Nepali Times
Strictly Business
The landlord syndrome


There are many ways to interpret why things are the way they are in this country. But in business terms, it helps to see Nepal struggling between two models of governance: the ease of a 'landlord model' and the competitiveness of a market-driven 'share-holder model'.

Historian Mahesh Chandra Regmi has shown that throughout much of its history, the Nepali state has acted as a landlord. To finance wars and to pay for its indulgences, it collected rents from those who lived within its borders. It rewarded officers by giving them jagir in the form of land. Those who were not absolutely loyal had their properties confiscated and were even exiled. Activities of the so-called disloyal sections were banned until 1990. Since the state exercised all-consuming power over their daily lives, Nepalis saw themselves not as citizens but as tenants whose self-interest was to be on the right side of the landlord lest they got punished or thrown out.

In theory, the Jana Andolan of 1990 gave the tenants a stab at becoming citizens to finally press for the 'share-holder model' through freely elected political representatives. There were fragments of hope in, say, the achievements of community forestry, diversity of FM radio news broadcasts and bits of economic reforms. But over time, it became clear that the representatives too had disappointingly degenerated into neo-landlords, accountable only to the myopic interests of party leaders. As they fought with one another for money and power in a continual haze of finger-pointing suspicions, they collected disgust, lost public support and eventually ceded their landlord status. Looking back, their greatest failure lay in not pushing for more competition-oriented market reforms, which would have quietly made the emergence of any other landlord difficult in the future.

Take something abstract like press freedom, for instance. They are gone because the new landlord has decided that the tenants don't need them. And activists are now reduced to either chanting the ideals of press freedom or going on a global road trip to take grievances to audiences abroad. But consider an alternative. Had there been a more direct and diverse foreign investment in the businesses of radio, television and print media, chances are that no landlord would have been able to squash the press. After all, it's easy to make arbitrary rules to inflict harm on purely Nepali-owned businesses. But the more such businesses are bound by globally accepted business practices through a horde of foreign investors and domestic shareholders, the more difficult it becomes for any landlord to act in ways which could harm that majority's interest. If that should happen, the investors would signal their anger by pulling money out of the country in no time.

Take telecom as another example. At a time when even vegetable farmers in Bangladesh have the luxury of choosing from eight competing phone service providers, Nepali businesspeople have none. But again, consider the alternative. Had the elected governments thought of their constituencies, let go of their greed to keep on milking the state-run telecom provider and promoted private and joint-venture telecom competitors to come on board faster, not only would millions of Nepalis be connected to one another at cheaper rates today but future landlords would have found it very costly-monetarily and coordination-wise-to seize the control of all phone lines in one day.

Some Nepali democrats argue for decentralisation of power while professing a knee-jerk distrust of markets. It's time they started appreciating how a rule-bound competitive market acts as an instrument that decentralises power, checks against the excesses of a capricious landlord and makes citizens' voices count through the shareholder model of governance.

(11 JAN 2013 - 17 JAN 2013)