Johnny Mattei, who says he's an owner operator for the incumbent BWI taxi contractor, says my column advocating deregulation of BWI cabs ran out of gas. Having an exclusive deal keeps cabs clean and safe, he says, and the drivers can't pick up fares anywhere but BWI. Mattei:

I am a owner/operator of a BWI Taxi and I feel your article is worthless!! All of our cabs are subjected to twice a year inspections for cleanliness and serviceability! Have you ever taken a county cab or city cab and see how they look and smell? We wear uniforms and are presentable and make our customers happy and want to use our service time and time again! There are close to 400 drivers at BWI who have families and mortgages, all of our work comes from BWI and BWI only we are not allowed to pick up in the city or surrounding counties! The city has their cabs, the counties have their cabs and the airport has their own! That is just the way it is!! People will pay for comfort and convenience!!

The Board of Public Works meets Wednesday to again consider awarding a new contract to Dulles Airport Taxi. Liz Kay covered Tuesday's driver protest against the deal, which drivers say would put their jobs and income at risk.

Posted by Jay Hancock at 6:37 PM | Permalink | Comments (6)
Categories: Regulation
        

Her record suggests that Sarah Bloom Raskin, whom President Obama nominated to sit on the Federal Reserve's Board of Governors, will not be a passive regulator. Look for Jamie Smith Hopkins's profile in tomorrow's Baltimore Sun.

Meanwhile, here are Raskin's words from her acceptance speech last fall of an award from the Maryland Consumer Rights Coalition. She quotes the poet Roethke, who perhaps refers to his experience with bipolar disorder. But who says financial markets haven't been manic-depressive, too? Raskin:

The chickens have come home to roost; these are our problems and they are not disappearing on their own... And in this it is necessary to move forward, in the midst of the devastation brought upon us through a combination of greed, weak regulation, and weak enforcement. We need courage. It is a courage not unlike the courage the Theodore Roethke describes in his poem “The Waking” when he writes:

God bless the Ground! I shall walk softly there,
And learn by going where I have to go.
This shaking keeps me steady. I should know
What falls away is always. And is near.

Posted by Jay Hancock at 1:36 PM | Permalink | Comments (0)
Categories: Regulation
        

Great post by Barry Ritholtz on Congress' chronic underfunding of the Securities and Exchange Commission. The SEC had its failures, for sure, but they were exacerbated by lack of money. From Barry:

Apparently, Congress screwing around with SEC defunding goes back 20 years, if not further.

The villain of the discussion is (of course!) Phil Gramm, the intellectually bankrupt Texas Senator whose economic arguments are invariably proven to be wrong, with grave economic consequences. Gramm argued in 1994 that SEC fees “made it too expensive to raise money in the capital markets, and thus deterred growth.”

As per usual, Gramm had it precisely backwards at exactly the wrong time.

Posted by Jay Hancock at 8:52 AM | Permalink | Comments (2)
Categories: Regulation
        

The Public Service Commission is out with an offer to settle complaints against Verizon's bad service record for its traditional, landline phone service. The company was taking too long to fix failed service, missing appointments, the usual stuff. As most telecom is increasingly unregulated, the PSC would explicitly tie Verizon's ability to raise prices for local landline service to the company's service record. Verizon can accept the offer or counteroffer.

Some excerpts from the offer:

As we explained at length in the April 6 Order, Verizon’s service quality performance has fallen far below our regulatory standards, and neither competitive market forces nor an open service quality investigation has improved Verizon’s performance.We rejected the Prior Proposal in part because it left unbridged the structural gap between service quality and rates. A new AFOR [regulatory structure] consistent with our Order will address this fundamental concern.

Among other things, the AFOR we contemplate creates a new set of service quality metrics, holds Verizon directly accountable to its customers (by requiring it to pay substantial customer credits) if it fails to satisfy those metrics, precludes Verizon from raising prices on residential basic local telephone service until it demonstrates service quality improvements, and provides customers with a year (calendar year 2009) free of any increase in residential basic local service rates.

Continue reading "PSC tries to crack down on Verizon's poor service " »

Posted by Jay Hancock at 11:30 AM | Permalink | Comments (3)
Categories: Regulation
        

Gov. O'Malley, trying to burnish his pro-business appearance, is holding a "Small Business Summit" today. There are various issues, but I promise you that the No. 1 topic for most small businesses is the increase in rates for unemployment insurance. Because rising unemployment has drained the fund, Maryland rates are supposed to pop by hundreds of dollars per employee in many cases on Jan. 1.

I'm sure O'Malley has gotten an earful. He's announcing several small-biz boosters today, including tax credits of up to $3,000 for hiring an unemployed worker and speeding up the process to get state-guaranteed loans. Question: Could businesses claim the new tax credit on top of the existing job-creation credit of up to $1,500 per worker? That credit was approved in the 1990s, the last time Maryland's economy was this sluggish. It was permanent; O'Malley's proposal would be temporary. And what if companies rehire people they laid off? Are they eligible?

In any event businesses are really going to want to know what the governor is doing about unemployment insurance. So far his office is very vague, saying it would "Introduce emergency legislation to address the rate increase for small businesses to the Unemployment Trust Fund."

Posted by Jay Hancock at 1:44 PM | Permalink | Comments (2)
Categories: Regulation
        

Great story by Laura Vozzella on Baltimore's thriving hack industry. Hacks routinely carry residents of Baltimore's poorer neighborhoods to faraway supermarkets, where the clients can buy a wide variety of foods at decent prices. The piece is a good case study on the demerits and benefits of regulation.

If you carry passengers in your car for a fee, Baltimore, like most cities, requires you to have a taxi license. Hacks don't. They're operating illegally. But they're providing an obviously popular and important service -- ferrying people to otherwise inaccessible grocery stores at fares that are probably much lower than what licensed cabs would charge.

Should the city crack down on hacks? Vozzella notes that they can be dangerous and even deadly. Several hack customers have been raped. Two hack drivers were shot and killed in April. Hacks are seemingly more hazardous than regulated taxies.

But if you put hacks out of business, you'll deprive many people of greater food and transportation choice. Shoppers would have to pay the higher fares of licensed cabs, which might be out of reach for many. Without transportation they would have to rely on neighborhood offerings, which are often less healthy and more expensive. And of course hacks provide one of the few ways in some neighborhoods to earn a living without peddling drugs.

Note that, in the practical absence of regulation and enforcement, private parties have come together to address the risks of Baltimore hacking in a way that would warm a libertarian's heart. As Vozzella notes, supermarkets run background checks on hacks and issue them IDs for customers to check. Hacks try to run a smooth show and keep bad actors out of the business. Supermarkets won't issue an ID unless a hack "captain" vouches for a new driver. Customers stick with the hacks they know and trust.

It seems like self-regulation may be working -- until it doesn't. How should Baltimore respond? Should it crack down? Enforcement would divert public safety resources the city badly needs elsewhere. Should it continue ignoring hacks? That might put new hack customers in danger. Should it issue special hack licenses that are more restrictive than cab licenses? That would require new rules, regs, administrators, enforcers etc.

Posted by Jay Hancock at 6:18 AM | Permalink | Comments (21)
Categories: Regulation
        

From the NYT:

BOB BUCKWALTER, a retired pastor in Williamstown, Mass., bought his first pair of hearing aids in January. Like most people suffering from gradual hearing loss, he had resisted the idea for years. But, after talking with people who have benefited from aids and doing research to find a nearby audiologist, Mr. Buckwalter was ready to take the plunge.

But there was one thing he was not ready for: the $4,600 price tag.

Unlike computers, CD players, flat-screen TVs, cellphones etc. etc. hearing aids have mainly refused to become more affordable. Is it over-regulation? (FDA/state oversight that may stifle innovation and allow inefficient pricing & vendor profiteering.) Or some other reason?

Posted by Jay Hancock at 8:20 AM | Permalink | Comments (20)
Categories: Regulation