Tag Archives: Washington Times

Asymmetric Information and Taxicabs

Under traditional taxi service models, consumers are at an informational disadvantage when hailing a cab. Since they can see the cab only from the outside as it screeches to a halt, people can’t tell whether the inside is clean, whether the driver is well-kempt, whether he will drive safely or whether the price is reasonable.

So, the argument goes, government regulators like the D.C. Taxicab Commission can solve the problem by establishing uniform codes of conduct and by pre-screening drivers for the consumers’ benefit. To this end, the commission establishes detailed cost and quality regulations, mandating everything from the per-mile fare that cabs may charge to the appropriate shade of carmine (or is it chestnut?) with which to paint cabs. Ideally, these rules make sure that cabs and their drivers meet the highest standards of quality and customer service.

Taxi

One company has found a way to solve this asymmetric information problem without government regulation. How have regulators reacted?

You can read the rest of my piece in the Washington Times to find out.

Is the Election a Referendum on Power?

Matt Mitchell’s op-ed in today’s Washington Times considers the significance of the dramatic shift in voter opinion in two short years. Are voters looking for elected officials to relinquish the reins of power? After the last two elections, Congress and the Administration have taken more control over just about everything: the banks, mortgages, auto companies, healthcare, infrastruture, and the list continues.

Today’s election may be less about individual personalities than the general sense that being elected to serve is not a mandate for amassing power and then mistaking power for wisdom.

Convertable housing vouchers

Robert Lerman, a fellow at the Urban Institute in Washington, has an interesting proposal in the February 27 issue of the Washington Times.

Lerman notes that around 2 million low-income households are now receiving more than $20 billion per year in total rental subsidies from the federal government.  For example, a household might rent an apartment for $800 per month, and pay only $300 out of its own pocket, while the federal government picks up the remaining $500.

Lerman’s suggestion is simple.  Partly because of the depressed housing prices today, if the federal government kept up the same level of payments, it would be financially workable for these households to purchase a home with the same amount of money – or often less – that is now going to rents.  In Detroit, for example, a typical house in a lower to moderate income neighborhood now sells for around $70,000.   At current rates, paying off a 30-year mortgage would cost about $400 a month, leaving up to the remaining $400 (from the $800 now being spent on rent) to cover taxes, maintenance, and other home costs.

With much of the mortgage payment in effect guaranteed by the federal government, a small down payment might be possible.  Under this idea, many new households might be able to join the ranks of homeowners without any additional costs to the government.  And if large numbers of households pursued this course, it might also help to stabilize currently stressed housing markets and prices in many cities across the United States.

Errata: This post originally showed Daniel Rothschild as the author. It is Bob Nelson.