Thoughts on Uber

Yesterday, my boss came out in favor of a deregulated vehicle-for-hire industry which would allow companies like Uber to operate in San Antonio. The San Antonio Express-News ran a B1 story on his proposal this morning. This is from his post on D8 Dialogues blog on the subject:

Currently, San Antonio lacks the regulatory flexibility needed to unleash innovation in the transportation industry. Even though City Council recently amended Chapter 33 of the City Code, which regulates vehicle-for-hire services, progress and marketplace disruption demand that we revisit its contents.

To open the doors for innovation in the transportation-for-hire industry, the City Council should adopt policies that: 1) level the playing field; 2) encourage competition; 3) ensure public safety and consumer protection; and 4) provide access for all of our residents.

Two years ago, I wrote an op-ed for a political commentary site outlining my views on the subject:

Uber exists as a mechanism to streamline processes, making urban transportation more convenient for every party involved. Uber has even used market forces to protect the public (a novel concept!) because consumers know more about a driver because of information available about each driver on the app.

Critics of Uber are ostensibly attempting to “protect the public,” but are actually just safeguarding their own…oligopolies of urban transportation. 

My time working for Councilman Nirenberg has changed my perspective slightly, but I wholeheartedly support his proposal.

Unintended Consequences of US Housing Policy

In this morning’s Wall Street Journal op-ed page, Michael Milken makes a compelling argument that federal policies designed to increase home buying hurt the middle and lower classes.

The American culture of consumption is exacerbated by policies that encourage home buying:

[E]xtensive tax advantages, no recourse against the borrowers’ nonresidential assets if they walk away, and typically no protection for the lender if the borrower prepays the loan to get a lower rate.

Compare our culture on this front to those of other countries:Im-from-the-government

By contrast, according to CLSA Asia-Pacific Markets, middle-class households in 11 Asian nations spend an average 15% of income on supplemental education for their children—nearly as much as the 16% spent on housing and transportation combined. Americans spend only 2% on supplemental education and 50% on housing and transportation.

Then there is a regulatory apparatus that, despite its best intentions, leads to inconsistent enforcement:

Consumers can sue if the volume of loans to any racial group or aggrieved class differs substantially from loans to other groups. No intent to discriminate is required, and it’s illegal for a mortgage application to ask the borrower’s race. Financial institutions trying to avoid making bad loans by implementing prudent underwriting practices can inadvertently get in trouble. A bank forced to pay a fine one year because it irresponsibly made “predatory” loans to people with bad credit can be fined the next year for not making similar loans.

What’s a better solution?

Rather than hold or securitize mortgages, Fannie and Freddie [should] retain only a limited role as secondary guarantors. With the government as a backstop and private capital risking the first loss, mortgage interest rates would undoubtedly rise. But the taxpayer subsidy would fall. It’s a reasonable trade off to transfer risk from taxpayers to investors and let the market determine rates.

What could we do with that tax revenue? Build an “infrastructure of opportunity” by investing in new roads, better education, and improved health.

 

The Wolf of Wall Street & Assorted Links

Erin and I saw The Wolf of Wall Street yesterday afternoon. It was a gross display of excess. Three new-wolf-of-wall-street-trailer-leonardo-dicaprio-is-the-wealthiest-stockbroker-in-the-worldstraight hours of profanity, sex, greed, drugs. There are those who say that the film doesn’t go far enough to villainize the Wall Street hucksters or moralize about how greed can breed self-destruction. I thought the bacchanalian nature of every single scene made many moral lessons self-evident. Here are some links:

The Wall Street Journal published a profile of Terence Winter, who adapted Jordan Belfort’s memoir into the film. He gives some of his own perspective:

“You, the viewer, are the sucker. You’re being duped and seduced into laughing along with these guys. And every once in a while you’ll hit a little bump in the road”—as when Belfort mentions an employee’s suicide in passing—”where you go, ‘What did he just say?'”

Not many revisions were needed to make the movie’s ’80s and ’90s-era hubris seem relevant, Mr. Winter says: “That’s the point of the movie: We don’t learn anything. Nothing changes.”

From 1905 to 1937, corporate America relied on a Supreme Court case, Lochner v. New York, to challenge most government regulations as violating a “liberty of contract” implicit in the Due Process Clause. Haley Sweetland Edwards argues in Washington Monthly that Citizens United is the new Lochner.

In the Lochner Era, big industry groups and their allies on the Court wielded the notion of “freedom of contract”—any regulation that abridged it was chucked. Today, the notion of “freedom of speech” is being used virtually the same way, just as Rehnquist worried it might be. Any rule or law that abridges a company’s claims to First Amendment-protected speech is now vulnerable to attack.

I’ve argued that generalists are undervalued in our corporate culture. Philosopher Roman Krznaric critiques the “cult of specialization” that has arisen since the Industrial Revolution.

Moreover, our culture of specialization conflicts with something most of us intuitively recognize, but which career advisers are only beginning to understand: we each have multiple selves. … We have complex, multi-faceted experiences, interests, values and talents…

smoking-pregnant-woman1Prevalence of smoking among pregnant women is still, in 2013, 10%.

These numbers are not just women who smoked a little before they realized they were pregnant — these are women who reported smoking during the last three months of their pregnancies.

I’m personally really not a fan of CEOs wearing hoodies. But a recent study profiled in The New Yorker gives some insight into why this “sartorial tactic succeeds.”

But how is nonconformity interpreted by others? Do we see it as a sign of status? New research, to be published next near in The Journal of Consumer Research, suggests that we do. The authors call the phenomenon the “red sneakers effect,” after one of them taught a class at Harvard Business School in her red Converse.

Yuletide Reading and Links

1495490_352111591598550_810066280_nChristmas is always a good time to catch up on reading. I’ve gotten to sit down with my Kindle for more time in the last week than I had in the previous three weeks. I’ve been making my way through Malcolm Gladwell’s David and Goliath,  The Wall Street Journal had an awesome $12.00 for 12 weeks Christmas subscription special, I’m starting to make my way through the books I received as gifts, and Buzzfeed has some awesome Home Alone articles. Some interesting passages for today.

 

From David and Goliath:

The psychologist James Grubman uses the wonderful expression “immigrants to wealth” to describe first-generation millionaires—by which he means that they face the same kinds of challenges in relating to their children that immigrants to any new country face.

Zachary Karabell laments the Internet’s hatred of optimism while offering his own defense:

Optimism is simply the certainty that any human progress to date has been a product of our collective ability to understand how things work and to craft solutions. The conviction that the present is a prelude to a bad future negates that collective ability. Yes, we may indeed be at the end of the line, but by angrily dismissing optimistic arguments we are likely to fail more rapidly.

In a TNR cover piece about Syrian dictator Bashar Al Assad, a former advisor gives some perspective:

“He’s more clever than all the Western and U.S. politicians, for sure,” Ayman Abdelnour, a close adviser to Assad before he fell out of favor and fled into exile, told me. Abdelnour then recalled—by way of explaining why Assad was so difficult to take down—something the young president would tell his inner circle about their foreign adversaries. “They are here for a few years,” Assad would say. “My father, seven presidents passed through him.”

Chiara de Blasio, incoming first daughter of New York City, released a Christmas Eve video in which she admitted that she is in recovery for alcohol and drug abuse. Texan-turned-New Yorker Jessica Huseman gave her take:

Admitting drug addiction as self-medication for depression is an obstacle not many successfully hurdle — especially not so publicly. But it is a choice that presents a lot of loaded political questions for the family.

New York City joined other cities by extending its smoking ban to include e-cigarettes. Councilman James Gennaro, who co-sponsored the legislation, gave some insight into why:

Just seeing people smoking things that look identical to cigarettes in subway cars, colleges and public libraries will tend to re-normalize the act of smoking and send the wrong message to kids.

Some Public Health professors at Columbia have a different take:

The evidence, while still thin, suggests that many e-cigarette users, hoping to kick the habit, use e-cigarettes as a safer alternative to tobacco. Research also suggests that e-cigarettes may be better at helping to sustain smoking cessation than pharmaceutical products like nicotine patches or gums.

Speaking of smoking cessation, a really good advertisement for it:

Libertarian Paternalism

In Nudge, legal theorist Cass Sunstein and the behavioral economist Richard Thaler argue that the government can adopt policies that don’t limit individual liberty but encourage better choices. This is known as “libertarian paternalism”.

There are some classic examples of this: the cigarette packaging labels proposed by the FDA and the so-called soda ban proposed by Mayor Bloomberg. Had these proposals not been blocked by courts, people would have still had the opportunity to smoke (in some places) and drink as much soda as they would want. The idea was to make it just a little bit harder.

My personal evolution from a Keynsian to a Hayekian was due in no small part to this concept floated in The Fatal Conceit:205413_114712335338478_1994812516_n

It may be admitted that, so far as scientific knowledge is concerned, a body of suitably chosen experts may be in the best position to command all the best knowledge available… [Yet] scientific knowledge is not the sum of all knowledge… [A] little reflection will show that there is … the knowledge of the particular circumstances of time and place. It is with respect to this that practically every individual has some advantage over all others in that he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation.

One of the fallacious assumptions underlying the concept central planning is the notion that any committee will have sufficient information to make judgments about what is best for everyone. It is desirable, therefore, for each individual, with sufficient information about what he perceives to be in his best interest, to make those judgments on his own.

Libertarian paternalism seems to allow individuals to make those judgments, so what’s the problem? Many libertarians argue that libertarian paternalism is still paternalism:

Instead of helping people overcome cognitive weaknesses, policy makers are just nudging people towards the interests that policy makers prefer.

We actually do know that scientific knowledge is the sum of all knowledge in some respects, like smoking. Although I personally opposed the graphic cigarette warnings on First Amendment grounds, making it harder for people to choose to smoke without banning the sale of tobacco doesn’t seem objectionable.

My only real objection to libertarian paternalism is that it creates a slippery slope, opening the door for the government to nudge us where scientific knowledge is not the sum of all knowledge.