Yesterday, on a cab ride in Dar es Salaam, I was talking with my driver about high fuel prices in Africa and elsewhere (as well as about the fascinating similarities between bribe-demanding road police officers in Tanzania and Russia – but that’s another story). In trying to explain the rising fuel prices, I referred to increasing demand and limited supplies as some of the main drivers. So to keep prices down, speaking simply, you can do two things – either reduce demand or increase supply. He, however, did not buy the argument. Some of his comments echoed what one frequently hears from people concerned about rising prices – governments should keep prices under controls.
As the conversation turned to job opportunities in the country, he started telling about his past as a mechanic and how difficult it was to make a living. “Why?” – I asked. He reasoned it by the abundance of mechanics and small repair shops in Dar — “There are just too many mechanics and not enough jobs, so it’s difficult to make money.”
I didn’t miss the chance to bring up the topic of fuel prices again – relating it to what he just told me – lots of mechanics, low wages. This time around, it was difficult for him not to agree with the supply-demand relationship – after all, he experienced it first hand, but just never thought of it in the same terms (or maybe he just didn’t want to argue about it anymore). Either way, I think my cab driver passed economics 101 and maybe now there is now one less supporter of hurtful price controls. I wish I could have a similar conversation with top Zimbabwean government officials — they certainly need it. I dont know if I’d succeed, but its worth trying…
Published Date: March 25, 2008