Death, Taxes and Taxi

Nothing is certain in life, they say, except death and taxes. Well, in Singapore, there's one more - Taxi fare increases. As many have expected, the prices of many essential items are going up. Some are naughty enough to link this chronologically to the last General Elections. Well, there is another reason for these prices increases (including electricity tariffs), and that is the increase in the price of oil. Still, many people will be unhappy about the increases in tranportation costs, though I venture that they are less unhappy when electricity tariffs are increased.

One of the things about increases in electricity tariffs that raises relatively less negative public feedback is that these tariffs are peg to the actual price of oil. When oil becomes cheaper, the price of electricity actually falls. But when was the last time you can recall the prices of transportation have fallen when oil becomes cheaper? I will hazard to say, on everyone's behalf, that it has never happened at all in the last 30 years. And that is why, as has always been the case, that most commuters will be unhappy, except the editorial staff of the Straits Times, i.e.

A few days ago, the editors of the ST ventured that raising the price of taxi fares is a good thing. They argue that this will make the cost of travelling on taxis significantly higher than other mass public transport such as the buses and trains. This will in turn discourage the long queues for taxis and lessen the pressure on taxi services. In this way, complaints against non-existent taxis, long waits for taxis and similar irks expressed by many commuters will naturally decrease. This will be good for tourists, who now have less people to compete with them. I was horrified that these editors, most of whom probably own private transport, could be so mean. But on further reflection, they may have a point. I wrote in the past how I was irritated when people jump the queue by whipping up their handphones to book a taxi, preferring to pay the surcharge over waiting. So there are people who are willing to pay more than what taxi companies are charging now.

On the other hand, the cost of transport in this tiny island, ironically, is very expensive. Owning a car can set you back S$60,000 at least, and even that is limited to 10 years, after which you need to pay more money to continue owning a car. So for many, the taxi is the next best thing without breaking an arm and a leg. Anyone insisting on increasing this costs to the commuter will naturally meet with a lot of opposition. In Singapore, business strategy is simple - follow thy neighbour. Price competition in Singapore is an anarchronism. But as anybody studying economics will know, upward price movements have unintended but certain consequences - it will lead to other price increases. This is known as the price acceleration phenomenon in inflationary situations.

So while nothing new is happening under the Singapore Sun, all of us have to brace ourselves for a recession a few years hence, when increasing costs will inevitably lead to another round of recession.