A visit to a garage in “Grogan” off Kirinyaga Road got me thinking.
First, you pay Sh300 to get your car into the garage. The owner of the open field garage must be a real entrepreneur. He has created daily cash flows instead of waiting for end month.
Economists will tell you that the more frequently you pay workers, the more they consume and the higher their contribution to the gross national product.
In the US, they pay you twice a month. We should do the same to reduce “fulizaring” and profiting shylocks.
Why keep my money for a whole month? Outside the garage, there are many mechanics hawking their services or selling everything from air fresheners to wipers.
Once inside the garage, more join in. They are quick to show you “small problems” like missing clips, paintwork, a rubber strip and foggy headlights, among others.
There are charges for the item and labour for everything that needs fixing. Most of these “entrepreneurs” are youngsters. They make around Sh100 to Sh300 for each task. That does not seem much until more “fixers” swam around your car like bees, and each seems to have his area of focus.
And once you are done fixing one thing, another sees something else.
As my steering system was being checked, three more faults were found.
They had identified others, but I had to stop it. The fixers carry small bags with the small items for fixing the “faults”. One can easily confuse them for witch doctors.
This money-making venture got me thinking: these jobs are created from the supply side, not the demand side.
The mechanics decide what is to be fixed, not the car owner. And it’s not just mechanics who “create jobs,” it’s common in other trades. While taking a haircut, someone will request you to get a pedicure, manicure, facial scrub or have your hair dyed.
Once a hawker sells you something, he creates the need for another.
No wonder behavioural economics is the in-thing today.
Professions do the same. Doctors will demand one test after another, architects will bring in their cousins – interior designers or quantity surveyors.
Lawyers will bring in an expert witness. While waiting for surgery in an American hospital, I was referred to a lawyer to write my will. I have never gone through that surgery to this day!
In the public sector, it’s common to extend projects or propose new ones to create jobs.
While these might be discussed and vetted at the national or county level, there is usually a push for more projects often without good justification, just like with the mechanics.
That is how white elephants are created. The laws of supply and demand are distorted.
Such “forced jobs” or services often deny the customer time to search for information on price or quality.
When fixing the “small problems” on my car, I never checked the price of those small items or tried alternative fixers.
That leads to overcharging, christened “being smart” or kujichanua. It could also lead to collusion and cartels. This curtails competition and innovation. Why does the seller think they need the money more than the buyer?
This supply-side entrepreneurship is created by information asymmetry. One party has more information about an issue than the other.
Doctors know more about your body than you do, while mechanics know more about the car than you do.
And in dowry negotiations, the girl’s parents know more about their daughter than the bridegroom and his parents.
You are left to discover the truth after marriage. Some truth cannot be found through coffee dates whose key currency is pretence.
We would not mind this asymmetry if the suppliers were genuine and driven by customer interest.
The suppliers for products or services often say the customer will sort themselves out, more like hit and run.
That is why receipts are written: “goods once sold can’t be returned.” The likes of Walmart do not subscribe to such attitudes, which keep our enterprises small.
The solution was to come up with trade guilds and professional associations to ensure standards in the provision of services. What of those who belong to none? Regulators like the Kenya Bureau of Standards do the same.
The legal system protects customers, but we haven’t had a case to awaken them. The Competition Authority of Kenya is baring its fangs, but not enough.
Could this supply-side entrepreneurship slowly disappear as we develop and give the youth higher-quality jobs?
I do not recall my former mechanic, Mr James in the US the city of Jackson, Mississippi in the Deep South going beyond the problem that took me to his garage.
Are you a victim of supply-side entrepreneurship? If yes, please share your experience with us.