Tuesday, October 21, 2008

From Out Of What Pit of Sordid Ignorance?

Ask a question, get an answer.

Asō Tarō on the income effects of deregulation:

As for the dispute over income inequality (kakusa), another commonly used phrase is "the black hat side of deregulation." The examples that are trotted out are, due to deregulation, the low levels of income among taxi drivers and the shrinkage in the number of permanent employees and the increase in the number of part-timers sent by personnel services companies.

Now it certain that due to deregulation the number of taxis has increased and the fare prices have dropped. It is said the median incomes of taxi drivers have fallen.

Even if that is the case, let us think about this, not just concentrating on the negative side. If deregulation had never happened, it is probably true that the incomes of the then existing taxi drivers would not have fallen. However, on the other hand, that would have probably meant that those in their middle age or in their senior years who had been laid off due to the economic slump would not have found new work opportunities as drivers. Would those persons have simply become "the unemployed" or been forced to take jobs featuring even worse conditions? Probably. In those cases, income would have been a) zero, or b) less than what they are making now.

If there had not been a deregulation of the taxi industry, it is possible that income disparity (shotoku kakusa) would be even greater than it is now. Because the number of part-timers and those sent by personnel services companies has increased, the income disparity between those individuals and permanent employees has grown larger. If, however, the number of unemployed has decreased by that fraction (of persons employed part-time or via personnel services contracts), it is not possible that for society as a whole, inequality has decreased?

Tarō Asō, Totetsu Mo Nai Nihon (Tokyo: Shinchosha, 2007), pp. 95-6.


Dear Francisco,

Competition is good. More flexible labor markets are good. Unfortunately not increasing the ability of individuals to put greater competition to their own advantage -- i.e., without giving taxi drivers the right to work harder and more, if they want to -- the only result is lower median incomes. The bias, given the fixed hours of operation, would be toward more aggressive driving (to chase down more fares) and poorer point-to-point service (in favor of rides beginning and ending on major thoroughfares) -- both of which are net social negatives.

The above passage from your book also places your little visit to the Takadanobaba Station roundabout in a whole new light.


rubashov said...

You say that "the result is a fall in median income." That what Aso says too! His claim is about "mean income." He admits the decrease in income for some employed people (which causes a drop in median income) but claims that is countered by an increase in the mean income (because formerly unemployed people now have some income, at least). He's talking about shifting the outliers and you're shifting the middle point.

Reasonable people can disagree with which form of the averge is more important, but we usually see conservatives talk up the mean (which goes up when rich outliers make more money) and liberals talk up the median (which does not). That's why it was surprising for me to see your use of the median to reject his concern for outliers at the poor end of the scale.

MTC said...

rubashov -

1) Declines in median incomes are better guides as to the likelihood or not of political revolt than declines in mean incomes.

2) By increasing the number of licensed taxicab drivers without increasing the number of hours or days a taxicab driver could work per month, the government plunged all taxicab drivers into a hopeless struggle to make a living wage. At a stroke, taxicab driving was transformed from a profession to a part-time job for most of its practitioners.

3) Does your final point indicate surprise as the possibility I might be a liberal?