* This is my article in BusinessWorld last September 11, 2018.
Economics is the study of proper allocation of limited
resources mainly via market mechanism. If there is rising demand for a
particular commodity or service, the price goes up as indicator of consumers’
willingness to pay for more services or goods, and this tells existing and
potential providers to increase the supply as there is more revenue and profit
to be made.
When the supply outstrips the demand due to rising
competition, the price begins to flatline or decline, telling producers to stop
expanding the supply, otherwise the price will keep declining further and they
will lose money and may go bankrupt.
The role of government as regulator and prohibitor in
this case should be limited unless a commodity or service can directly and
adversely affect public health and safety, like the sale and distribution of
guns, ammunitions and bombs, toxic and poisonous substances, and substandard or
expired medicines, food and drinks.
When government intervenes and regulates a lot even for
very useful services like providing convenient public transportation to people
who have no cars or have cars but do not want to drive because of frequent
heavy traffic, that is a signal or red flag that government becomes abusive and
is engaged in corruption and cronyism, directly or indirectly.
The Land Transportation and Franchising Regulatory Board
(LTFRB) is among the most bureaucratic and prohibitionist agencies in
government. It issues plenty of NOs, prohibitions and restrictions to
entrepreneurs and companies that want to provide convenient and safe rides to
the public.
The long lines of people daily in many areas and cities
who cannot get fast and convenient rides are the result of LTFRB bureaucratism.
The franchise of legal and accredited air-con vans, buses, ride-sharing
services is limited and capped or controlled at low levels. This seems a
calculated move so that there will be more illegal and “colorum” vans, buses,
ride-sharing cars as passenger demand is very high. And that is where lots of
apprehensions, driver harassment, corruption and extortion can come in.
Last week, there were two news reports in BusinessWorld
about continuing LTFRB bureaucratism of transport network vehicle service
(TNVS) or transportation network companies (TNC):
(1) “LTFRB junks order for Grab to reimburse passengers”
(Sept. 5), and
(2) “LTFRB approves P2-per-minute TNVS charge” (Sept. 6).
Report #1 is the agency taking back its previous order
that Grab should reimburse future passengers but it should still pay the agency
P10 million for “overcharging” its passengers and failure to inform the board
of its P2-per minute charge.
Report #2 is the agency allowing the per minute charge
and ordering TNVS to give detailed and unbundled breakdown of fares — flag down
rate, per kilometer rate, travel time rate and surge price.
The P2-per minute charge is an important incentive for
drivers to endure heavy traffic or flooded areas and pick up, bring passengers
to their destinations.
In a deregulated environment, TNVS should be allowed to
charge whatever amount as their per minute charge so long as passengers know
their rates via online transactions. So a TNVS can charge P5, P10 per minute or
higher — because it is fielding an SUV or a BMW or Benz to passengers who can
afford.
I checked the LTFRB budget, the biggest item is on its
“service” for issuing the Certificate of Public Convenience (CPC), granting of
permits and establishment of routes.
One can interpret it as we taxpayers giving the LTFRB
hundreds of millions of pesos yearly so that it can choose who among the
entrepreneurs and businesses can expand and who should be choked. We are giving
them lots of money so it can harass and even confiscate and impound private
property that provide services to wary and harassed passengers but has no
accreditation precisely because the agency has capped and limited the number of
accredited vehicles to small numbers.
LTFRB bureaucratism seems to be doing the exact opposite
of what government should do — to respect private property and allow market
mechanism to respond to passengers’ rising and changing demand.
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See also:
BWorld 246, LTFRB command and control, September 08, 2018
BWorld 247, E-smoking, smoked rice and ASEAN integration, September 11, 2018
BWorld 248, Inflation, energy prices and mini-greed, September 12, 2018
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