* This is my column in BusinessWorld last December 7, 2018.
The University of the Philippines (UP) Fighting Maroons
reaching the University Athletic Association of the Philippines (UAAP)
championship this year was so spectacular, the spectacle is easily seen in two
things: quick scarcity of game tickets and hyper-inflation of available ones.
UP became the UAAP champion in men’s basketball only
twice, in 1940 when there were only four member-universities, and in 1986 with
plentier teams. So after 32 years, 2018 could have been the rare chance for UP
to become champion again.
From always cellar-dweller with often winless records, UP
reached the top four, the semi-finals this year, and it was big celebration
among UP students and alumni. High inflation of ticket prices started in their
two knock-out games with Adamson.
When UP defeated Adamson and reached the finals after
three decades and challenged defending champion Ateneo Blue Eagles,
hyper-inflation of ticket prices occurred. A P200 ticket in Upper Box for
instance was selling for P1,000, P1,500, even P3,000.
I watched Game 2 of the championship when Ateneo
officially bagged the 2018 championship trophy. The energy of both sides was
electrifying. Perhaps anyone paying the hyper-inflated ticket with a seat from
scalpers would not bother just to feel such electrifying experience.
There is no escape from the law of supply and demand.
When demand is very high while supply of seats is limited — Araneta Coliseum
16,500 seats, Mall of Asia (MOA) Arena 20,000 seats — then the tickets at
original prices would quickly vanish. To reappear at a much higher,
hyper-inflated prices.
Both venues should have struck a deal with UAAP and
member-universities to raise ticket prices to 3x or 5x their original prices
and portions of the extra revenues will go to UAAP members. This way, people
with lower budget would opt themselves out and watch the games free in their
respective campuses, malls, bars or in their houses. This is a proven measure
to get rid of scalpers partially or fully.
The lesson — rely on market forces, let prices go up or
down temporarily depending on supply-demand dynamics.
When government comes in, this market dynamism is
restricted if not killed. Like when government imposed high oil taxes under the
TRAIN law and this was implemented this year.
The Philippines’ inflation rate this year has mellowed
from peak 6.7% in September and October to only 6% last November. This is the
good news.
The bad news is that such decline is not enough to
counter the inflation momentum this year. The Philippines has the biggest jump
in inflation 2018 year to date (ytd, January to October or November) versus
inflation 2017 (See Table 1).
A few weeks ago, the Duterte administration announced
that it will suspend part 2 of oil tax hikes this coming January. That was
good, and it was an implicit admission that oil tax hikes under TRAIN law are
mainly responsible for our high inflation.
This week, the government made a U-turn and announced
that part 2 of oil tax hikes will proceed as scheduled next month.
Cheap oil and energy is good. It means lower cost of
farming (tractors, irrigation pumps, threshers, harvesters, trucks) and lower
cost of fishing, which can help bring down food prices. Lower cost of
manufacturing and in all other sectors of the economy.
But government and its allies think this is wrong, so
government imposed high taxes to make oil and energy become expensive. Lousy.
French President Emmanuel Macron suffered heavy political
beating after his government imposed high diesel taxes this year, part two to
be done next month. Public reaction was deep anger at such a policy of
expensive oil, expensive energy, even if Macron said it was meant to help
“fight (man-made) climate change.”
After more than two weeks of violent demonstrations and
rioting, Macron reversed policy and will not implement additional oil tax hikes.
While players, officials and fans of UAAP basketball and
other sports can now rest, Philippine consumers have no rest from
government-imposed expensive energy policy.
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See also:
BWorld 270, Debating with Mr. RE, December 04, 2018
BWorld 271, More smokers and drinkers needed to fund more UHC? December 10, 2018
BWorld 272, The ASEAN Prosperity Initiative, December 11, 2018
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