Sunday, November 03, 2019

BWorld 377, Property rights and transportation bureaucracy

* My column in BusinessWorld on October 15, 2019.

“In all countries where there is tolerable security, every man with common understanding will endeavour to employ whatever stock he can command, in procuring either present enjoyment or future profit.”

— Adam Smith,
The Wealth of Nations (1776), Book II, Chapter 1, “Of the division of stock”

The father of market economics was referring to private property rights protection and how people will use such property to either expand current consumption or future investments. Otherwise, if there is rampant disrespect for private property and investments, “where men are continually afraid of the violence of their superiors… they conceal a great part of their stock,” Smith added.

Among the perplexing things that continue until now is the government confiscating private property (buses, aircon vans, taxi, jeepney, private cars, motorcycles, etc.) and having these impounded by various agencies like Land Transportation Office, Land Transportation Franchising and Regulatory Board, and Metropolitan Manila Development Authority in far away places. Corporate and individual owners of these vehicles must pay a big fine and a big towing fee before they can get their vehicles, while the vehicles may suffer some physical and mechanical damage in the process of towing and impounding.

If one passes by Ayala and Buendia Avenues in Makati, other commercial areas like Ortigas, Eastwood, BGC, and Cubao, among the regular daily sights are long lines of people, tens of thousands of passengers, queuing for a ride in buses, jeepneys, and aircon vans. There is huge insufficiency in the number of these vehicles daily, in the morning and afternoon till evening. The inconvenience has prompted many people have to drive their own cars or motorcycles, which contribute to more traffic congestion.

So why is the government confiscating and impounding private property like these vehicles when these are what the public and commuters need, which further cause inconvenience in public transportation?
Sure the owners of these vehicles have faults and may not have followed certain government regulations, but the regulations themselves are often very strict and costly, very bureaucratic and time consuming, they were designed to force some players to violate them, and that is where more government harassment and possible extortion comes in.

Then there is the problem with rails. The Philippines has among the most underdeveloped rail system in Asia (see Table 1).

The government should simply privatize the LRT, MRT and Philippine National Railways (PNR). After many decades, there is no significant improvement and modernization despite the huge increase in potential and actual passengers. The private sector has the financial and technical muscles to modernize these things without the need for additional taxes and subsidies, like the P6 billion a year annual subsidy to MRT alone in Edsa (see Table 2).

In addition, the Pasig River ferry needs to be privatized too. After many years of existence, the project does not appear attractive to the public.

The transportation bureaucracy, the many agencies, national and local governments, converge to penalize private sector initiatives like buses, TNVS and aircon vans with lots of restrictions, penalties, and impounding. Government needs to step back and focus on its main purpose — protect the people’s right to life, liberty, and private property. It should get out being in the business running trains and ferries.

Meanwhile, the global launching of the International Property Rights Index (IPRI) 2019 will be done tomorrow morning, Oct. 16, at Fairmont Hotel in Makati. The important speakers will be Department of Trade and Industry Secretary Ramon Lopez as Keynote Speaker, Dr. Sary Levy-Carciente, an academic economist from Venezuela to discuss the results of IPRI 2019, Lorenzo Montanari, Executive Director of the Property Rights Alliance (PRA, Washington DC), and former Department of Finance Secretary and now Chairman of the Foundation for Economic Freedom, Roberto de Ocampo as Closing Speaker. Famous TV host and trade lawyer Tony Abad will be the program emcee.

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