Posts Tagged ‘utility rates’

Knowing what’s good for you

“Paying tax is a patriotic duty!”

So say some adverts around here. Alas avoiding paying tax is something of a national pastime. And not just taxes, but utility bills etc too. (Especially if you are, ahem, part of the government!) This obviously can make life quite difficult for the utility companies. In theory that would mean the rest of us having to pay more for our electricity and water etc, but such prices are highly political and thus tightly controlled by the government. Result: highly dysfunctional services that greatly undermine the economy.

What is interesting, is that in such a context, business opinion appears to divide. Some business people understand the fundamentals and would prefer to pay substantially more to get a reliable supply/service. However, others take the typically short-termist view that higher prices means higher costs, and higher costs are always bad.

Thus we see another result, across a wide range of economic issues, government fixed prices and royalty rates stay exactly that – fixed – for relatively long periods of time under lobbying from special interests. Then, inevitably, the earthquake happens, and the price shifts dramatically, doubling or more overnight in the case of some royalties. Unsurprisingly businesses then complain that it is impossible to plan sensibly against such huge political uncertainties. So I’m waiting for the day when enough of these businessmen and women grow up, drop the whole ducking and diving mentality, and accept that a far better solution is for such prices to increment annually based on inflation or some other appropriate measure.

One of the trite aphorisms of the aid industry concerns the benefits of teaching someone to fish over just giving them a fish today. Many business people here, however, appear to prefer the solidity of the fish today over hypothetical fish tomorrow.

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