Tuesday, September 11, 2012

rational, economic, and wrong

Check out this rational yet wrongheaded economic argument parroted by The New York Times today: traffic snarls, caused in part by a phalanx of unlicensed street vendors, cost Cairo "as much as $8 billion in lost productivity, delays and excess fuel consumption, according to the World Bank."

First, there seems to be a math problem. On page 131, the World Bank report computes the total cost of congestion in Cairo as close to 14 billion Egyptian pounds. At today's exchange rate that would equal $2.3 billion, far lower number than the $8 billion number cited in the article.

But also, according to a vendor quoted in this article from Al Arabiya, each street seller actually pays 200 LE (livres Ć©gyptienne--or Egyptian pounds), or about $33, per month for the right to be at the roadside--money that is supposed to go to the government. And the article implies that if the government were willing to replace a vendor's monthly income, the payment might amount to 600 LE (approximately $100 -- or an income of about $3 a day.) Take the Times' own low estimate of 10,000 street vendors and multiply the earnings out to an annual figure and you get this: 72 million LE, or almost $12 million. That's a rock bottom reflection of how much income vendors will lose if they're forced off the street. And the full value of all their transactions is far more than that, involving leagues of wholesalers and the importers they buy from. Add in the human cost of lost livelihoods on the families of all these merchants, and you begin to see the problem with the World Bank's one-sided calculations.

What's more, The Times reports that Cairo is desperate to promote tourism and investment. Tourists, you can be sure, don't want to visit a Cairo bereft of street vendors. While the cacophony can seem chaotic and bewildering, it is also an indelible part of the Cairene experience. There's an economic value in that as well.

The larger point is that purely economic arguments make all human issues money issues. Cairo may need to take some major steps to address traffic congestion (since, as the World Bank notes, more than 1/3 of what it includes in the cost of congestion comes from excess fuel consumed in traffic jams, regulating the number of cars on the street, imposing emission controls on trucks, and bulking up mass transit options might be better answers for the city--and Al-Shorfa reports on another approach involving street vendors: creating one-day markets.). Forcing street vendors to bear the burden of what's obviously a much larger problem simply shoves the blame down on those who can least afford to suffer the consequences.

Remember: it was a street vendor in Tunisia, aggrieved that he was harassed and prevented from doing business by the government, who set himself on fire and inadvertently lit the match that started the Arab Spring.


amah said...

I think you may have read that article a bit too hastily.

"Provide me with just one meter under the sidewalk, and take a monthly rent from me."

Mr Suleiman is not currently paying rent--he is advocating a fee system by which he would pay the government for the right to remain on the busy street without being harassed.

rn said...

You may be right, Amah. I thought Mr. Suleiman was alluding to informal payments many vendors give to the government in many countries so they are not harassed on the sidewalks. Indeed, in a city as big as Cairo, I'd suspect many vendors make these kinds of unreported payments to local authorities. Still, rereading his words, I think you're probably right: he's proposing this, not saying it exists.