In temple towns such as Horanadu and Sringeri, the temple has a virtual monopoly over accommodation for tourists. There have been a few private lodges springing up in both places of late, but indifferent quality means these are places of last resort for tourists. The temple accommodation, however, is well maintained and clean, and most importantly comes cheap. The undifferentiated twin bed room goes for about Rs. 100 per night in both places.
The low price for the room is a conscious policy by the temples to promote equality. However, I’m not sure how well they are doing on that front. The low price means that quantity demanded far exceeds the quantity supplied and this enables people who are in charge to extract rents. There has been significant investment in building more rooms over the last decade or two, but still during most times of the year it is hopelessly insufficient.
I haven’t openly seen cases of bribery in these towns, but given the power that the clerks in charge of the guest houses wield, it cannot be ruled out. What is more common, however, is using contacts to get rooms. You need to know the right people, or need to know people who know the right people. Having relatives who are either natives of these places, or working for the temples, helps. And there is nothing better than being a high-ranking government official.
What has happened is that in the name of creating equality in monetary terms, the temple encourages massive inequality when it comes to power. My hunch is that due to the extreme shortage of the rooms, the market finds its own clearing price, if you can count recommendations as having a monetary value. The only issue is that due to the official policy, most of the actual clearing price doesn’t reach the temple, and is instead distributed along the chain.
The name of the common man and the poor are exploited regularly among rent-seeking agents. Other examples of similar behaviour occur in the markets for kerosene and telecom licenses (I’m picking two random examples here; there are several more). In the name of the common man, kerosene is priced obscenely low. I’m not sure if the intended beneficiaries are getting the benefits of this low price. What is clear, however, is that the people in charge of the distribution are having a jolly time. The power vests with them.
Recently, telecom licenses were handed out at a much below market price, using some extremely dicey FCFS rules. What seems to have happened is that the real price has been discovered, but officials have changed the rule to ensure that most of this real price doesn’t accrue to the government. All in the name of the common man – it is said that high license fees would result in more expensive phone calls.
Socialist ideals and equality are easy methods available for agents to maximize their rents. Economically efficient market-based techniques ensures transparency. “You have the money? You get it”. When rules are created using equality as an excuse, the rules are so less clear. And this transfers immense power to the people who are in charge. The common man doesn’t benefit at all.
So far there haven’t been any attempts to define power inequality. There is no Gini coefficient yet to define this. However, I won’t be surprised if the “power Gini” (as opposed to “money Gini”) is much higher in socialist economies.
Coming back to the original issue of accommodation pricing in temple towns, I’m reminded of Baptists and Bootleggers. The officials running the guest house, sensing an opportunity to collect rents, say? “let us keep the prices low and equal”. The swami in charge o the temple says “yes, we need to ensure equality. let us keep prices low and equal”.