Bureaucrats Set the Taxi Fare in Japan

for the taxi companies who wanted to offer LOW fare

Let's see... Japan is entering the third decade of stagnation/recession/depression however you want to call it. People are struggling to keep or find jobs, now that the traditional "life-time employment" has been destroyed even for male workers (female workers never had such a thing). Contrary to what is generally reported and perceived here in the U.S., prices of goods and services haven't gone down in Japan. It has pretty much stayed the same. But increasing burden of more taxes from two decades of deficit spending, pensions, national health insurance, and national long-term care insurance on a shrinking population means people have less money to spend.

So, when entrepreneurial taxi companies in Osaka, Japan wanted to continue their popular low taxi fare so that people use their taxis more (and maybe they can hire more taxi drivers), what does the government bureaucrat in the regional bureau of MLIT (Ministry of Land, Infrastructure, Transport and Tourism) do?

Deny the request, of course.

Yomiuri Shinbun reported (in Japanese) on February 11, 2010 that the regional bureau of MLIT notified the two taxi companies that their request to continue the low taxi fare was denied. The bureau is demanding that the two taxi companies RAISE the fare for the first 2 kilometers (1.24 miles) from 500 yen to 590 yen, in line with their competitors.

"500-yen" taxi is also called "one-coin" taxi, as 500 yen is the largest denominated coin in Japan.

The MLIT bureau even calculated the profit and loss for them, and decided that the profit level would not be "appropriate" if the first-ride fare remained 500 yen.

The two taxi companies are furious. Their competitors welcome the decision, as it will "help dampen excess competition".

This is the first intervention by the MLIT after the legislation to "normalize and revitalize the taxi industry" was passed in October last year. Far from "revitalizing", this legislation was designed to further regulate the industry. Orwellian use of language is not exclusive to English-speaking countries.

(Hmmm. Maybe I will start writing about Austrian economics on my Japanese blog...)

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