Transportation fares
With the rising cost of fuel, you can well imagine that the prices of transportation here in the Philippines have gone up. Whether it be taxis, jeepneys, buses, whatever the mode of transportation, the fares are increasing. These fare increases, though, have made me a little curious. Every time that a jeepney operator wants to raise his fare by half a peso, he must seek approval from the government first. The LTO has control over this, that’s the land transportation office. Any time that any of these transportation operators wants to increase their price, they must file a request to the LTO. If the fare increase is approved, it applies to all vehicles of that class. So, for example, if jeepney operators think that they should increase the price, the petition is generally filed by their jeepney drivers Association, and if approved, every jeepney driver in the country can raise his rates then.
I feel this whole system is very cumbersome, filled with red tape, and controlled by the bureaucracy. I’m a free-market guy, I always have been. I feel it’s always better for the free market to determine the price than the government. If the current jeepney fare is eight pesos, what if José wants to make his jeepney nicer than all the others and charge 10 pesos? Well, under the current system he can’t legally do that. For me, that means that all jeepney operators have really no incentive to improve their vehicles, make them nicer, more comfortable or what ever. The price is the price, no matter what. What if Carlos wants to make his jeepney have air conditioning? Why couldn’t he do that and charge, the price that the customers would be willing to pay? I mean, the free market sets the price. If customers feel that a jeepney with air con is worth 20 pesos per ride, they’ll pay it. If somebody sets up a nice jeepney like this and they get no customers, well, they’ll have to adjust the price until somebody starts riding.
In today’s world, with gas prices increasing almost daily, having to go to the government and get permission for a price increase is kind of crazy. The approvals on these requests can take months to get done, and by then the requested rate increase is too small anyway, because the price of gas has gone way up. So, the way it is now, when a fare increase is approved, they immediately apply for another fare increase. Personally, I feel this is kind of unfair to the drivers. Frankly, I don’t see how a jeepney or taxi driver can make any money these days. The price increases in fares have simply not kept pace with the increase in fuel prices. I hear that a lot of such drivers are now seeking other forms of employment, because they simply aren’t making any money.
To me, the solution to this is simple. The free market. It’s a good thing!
Hi ecstasy – Ah, now this is what I like! I like seeing my column sparking off some interest and people actually researching into it! You know what? They say that China was the number one country that supported the free enterprise system, and these days, when it comes to economic success, China is at the top of the pack! I believe that the two go hand in hand. I am happy to see the Philippines so enthusiastic about the free market system too! Thank you for sharing the information, Ecstasy!
Hi Dr. Sponk Long – Haha… I just woke up, it’s 6am here. Your comment put a smile on my face – what a great way to start off a day!
Wow, did this one elicit some comments! And rightly so. I’ll keep mine brief. (Yeah, right, when did that ever happen). I am strongly in favor of Bob’s contention that the free market should rule! Period. (read my colomun for more
Hi Dave Starr – Indeed, lots of discussion on this one! Glad to hear your comment too, especially since you are supporting me!
hi bob,
free market in the philippines only benefits the companies and not the consumers, in the case of internet providers, the number of isp in the philippines is more than enough to choose from, however, these isp’s are somewhat coniving each other to set prices and lock-in periods, back in the 90’s when the internet was first offered to the public, there was no lock in period, it is a pay as you go service, and when one isp starts to make the consumer signed a “lock-in period” contract, the rest of the isp followed, now it is very common for any isp to have a “lock-in” period.
this is almost the same case with oil companies, one company raise the petroleum price, the rest of them just follow.
companies in the philippines suck the poor people dry.
the question of, if there is a free market in the philippines? the answer is absolutely YES, does it benefit the consumers? the answer is NO.
Hi dans – Thanks for your opinion, dans. Economists have, for centuries, described what the free market is. I guess that there is none in the Philippines, as what you describe is not the free market at all.
Thanks for sharing your opinion.
Hi Bob- while I dont totally agree with this one with you, my wife has seen an opportunityt to invest in the local sikad-sikad industry in her native province , as the cost of labor has not risen as much as fuel prices.
In her opinion she is happy that more poor people are offered an opportunity to earn some money renting the sikad.
I think that sometimes those of us with more than enough money/income forget how tough it can be to put your kids to bed with a hungry tummy.
Hey I know its late on a Sunday night but I gotta stay awake to see if Greg Norman can win the British Open! Go the SHARK!
Hi anthony – I must say, I am also rooting for Norman! I hope he wins it!
Good luck to your wife with the trisikad business! I hope she does well.
On a side note, the Philippines Central Bank raised their prime rate in order to fight inflation. The peso gained vs. the dollar immediately.
I’m a free market guy, grew up on poor in the USA, and that was the only system that got me to where I am today.
Socialism enthrones a small elite who control everything, the free market busts open a middle and entrepreneur class. As was rightly noted, one needs a government for two things: prevention of monopolies/oligopolies and prevention of social chaos.
Hi Thomas Shawn – Yes, it was almost instant that the Peso gained P1 against the $, but it is expected that in the long term the move will backfire, and cause the Peso to lose more ground. We’ll see!
I agree with you completely about the free market!