Wednesday, November 3, 2010

Calcutta's on-street parking "extortion rackets"

Wednesday, November 03, 2010

When the "parking meters" are human beings, they actually notice for themselves when the parking is saturated. As you might expect, this makes raising prices rather tempting. Indeed, something like this is happening in the streets of India's large cities.

If you are a Shoupista, then it sounds perfect to adjust prices when the parking is full.  Shoupistas are supporters of Prof Donald Shoup's parking policy ideas, which include performance-pricing for on-street parking spaces.

There is just one problem. Raising the prices is against the law.

Here is a current example from Calcutta (Kolkata) in India, as reported in The Telegraph (Calcutta) newspaper. The outcomes are far from perfect. (Note that currently US$1 = Rs 44 or so):
Extortion rackets thrive in broad daylight across the city in the name of car parking. The rackets — run by cooperatives issued licences by the civic body, in collusion with police and local goons — force car owners to shell out exorbitant sums...
Metro visited three such parking zones where owners have to pay between Rs 20 and Rs 50 per hour for parking their cars. The hourly rates fixed by the Calcutta Municipal Corporation are Rs 7 for cars and Rs 3 for motorcycles.
There are more details in the rather breathless report.

Sadly, the nasty side-effects here certainly outweigh any benefits from 'rational pricing'.
  • The 'human parking meters' (employees of the cooperatives with contracts to run the parking) have become criminals. 
  • The report alleges that the local police have also been corrupted and even count cars in order to estimate their cut. 
  • Presumably the agency overseeing the parking contracts has also been compromised by graft. 
  • Since these extra parking payments have no legal sanction, only some not-so-subtle intimidation persuades motorists to pay. There is potential for real nastiness that would make the Parking Wars TV show look tame. 
  • Finally, most of the money paid is rewarding crime rather than helping to pay for much-needed services.  

These are not good outcomes!  

The journalist seems to see think better enforcement is the answer. Good luck with that when all the incentives point towards the corrupt outcome that he so vividly reports.

Maybe a better way would be to reduce the temptation to corruptly raise prices? But how?


How about making the official prices closer to the market realities we find on these streets? That would leave less room for illegal extra payments. Ideally it would reduce them to zero so that all the revenue is legitimate and all of it goes to the right people.

So maybe the root problem here is the fact that the official prices are too low.

Even with the higher-than-allowed prices, demand remains high. The parking attendants even allow parking in no-parking zones and organise double parking where space permits. Clearly the market prices in these locations tend to be higher than the official ones for long periods of the day.

Horror! Am I really suggesting raising the official prices to what the extortionists are now demanding? Wouldn't that just turn the municipal authority into an extortionist itself? Surely that would never pass the political process? Maybe not.

But wait a minute. Motorists parking in these areas are already paying between Rs20 and Rs50 per hour. They are not happy about it of course but they are paying. And this is despite it being obvious that the money is lining corrupt pockets. Wouldn't they be a little happier if they knew they were paying an official fee with some assurance that their money is paying honest contractors and paying for urban services?

Of course, maybe I am being naive.

This photo is actually in nearby Dhaka, Bangladesh. Here we see the attendants allowing double parking. But I am not sure if they are sticking to the official prices. 
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