The death toll from the collapse of the Sasago tunnel in Japan on Sunday has reached nine, and the Japanese Government have now raided the headquarters of NEXCO, the company that owns and operates the tunnel. The Japanese Government are said to be looking at the tunnel’s safety records and talking to NEXCO employees to find out why the concrete panels fell, crushing three cars and starting a fire. 

But this incident also highlights another point. What do consumers do when monopolies fail in their duties? How do they go about getting a better product? According to Deutsche Welle, more than 47,000 people use that tunnel on a daily basis, and it is essential in connecting Tokyo with Western Japan. All of this traffic has since been diverted onto byroads, causing horrible gridlock and affecting the flow of goods. This may work to keep things ticking, for a while, but it is not an adequate fall back position.

The basic rules of Capitalism are; if you sell a horrible product then people will go somewhere else. But this is not possible in a monopoly. There are no other tunnels. There are no other roads. There is no space or will for more roads or tunnels. Furthermore, it is unfeasable for Japanese drivers to look up the owners of every tunnel and road to make sure they do not travel on one owned or operated by NEXCO. The tarnishing of NEXCO’s brand name will hardly hurt their business. If found responsible, NEXCO may face fines and litigation from the government and direct stakeholders, but they can’t be penalized by the market at large, something demanded by the tenets of capitalism. They may be responsible, but they won’t really be held responsible.

On the other hand, if the Japanese Government was responsible for this calamity then they would he held responsible by the public. Politicians would be voted out, bureaucrats would be fired, and there would likely be movement on the policy front. In other words, something would happen. Things would change. The responsible would be held responsible.

I am not a fan of government control, but in the case of monopolies, a lot of the time government monopoly makes more sense than a private monopoly. In a democracy, the failure of a government monopoly still leaves recourse for the disenchanted. A private monopoly gives no such hope. Government monopolies are better than private monopolies.




Originally posted at Sakalabujan Magazine