Saturday, December 6, 2014

Small is Beautiful: Why Small Businesses should Replace Big Businesses (A Case Study of Rickshaws vs Buses)


Major source of congested roads:
Minibuses/vans not rickshaws
Have you noticed a marked reduction of the concentration of minibuses often called yellow devils on the roads of Karachi lately? My heart fills with a feeling of comfort when I see these yellow devils and anticipate their dwindling fate, when I see them surviving with mostly empty seats, and await the deliverance from their yoke. Their arrogance has led to their takeover by the small homegrown rickshaws (12 seater) and ChinChi (QingQi). Tens of millions of commuters and pedestrians have been suffering from the menace of these yellow devils for the last 40 years: Their overloading, wild driving, menacing overtaking, threatening moves from one side to another, trying deliberately to block you and even trample you, holding up the traffic for as long as they want, their insensitivity to the wailing sirens of stuck ambulances, not listening to the persistent horns blaring at them by the traffic stuck behind and not caring a hoot about the passengers whether old, young or women or their discomfort. The emergence of these smaller rickshaws has convinced me about the theory of Small is Beautiful



For the past four decades, I have been closely observing the driving chaos in Karachi, first as a frequent passenger, then as a driver of motorcycle and for the past twenty years as driver of cars. I concluded long ago that 80% of the traffic chaos on our roads is caused by the menace of buses and minibuses perpetrated by transport mafia in cahoot with the encroachment mafia. 40 years ago buses in Karachi would always stop near the kerbside. But then came the yellow devils owned by the transport mafia with deep links to traffic police and soon they conquered the roads by squeezing out the old bus operators, by hijacking lucrative bus routes, by engineering the collapse of the government transport (SRTC and KRTC), and by ensuring that the local mass transit train system (KCR) was bankrupted. This was done by bribing the government buses to ply on uneconomical routes, and scheming to embezzle the parts from operational buses and to render them inoperable, conniving to ensure that train schedule timings were out of sync with the office timings to make it infeasible for students and office goers to use the train system and bankrupting it. Closely supporting the transport mafia, has been the land mafia that captured the KCR land and encroached upon the bus stops, bus depots, side walks and other road side kerbs. With the connivance of these mafias with the government, traffic management became toothless and lost its will to control the menace. Traffic deteriorated and abuse of travellers became rampant. The pent up anger and frustration of Karachites erupted in 1985 when a mini bus killed Bushra Zaidi, a college student, trampling her while she was waiting at the bus-stop. The incident blew up the powerder keg and Karachi erupted in violence which to date had not been curtailed till even thirty years later. 


In the absence of any governmental will to manage the traffic, the transport mafia installed their thugs at each major stop to sequence the buses on a route and to control the disputes that often erupted among the competing drivers about who needs to wait more at a stop for passengers. The mafia's links with the government provided them with the license to stop wherever they want; in the middle of road or at any intersection for whatever length of time. Traffic police lost the authority to displine them from changing the lanes without signal or indicator.  



As the planned bus stops got encroached, each major intersection became by default a bus stop. To stop the competing minibuses from overtaking, a minibus reaching an intersection first would stop diagonally on the road so that it can not only retain an access to passengers embarking from the kerb side, but can also block out the lane from which another minibus can overtake, and in doing so, leaving just enough space for only small cars to barely squeeze through. Effectively, this kind of parking converts the three lane road into a single lane road. This invariably causes a huge traffic jam as the traffic coming from behind in three lanes must merge first into two lanes which then is forced to merge in the only remaining lane. The only culprit for jams witnessed at such intersections is no other than the yellow devil minibuses parked diagonally. 


The other nuisance they create is that they often wait forever at certain intersection stops till the minibus of the same route approaches from behind. Then they will take off as if there is a major emergency and the driver is running for his life. In this dash to the next such intersection stop, the driver will drive so rashly that he will violate every rule in the traffic book. The minibus will swerve from left to right and then left overtaking ferociously every other vehicle, squeezing viciously smaller vehicles to the edge of the road, threatening motor-cycles and pedestrians. The only vehicle they are compelled to pay respect are the huge water tankers or the dump trucks that are heavier and larger and even more menacing than them. This law of the jungle is witnessed on our roads every day causing severe accidents. Scores of people getting injured and dying every day not to speak about damage of smaller vehicles and property. This often leads the public to vent their anger by burning these buses. 


In view of this madness of rash driving, my instructions to all those learning to drive in Karachi is to keep as much distance as possible from these yelllow devils. My advice is not only to watch out for the traffic but also keep a lookout for potential passengers of these minibuses, because these mini-buses would swerve from whichever side of the road they are, to the side where a potential passenger is sighted, and would stop abruptly without any warning or signal or paying any consideration to the vehicle coming from behind. Also note that a minibus in mad dash, is likely to make a sudden stop anywhere to shove the passenger in the middle of the road in front of the traffic from behind. This is often done because the minibus has to let off a passenger who may have been making a commotion inside protesting because his stop where he had to disembark has long passed and the minibus never stopped despite his signals. This is a major traffic nuisance for which drivers need to be mentally prepared. 



Advent of rickshaws has provided several respites from the menace of these buses and minibuses:  

  1. Rickshwas and QingQi are smaller and occupy less space on the road. They occupy at most one-third of the road. [Lesser infrastructure cost]
  2. Being smaller then cars and other vehicles, their ability to threaten other traffic is negligible. [Less predatory]
  3. Driver is sitting at the same level as most of the vehicles and even motor cycles and is also visible and accessible. His psychology is not tainted by being at a level that is higher than the level of most of the other vehicles. Hence, the driver is compelled to be more courteous. [Friendlier and Responsive]
  4. Rickshaws are open and airy. Passengers are not enclosed in claustrophobic heated tin sheets like oven structures of minibuses with windows grilled and closed by nearly opaque plastic glass windows that do not allow any cross ventilation in the humid and hot environment with scorching sun. [Lesser environmental costs]
  5. Passengers are all seated. They are not herded like sardines in low ceiling mini-buses where they are forced to stand in a crouching humiliating position, swinging from one to another side as the minibus swerves wildly from left to right in a mad dash. [Easily customizable, encourages creativity]
  6. These vehicles can only drive slowly. Therefore chances of fatal accidents is low and even severe accidents are less even when they roll over in accidents. [Lesser safeguards required]
  7. Threat to pedestrians and other vehicles is low because of their low speeds. [Lower threat to public]
  8. They are of lower cost and can be conveniently purchased for a couple of lacs of rupees. It is an investment that many people have made and has become a source of earning for many. They represent a better business startup opportunity unlike a minibus which not only requires multimillion rupees investment but also higher operating cost because each minibus requires a support of at least two other people in addition to the driver. Rickshaw's operating expense is only the driver and the petrol. [Business opportunity for lower income groups]
  9. Most of the body repair and engine maintenance is much more affordable and can be done by anyone as opposed to the maintenance of minibuses that often requires bigger workshops. [Promotes ancillary businesses]
  10. Rickshaws typically park at the kerbside on a two lane road and would still leave space for two vehicles to pass in parallel. In contrast, a minibus parked on a two lane road hardly leaves space for even one vehicle to squeeze through. [More Accomodating]
I think our salvation lies in not letting the businesses grow too big. Economy of scale is a farce and smoke screen for exploitation by the rich; to make the rich grow richer, and to stop the new entrants. All the big players get together and hijack the regulatory bodies and their policies and procedures. These regulators do nothing except protect the interests of big businesses, raise prices, increase taxes and exploit the poor people. [This is visible at  PEMRA, PTA, PMDC, NEPRA, OGRA, SBP, HEC etc that I would address in a latter post.]

Smaller businesses like rickshaws are better than big businesses because they promote indigenous engineering, create opportunities for small repair and maintenance shops, increase self employment, and allow small entrepreneurship to thrive. These rickshaws provide better seating for the passengers, environmentally friendly ventilation, lesser congestion on roads, more accommodating mannerism and much more social friendly environment. Thanks god, we do not have strong regulators whose purpose I am now convinced is to erect entry barriers for small businesses and to maintain the hegemony of the big business mafias.

I see in the newspapers the attempt of the transport mafia owned by the rich dons to clamp down on the emerging threat from rickshaws to their big minibuses and buses businesses. They have succeeded in imposing a ban on rickshaws plying on the roads of Karachi a couple of times previously. But, toothlessness of our government and law enforcers seems to have some advantages too. The ban was not adhered to and could not be implemented because the commuters are voting with their feet. Rickshaws have taken over. My best wishes to them. I am only afraid of the big businesses intervening through some regulator stop their growth.


We must ask Why Big Businesses and At What Cost? 
Smaller Businesses are better for the following reasons that need to be quantified as given above:
  1. Lesser infrastructure cost
  2. Less predatory
  3. Friendlier and Responsive
  4. Lesser environmental costs
  5. Easily customizable, encourages creativity
  6. Lesser safeguards required
  7. Lower threat to public
  8. More business opportunity for lower income groups
  9. Promotes ancillary businesses
  10. More Accomodating


See Also [Upcoming Posts]:
  • How HEC as regulator have erected entry barriers and increased the costs of education and decrease the spread of higher education. 
  • How OGRA, NEPRA and other regulators have only supported the cartel of big businesses, erected entry barriers and continuously led the increase in prices. 
  • How PMDC has stopped the spread of the medical education, increased the cost of education, and curtailed the spread of good medicine.

8 comments:

  1. Muslims opted for the "small, more beautiful" option because they knew inside their hearts and minds that they could not compete in a united India. Today the Ummah knows it has not developed itself to compete with the world ... so its best brains are at work.

    The corruption of the 'yellow devils' in my considered opinion was simply a reflection of the corruption of values of society in which they were operating ... not a corruption of the principles of economics or management. They have become obsolete like the dynasore ... change is the only constant. In the scheme of God, there is no lasting place for aggression be it the dynasore or the yellow devil.

    ReplyDelete
    Replies
    1. I think Small is Beautiful is a book by a Western scholar written for West, using examples of Western business practices.

      Let's do a similar analysis of corruption and exploitation by big oil companies, big pharmaceutical companies, big shipping companies, big banks, big builders, big fishing trawlers and companies, big high tech companies, big countries/empires, big provinces, big interest groups, ......

      Delete
    2. Let's first define each of the terms as used in my post and then see how each of the various types of big businesses perform on these terms; Smaller Businesses are better for the following reasons that need to be quantified as given above:
      - Lesser infrastructure cost
      - Less predatory
      - Friendlier and Responsive
      - Lesser environmental costs
      - Easily customizable, encourages creativity
      - Lesser safeguards required
      - Lower threat to public
      - More business opportunity for lower income groups
      - Promotes ancillary businesses
      - More Accomodating

      Delete
  2. I am inspired by Iqbals' poetry on 'the Mountain and the squirrel'.

    Though I consider myself a student of Economics, I believe that:
    1. Small businesses form the backbone of any economy. I am curious to learn if a body can be a body with only a backbone?
    2. Like the squirrel, small business are more nimble. Squirrels can climb trees and break nuts. A mountain sustains forests and creates rivers.
    3. A squirrel needs a small infrastructure for its 'home'. On mountains grow timber and rivers begin their lives.
    4. Squirrels are less predatory. On mountains live wolfs.

    I remain curious to learn if the squirrel and the mountain are both a necessary part of Gods' scheme, or are they mutually exclusive?

    ReplyDelete
    Replies
    1. I think small businesses are not only backbone, but also the meat, the bone structure and the life blood of a more equitable economy. An equitable society that does not only allow rich to become richer and erect entry barriers against poor to become richer through their front regulatory bodies.

      The problem is that man and his big businesses have become so predatory and owns the regulatory bodies (nation states and institutions and industrial machines) that have become so powerful that they have left no space for the squirrels to live and eke out their living.

      Delete
  3. Business ethics in its most basic form is the evaluation of business decisions according to judgments and moral concepts. This article will provide an introduction to the subject.http://smart-detox.web.id/agen/

    ReplyDelete
  4. Sir quite an interesting simile you have pointed at between the concept small is beautiful and Rickshaws v/s buses.
    Same thing has been said about size of cities by Dr. Allama Muhammad Iqbal that cities should be smaller as big cities create problems and foster crimes and slums as well.
    But here arises a question. If big businesses are a menace why these thrive on and flourish.

    ReplyDelete
    Replies
    1. Q: If big businesses are a menace, then why they thrive and flourish?
      A: They thrive by transferring the external costs (externalities) to society and environment. I think if we calculate the external costs and incorporate them as part of their income statement, they will not be making any money.

      I also think that the external costs should include (1) known external costs, and (2) provision for unknown external costs to be determined and adjusted later on.

      Let's have a discussion on this.

      Delete