April 12, 2016

Fixed wages in the public transportation segment?

It often appears like taxi, jeepney and bus drivers drive for their lives: they weave in and out of traffic changing lanes and they stop in the middle of the road to load and unload passengers; and in many cases this is quite close to the truth. Many public utility drivers are not paid fixed wages but earn only after they have met their daily quota (called boundary) which is paid to the vehicle owner (the capitalist).

The public transport system in the Philippines is a great case study of free market economics gone wrong. In many ways, this free market system works like how any free market system is supposed to work, albeit with some government controls in place. Like many free markets, competition is fierce and barriers to entry are relatively low. Theoretically, this should push prices down (or up) for consumers until the equilibrium between supply and demand is found.

Perpetual traffic congestion and an inefficient public transport system. This is now considered normal by millions of Filipinos in Metro Manila