Dear Editor,
The late US president, Harry Truman once said that he wanted to find a one-armed economist who could advise him, rather than confuse him. Most economists when asked for advice on policy decisions, will say that on one hand this could happen, and that on the other hand something else could, either outcomes being possible from the same decision. The reality is that well-intended decisions can have adverse, unintended or completely unexpected outcomes, and will obviously never satisfy all.
One good example of the unexpected arising, was when the US during the late 1960s experienced a surge in accidents following the passage of legislation compelling auto makers to install seat belts and other safety devices in their vehicles. An analysis of the puzzle showed that drivers, realizing that they would not be maimed or killed that easily if they got into an accident when using the safety devices, actually started to drive less carefully, causing more accidents, and killing more pedestrians (Peltzman, 1975).
When the Guyana government recently announced that there would be a ban on the importation of used tyres, as well as vehicles older than eight (8) years, many rushed to say that the government was inconsiderate to ‘poor people’. However, many benefits from these decisions can be seen, and some of these are given below.
With regards to allowing the importation of only newer vehicles, admittedly this will significantly carry up the price of acquiring a vehicle, but here are a few positives:
The demand for personal vehicles will go down, indirectly increasing the use of public transportation. This itself can pave the way for the introduction of a more efficient and attractive mode of public transport, starting within the cities and moving on to suburban areas. From this, Guyanese being notorious as latecomers, may even be forced to become time-conscious;
Overall, there should be a reduction in the demand for fuel, lubricants, spares, etc., all of which can help us save on foreign exchange expenditure. This will also be good for the environment;
Persons will likely now have an incentive to drive more carefully, and many will think twice before buying a car or mini-bus and putting it in the hands of a ‘road nut’ to work for hire. These will likely reduce the number of accidents, made even better with less vehicles being on the roadways;
The depreciation rates will reduce (even if artificially) and the resale value of vehicles will go up. This will actually encourage persons to take more care of their vehicles, as replacement will most likely be out of reach, and then again, you can probably get a better price for your old jalopy, if the average buyer can only afford a good Guyanese second-hand vehicle rather than a newer, freshly imported one;
With increased incentives for larger and more cost-efficient modes of public transport, there will be a huge disincentive for persons getting into the job-market as taxi or mini-bus drivers. This might even force persons to really pursue more rewarding means of livelihood, such as in the agriculture or manufacturing sectors;
There will be good reasons now for a comprehensive review of prevailing insurance rates and coverage, particularly the ever-popular ‘third-party’ packages that leave just about everyone a loser;
With regards to the used tyre ban, no sweat there! There has to be many reasons that people in other countries discard their tyres, or even trade them in. Here are some things to ponder:
Just supposing that it all boils down to a safety risk for the foreign user, then that risk is actually passed on to us here in Guyana when we buy those used tyres. The policies guiding such decisions to discard tyres after so much use, must have been progressively advised by valid research;
From a technical standpoint, the rate of deterioration for a used tyre actually increases with age and use. If the good, threaded part of the tyre is already mostly gone, there cannot be much life left in it;
From an economic standpoint, it makes a fair bit of sense to invest in buying new tyres. Most tyres are guaranteed for 80,000 – 100,000 miles, and are still good for more than five years. In that time, you may actually go through several used tyres, the total cost of which, and including the opportunity cost of downtime, might very well be much more than the cost of the new tyre. Think of it as going down Regent Street to buy two pairs of Chinese sneakers per year rather than putting a little more and getting a much better bargain for durability that can easily last two or more years;
Many would have had the difficult time of finding a good, matching pair of used tyres. Differences in tyre construction, thread ware /depth and configuration can actually impact the way a vehicle reacts to handling on the roadway. Not to mention the long term impact on the vehicle’s suspensions and drivetrain;
From an administrative / regulatory perspective, it will be a whole lot easier for the standards bureau to monitor imported new tyres of a particular brand or manufacture, than to inspect 4-5 times the amount in assorted used tyres;
Finally, we currently have no environmentally-sound means of discarding used tyres, which can potentially be 4-5 times the volume that will result from buying new tyres and using them until they are truly finished.
Combining the positives from the two policy decisions, may hopefully convince you that in the long run, the government has your overall interest close to heart.
Yours faithfully,
Khemraj Tulsie
