Be Careful What You Wish For.

Outrage is easy. Economic reasoning is harder.

When airfare prices surged during the Maha Kumbh event, Twitter/X exploded with outrage. Cries for government intervention, price caps, and even regulatory crackdowns filled the feed. But just months later, the same voices decry the Karnataka High Court’s decision to ban bike-taxis. Both examples highlight the dangers of government intervention in markets. While the problems associated with outright bans (like those on bike-taxis) are easy to identify, calls for other interventions—like price caps—often escape scrutiny.

Consider the call for price caps in airline fares. This reaction ignores basic supply and demand dynamics. During peak travel seasons, demand skyrockets while supply remains limited. Higher prices serve as a natural rationing mechanism, ensuring that seats go to those who value them the most rather than being allocated arbitrarily.

While it’s true that higher prices privilege those who can afford them, isn’t this the fundamental social contract we operate under? Money acts as a filtering mechanism, preventing costlier alternatives like war or rationing by queue. After all, there is no such thing as a free lunch.

What is often ignored are the unintended consequences of implementing price caps. If airlines were forced to cap fares, they would have little incentive to increase capacity, invest in better service, or optimize operations. The same consumers demanding price controls would later complain about deteriorating service quality and limited seat availability. Similar distortions occur in other sectors: rent controls lead to housing shortages, and artificially low electricity prices cause power shortages. By shielding consumers from real price signals, interventions encourage inefficiencies and discourage businesses from expanding supply.

What makes this debate even more frustrating is that the same individuals who cry foul over high prices conveniently celebrate free-market principles when they stand to benefit. The same travelers demanding airfare price caps during Maha Kumbh likely celebrate heavily discounted airfares during off-peak seasons. Many consumers complain about higher prices on Swiggy/Zomato compared to in-restaurant dining, expecting free delivery, even though the higher price reflects commissions and operational costs. Employees expect companies to pay them market wages, arguing that they deserve what the market dictates, yet criticize businesses for following the same logic when pricing their products or services.

A similar contradiction exists in how people discuss monopolistic behaviour. Many complain about how companies like Infosys and TCS suppress salaries, even going as far as calling it cartel-like at times. While it's debatable whether there is cartelization in the IT sector, the same people who criticize corporate collusion often participate in informal price-fixing at a smaller scale. In residential societies, it’s common to see collective wage-setting for domestic workers, drivers, and plumbers—practices that mirror the very collusion they decry in the corporate world.

Moreover, this outrage is not limited to consumers alone. Consider how auto and cab drivers protest against bike-taxis. They reject meter-based pricing and often refuse to use apps like Ola and Uber—decisions that suit them when it means charging arbitrary fares. But when consumers pivoted to bike-taxis—faster, cheaper, and hassle-free—these same drivers demanded intervention. Instead of adjusting their prices to compete, they sought a ban. The irony is unmistakable: they reject market forces when it constrains them but demand protection when it threatens them.

Even the government should stay away from these issues, but many times they do not because of political incentives. The recently launched Sahakar Taxi is another example of how government interventions lack foresight. The Indian government is introducing this service as an alternative to Ola and Uber, claiming that this initiative will directly benefit drivers and will not add to the profits of big companies (since drivers will no longer have to pay high commissions). As mentioned before, the Karnataka High Court banning bike-taxis until ‘proper rules’ are framed is also a bad example.

The crucial point, which I will stress again, is that the auto and cab drivers brought this upon themselves—had they priced competitively and improved service, Ola and Uber might not have gained such dominance in the first place. Now that they have, protests have erupted against them, and the government (for obvious political benefits) has decided to fund livelihoods via a market distortion using the money that taxpayers provide—the same taxpayers who prefer Ola and Uber to haggling with these auto drivers.

This also sends a bad signal to the market—when the government subsidizes alternatives, it signals that private businesses can be undercut at any time—discouraging investment, stifling innovation, and ultimately reducing choices for consumers.

That said, free markets do not mean unregulated markets. Some interventions, such as antitrust regulations and consumer protections, have merit. Price controls on essential goods, or policies preventing monopolistic exploitation, can be justified in certain contexts. However, indiscriminate price caps and reactionary policies typically do more harm than good.

Instead of demanding price controls, consumers should advocate for policies that improve market efficiency, such as better infrastructure to accommodate peak demand, regulatory frameworks that encourage competition rather than distortion, and incentives for businesses to expand capacity and innovate, leading to lower prices in the long run.

The next time Indians feel the urge to call for government intervention, they should pause and reflect: Will this solution solve the problem—or create an even bigger one?

If economic literacy improves, so will the quality of public discourse and governance.

One of the best decisions I ever made was taking that ECO101 course as a freshman in college. It changed the way I look at markets, incentives, and unintended consequences. Outrage is easy. Economic reasoning is harder. But if we want better policies, better markets, and better governance, it’s time we choose understanding over impulse.

I’ll end this with a meme I found on the internet that sums up my thoughts every single day: