Archives: 12/2014

Future Taxi Deregulation Will Not Look Familiar

Those who have argued for the deregulation of the taxi industry will be familiar with the claim that taxi deregulation was tried in the U.S. and that the results were so undesirable that regulation was introduced. In a recent Washington Post article about ridesharing and taxi regulation, Catherine Rampell states that prices rose in deregulated taxi markets and that the latest calls for deregulation are only the latest in a familiar cycle. However, future taxi deregulation will be different from past deregulation schemes thanks to relatively new changes in technology that allow passengers to overcome knowledge problems that led to price increases in deregulated taxi markets.

Rampell’s article includes some interesting historical insights. Regulations and licensing laws for passenger transport vehicles are nothing new. In the 17th century, Charles I tried to limit the number of horse-drawn carriages in London by passing an order which was ignored. During the Great Depression, some unemployed Americans found a source of income in the unlicensed taxi industry. By the 1990s much of the American taxi industry had been subjected to re-regulation following a wave of deregulation in roughly two dozen cities beginning in the 1960s.

Today, there are calls for the taxi industry to be deregulated amid the growth of ridesharing companies such as Uber, Lyft, and Sidecar. Some argue that taxis cannot fairly compete with ridesharing companies because they are hampered by outdated regulations, and that if taxis were deregulated they would be better suited to compete with rideshare companies. Rampell warns against deregulation, saying that we have “Been there, done that.”

While it is the case that the taxi industry in a number of American cities was re-regulated after a period of deregulation, many of the pricing problems cited as justification for taxi re-regulation are not applicable today thanks to technological advances.

In her article, Rampell links to a 1996 paper on taxi regulation written by Paul Dempsey, a law professor at McGill. The paper highlights an interesting problem that taxi customers face: a lack of good information.

A Far-Out Cato Unbound

This month at Cato Unbound, we’re talking about the Search for Extra-Terrestrial Intelligence, or SETI.

Why’s that, you ask?

Several reasons, really. First, although it’s not exactly a hot public policy topic, it will certainly become one if we ever actually find anything. But that’s hardly where the importance of the topic ends.

Much more interesting to me at least is that SETI can serve as a springboard for discussing all kinds of important concepts in public policy. Our contributors this month - David Brin, Robin Hanson, Jerome H. Barkow, and Douglas Vakoch - have talked about the open societycost-benefit analysisevolutionary psychology, the hubris of experts, the narcissim of small differences, and even Pascal’s Wager (and what’s wrong with it)

So… lots of interesting stuff, particularly for libertarians who are interested in public policy.

KGB’s Old Lubyanka Headquarters Glowers at New Russia

MOSCOW—Red Square is one of the world’s most iconic locales. Even during the worst of the U.S.S.R. the square was more symbolic than threatening. 

Very different, however, is Lubyanka, just a short walk away. 

In the late 19th century 15 insurance companies congregated on Great Lubyanka Street.  The Rossia agency, one of Russia’s largest, completed its office building in 1900. 

But in 1917 the Bolsheviks seized power.  They took the Rossia building for the new secret police, known as the All-Russian Extraordinary Commission for Combating Counter-Revolution and Sabotage, or Cheka.

The first Cheka head was Felix Dzerzhinsky.  He conducted the infamous “Red Terror,” what he called a “fight to the finish” against the Bolsheviks’ political opponents. 

After his death in 1926 Grand Lubyanka Street was renamed Dzerzhinsky Street.  A great statue of Dzerzhinsky, weighing 15 tons, was erected in a circle in front of the Cheka headquarters. 

After the KGB was dissolved the building went to the Border Guard Service, later absorbed by the Federal Security Service (FSB), responsible for foreign intelligence. Today Lubyanka looks non-threatening, a yellowish color and architectural style less severe than the harshly grandiose Stalinist architecture seen throughout the city.

The KGB faced its greatest challenge in the Gorbachev era.  Demands for reform raced beyond Mikhail Gorbachev’s and the KGB’s control.  In August 1991 KGB head Vladimir Kryuchkov helped plan the coup against Gorbachev. 

After the coup’s collapse a crowd gathered in front of Lubyanka and attempted to pull down the Dzerzhinsky monument.  City officials used a crane to finish the job.

Journalist Yevgenia Albats wrote:  “If either Gorbachev or [Boris] Yeltsin had been bold enough to dismantle the KGB during the autumn of 1991, he would have met little resistance.”  However, these two reformers attempted to fix rather than eliminate the agency.

And the KGB effectively ended up taking over Russia.  Yeltsin named Chekists, or members of the “siloviki” (or power agents), to important government positions, most importantly Vladimir Putin, who headed the FSB and then became prime minister—and Yeltsin’s successor as president when the latter resigned.

The Terrible, Horrible, No Good, Very Bad Falling Gas Prices

A left-coast writer named Mark Morford thinks that gas prices falling to $2 a gallon would be the worst thing to happen to America. After all, he says, the wrong people would profit: oil companies (why would oil companies profit from lower gas prices?), auto makers, and internet retailers like Amazon that offer free shipping.

If falling gas prices are the worst for America, then the best, Morford goes on to say, would be to raise gas taxes by $6 a gallon and dedicate all of the revenue to boondoggles “alternative energy and transport, environmental protections, our busted educational system, our multi-trillion debt.” After all, government has proven itself so capable of finding the most cost-effective solutions to any problem in the past, and there’s no better way to reduce the debt than to tax the economy to death.

Morford is right in line with progressives like Naomi Klein, who thinks climate change is a grand opportunity to make war on capitalism. Despite doubts cast by other leftists, Klein insists that “responding to climate change could be the catalyst for a positive social and economic transformation”–by which she means government control of transportation, housing, and just about everything else.

These advocates of central planning remind me of University of Washington international studies professor Daniel Chirot assessment of the fall of the Soviet empire. From the time of Lenin, noted Chirot, soviet planners considered western industrial systems of the late nineteenth century their model for an ideal economy. By the 1980s, after decades of hard work, they had developed “the most advanced industries of the late 19th and early 20th centuries–polluting, wasteful, energy intensive, massive, inflexible–in short, giant rust belts.”

Morford and Klein want to do the same to the United States, using climate change as their excuse, and the golden age they wish to return to is around 1920, when streetcars and intercity passenger trains were at their peak (not counting the WWII era). Sure, there were cars, but only a few compared with today.

Bitcoin Might Not Be Money, but Cryptocurrencies are the Way of the Future

Kevin Dowd, a long-time friend and eminent free-banking authority, set his sights on Bitcoin in the book he published this summer: New Private Monies: A Bit Part Player?.  His work delivers a refreshingly accurate and straightforward assessment of Bitcoin, ignoring the hype which surrounds it.

Both Kevin and I appreciate the importance of cryptocurrencies: in his own words, “The broader implications of cryptocurrency are extremely profound.”  The peer-to-peer exchange structure common to cryptocurrencies like Bitcoin cuts the intermediary out of transactions.  This eliminates the need for a third party in exchanges and protects wealth against exchange controls or capital controls.  Because Bitcoin and other cryptocurrencies are entirely digital, the location of the two parties of a transaction is irrelevant: transactions can be carried out anywhere.  This also makes transactions highly anonymous, a feature appealing to consumers who cherish privacy.

The intermediary-free, digital transactions characteristic of cryptocurrencies such as Bitcoin are an important step towards exchanges free of regulatory meddling.  In addition, this technology should enable low-cost banking accessible to anyone with a cellphone.  Indeed, cryptocurrencies should improve access to financial services in developing countries and elsewhere because they will complement existing services that now rely on standard currencies (see the M-Pesa in Kenya).

There is, however, an important line to be drawn between the future of the technology behind Bitcoin and the future of Bitcoin itself, thanks to its notorious volatility.  Kevin is crystal clear on the distinction:

“Though the supply of Bitcoin is limited, the demand is very variable; this variability has made its price very uncertain and created a bubble-bust cycle in the Bitcoin market.  Perhaps the safest prediction is that Bitcoin will eventually be displaced by alternative cryptocurrencies with superior features.” 

Police Misconduct — The Worst Case in November

Over at Cato’s Police Misconduct web site, we have identified the worst case for the month of November. It turns out to be the Cleveland Police Department.

To begin with, in late November, a Cleveland police officer shot and killed a 12-year old boy, Tamir Rice.

The press reports based on the police accounts at the time of the incident read:

A rookie Cleveland police officer shot a 12-year-old boy outside a city recreation center late Saturday afternoon after the boy pulled a BB gun from his waistband, police said.

Police were responding to reports of a male with a gun outside Cudell Recreation Center at Detroit Avenue and West Boulevard about 3:30 p.m., Deputy Chief of Field Operations Ed Tomba said.

A rookie officer and a 10-15 year veteran pulled into the parking lot and saw a few people sitting underneath a pavilion next to the center. The rookie officer saw a black gun sitting on the table, and he saw the boy pick up the gun and put it in his waistband, Cleveland Police Patrolmen’s Association President Jeffrey Follmer said.

The officer got out of the car and told the boy to put his hands up. The boy reached into his waistband, pulled out the gun and the rookie officer fired two shots, Tomba said.

As detailed in this video report by MSNBC’s Chris Hayes, the initial reports by the police do not jibe with video evidence in several major respects.

The video shows Rice, alone, playing with his toy gun and also with the snow, as 12 year olds are wont to do. He was not, as the police said, with “a few people” in the pavilion. Other police reports to the press said the shooting officer got out of his car and told Rice three times to put his hands up. The video, unfortunately without audio and recording at the speed of two frames per second, shows the officer shooting Rice within 1.5-2 seconds after exiting the police vehicle.

The officers also waited several minutes before administering CPR to the fallen child.

The original call that drew the police to the park in the first place said the person with the gun in the park was likely a minor and likely was a toy gun. Apparently, this information was not relayed to the responding officers, who called-in the shooting victim as “possibly 20” years old.

The officer who shot Rice “was specifically faulted for breaking down emotionally while handling a live gun” according to subsequent reporting. The internal memo that informed the report concluded that the officer be “released from the employment of the City of Independence [,Ohio].”

Here’s the thing: The Cleveland Police Department hired the officer without checking his personnel file from his previous law enforcement job!

This tragic event is just the latest that involves police using deadly force, and likely too quickly. The facts released by the police department that favor the police officers involved were either misleading or inaccurate.

At best, this event highlights poor communication and procedure leading up to and immediately following a tragedy. At worst, this is a police department caught covering up a series of preventable mistakes that cost the life of a young boy.

The Department of Justice recently issued a report after looking into the policies and practices of the Cleveland Police Department.  According to the New York Times,

The Justice Department report on Cleveland cataloged many instances of unjustified force, including officers who assaulted, pepper-sprayed and even Tasered people already being restrained. In one case last year, the police fired two shots at a man wearing only boxer shorts who was fleeing from two armed assailants. In a 2011 case, a man who had been restrained on the ground with his arms and legs spread was then kicked by officers. He was later treated for a broken bone in his face.

The city’s policing problems, [Attorney General] Holder said, stemmed from “systemic deficiencies, including insufficient accountability, inadequate training and equipment, ineffective policies and inadequate engagement with the community.”

 

Jeb Bush and Lyndon Johnson

Former Florida governor – but Texas native – Jeb Bush told the Wall Street Journal CEO Council:

Republicans need to show they’re not just against things, that they’re for a bunch of things. 

Which reminds me of a quotation from Lyndon B. Johnson that George Will often cites:

We’re in favor of a lot of things and we’re against mighty few.

Let’s hope Bush’s “bunch” is different from Johnson’s “lot.” We can’t afford another such escalation in the size, scope, and power of government.