Archive for the ‘Regulation’ category

Does Burning Money Increase MoCo’s Carbon Footprint?

28 April 2014


Council member Roger Berliner sponsored a set of environmental bills that made it through the council last week.  The worst one — which was passed, of course — requires the county to purchase 100% of its electricity from “clean fuels”.  The current requirement is 30%.

This initiative is all cost, and no benefits.

Based on the county’s fiscal impact statement, the law will increase the county’s energy expenditures in the range of $279,000 – $545,000 per year.  That gets over a million easily, in less than four years.Plaudits to Nancy Floreen, who argued for looking at this from a budgetary standpoint.  None of the other council members thought that was worthwhile.

And what do we get for those millions of dollars? Nothing.   The incremental change from this bill is so infinitesimally tiny that it adds up to nothing. No change in greenhouse gas emissions, no impact on climate change. Zero. Just a meaningless statement and bit of bluster.

So if the environment is not improved, who does benefit from those millions of taxpayer dollars? Well, council members like Berliner and George Leventhal get to crow about their wondrous accomplishment. (Leventhal excelled at playing the pompous windbag on this one.  He called it “the most urgent public policy challenge that we face.”   Really, George? More urgent than homelessness? Crime? Poverty? Educational failures for low-income neighborhoods?)

And certain energy producers, politically favored, get a more than tripling of the subsidy they currently receive. These producers are too expensive to compete, so they work through the political process to extract funds from MoCo taxpayers.

I can understand wanting to reduce emissions from fossil fuels.  I can understand reasonable policy proposals to do that.  But anyone with a lick of sense can also see what is purely symbolic, useless, and wasteful.This is a useless and expensive heap of corporate welfare, that allows the politicians to beat their chests, but accomplishes nothing. Nothing, that is, except take away funds from needs that really are urgent.



Increasing Poverty and Homelessness: Who Benefits?

27 March 2014

Giving politicians the power to manage the economy causes all kins of problems. For one thing, they act in their own interest – just like anyone else. This shouldn’t be a surprise to anyone, but it seems to be. It’s time to get past the idea that politicians (or bureaucrats) are wise and altruistic overseers of the economy, taking necessary actions to correct imperfections and imbalances caused by, well, regular people.
A good example is the proposed legislation in the Maryland General Assembly to raise the state minimum wage by nearly forty percent. The purpose of this law is to make it illegal for a high-school dropout — let’s call him John — to agree to accept a $10 hourly wage from a shop owner.
The evidence clearly shows the likely result of this action. If the shop owner has a job, she will hire the best-qualified person she can. A person with a good work history, or a high school diploma or GED, will seem like a better bet than John. John, representing the lowest level of skills and education in our society, will be the loser from this legislation. He will become unemployed, and likely remain unemployed for the long term. An increase in the minimum wage almost always increases unemployment for that reason. Specifically, it increases the already abysmal employment prospects for those starting out in the job market (the 17 – 25 cohort), and even more so for the black and Hispanics in that group. An increases in the minimum wage ends up being a knife in the back of the least advantaged, the worst-off among us. When Montgomery County sought to raise the minimum wage, this was the advice they got from expert labor economists at the University of Maryland and Georgetown University. The deleterious effects, the economists testified, are more likely when the increase is large and when the unemployment rate is already high. Economist Stephen Fuller looked at the Maryland bill and concluded it would probably cause a reduced standard of living and higher costs.

But political management of the economy doesn’t pay any attention to those people at the bottom. When the high school grad with the increased wage gets his paycheck, he’ll thank the politicians who caused it. The politicians have no incentive, however, to be concerned about the people at the very bottom of the economy – the ones we should be most concerned about. John’s lost job or lost employment opportunity doesn’t have any political loss for them. They are seeking political support, and they get rewards for increasing the minimum wage — and also for increasing unemployment, poverty, and homelessness.

Public Service Commission Doesn’t Help the Public

15 April 2013

Nearly a year after the dreadful power outages of the 2012 derecho,  the Public Service Commission has finally taken decisive action, to show how well government can regulate utilities to protect consumer interests.  They’ve decided … to do nothing.

They did, however, note “a significant and unsatisfactory disconnect between the public’s expectations of the distribution system reliability… and the ability of the present-day electric distribution systems to meet those expectations.”

There are two basic ways to ensure that service providers are aware of the needs of their customers, and remain responsive to those needs.  One way is to promulgate and enforce government regulations on the service providers.  The other is to have market pressures and competition as the hammer to induce businesses to meet customer needs efficiently and effectively.

Once again, then, we see the impotence of government regulation when it comes to protecting consumer interests  Contrast it with the consumer sovereignty in a market system.  When products or services don’t meet their expectations, consumers don’t meet for a year to decide to do nothing.  They don’t need to become experts in the ins and outs of distribution systems and economic regulation.  Instead, they simply move their business elsewhere.  The state of Maryland should be focused on revamping the regulatory system to resemble a real market with choice, to enable electricity customers to do just that.

Damn the low-income residents and the jobless: Anybody but WalMart!

10 April 2013

The building on the corner of Connecticut Avenue and Aspen Hill Road in Aspen Hill has been empty for three years.  At the same time, downcounty residents have been looking forward to a WalMart opening in the area, where heavy discounts on household goods and groceries would be available.  And to complete the confluence of opportunity and fortune, Walmart is interested in occuping the space, which would establish dozens of jobs.  Sounds like a fortuitous win/win/win situation, right?  Who could oppose this?  Councilman Craig Rice, who is often looking out for the interests of low-income residents,  is eager to see it happen.

But Councilman George Leventhal, who is often looking out for politically popular causes, is trying to stop it.  After all, criticizing Walmart is all the rage among Leventhal’s upper-income constituents.  It’s chic to oppose the lowbrow store, which doesn’t serve gourmet fair trade chai or organic truffles.  Leventhal complained that “the county has not had a chance to weigh Walmart over other potential uses for the land.”

It’s been three years, George, and no one else is moving in there.  Yet he continues to block the approval process, hoping that someone more tasteful might be persuaded to move there.

What To Do About the Bag Tax?

7 April 2013

What do do about the bag tax?  The County Council is currently considering the question, including options for expanding the tax, increasing it, reducing the types of retail locations which must charge it, and banning plastic bags completely.
MoCo reports that the county has taken in about $2 million from the bag tax, much more than had been expected.  This demonstrates that some combination of the following conclusions is true:

(a) shoppers find bags to be convenient, and are willing to pay for them

(b) grocery shoppers have learned that plastic bags are a more sanitary way of carrying food, and are seeking to avoid the bacterial diseases associated with reusable bags

(c) the bag tax, in the end, has just been a way to raise revenues for the cash-strapped county government.

The negative effects of the bag tax are beginning to pile up:

Retail thefts and shoplifting have surged in areas where bag taxes are put into place, as it becomes much easier for shoplifters to pilfer merchandise and slip it into the shopping bags they are already carrying.  This phenomenon seems to be found wherever bag taxes (or bans) have been put into effect.

Council member Craig Rice has noted a corollary to this problem.  As department stores have become suspicious of people walking around with roomy bags, racial profiling leads to more black men being stopped and interrogated by store security personnel.

– Theft of supermarket grocery baskets has increased. Apparently, people figure that they need a convenient way to carry their purchases, but don’t want to pay extra for bags.

– Most distressingly, researchers are finding evidence of illnesses associated with these bans.  This was predictable, as shoppers are carrying fresh meat, vegetables, and fast food fried chicken and hamburgers in these bags, over and over again.   Even beyond microbial contamination, reusable bags often have toxic materials, like lead, that leach into the food people carry. Senator Charles Schumer of New York has called for a federal investigation of this problem.

One-use bags are also more sanitary.  Since people tend not to wash their reusable bags, they increase the risk of food-borne illness.  Studies of San Francisco, which banned plastic bags in 2007, reported that after the bag ban there was a spike in the number of E. coli cases and increase in deaths from foodborne illnesses.  Another study found that 8 percent of all reusable bags contained E. coli and doubted how often shoppers actually wash their bag.

– Finally, the environmental impacts of the bag tax are at question.  There is anecdotal evidence of reduced bag litter in the county’s waterways, but increased litter from bottles and food packaging, which is harder to carry without a bag.  The bag tax, in effect, creates an incentive for increasing this kind of litter.  Not only that, but the tax increases total resource consumption.  People tended to reuse plastic grocery bags for dog waste, lining trash baskets, etc.  The National Black Chamber of Commerce notes that consumption of store-bought plastic bags increased by 400 percent in Ireland, after that country implemented a bag tax.

The bag tax is a classic example of unintended consequences of legislation.  (OK, that’s a generous term.  I’d say it is an example of a failure of policy analysis).  Unless bringing in more revenue for the county government was the main purpose,  the tax is doing much more harm than good.  Certainly expansion of the tax (or a ban) would be even more harmful.

Regulators Block Access to Health Care

19 October 2012

Adventist Health Care has been planning for years to open an 83-bed hospital in Clarksburg, right off the booming I-270 corridor.  This area is experiencing great population growth, and the need for health care in the area is strong.  However, the Maryland Health Care Commission has taken action to prohibit Clarksburg Community Hospital from opening.

How does this happen?  In order to open a new hospital, the state has to be satisfied that there is a “need” for the facility.  In this case, the state decided that only one hospital was needed – and the bureaucratic processes of the MHCC would decide which facility would be allowed to exist.

Can you imagine this in any other business?  Instead of Target and K-Mart, for example, competing for business – doing their best to satisfy customer wants at the best price – the fate of the business would be decided by a political process.

The arrogance is striking, too.  The commission rubber-stamped the recommendation of the commission chair, Marilyn Moon.  She, and she alone, ruled on the best interests of not only county residents, but even of the hospitals and their management.

“I have concluded that Adventist HealthCare’s priority over the next few years must be assuring the long-term viability of Washington Adventist Hospital,” said Maryland Health Care Commission Chairwoman Marilyn Moon in her recommendation for a denial of a certificate of need for Adventist’s plan to build a new hospital in Clarksburg. “This task, critical to restoring Adventist HealthCare to robust financial health, is large enough that it should not be put at risk by simultaneously attempting to establish a new hospital.”

The mission of the MHCC is described as: “[T]o ensure that informed consumers hold the health caresystem accountable and have access to affordable and appropriate health care services through programs that serve as models for the nation.”

In this case, the MHCC decided to “ensure access to affordable and appropriate health care services” by prohibiting a hospital from offering those services.   Making these decisions through political processes, rather than allowing hospitals to provide services, only limits access to affordable health care.

Let the hospital open, and let the people decide where they want to go.

Where Washington Governs Better than Montgomery — for now

28 September 2012

I’ve maintained that there are (at least) a couple of things that the DC government does better than Montgomery County government:  charter schools and taxi regulation.

It would seem that Washington is upset about this, and has been moving to make taxi service worse than it has been.  (I still think it would take a while to descend to MoCo’s level, though).

The main difference has been Washington’s unwillingness to impose anything but minimal restrictions on entry to the market.  Anyone passing some very simple safety and competence standards can operate a taxi service in the District.  The healthy competition means that it’s easy to get a cab downtown.  It also means that a relatively small investment allows people to work for a living; the more you work, the more you can make.  In MoCo, it can be very difficult to find a cab, since regulators kowtow to the cab firms, and restrict new competition.  (Basic economics: restrict supply and restrict price, and the market never clears.  Consumers are left demanding more taxi service than the government will allow.)

Last year, the City Council was considering shifting to a medallion system like New York’s, which would sharply restrict the availability of taxis.  Fortunately, they heeded a study which demonstrated the likely results: Longer waits for service, higher fares, increased corruption   – and a windfall for those firms already in the business.    Like much economic regulation, taxi regulation is designed to benefit those who are already in the business, and protect them from competition.

One thing regulators can’t stand is someone rising up and succeeding, despite them.  Sedan service Uber has been bringing in a lot of customers, and the taxi owners are complaining.  The DC Taxi commission is proposing a new set of regulations to drown the successful service.  The regulations would limit the participation of small business or individual owners (seriously – only fleets larger than 20 cars would be allowed to engage in the business).  It would also prohibit pickup or dropoff outside of DC (so there goes the idea of picking up the sedan in Takoma Park or Bethesda to ride downtown).