Steve Reads

Don’t strengthen economic regulations on ride-sharing services; weaken them on cabs: an open letter to my representatives — August 20, 2015

Don’t strengthen economic regulations on ride-sharing services; weaken them on cabs: an open letter to my representatives

From: Steve Laniel
Date: Thu, 20 Aug 2015 18:17:47 -0400
To: Michael J Moran, Linda Dorcena Forry
Cc: William N Brownsberger, Sonia Chang-Diaz,
Anthony W Petruccelli, Aaron Michlewitz, Byron Rushing, Jay D Livingstone

Dear Representative Moran and Senator Forry,

I read in the Globe about your bill, H.3702, that would add more regulations to ride-sharing services in an attempt to level the playing field with taxis. The intention is probably sound, but it seems to me that it’s going in the wrong direction. Why not loosen regulations on cabs? Two types of regulations strike me as hugely detrimental to taxi drivers:

  1. “Dead-heading”: if a cab picks up a passenger in Boston and drops her off in Brookline, that cab has to then drive back to Boston empty before picking anyone up in Boston. In that same situation, ride-sharing services can pick up passengers in Brookline. Each fare is thus more expensive for cabs than it is for the ride-sharing driver. Why not get rid of the dead-heading requirement? There’s no conceivable public-safety justification for such a requirement.
  2. Medallions: cab owners have to spend hundreds of thousands of dollars, even after ride-sharing services have driven down their value. Ride-share drivers aren’t subject to this requirement — and they shouldn’t be. Naturally we can expect that current medallion owners would hate the idea of their medallions becoming valueless, so of course we expect opposition here. The public good, though, is not served by defending entrenched property owners’ monopoly rents. Medallions introduce artificial scarcity, to no public-safety end.

The net effect of dead-heading requirements and artificial scarcity is that, as of 2011, Boston had the most expensive cabs in the country. And Boston cabs offer notoriously poor service, which is an expected outcome of a market protected by medallions: cab owners fight to protect their monopoly, rather than fight to provide better service to their customers. No wonder ride-sharing services have found a welcome home in Boston. And no wonder that the cab owners, long accustomed to monopoly rents, are outraged.

By the way: I’d be interested to hear the perspective of the cab drivers rather than that of the cab owners. Are the drivers choosing to quit the cab companies and work for ride-sharing services instead? Whose interests are we protecting? I suspect we’re not protecting the interests of the drivers. We’re certainly not protecting the interests of passengers. It looks from the outside like we’re only protecting the interests of the owners.

If what we care about is public safety, then by all means let’s require ride-share drivers to satisfy safety requirements. If, however, the goal is to level the economic playing field, then the way to do that is to weaken obsolete economic rules on taxis rather than strengthen them on ride-sharing services.

Steve Laniel

John Dean, The Nixon Defense: What He Knew and When He Knew It — August 8, 2015

John Dean, The Nixon Defense: What He Knew and When He Knew It

Close up black-and-white photo of Nixon's face. He looks evil -- scheming and plotting

As Hunter S. Thompson put it, “for people with seriously diminished attention spans,” the death of J. Edgar Hoover

led inevitably to the disaster of Watergate. It meant hiring a New Director — who turned out to be an unfortunate toady named L. Patrick Gray, who squealed like a pig in hot oil the first time Nixon leaned on him. Gray panicked and fingered White House Counsel John Dean, who refused to take the rap and rolled over, instead, on Nixon, who was trapped like a rat by Dean’s relentless, vengeful testimony and went all to pieces right in front of our eyes on TV.

The longer story — from the moment Nixon’s White House tapes started rolling until they were switched off — is contained in John Dean’s [book: The Nixon Defense], and it is almost intolerably gripping. Within days of the Watergate break-in, Nixon was actively planning the cover-up, even as he was warning all and sundry that the cover-up is always worse than the crime. On June 23, 1972, Nixon instructed his men (H.R. Haldeman and John Ehrlichman) to tell the FBI that their investigation of the break-in was intruding on some secret CIA work, and that they had to stop. It didn’t work, and the FBI kept investigating. It seems like the real reason they wanted to keep the FBI away is that they would eventually stumble on the White House “plumbers”, who among other things broke into the office of Daniel Ellsberg’s psychiatrist to find information damaging to Ellsberg. Oh, and Nixon himself ordered a break-in at the Brookings Institution.

The Nixon Administration was rotten to its very core, as anyone who’s read [book: The Final Days] well knows. Watergate wasn’t just the story of a “third-rate burglary”; Nixon’s obsessive desire to cover it up, and then cover up the cover-up, is almost prima facie evidence that there was more to it than that.

Nixon went all the way to the Supreme Court to resist turning over his Oval Office recordings. When the “smoking-gun tape” of that June 23rd conversation came out, everyone — the White House staff, Congressional Republicans, and Nixon’s own counsel — realized they’d been duped, and Nixon was out of the White House days later. I’m mostly inclined to say that Nixon’s refusal to turn over the tapes was, again, prima facie evidence of his guilt. The only thing that stops me from saying that wholeheartedly is that it’s the same sort of argument made about people who claim their Constitutionally granted Fifth Amendment rights, and it’s deeply wrong when it’s made in that context.

Nixon’s argument for refusing to turn over the tapes is that it would set a dangerous precedent: as he said in his address to the nation on August 15 of 1973,

The Presidency is not the only office that requires confidentiality. A Member of Congress must be able to talk in confidence with his assistants; judges must be able to confer in confidence with their law clerks and with each other. For very good reasons, no branch of Government has ever compelled disclosure of confidential conversations between officers of other branches of Government and their advisers about Government business.

When he wasn’t making that argument, he was trying to cover the White House recordings in the mantle of “national security”. Indeed, that was the basis of the cover-up from the beginning: the FBI was about to tread on national-security matters, and had to be stopped.

These are all fair arguments on their own terms; they’re obviously tarnished by Nixon’s having used them. Offhand, it seems like the 1996 agreement which ultimately led to the release of the tapes is a good model for how these sorts of releases should happen while presidents are in office:

[W]e also are sensitive to the concerns of the Nixon family about material that is legally personal and private, and we recognize the need to treat materials not related to ‘abuses of power’ as we would treat materials of any other President in our Presidential library system, consistent with the law that specifically governs the Nixon materials. We believe that this agreement protects both the Nixon privacy rights and the public interest as defined by law.

Had Nixon actually been concerned to strike an appropriate balance among the public’s right to know, the president’s need for confidential conversation, and the government’s need for discretion in national-security matters, he would have landed on a solution like the 1996 agreement while he was in office. The tapes that John Dean so scrupulously transcribed explain exactly why Nixon didn’t want to strike this balance: he was a crook and a liar.

What makes Dean’s book such a nail-biter is that it’s practically an account from inside of Nixon’s own head. You’re watching a man dismantle himself and his administration. You’re watching as his aides filter in and out, telling Nixon what he wants to hear and hiding the true depth of the crimes from him. By the end, you’re watching his aides all turn their knives on each other, and then eventually — with a really shocking degree of uniformity — turn them all on Dean as the fall guy.

As the years go by, more and more things fall into the memory hole. We’re not long out of the nightmare of the Bush years, yet it’s still easy to forget what a criminal undertaking that was; in a better world, our former president and vice president would be in shackles in The Hague, on trial for crimes against humanity. It’s easy to remember Watergate as some minor crime that unfairly impugns the memory of an otherwise good man. It’s harder to remember that Nixon scuttled the peace talks that might have ended Vietnam, and that LBJ said Nixon had “blood on his hands”. It’s hard to remember the paranoia that gripped Nixon, a man of many hatreds.

The memory hole has consequences: maybe we care a little less the next time the government tries to use “national security” as an excuse. The only defense I can think of against the memory hole is to read and remember. So on my shelf now, I have Jane Mayer’s [book: The Dark Side] and Barton Gellman’s [book: Angler], both about the Bush administration. Dean’s [book: Nixon Defense] deserves a permanent place on the shelf of anyone who wants to remember our country’s nightmares.

On Boston’s rejecting the Olympics — July 29, 2015

On Boston’s rejecting the Olympics

Most of the griping seems to be less about the Olympics themselves, and more about how we won’t get things the city needs — such as better mass transit and a “master plan”. (That’s a new one to me. I didn’t know the city needed one of those.)

That’s always been the nature of the pro-Olympics case, and it’s always been an atrocious argument; no wonder the city, in it wisdom, ultimately rejected that argument. Yes, the city has broken infrastructure. But conditioning infrastructure improvement on our accepting the Olympics is tantamount to blackmail. If we want to improve the city’s infrastructure, let’s improve the city’s infrastructure.

I’d be willing to start the discussion right there. If you think the city is a parochial backwater that is unwilling to think big, then the place where that matters is in the lived experience of its residents and the public services that support them; it has nothing to do with whether the Olympics come here. The three biggest challenges in Boston / Cambridge / Somerville / Brookline, to my mind, are that

  1. The public transit isn’t up to the level of a great city. It should break down less often; it should come more often; it should run all night; the vehicles and the stations ought to be so well-maintained that no one would ever hesitate to use them; we ought to have real Bus Rapid Transit; and the subway should reach at least as far out as Lexington: wherever you’re standing, you should be able to walk ten minutes and reach a subway stop. (And not the green line. No one likes the green line.) Even some low-tech solutions would do a world of good: separate bus lanes on Mass. Ave. would make our most popular form of mass transit speedier than the cars that surround it.

  2. The schools are a problem. No Boston / Cambridge / Somerville parents should have any hesitation about sending their kids to the public schools. It’s not uncommon for parents to think of ways to get a toehold in Brookline so that they can send their kids to the famously good schools there; consequently, Brookline property values are astronomical. Let’s talk about how to sunder the link between “the good places to live” and “where the schools are good”, like then-Professor Elizabeth Warren suggested. Parents in Roxbury should be able to send their kids to schools in Brookline. Let’s consider merging the school districts. (And yes, I’m aware that much of this is the legacy of a horrific episode in the 70s.)

  3. Property values are insane, to the point that I don’t understand how those earning the median household income of $53,000 can afford to own their homes. Let’s talk about building more densely. Let’s talk about making America’s Walking City truly the best city in the world for pedestrians.

These are the conversations we need to have. If we don’t address these things, that is what makes us parochial. If we can only have conversations about how to make Boston a great city when those conversations are based around a fantasy Olympics nine years in the future, that makes us juvenile. We should be able to improve Boston because we want to improve Boston, not because the International Olympic Committee told us to.

Jeb Bush and 4% GDP growth — July 14, 2015

Jeb Bush and 4% GDP growth

There are many infuriating things about Jeb Bush’s idea that Americans should work more to achieve 4% GDP growth. Among the more infuriating is that the press is actually engaging with it.

Here’s the part that drives me the most crazy: it’s seemingly all based on an accounting trick that no one (to my eye, anyway) has explicitly called out: if we’re going to obsess over GDP, what actually matters is productivity growth. Alternatively, if you’re an ordinary human being, what matters is per-capita GDP growth. Neither productivity nor per-capita GDP growth increases with the number of people in the society, nor with the number of hours that people work. Indeed, to the extent that the 41st hour of your workweek is less productive than your 40th, working more hours might decrease marginal productivity.

If, though, we continue to focus on the wrong goal — namely increasing total output — there’s a very easy way to get there: allow more people to immigrate to the U.S. More people means more work, which means more GDP. Problem solved.

I eagerly await Jeb Bush’s plan for increased immigration.

The sixtieth anniversary (at least) of our knowledge of global warming — June 25, 2015

The sixtieth anniversary (at least) of our knowledge of global warming

Not sure why I was reminded of this today, but here’s a John von Neumann quote from 1955:

The carbon dioxide released into the atmosphere by industry’s burning of coal and oil — more than half of it during the last generation — may have changed the atmosphere’s composition sufficiently to account for a general warming of the world by about one degree Fahrenheit.

(I’ve seen this collected in The Neumann Compendium and The Fabulous Future: America in 1980.)

This is not new knowledge.

Just a little maintenance; nothing to see here — May 5, 2015

Just a little maintenance; nothing to see here

After having run this blog on my own site (via either Blosxom or self-hosted WordPress) for many years, I’ve moved to Turns out that doing your own web and email hosting became a mug’s game maybe around five years ago. So anyway, I’ve migrated a good bit of the site to shared WordPress infrastructure. You’ll notice lots of little nits around this blog now — e.g., it seems like posts formatted with Markdown don’t render properly unless I edit each of them individually and click ‘Update’. And the old plugin via which I could type, e.g., [book: This Is The Title Of A Book], and get back a title formatted with italics, isn’t installed on the shared host.

Do forgive the annoyances while I work through these.

Obama and 529 plans — January 27, 2015

Obama and 529 plans

I had set President Obama’s State of the Union proposal on 529 plans to one side to read and think about later, but now I see that he’s already killed it.

Soon I’ll write a proper review of Kleinbard’s [book: We Are Better Than This], which goes into this sort of thing in great detail, but: the opposition to Obama’s plan seems like a great example of tax illiteracy. Maybe it’s also a problem of impolitic presentation on the president’s part; I’m not sure. But there are a few things that absolutely need to be pointed out:

  1. Any kind of benefit that comes to you in the form of a tax deduction helps the wealthy more than it helps the poor. If you spend $18,000 a year on mortgage interest, and your top marginal tax rate is 28%, then you get to spend $5,040 less on your taxes every year than you would in the absence of the mortgage-interest deduction. Whereas if you make a bit less money and are in the 25% bracket, you get to save $4500 on your taxes. The wealthier person saved $500 more than the poorer person for the same mortgage.

    The same is true of the health-insurance deduction: if you get insurance through your employer, you don’t pay taxes on that benefit, even though it’s basically a form of cash; and wealthier people get the same insurance more cheaply than poorer folks. This even holds within the same company: even if the CEO and you use the same health-insurance plan, he’s getting it more cheaply than you are, thanks to the tax law. (Kleinbard himself went through this example a year and change ago.)

    (Worth pointing out: just as the deductibility of health-insurance benefits encourages us to spend more on health care than we otherwise would, so the mortgage-interest deduction encourages us to buy larger houses than we otherwise would.)

  2. Many of the benefits that come to us through tax deductions encourage people to save, and those people often turn out to not need the encouragement. 401(k)s are a great example here. I, personally, save the legal maximum in my 401(k), but I would be saving that money some other way if the 401(k) weren’t pre-tax. So I’m getting a tax benefit, and for what? To encourage me to do something that I’d do anyway. The government shouldn’t be in the business of giving people money for no benefit.

  3. When we encourage behavior through tax deductions, we can pretend they’re not actual expenses. Here’s how to help middle- and low-income kids afford college: pay for them to go to college. Or better yet, run public universities and community colleges directly. But if we did this, there would be a cost on the books, and our elected representatives (and many Americans, I suppose) hate to spend money on things. So instead we give people tax deductions, which suffer from all the problems I’ve mentioned above; then we can pretend that these aren’t real expenses.

    This spending is called, instead, a “tax expenditure”, and we’ve only been tracking it since 1967. Better yet, I discovered from Dr. Kleinbard that we undercount tax expenditures: we count the lost income tax, but we don’t count the lost Social Security tax. So when people talk about how “Social Security is going broke,” a large part of the blame can be laid at the feet of our health-insurance and mortgage-interest deductions. If I understand the accounting properly, the health-insurance deduction costs about $100 billion in Social Security taxes annually. Think about how much more easily we could shore up the Social Security Trust Fund if we put that back on the books.

    I can hear one objection already: “That’s the taxpayer’s money. Don’t pretend that the government ‘deserves’ that money.” That’s a fair objection, but my point is not that one side or another deserves the money. My point is that if we’re going to spend money, we should be honest about what we’re spending. Instead we’re patently dishonest: because we’ve developed a public allergy to spending money on things, we hide our spending in the form of tax deductions. Somehow a dollar of foregone tax revenue doesn’t count the same as a dollar of direct spending. So we opt for subterfuge. (I got a review copy years ago of [book: The Submerged State], but never got around to reading it. My understanding is that it makes this point more broadly.)

My point, and I think President Obama’s, is that if we have to spend money, we should spend it honestly, should spend it wisely, and should spend it progressively. If the goal is to encourage middle-income families to send their kids to college, and if we feel we must make this happen through the tax code, then give people a tax credit that doesn’t increase with income. Better yet, spend the money directly rather than hiding it in a tax expenditure. And don’t give people a tax-advantaged way to save when those people would already be saving money even without the tax break.

This is all common sense, yet I’m coming to the sad conclusion that we as a country like to be lied to. Not only that, but tax policy is boring. To paraphrase Leon Trotsky: “You may not be interested in tax policy, but tax policy is interested in you.” I hope there comes a point when we grow up and pay attention to how our nation is being mismanaged.


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