TRAFFIC MANAGEMENT MODULE

CHAPTER 8
TRAFFIC ECONOMICS

Objectives:
• Develop understanding of Traffic Economics.
• What are the Economic Problems?

Economic oils the wheels of traffic. It is not a mere force but the centrifugal force
that dictates the success or failure of the governance. Time has come that economics of
traffic be rescued from the lack of interest of wrong perception Expert must have an open
mind not just limited to the narrow confines of 3E"s in traffic and refuse to look beyond
the costly illusion of its advocates. There are novel decision(s) that might be charting the
unpopular course. But hope to give shape and sinews to an empty illusion of the past and
to look forward to the new complexion of the present system with a new vision of the
future, the crowning of the 5th E if traffic, ECONOMICS. This is not a choice of necessity
but signs of time.

In these days and age, the most imposing testament of public ire and woes is the
unabated traffic conflicts Urban life seems to have been hostage to this most unyielding
antithesis, the unwanted traffic trash of modern road life. Whether by faith or fortune,
traffic becomes an inescapable lifestyle in the Metropolitan arena of the world, the
harbinger of modern road dilemma of civility In this era of a fast-moving world, it is difficult
to guarantee solution with predictable success in the absence of economics interplay
Economics is the center of gravity of traffic and the bedrock upon which the system
depends Economics especially centered its study to the productive resources to produce
commodities and distribution for their consumption.

Productive resources are:

1. Land
2. Labor
3. Capital goods machinery
4. Technical knowledge

Productive commodities are:

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1. Rice
2. Meat
3. Ships
4. Concert road

ECONOMIC PROBLEMS:

I human gregariousness craves for many years wants and seem to admit no
satisfaction problem begins. But all of these wants are not free and can only be required
at the altar of sacrifice must goods are scare Gods are not necessarily chosen to satisfy
basic wants either directly or indirectly Capital goods are produced for industries to
produce goods for consumption. The element of choice how to satisfy the present wants
for the future wants? Even with modern infrastructure plan as an alternative solution to
the ills of traffic will put to naught if the resources are scare: a classical balancing
interaction of traffic and economics.

ECONOMICS GROWTH AND DEVELOPMENT:

These two economic parameters are interchangeably been misconstrued:

• Economic growth refers to a sustained increase in output as measured by gross

national product (GNP), the total of goods produced in a given year with the
economy. Technology and advancement in productions hastened economic
growth as production increases, the income also increases.
• Economic development is a complex process and broader in scope than economic
growth political, social, and cultural factors that produce changes and
development. These changes improve the capacity to enjoy material fruits of
progress individual and society. Time has come when the principle of the gross
national product (GNP) would be the yardstick to measure the number of vehicles
on the roadways as a parameter of progress.

LAW OF SUPPLY AND DEMAND:

In economics, in a free market, the price of a commodity is relatively high when the
demand of its abundant and supply is low Likewise, the price is relatively low when supply
is abundant and demand is scare. The interaction of supply and demand in preferences
or tastes, on incomes, on population, and expectations. Any of these factors can increase
or decrease the demand of the product, at a given price if preferences change so that
many want to buy more of a commodity, at a given price, then there is an increase in
demand. In the final analysis, a market exists as long as there is an interaction between
buyer and seller. The law of supply and demand states that at high prices few goods are
bought, and more goods are bought at low prices. Corollary, in the law of supply more, is

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offered for sale when the price is high and fewer goods are offered sale when the price is
low.

LITERACY LEVEL:

Unquestionably, literacy affects economic behavior. The literacy level is the

parameter of the pressure of the population on resources. Simply stated, if the literacy
rates are poor, expect low transmission of new knowledge and technology This may be
aggravated by a poor transportation system the mobility of personal contact and trade is
nil. The factor that affects economics through literacy level is ignorance due to illiteracy
and culture which greatly influence the economic' decision-makers among developing
countries.

The term "human capital formation" is the product of the quality of human
resources that acquire knowledge either from formal or non-formal education that spark
the scale of economic growth. The use of "physical capital " depends on the quality of
human capital possessed by individuals. Thus, the existence of a scientific and
technological community sharpened by education and experience can lead to an
innovative and inventive society.

Therefore, the returns of educational investments are through the human begins
as an active factor that can accumulate capital and build social and political conduit to
mobilized resources economic growth.

MICRO VS MACRO:

Micro is derived from the Greek word meaning small and Macro means something
"large" Micro economic, are the study of the behavior of individual decision-making units
like landlords and tenants relationship The time-honored distinctions are microeconomics
focuses on the decision of individual units no matter how large, while macroeconomics
concentrates on the behavior of entire economics no matter how small While
microeconomics are looking at the price and output decisions of a single company,
microeconomics study the overall price level, unemployment rate. and other fields known
as economic aggregate Said an economist "In the aggregate measures of
macroeconomics, the output is output no matter what it takes " Because
macroeconomics, believes for aggregation on two foundations the composition of
demand and supply and economic fluctuations that tend to move market forces in unison.

The demarcation lines are in microeconomics, inflation and employment are

ignored and instead focus on how individual markets allocate resources and distribute
income. In macroeconomics, the details of resources allocation and income distribution
are of secondary importance than to the study of overall rates of inflation and employment

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These are the crucial interconnection between micro and macroeconomics, but after all,
said one critic, “there's only one economy.”

BANKING SYSTEM:

Bank, is a business institution that accepts deposits and lends to borrowers Bank
deposits are the barometers to determine whether the economy is on the uptrend if
deposits grow faster than withdrawals. But the nemesis of the bank as a business
institution is when the depositor lost confidence and as a consequence, there are massive
withdrawals to the extent that it created an atmosphere of a bank-run. Many banks
collapsed if the bank bank-run remains unstoppable. But what is the inter-relation of the
banking system to traffic management? In summary, without a banking mechanism there
will be no mass transportation and without the wheels, traffic conflict, need no exits. As
long as the financial skies are sunny and the banks keep going and growing, traffic
problem begins. If monstrous traffic files along the highway it is an economic indicator of
progress.

ANTI-TRUST LAWS:

Anti-trust laws are designed to prevent collusion among competitors and to

regulate mergers of companies It was also designed to remove barriers to effective
competition. By ensuring that entry of new competitors to the industry is not impeded by
forces within the command of those already on business. While market influence is not
easy to remove some measures of the deduction are nonetheless achieved. The anti-
trust policy aims to reduce agreements or collusive pacts among businessmen, which are
designated to raise prices and to control supply.

How anti-trust law influence traffic management? Comparing anti-trust action to

traffic laws. Most citizens do not consider breaking traffic laws, rules and regulations,
mortal sin and the police tend to act against the most flagrant offenders: the drivers who
go 80 KPH in a school zone Generally, drivers conform with the law, with the presence of
a policeman. There is a truism, "the guilty Des where no man pursueth" By public
regulations of utility and by various formal and informal anti-trust activities of the state,
some of the check and balance that are not automatically enforceable by perfect
competition can be achieved by governmental action without prejudice to the individual
initiative, the very germ inherent in the capitalistic system Public utility service, like
transportation is classified as a vital industry not only in the economic world and national
security but national in general The metropolis or the entire nation could be placed on
total standstill no movement of people and goods and the roadways becomes veritable
ghost's roadway if transport would be under siege of cats-call-strike Without antitrust law
and traffics programs, the people would be economics hostage by his pernicious evils of

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economics. Thus, anti-trust thrust traffic policymakers should partake the character of the
fabled sword of Damocles that hangs every businessman limiting his temptation to
exercise monopolistic power anarchy on the roadways.

FISCAL POLICY:

Governmental tax and expenditures policies and budgetary deficits or surpluses

refer to public fiscal policy However it is painful and wasteful many government, public
and private institutions ended in disgrace for ignoring the cannons of fiscal policy Even
the modern fiscal policy expert cannot ignore the wisdom of what or forebears reached
and taught us in economics, to name a few.

• The budget should be balanced every year at a low level, with expenditure prudent
and purposes strictly limited.
• The public debts are a burden on our children's children Said economist
Samuelson, "all debt is evil: public debt, absolutely evil."
• If the expenditure of a husband and wife exceeds more than their monthly income,
bankruptcy and misery follow. The same pattern holds in public governance.
• A good tax produces the same revenues in good time as in bad time There is logic,
but no experts agree with it, or the reasoning on which it relies.

No nation can avoid having a fiscal policy. The government is such an important part
of present today's economy, that it is almost impossible to define what is a neutral fiscal
policy. It is even harder to give rational reasons for preferring which policy has an active
fiscal program aimed at preventing inflation and deflation. With that policy statement, what
is the inter-relation between fiscal policy and traffic? Can traffic management survive
without the support of the fiscal program of the government? Can the fiscal program have
derailed traffic plans? Can we now authoritatively conclude that the many debacles of
traffic programs are attributed to the non-inclusion of economics a pillar of traffic? There
is no wrong question only a wrong answer.

A very complex reality, that can be reduced to a simple answer. The most
sophisticated and hyper-traffic plan will crumble to pieces without fiscal policy support. It
is probably for this reason that the many novel plans to solve traffic gridlock remain in
suspended animation failed hopes and broken dreams.

Only by knowing the interplay of economics and traffic can we choose wisely and
freely what to incorporate in the traffic plan. The rule of reason tells us that a plan must
not only be viable but with fiscal policy support, otherwise, it will end as a mere air castle
in the land of fantasy.

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Modern progress becomes man's road grave digger; a challenge, today and the next
century. The magnitude of traffic ills, written or unwritten, spoken or unspoken raised
more questions than it seeks an answer. This signals the need to refashioning the
interplay of traffic pillars in relationship with the cobwebbed belief of conservatism.

The highlights of this gradualist approach and activism are the emergence of
economic as the common denominator 10 guide the system. This may be selling the
unsellable, but the writer deliciously welcome critics and for this trend-setting introduction
of economics as the pillars of traffic

Borrowing the popular catch of Holland "God created the universe but Dutch created
Holland" Like laser beams, the Romans developed the 3 E's of traffic, this writing
christened the catalyst of traffic, ECONOMICS.

“If a nation's edifice is to build out of the concrete of economic progress, it must
be reinforced by the steel cables of cultural growth. To use one without the other
is to betray the nature of man.”

TOPIC LINK FOR VIDEO

Effect of Traffic in the Economy in

https://www.youtube.com/watch?v=Xd5j5z4-CaU
the Philippines

How to solve traffic jams https://www.youtube.com/watch?v=CX_Krxq5eUI

Top 10 traffic jams in the world https://www.youtube.com/watch?v=1Ym9I77dZoI

References:
Traffic management and accident investigation.
Deliso, Darlito Bernard 2014