August 17th, 2009 by Hafiz Noor Shams
Sometimes, much against the spirit of egalitarianism, I am tempted to suggest that most policymakers must have at least basic background in economics. The reason is that, some of the policies politicians advocate sometimes are very, very disagreeble in terms of its consequences.
Today in The Star, Minister Shaziman Abu Mansor — a minister no less — suggested that toll operators should give discount to motorists for facing congestion during festive season.
RAUB: Works Minister Datuk Shaziman Abu Mansor said highway toll operators should give motorists discounts during festivals to compensate for the congestion.
He said they should be fair to motorists as traffic congestion normally occurs during festivals, forcing them to be on the road for a much longer time before reaching their destinations. [Give discounts, toll operators urged. The Star. August 17 2009]
Does that sound the right thing to do?
Only if you are an economic illiterate.
More individuals are likely to use the highway if the toll is cheaper than what it is at the moment. Lower prices will exercabate congestion problem.
The right thing to do in order to keep travel time reasonably low — barring investment in more roads, better public transportation or some innovative engineering solution — is to increase prices to ensure allocation efficiency!
Higher prices will, among others, encourage pooling, utilization of public transport or travelling out of peak time. All that combats congestion.
Lower prices will come with worse congestion to make everybody worse off!
Surely that is a bad policy.