Quota System - Why The Road To Hell Are Paved With Good Intentions

When someone says "quotas", what is the first thing that comes to your mind? For me, it is university seats in our local universities. Also, quotas remind me of approved permits. And the unwritten rule that MNCs and large corporations are supposed to ensure 30% of their workforce consist of bumiputeras.

So, are quotas good or bad? To me, in this case, whether it is good or bad, derives not from the intention but rather, the outcome. But knowing that I can't live forever and that outcomes have trickling down effect that lasts more than a lifetime, my limited mind would only judge the outcome I see for now and until the end of my lifetime.

Anyway, I am not talking about university seats, approved permits or 30% bumiputera workforce requirements, though it is related.

As you can read in Malaysian Insider today, apparently our Government is toying with the idea of implementing a quota system to ensure subsidised fuel truly benefit those who deserves it. Details are sketchy but under this scheme, motorists are penalised for having higher engine capacity cars or motorcycles. Of course, the degree of "punishment" depends on the level of "sin" committed. While the holier-than-thous preach a simple "An eye for an eye, a tooth for a tooth", surely life is never that simple to begin with?

Source: http://elenemigocomun.net/1368

So as much as the Government would like to be fair and make the rich pay for the poor, I am seriously doubtful how will this Government be able to pull it off?

Like in a computer game, the more barricades/levels of difficulties being placed to "test" the skills of players, the more likely the players find ways to overcome it.

Ceterius paribus, some can argue, "Let's introduce a subsidy card!". To ensure it works,"Let's set up a centralised entity to properly distribute the issuance and maintenance of these cards!". Logically, that means someone must set up this entity. It must be a monopoly to make it work and whenever it involves a monopoly or oligopoly, that means, inefficiencies. So how do a player employ a cheat code to overcome this?

Personally, I would look for a 2nd hand condemned low engine capacity car. I will buy it and apply for a card that carries high subsidy. Then I will use this card to buy petrol which will be used to funnel into my expensive cars.

But then, the Government could then say, "Well, we will make sure the petrol stations monitor the cards being used!". The problem is who is going to monitor these station kiosks owners? Collusion in the face of abnormal profits, will inevitably encourage people to cheat anyway.

So, what if the Government would then require that the engines of higher capacity cars be designed to take different octane levels? Again, it sounds good but there are thousands of higher capacity cars right now that works fine with burning lower octane fuels.

Source: http://www.jupiterimages.com/itemDetail.aspx?itemID=22613187

Perhaps the Government would like to ration? But honestly, does it really mean fuel guzzlers are the domain of the rich and powerful? What about the neighbour of yours who have 5 children and they need multi seater vehicle to fetch his/her family to travel? Or the kind auntie down the road who fetches your children to school along with her MPV? Isn't the Government punishing those who decides to have large family? What ever happened to 70 million population target?

All the Government is trying to do is reduce the subsidy and ensure fair distribution. Is the subsidy scheme THE method to do so? But what I do know is if we introduce more inefficient methods to correct market inefficiencies, it will never work and it ended up, more often than not, benefit the wrong people.

Ask the fishermen who purchase subsidised diesel. Or the new owners of the subsidy card and centralised quota distribution system.