Saturday, June 13, 2020

Welfarism 36, On mandatory 20% discount for seniors, PWDs

On mandatory 20% discount for senior citizens (SCs) and persons with disability (PWDs) -- it should be voluntary, not mandatory and hence should not have been legislated. If it's voluntary, cost is on the resto. Like a marketing come on to seniors hoping they bring their children and grandchildren too. If it's mandatory, government should shoulder the cost, but govt regardless of administration doesn't think this way.

The mandatory discount results in price distortion upwards. Say the price of a ChickenJoy meal shd be P100. But with forced discount not assumed by the govt, the resto raises the price to say P105. So it's the non seniors who pay for the discount.

It was somehow ok before this Covid hysteria and business shutdowns, many non seniors have stable income. Now many non seniors minimize eating out and cook food at home instead. So the restos will have fewer customers to pass on the price distortion, barely surviving and forcing them to give 20% discount might push them to bankruptcy.

The (PWDs), non seniors deaf, blind, on wheelchair, etc also get discounts. In drugstores, hospitals, clinics, restos, bars, airlines, bus lines, etc.

Also 20% discount for students in fares during classes. Another law last year made the 20% discount for students all year round, even during sem break, summer break, holidays. And covers not just buses, ships, planes, also taxi, TNVS.

Some resto chains give 20% discount to all of their card holders, seniors or not. 30% discount on Mondays. This is voluntary type of price discount and it's working.

The legislators just make mandatory and forced discounts left and right bec the cost does not come from their pockets while expanding their pol mileage to run for reelection or higher posts.

The forced discount on medicines caused many small, non-chain drugstores to go bankrupt even before this Covid hysteria. Since they are small, small volume purchase, they get small discount from the drug manufacturers and they can't price higher or similar to Mercury, Watson's, so their average margin is around 5-10% only. Forcing them to give 20% discount means selling at a loss. To avoid further bleeding and bankruptcy, they stop selling drugs often bought by the seniors and PWDs. The typical case of "cheap but not available."

SCs can use their 20% discount in big chains like Mercury, Watson's, TGP, Generika, because these are big volume purchasers, they get big discount from drug manufacturers, have economies of scale. But for small, non chain drugstores, better not use the SC discount at least during this period because you may contribute to their bankruptcy.

For airlines and hotels, I would like to think that rich seniors should also not use their SC discount. The losses 3 months are horrible, next 2-3 months losses may be bearable.

Ultimately, mandatory price discounts, another form of state price control, should be avoided, and existing laws on the subject should be reversed or cancelled.

See also:
Welfarism 33, Janitor turned lawyer, self-reliance vs welfare-dependence, May 05, 2017 
Welfarism 34, Larry Reed on poverty and self-reliance, December 07, 2019 

Welfarism 35, Healthcare is not personal/parental responsibility, only state responsibility, February 14, 2020.

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