23rd May 2008
The Malta Independent - Friday Wisdom
The Malta Independent - Friday Wisdom
W
hy is it possible for Malta
International Airport to increase the parking charges to car-hire firms by 2300
per cent? How is it that taxi cabs spend most of their day waiting for business
rather than actually driving clients around , but yet thrive as evidenced by the
premium charged for transfer of licences? Why do banks often give their clients
take it or leave it terms for their service?
The answer to all these questions is that we have too many segments in our economy where there is no real and fair competition. MIA is the most glaring. It is a privatised monopoly against all conventional economic wisdom.
Taxi operators remain a closed shop who prefer high prices to high business volume. Banks are the closest thing to a local cartel where operators pretend to compete but in reality they merely go through the motions while two large players continue to dominate the market and use all tricks in the book to maintain the status quo.
The economy desperately needs to be liberated from the stranglehold of such monopolies in order to preserve and enhance competitiveness. Monopolies increase expenses, reduce efficiencies and cost the country dearly in missed opportunities.
Take the sharp increase in parking fees by the airport operator to local car-hire firms. Somehow such an explosion in the operators’ costs will translate in higher car-hire fees charged to tourists who already contribute well the MIA’s ordinary revenues. Clearly something is wrong when a price goes up by 2300 per cent. Either the previous price was substantially subsidised, or the increased price is an exaggeration resulting from monopolistic powers, or both.
This shows the need for prices to be allowed to reflect market forces by elimination of unnecessary subsidies as well as by the control of monopolies in order to get prices fixed by the interplay of efficient supply and economic demand. Monopolies and undue subsidies lead respectively to inefficient supply and uneconomic and wasteful demand.
What is equally worrying is that our trait for tolerance of monopolies is being ingrained in the political sector. Following the last election results we have a PN which seem to have monopolised the government and an MLP which seem to have monopolised the opposition. It is arguable whether PN have monopolised the seats of government because MLP chose to monopolise the seats of opposition or vice-versa. I maintain that the former is more likely.
Labour almost deliberately chose to hand over government to the PN in the last three elections. They did it in 1998 by going for early elections without exploring other less drastic solutions. They did it in 2003 by forcing the electorate to vote against it when it made Labour government and EU membership mutually exclusive. And it did it again in 2008 by trying to force on the electorate a Prime Minister devoid of credibility. In all three instances the electorate would have chosen Labour in government if Labour were ably led. If the PN are monopolising the seats of government it is with courtesy of Labour.
What is doubtful is whether Labour have got so used to being in opposition that they really have lost the urge of winning government. So far we have had conflicting signals. The way the delegates defended their right to elect the leader and denied ordinary members the right for direct participation shows diabolical persistence in error.
Having been responsible for choice of the leader who led the party to three successive defeats and knowing how critical the choice of the leader is for electoral success or failure, delegates should have had a tinge of humility about their ability to elect a prime minister rather than merely a party leader.
On the positive side the decision to publish the full report of analysis regarding the last election defeat and to make it widely available to the conference delegates in good time before the leadership election, shows that there is still inner will to get unglued from its pitiful situation since opting for early election nearly 10 years ago. This optimism assumes the report will be published in its original format, in full and without censorship or editing.
While five contestants are in the contest, research among the general electorate shows basically that it is a two-horse race between Abela and Muscat. Research conducted by Media Today among a sample of conference delegates shows the same two favourites but with inverted rankings. These surveys carry a wide margin of error and the Media Today survey has been faulted for being selective in the choice of the sample (in reality when the base is as small as 900 it is more realistic to conduct a full survey rather than a sample) but they are still fairly indicative.
They are indicative of a situation where while the general electorate prefer Abela over Muscat as the new Labour leader, the hard core Labour seem to prefer Muscat over Abela. Why this is so lends itself to many conspiracy theories of inner divisions and manipulation by those resisting internal change that prefer Muscat as the candidate with the minimalist approach to it.
Will the delegates engage with the views of the wider electorate or persist in doing it in their own way? The new leader will be elected by the delegates but his success or failure will be decided by the general electorate. So the delegates have to search really deep in their conscience and decide whether they continue electing a mere party leader or do it in full engagement with the wider electorate and elect a future prime minister.
This decision will be instrumental in deciding whether the monopolies of the respective parties in government and in opposition will persist beyond 2013.
The only emerging monopoly I really would not touch is Inter’s dominance of the Seria A scudetto.
hy is it possible for Malta
International Airport to increase the parking charges to car-hire firms by 2300
per cent? How is it that taxi cabs spend most of their day waiting for business
rather than actually driving clients around , but yet thrive as evidenced by the
premium charged for transfer of licences? Why do banks often give their clients
take it or leave it terms for their service?The answer to all these questions is that we have too many segments in our economy where there is no real and fair competition. MIA is the most glaring. It is a privatised monopoly against all conventional economic wisdom.
Taxi operators remain a closed shop who prefer high prices to high business volume. Banks are the closest thing to a local cartel where operators pretend to compete but in reality they merely go through the motions while two large players continue to dominate the market and use all tricks in the book to maintain the status quo.
The economy desperately needs to be liberated from the stranglehold of such monopolies in order to preserve and enhance competitiveness. Monopolies increase expenses, reduce efficiencies and cost the country dearly in missed opportunities.
Take the sharp increase in parking fees by the airport operator to local car-hire firms. Somehow such an explosion in the operators’ costs will translate in higher car-hire fees charged to tourists who already contribute well the MIA’s ordinary revenues. Clearly something is wrong when a price goes up by 2300 per cent. Either the previous price was substantially subsidised, or the increased price is an exaggeration resulting from monopolistic powers, or both.
This shows the need for prices to be allowed to reflect market forces by elimination of unnecessary subsidies as well as by the control of monopolies in order to get prices fixed by the interplay of efficient supply and economic demand. Monopolies and undue subsidies lead respectively to inefficient supply and uneconomic and wasteful demand.
What is equally worrying is that our trait for tolerance of monopolies is being ingrained in the political sector. Following the last election results we have a PN which seem to have monopolised the government and an MLP which seem to have monopolised the opposition. It is arguable whether PN have monopolised the seats of government because MLP chose to monopolise the seats of opposition or vice-versa. I maintain that the former is more likely.
Labour almost deliberately chose to hand over government to the PN in the last three elections. They did it in 1998 by going for early elections without exploring other less drastic solutions. They did it in 2003 by forcing the electorate to vote against it when it made Labour government and EU membership mutually exclusive. And it did it again in 2008 by trying to force on the electorate a Prime Minister devoid of credibility. In all three instances the electorate would have chosen Labour in government if Labour were ably led. If the PN are monopolising the seats of government it is with courtesy of Labour.
What is doubtful is whether Labour have got so used to being in opposition that they really have lost the urge of winning government. So far we have had conflicting signals. The way the delegates defended their right to elect the leader and denied ordinary members the right for direct participation shows diabolical persistence in error.
Having been responsible for choice of the leader who led the party to three successive defeats and knowing how critical the choice of the leader is for electoral success or failure, delegates should have had a tinge of humility about their ability to elect a prime minister rather than merely a party leader.
On the positive side the decision to publish the full report of analysis regarding the last election defeat and to make it widely available to the conference delegates in good time before the leadership election, shows that there is still inner will to get unglued from its pitiful situation since opting for early election nearly 10 years ago. This optimism assumes the report will be published in its original format, in full and without censorship or editing.
While five contestants are in the contest, research among the general electorate shows basically that it is a two-horse race between Abela and Muscat. Research conducted by Media Today among a sample of conference delegates shows the same two favourites but with inverted rankings. These surveys carry a wide margin of error and the Media Today survey has been faulted for being selective in the choice of the sample (in reality when the base is as small as 900 it is more realistic to conduct a full survey rather than a sample) but they are still fairly indicative.
They are indicative of a situation where while the general electorate prefer Abela over Muscat as the new Labour leader, the hard core Labour seem to prefer Muscat over Abela. Why this is so lends itself to many conspiracy theories of inner divisions and manipulation by those resisting internal change that prefer Muscat as the candidate with the minimalist approach to it.
Will the delegates engage with the views of the wider electorate or persist in doing it in their own way? The new leader will be elected by the delegates but his success or failure will be decided by the general electorate. So the delegates have to search really deep in their conscience and decide whether they continue electing a mere party leader or do it in full engagement with the wider electorate and elect a future prime minister.
This decision will be instrumental in deciding whether the monopolies of the respective parties in government and in opposition will persist beyond 2013.
The only emerging monopoly I really would not touch is Inter’s dominance of the Seria A scudetto.
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