It's only fair that commuters who take public transport pay for the cost of public transport. Otherwise, it has to rob someone else to pay for it.
No matter who runs it, at least it is a cost+ model. Anything less than that, it is robbing someone else.
government-run company probably will not care whether advertising or retail makes money or not. their eyes are probably only on transportation.
I won't be surprise that the public are paying more for worse service.
I guess armed forces, police, infrastructure, Biopolis and not forgetting the durian is robbing us
I'm not suggesting free riding. I'm saying essential public services cannot be based on simple PnL considerations. I have no issue public transport or universal healthcare or education running at a loss. So was HDB or so it claimed. But it cannot be managed inefficiently or non sustainable loss... that's the difficult part. Tax monies are not just for paying ministers salaries. They are to subsidise public goods in a effective manner.
Public goods MUST be profitable is an oxymoron.
(27-09-2013, 07:25 AM)FatBoi Wrote: [ -> ]Quote "Public transport is a public good. It should be operated as one."
Is this a desire / ideal rather than what it really is?
Public goods have two distinct aspects: nonexcludability and nonrivalrous consumption.
In Singapore, due to increasing demand and physical supply constraints, we will find it difficult to satisfy both aspects for public transport. it's different from street lighting. (ans: security and herd perception)
In any case, I see people raising concerns when PTOs are making profits, and concerned again when PTOs are not doing well. it boils down to which model can give the most optimal balance of service and cost - private or nationalised model. can our govt do a better job if they are directly running it? did we see success in public hospitals n polyclinics?
Do you think healthcare and transport (not cars) are essentials vs say handphones? Why should streetlamps in Jurong where most likely no one is around be lit and I have to be robbed?
There are also other "public goods" that serves strategic interest. There is a fine line even for selling off power stations or telecommunication assets. US blocked port purchases because of national interest.
Like any crisis, it is ok until sh*t hits the fan. When your telecoms and banking sector are controlled by foreign entities it may look good on PnL but structurally you are weakened. In singapore's case, water is a clear example vs others more grey.
(27-09-2013, 07:44 AM)HitandRun Wrote: [ -> ] (26-09-2013, 05:22 PM)specuvestor Wrote: [ -> ]Public transport is a public good. It should be operated as one.
Specuvestor
I disagree with you that as long as anything service is considered a public good, it should be operated as one. E.g. Telecommunications.
However, I strongly agree that the current competition model for public transport is broken. I'm just wondering how long will it take for the government to admit it and re-vamp the model.
Hi I don't think I said that
I think public goods are those that 1) benefits majority of people yet non commercially viable 2) necessary for increasing productivity or aggregate wealth 3) national strategic interest. Telecom for obvious reasons is a public good for strategic reasons. But there are different levels of government interventions. As long as telecom is not operated with covert intent ie wire tapping (refer to the Greek wire tapping scandal) we leave as it is but we disallow foreign control, just like SPH. Makes a lot of sense strategically despite all the grunt about media control. But even telecom has to be regulated to provide universal coverage else no one would put a base station in Ubin or a remote village in China
I do agree that somesectors that serve strategic purpose, or public interst cannot be totally privatized. Eg. Telecoms, power, some transport etc. it's rather sad that the Tiger brand fell to others hand lately. Our iconic beer could be gone one day, if the new owner decide that one day . It may be financially benefiting now.
Without profit, why would management think about improvement or creating a better business model letting retail/advertising subsidizing commuters(think about newspapers, I am quite sure that there was no free newspaper in the beginning.)? There are no incentives to innovate. Profit is also an important driver for innovation and value enhancement of infrastructure and services.
If government is running SMRT, I am pretty sure that neither profitable retail nor advertising will be in their mind(probably they would run ads/retail space, but profitability is not their concern). They don't have mandate to save cost for commuters or improve the value proposition of public infrastructure.
Agree that capitalism is totally efficient and focused on profitabilty, driving innovations and providing clear cut incentives
Problem is people assume that mean it is effective. Not so sure it drives infrastructure, especially those that will benefit most people. It is prisoners' dilemma in action (ie why should I do that for which others will benefit?) which the govt had to come as in between to allocate resources for the better good. In another sense that is also the reason why there is so much angst that the roads that was built by taxes of our forefathers be given for use to foreigners who drives ferraris. hence the rise of nationalism.
If we think about it, the financial crisis from AFC to GFC are results of very efficient asset allocation to the most pofitable venture, and very profitable to many. But I doubt it was very effective for the well being of most, or to the incremental prosperity of the world.
PS I doubt beer is "public goods"
Investors complain that financial institutions are the cause of the financial crisis. But what is the solution for that? I ain't see any. People are talking about regulations and regulations. But regulations do not prevent financial crisis and regulations often kill innovations. On hindsight, we can say that financial institutions take advantage of investors, but at that moment, investors are looking at their huge future profit. If there was no subprime crisis, would investors complain and complain? would people ask for more regulations? I am pretty sure that with even more and more regulations, the next crisis will come anyway because no one knows at which point the regulation should come in and prevent a catastrophe. Even on hindsight, no one can be sure at what time, the regulation should come in and prevent subprime crisis.
What capitalism is really great is that it learns from the mistake and be better as it recognizes that nothing is perfect. The cycles will continue forever.
I can think of a few:
1) Glass Steagall act should never have been repealed. Regulators across the globe should learn to segregated public interest (ie depositors) from commercial risk (ie investment banking)
2) Risk weighted asset calculation should be higher for derivatives, especially since most of the time it is leveraged, which is happening now in Basel III
3) Curb on leverage
End of the day regulation should curb excessive incentives. I think regulators should learn from mistakes because the market as a whole never, though companies that suffered does. That is why I said US is primed for a SIMILAR crisis because nothing had been done substantially in this administration. The markets still operate under the same greed and fear... it never learns the mistake as long as some people benefit greatly from it, and so yes the cycle continues. That is where government need to intervene to prevent it from happening again. For sure the unknown unknowns will not be able to be foreseen, but that does not mean one does not correct mistakes and progress onwards.
Which leads us back to the topic: Does increasing the fares of MRT and buses means better transportation in Singapore? I highly doubt so because private companies don't care about the system as a whole, yet they are affected by congestion and asset prices, and transmitting those pain to the consumers. They only look at their individual PnL. It is obvious to me why SMRT lagged on their maintenance job. Does privatising power stations really gave us better power pricing?
The anecdotal evidence is very clear in a strong administrative place like Singapore, and may not work as well as say our neighbours. But the principle on public goods remain, effectiveness adjusted by the efficiency of the governance
How about this? for "essential services", public transports, energy..healthcare.. educations...NS...
Can we have capitalism profits and socialism benefits?
afterall, the profits has to be spent... (after the reserves are topped up, of cos..)
the question is what is excessive? Without subprime crisis, no one has an idea about it.
With glass steagall act, there is not going to be such a successful bank as JP Morgan. People often forget why glass steagall act was repealed and the benefit of repealing glass steagall act. Just because of subprime crisis, we should just ignore the wealth/value created since the repeal?
On derivatives. Before there is derivatives, interest rate and forex fluctuated widely. so was any other asset. Yes derivatives are not perfect, but is anything?
Well, people get choked to death when they are eating. So should human beings stop eating? Or at what circumstance should human being stop eating? What a wonderful world we have! A bunch of ignorants are telling how Jamie Damion should run JP Morgan.
(27-09-2013, 12:43 PM)brattzz Wrote: [ -> ]How about this? for "essential services", public transports, energy..healthcare.. educations...NS...
Can we have capitalism profits and socialism benefits?
afterall, the profits has to be spent... (after the reserves are topped up, of cos..)
so you like to pay more tax or less tax?
To me, all socialism benefit should be eliminated.
I am not sure JP Morgan is as successful as u say after merging with Chase. It was the bluest of the blue bank before the merger. And I speak as an ex employee. They should be reprimanded for London Whale. Should Dimon be untouchable such that no one can tell him how NOT to run his business? Successful unsure... Large yes. So was Tokyo Mitsubishi in the 90s. Wealth created? You mean like Citicorp and Travellers?
Derivatives created excessive incentives because of leverage. FX and interest rates are not volatile compared to say equities. It is the inherent leverage that makes it volatile to one's capital, and also gears up one's incentive. The property market would be boring if no loans are allowed.
Too much good food will choke a starving teenager to death, from Baring's Leeson to SG's Kerviel. So we regulate them by making them eat slower, "don't bite more than you can chew" and drink more water.
Like Buffett I would gladly pay more taxes if it helps improve aggregate well-being which in turn would benefit my own well-being. Social unrest is not more attractive to low tax. Taxes are not the main drivers for business. You consider opportunities, infrastructure, safety, culture, etc before you even think about taxes.
To say all socialism benefits should be eliminated sounds so much like the CNBC anchor saying there are no benefits for regulations. Without regulation there wouldn't even be broadcasting standards. Without a well planned wealth distribution agenda, we will also not be able to get people out of poverty traps, increase the middle class and hence lose the potential for innovations. I am glad that Singapore is not only rich but highest number of millionaires per population. The system had worked vs those wealthy countries with wealth concentrated on top few. Singapore govt challenge is how to make it better instead of relying on importing the rich and FT, balancing the wants of the middle class and to abandon the PnL obsession.
So ya Brattzz it can be done on balance. These 2 ideas are not entirely exclusive or incompatible. Even China which is so huge has made it pretty successful modeling after our system of using capitalism as a mechasim to achieve socialist goals.