Daniel Beitler
The detrimental effect on an economy of even the smallest changes in local weather or transport conditions always seems to far outstrip any reasonable expectation. Nevertheless, experts assure us that even the smallest change, once multiplied by the affected population of a given city or country, can result in a substantial loss or gain to an economy.
It is productivity – particularly business productivity – that is hardest hit in such conditions.
While a severe typhoon in Macau can wreak substantial damage to trees, buildings, and other elements of infrastructure, such as signposts, the direct economic loss to a city following such a weather phenomenon (excluding, of course, human lives) pales in comparison with the indirect cost of having half the city’s working population stay at home for the duration of the storm.
The debate over Daylight Saving Time has been linked to both costs and benefits for an economy, covering areas like energy savings, tourism levels and even business productivity – which can be impacted by a fall in workplace punctuality, driven in part by the few who forget to adjust their clocks.
Even the pittance of snowfall that generally afflicts the U.K. once or twice a year costs the economy hundreds of millions of pounds per day; insurance group RSA estimated a cost of around £500 million (MOP5.3 billion) per day in a report earlier this year, while the same group estimated that an extended cold spell in 2010 had negatively impacted the economy by as much as £1.2 billion (MOP12.78 billion) per day.
In the U.S., the physical act of changing the clocks twice cost the national economy an estimated USD430 million (MOP3.43 billion) in 2010, according to a study by Chmura Economics and Analytics. Meanwhile, other analysts have put their estimate closer to USD2 billion (about MOP16 billion).
Moreover, small changes to the efficiency of transport conditions can result in almost unbelievable loss of productivity for an economy.
Take railway train delays in the U.K. as an example. The country’s National Audit Office has found on multiple occasions that delays, often only a minute-or-two-long, cost the economy over £1 billion (MOP10.64 billion) each year. Motor vehicle accidents result in an even larger loss to productivity.
With all of this in mind, let us turn out attention to the floundering Uber service in Macau, which is expected to disappear by the end of the week.
I doubt that any studies will be conducted on the estimated productivity loss following the departure of one of the city’s most cherished forms of transport – a study certainly won’t be financed – but I can imagine a few scenarios where Uber’s exit might affect economic efficiency.
Take, for example, the late employee who waits by the side of the road for 20 minutes to unsuccessfully hail a taxi. Or the frequent Uber-taker who, when forced to return to traditional forms of transport, buys a car or motorbike, adding to the territory’s congestion woes – and marginally reducing productivity for everyone else in the process!
Now consider that the local economy may be on the verge of a sustainable recovery. Macau has just seen the first sliver of a silver lining in the gaming downturn; according to recent data, gross gaming revenue in August was up 1.1 percent year-on-year.
I am not making the case that Uber should be regulated on the basis of marginal productivity gains (I make the case on the basis of free market economics, more generally). Rather, I seek to draw attention to the indirect, behind-the-scenes economic consequences of Uber’s retreat.
In any case, without any studies on the productivity losses – or gains – the best we can do is to wait and see whether the marginal effect of some 2,000 drivers exiting the territory will impact the non-gaming aspects of the economy; namely, sectors such as retail and food and beverage, as well as workplace productivity.
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