Mon | Nov 18, 2019

Peter Espeut | Market fundamentalism again!

Published:Friday | November 8, 2019 | 12:35 AM

When it comes to the religion of the market, I am an atheist. There are just too many instances when the market simply does not work as a mechanism to solve social and economic problems.

True believers in the religion of the market have faith that the ‘law of supply and demand’ can regulate production and labour if left to work, without interference from Government or any other agency, in the context of ‘perfect competition’. But they also admit that there is no such thing as perfect competition. The whole system is more airy-fairy and pie in the sky than fundamentalist religion.

The example of market inappropriateness I have used most often over the last 25 years in this column is the allocation of fishing licences, which has led to overfishing and depletion of all of Jamaica’s fish stocks. Our most valuable marine resource – conch – has been so overfished that that fishery has been closed for a year in the hope that the stocks will recover. This is because – despite protests from myself and others – too many licences to catch and process conch have been granted. Illegal fishing (our enforcement mechanisms are weak) also plays a small part.

Fish are wild animals, which hatch, grow and breed in various habitats over a finite and known period of time. When the Government issues too many licences, there are more fishers than fish to support them all; and fishermen have to scramble to catch enough to cover their expenses, and then make a profit. They fish harder and harder: build more traps with smaller mesh; use bigger nets with smaller mesh; use Scuba-diving gear with more efficient spearguns; and they may even use dynamite!

The so-called ‘law of supply and demand’ does not have a problem with this: inefficient fishers will go bankrupt, and drop out of the business. But in the process, the fishery will become depleted, and the habitats will have become damaged.

The mechanism for allocating fishing licences must be based on assessing the quantity of stocks that exist, and only issuing enough licences that will catch fish at the same rate (or less) than they breed. Only the most appropriate gear must be allowed; using too-small mesh will catch juveniles before they are old enough to reproduce, which means there will be less fish in the next generation.

MORE TAXIS NOT THE ANSWER

The mechanism of the market is not only useless for allocating fishing licences; it is downright destructive, and will lead to overfishing, stock depletion, and a less valuable and productive fishery.

Another arena that will lead to chaos is public transportation. The Government has announced that they will open up the system by giving a taxi/minibus license to anyone who applies, and let the market determine who sinks and who swims.

The number of commuters is finite; it costs money to put a taxi on the road; owners want a return on their investment; and drivers want to earn a decent living.

The system is already in chaos: every day, thousands of drivers scramble to make enough trips to cover their expenses, pay the owner, and then make something for themselves: too many taxis competing for the few passengers. Opening up the system will lead to more bad driving, more accidents, and more deaths and injuries.

The mechanism for allocating taxi/minibus licences must be based on assessing the quantity of passengers, and only issuing enough licences to allow owners and drivers to make a decent living.

Other countries invest in more efficient rapid-transit options that do not cause traffic congestion. We are building more roads, hoping to relieve traffic jams, but the vehicles are coming in faster than we can build the highways.

I do not believe that more taxis are the solution to our public transportation problems. Why not overhead light rail from Papine to Three Miles, from downtown to Portmore and Constant Spring?

Peter Espeut is a sociologist and development scientist. Email feedback to columns@gleanerjm.com.