into the day before. The first call came after we had gone to bed. Gopal made it clear that there should be no delay on our part the next morning. Another call came an hour later to confirm our address. I wasn’t pleased as our already short night of sleep was getting shorter.
When the appointed time came the next morning, no Driver Gopal came. What did come was a huge downpour. Our street was more potholes than road, and when the utility company decided to dig a ditch for added inconvenience, a bad street had become a terrible one. Add rain to it and it’s a nightmare pretending to be a street. An hour behind the appointed time, Driver Gopal appeared, and we were on our way. I asked that we stick to main roads given the conditions. For much of the next hour of driving, we were on roads that were anything but main and going at speeds not helpful for a weak stomach as Gopal aimed to make up for the lost hour.
Over the next 18 hours, we’d get to see firsthand the life of Driver Gopal, a man in his fifties. This 18-hour day was apparently nothing out of the ordinary for Driver Gopal. He apologized for calling late the night before explaining that he had just returned from a similar trip. The company that employs him called him multiple times to complain about his late start, though we never complained to them. They must just track him just to pester him!
Gopal is married and has two children, one in college. He didn’t even make it to high school. Gopal offered that he is allowed four days off from work per month, and those days are often about the only time he has for his family. He is paid about $10 per day (about 800 Indian rupees), though we paid nearly $180 for our trip. Hard to fathom how Gopal gives so much to earn so little. Like most independent workers, he has little bargaining power. As we contemplated Gopal’s life, and more than doubled his daily salary with our tip, I did the following back-of-the-envelope calculations.
For the tour company that organized our trip, between providing our meals and gas for the car, the trip likely costs about $30. Maybe all things considered, the company spends about $90 on our trip and makes a handsome profit in the range of $90, i.e., 100%, on their investment. While I cannot be sure, I doubt the salaries they pay, the prices they charge, or their profit margins are out of the ordinary. I understand the basics of a free market economy. I also understand how it is easy for a few owners in a certain business, such as luxury day travel in India in this case, to come to agreement on salaries and prices (though explicit collusion may be against the law).
While our day travel in India can be hardly compared with buying a yacht, I understand how inessentials can be priced high as long as there are willing customers. The problem is relying on a free-market economy to set prices for essential items in markets that are anything but free. The recent price restriction on insulin prices in America is an example where lawmakers came together to benefit the people. Similarly, housing is an essential part of living, so rents in small college-town markets or in congested city environments are worthy of controls — even if you’re a believer in the magic of a free-market economy. Making this distinction between luxury and essential items is central.
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