The current Government of Puerto Rico has done it yet again...
Since yesterday, the government ceased services for public transportation (train and buses)- since they have no budget. Of course, cutting all public transportation makes complete sense....it's such a luxury good. If you look at the microeconomic definition of the different goods, you have the following:
- Inferior good - Increase in income causes a fall in demand
- Normal good - Increase in income causes an increase in demand
- Luxury good - Increase in income causes an even bigger increase in demand
- Public goods - Non rival and non exclusive goods
- Private goods - Rival and exclusivity
- Common resources - Goods that are rival in consumption but not excludable
According to these definitions, public transportation totally fits in luxury good (sarcasm speaks). I mean it's not rocket science that public transportation is a public good. With the ceasing of these exclusive public goods around 70 thousand passengers that utilize the public transit will be affected. Along with 882 employees of the AMA (bus transit) and 1,600 of the ACT (train transit). To this we should take into account around 3,000 patients and employees that use public transportation to get to one of the top Medical Centers in Puerto Rico (Centro Medico), and not to forget of the inmense amount of students from the University of Puerto Rico Rio Piedras Campus that use the train to get to their respective classes. So, not only are you affecting the transportation sector, but this action can have a domino effect on the education sector, the health sector and of course the labor force; as well, are you leaving without pay around 2,000 public employees and around 70 thousand people with no means or ways to get to their workplaces.
But wait! There's more...isn't petroleum prices in PR going up? buuut in the U.S. it is being reported as the lowest petroleum prices since 2010; gas prices are no more than $3 per gallon in the United States, while in Puerto Rico they are 0.87 cents per litre, which is around $4 per gallon. Also, take into account the impact this will have in traffic..currently you have an average of around 2-4 cars per household in Puerto Rico, of a total population of 3.62 million; where the whole island only has 10 expressways.. plus some 66 primary highways (and other secondary/tertiary roads).
Chronological order:
- Government gets petroleum company to invest in Puerto Rico
- Gas prices rise
- Government ceases public transportation in debate of an increase in petroelum tax to 68%
Hence, did the Government of Puerto Rico promise to subsidze PUMA Energy's investment in Puerto Rico with the people's money? Did they sign an agreement on behalf of the citizens? Why are you all of the sudden looking to increase petroleum tax, cease public transportation and have gas prices rise simultaneously? Sure, makes sense...obligate people to use cars by ceasing public transit and raise petroleum prices/taxes to get the revenue you need to account for some sort of a subsidy. All of which, have an IMMEDIATE effect on your citizens.
The Government of Puerto Rico is playing a chess match against the Puerto Rican economic crisis, and it's using its pawns to try and win. For those avid chess players, you know that pawns can't really get you too far, you are going to need to move the bishops, knights, queen and king in order to win the match. The Government of Puerto Rico can't keep trying to use its pawns (citizens) to win over this economic crisis- they need to start moving other pieces or looking into other sources of possible revenue besides their pawns.
