A rare, worthy reform, made in Washington.Jan 5, 2015, Vol. 20, No. 17 • By ELI LEHRER
Mary Cheh, who represents a leafy, affluent, embassy-filled section of Washington, doesn’t fit anyone’s image of a free-market reformer. A member of the D.C. Council since 2007, the sixty-something’s dress and manner are those of the Harvard-educated law professor she is. Many of her legislative priorities—free breakfast programs and green energy—could come from the playbook of any urban progressive.
Her latest accomplishment, however, is a model in managing economically disruptive forces in a way that balances capitalist principles with traditional institutions. She led an overhaul of the District’s ridesharing and taxi regulations, creating a level playing field for conventional taxis and their rival upstart transportation network companies (TNCs) while responding to residents’ legitimate gripes about a system with serious shortcomings.
Cheh’s transportation reforms have won plaudits from free-market groups for creating a sensible legal framework to regulate fast-growing TNCs like Uber, Sidecar, and Lyft. The companies have to procure insurance, check their drivers’ backgrounds, and ensure cars are in working order, but they can otherwise charge fares and maintain service as they please.
Most of the nation’s big cities now allow ridesharing services to operate without huge burdens, with New Orleans, Las Vegas, and Houston notable exceptions. What distinguishes Washington’s regime is that it also maintains a largely free market for taxicabs that has been enhanced under the legislation that opened things up for the TNCs. The District never issued tradable medallions like New York and Chicago, which serve to enrich lucky medallion owners while limiting the supply of cabs for consumers. Deregulation in the late 1990s and early 2000s under former insurance commissioner Larry Mirel also made taxi insurance more affordable than it is in other big cities and let local insurance companies write most of the coverage.
Nonetheless, D.C.’s taxi system was never copacetic. While anyone with a full-sized car who passed a fairly simple test could drive a cab in Washington, an antiquated zone system made it difficult even for locals to figure out fares but downright easy for cabbies to cheat out-of-towners. Price controls also ensured that D.C.’s cab fleet remained dingy and decrepit.
There are good reasons that, in most places, taxis tend to be heavily standardized. If fares had to be negotiated each time a customer hailed a cab, cabstand lines would grind to a halt and street hails would block traffic. Because consumer choice has always been limited, most cities have required that taxis be full-sized cars with room for four adults and their luggage; that they maintain a uniform livery “trade dress,” with black cabs in London and yellow ones in New York; and that they have basic amenities like air conditioning and seatbelts.
But starting in 2008, through several successive waves of reform, Washington’s taxi regulations moved toward a far simpler structure, replacing zones with conventional meters and allowing more adjustments for gasoline prices. This made it possible for cabbies and companies to buy newer, better cabs.
Cheh’s bill went further in the direction of deregulation. If they’re hailed by a smartphone app, D.C. taxis now can set prices based on market forces of supply and demand, just as TNCs do. Alone among major U.S. cities, therefore, the nation’s capital now has something close to a free market for on-call transportation. So long as they follow some basic rules, just about anyone can drive for hire in the District and, in many cases, charge almost any price the customer is willing to pay.
The reforms haven’t all made cabdrivers happy, though. In October, hundreds of them staged a protest on the city’s Freedom Plaza, blocking traffic for hours while honking their horns loudly. While the protest, organized by the Teamsters-affiliated Taxi Operators Association, probably backfired on the cabbies themselves—the Washington Post reported that it was “unlikely to have endeared the taxi driving community to their riders”—it did raise legitimate issues. The city, for example, now requires drivers to use credit card readers that charge relatively high fees and take, the Teamsters say, “a very long time to get drivers their money.”
How the legislative branch can resume its rightful roleOct 27, 2014, Vol. 20, No. 07 • By CHRISTOPHER DEMUTH SR.
What difference will it make if the Republicans win the Senate and hold the House in November? The House can already block Democratic legislation Republicans do not like, and President Obama would still be able to veto Republican legislation he does not like. The Republicans are talking of a positive, problem-solving agenda.
12:00 AM, Jul 26, 2014 • By IRWIN M. STELZER
Celebrating a fourth birthday and growing nicely. That’s the story of the Dodd-Frank law, designed to end a “too big to fail” banking system that forced taxpayers to bail out bankers who took not only their own banks but the entire financial system to the verge of collapse, and brought on a record recession. Dodd-Frank, which weighed in at over 2,000 pages at birth, has since put on 14,000 pages of implementing regulations, with more to come.
10:31 AM, Jul 17, 2014 • By IRWIN M. STELZER
Conflate two separate issues and you get one policy error. That is what too many opponents of carbon taxes are doing, getting caught up in the argument about climate change, which really has nothing to do with the case for a carbon tax. That case is that such a tax can make growth-inducing tax reform easier to achieve, and reduce the need for an expansion of the regulatory state, while protecting the competitiveness of our industries.
How long can dinosaur industries stave off the inevitable?Apr 21, 2014, Vol. 19, No. 30 • By IRWIN M. STELZER
"The dinosaurs surviving the crunch” was how Stephen Sondheim described women living an outdated lifestyle and grimly aware that “everybody dies.” If Sondheim had the slightest interest in the less exalted subject of economics, he would apply that descriptive to a host of companies and industries trying to beat the hooded man with a scythe, aided by their regulators.
12:00 AM, Aug 17, 2013 • By IRWIN M. STELZER
The antitrust lawyers I have served as a consultant often have the same complaint: Their clients don’t know when to shut up. This was certainly true of the executives of US Airways and American Airlines as they touted the virtues of their proposed $11 billion merger. US Airways president Scott Kirby reportedly said consolidation allows airlines to raise fees and charge for baggage, and the company’s CEO, Doug Parker spoke of the virtues of “rationalization,” which antitrust enforcers have always taken to mean higher prices and consumer harm. Now that the Justice Department has decided to sue to stop the merger, the airlines’ lawyers say these comments are taken out of context.
Aug 19, 2013, Vol. 18, No. 46 • By THE SCRAPBOOK
The Scrapbook neglected to follow its usual practice last week and had a look at the reader comments under an online New York Times article. The Times piece covered the growing popularity of so-called electronic cigarettes (which Ethan Epstein chronicled in these pages a few weeks back), noting that people are increasingly using the devices in public places like restaurants and bars. Unlike real cigarettes, e-cigs don’t contain tobacco and don’t emit carcinogenic smoke—they only expel water vapor—so they don’t cause any harm to nonusers.
It would make Buffett's holding company the nation's 'largest utility holding company.'9:18 AM, Jul 31, 2013 • By MICHAEL WARREN
Even if you're Warren Buffett--billionaire investor, founder of Berkshire Hathaway, and Democratic donor--it helps to have friends in high places. Through his holding company MidAmerican Energy, Buffett is currently atttempting to purchase NV Energy, a Nevada-based energy firm, and he's getting some big help from that state's senior U.S. senator, Majority Leader Harry Reid.
Jul 22, 2013, Vol. 18, No. 42 • By THE SCRAPBOOK
While not exactly a national monument, the north entrance to the Dupont Circle Metro stop in downtown Washington, D.C., is a pretty impressive edifice. A large circular granite wall is inscribed with a portion of Walt Whitman’s poem “The Wound-Dresser,” which you can ponder as you slowly descend the 188-foot escalator that takes you to the train underground. The escalators are encased on both sides by sloping concrete blocks with planters interspersed.
The taxpayer-funded Obamacare temperance league. Jul 8, 2013, Vol. 18, No. 41 • By MARK HEMINGWAY
When Prohibition ended in 1933, Pennsylvania governor Gifford Pinchot promised to make purchasing alcohol “as inconvenient and expensive as possible.” To this day, Pennsylvania has some of the most stringent—and absurd—liquor laws in the country. Beer and wine can’t be sold in grocery stores, and you can only purchase six-packs of beer at delis or under the counter at bars and taverns, and no more than two six-packs can be purchased at a time.
11:22 AM, Jun 7, 2013 • By DANIEL HALPER
At a Democratic fundraiser in Palo Alto, California, President Barack Obama described himself as a common sense Democrat.