Tag Archives: Whole Foods

Delaying the Rearview Camera Rule is Good for the Poor

A few weeks ago, the Department of Transportation (DOT) announced it would delay implementation of a regulation requiring that rearview cameras be installed in new automobiles. The rule was designed to prevent backover accidents by increasing drivers’ fields of vision to include the area behind and underneath vehicles. The DOT said more research was needed before finalizing the regulation, but there is another, perhaps more important reason for delaying the rule. The costs of this rule, and many others like it, weigh most heavily on those with low incomes, while the benefits cater to the preferences of those who are better-off financially.

The rearview camera regulation was expected to increase the cost of an automobile by approximately $200. This may not seem like much money, but it means a person buying a new car will have less money on hand to spend on other items that improve quality of life. These items might include things like healthcare or healthier food. Those who already have access to quality healthcare services, or who shop regularly at high end supermarkets like Whole Foods, may prefer to have the risk of a backup accident reduced over the additional $200 spent on a new car. Alternatively, those who don’t have easy access to healthcare or healthy food, may well prefer the $200.

A lot of regulation is really about reducing risks. Some risks pose large dangers, like the risk of radiation exposure (or death) if you are within range of a nuclear blast. Some risks pose small dangers, like a mosquito bite. Some risks are very likely, like the risk of stubbing your toe at some point in your lifetime, while other risks are very remote, like the chance that the Earth will be hit by a gigantic asteroid next week.

Risks are everywhere and can never be eliminated entirely from life. If we tried to eliminate every risk we face, we’d all live like John Travolta in the movie The Boy in the Plastic Bubble (and of course, he could also be hit by an asteroid!). The question we need to ask ourselves is: how do we manage risks in a way that makes the most sense given limited resources in society? In addition to this important question, we may also want to ask ourselves to what degree distributional effects are important as we consider which risks to mitigate?

There are two main ways that society can manage risks. First, we can manage risks we face privately, say by choosing to eat vegetables often or to go to the gym. In this way, a person can reduce the risk of cardiovascular disease, a leading cause of death in the United States, as well as other health problems. We can also choose to manage risks publicly, say through regulation or other government action. For example, the government passes laws requiring everyone to get vaccinated against certain illnesses, and this reduces the risk of getting sick from those around us.

Not surprisingly, low income families spend less on private risk mitigation than high income families do. Similarly, those who live in lower income areas tend to face higher mortality risks from a whole host of factors (e.g. accidents, homicide, cancer), when compared to those who live in wealthier neighborhoods. People with higher incomes tend to demand more risk reduction, just as they demand more of other goods or services. Therefore, spending money to reduce very low probability risks, like the risk of being backed over by a car in reverse, is more in line with preferences of the wealthy, since the wealthy will demand more risk reduction of this sort than the poor will.

Such a rule may also result in unintended consequences.  Just as using seat belts has been shown to lead to people driving faster, relying on a rearview camera when driving in reverse may lead to people being less careful about backing up.  For example, someone could be running outside of the camera’s view, and only come into view just as he or she is hit by the car.  Relying on cameras entirely may increase the risk of some people getting hit.

When the government intervenes and reduces risks for us, it is making a choice for us about which risks are most important, and forcing everyone in society to pay to address these risks. But not all risks are the same. In the case of the rearview camera rule, everyone must pay the extra money for the new device in the car (unless they forgo buying a new car which also carries risks), yet the risk of accident in a backup crash is small relative to other risks. Simply moving out of a low income neighborhood can reduce a whole host of risks that low income families face. By forcing the poor to pay to reduce the likelihood of tiny probability events, DOT is essentially saying poor people shouldn’t have the option of reducing larger risks they face. Instead, the poor should share the burden of reducing risks that are more in line with the preferences of the wealthy, who have likely already paid to reduce the types of risks that low income families still face.

Politicians and regulators like to claim that they are saving lives with regulation and just leave it at that. But the reality is often much more complicated with unintended consequences and regressive effects. Regulations have costs and those costs often fall disproportionately on those with the least ability to pay. Regulations also involve tradeoffs that leave some groups better off, while making other groups worse off. When one of the groups made worse off is the poor, we should think very carefully before proceeding with a policy, no matter how well intentioned policymakers may be.

The DOT is delaying the rearview camera rule so it can conduct more research on the issue. This is a sensible decision. Everyone wants to reduce the prevalence of backover accidents, but we should be looking for ways to achieve this goal that don’t disadvantage the least well off in society.

A public failure for a successful grocery chain

DC area entrepreneur Gary Cha owns a successful small chain of grocery stores called Yes! Organic Market. His business model is based on identifying neighborhoods that are not well-served by other grocery stores and opening up locations to provide residents with fresh produce and healthy food in their neighborhoods. Until his most recent location in southeast DC, Cha had never received subsidies for opening his stores. Rather, he chose locations with the duel objective of making a profit and providing his customers with access to groceries.

His most recent store, however, received a $900,000 subsidy to open in a location in DC’s Anacostia neighborhood that is not well-served by current grocery stores. After two years, the location is closing. Cha is very remorseful about the closure, and has lost about a million dollars of his own money in the effort. Cha and others have attributed the southeast location’s problem to the site’s access. As he told Washington City Paper:

“East of the river, I think, is a great place to do business,” he says. “And I think if I find another location with easier access, I may be the first going back there.”

The demand is there, he’s sure. Ever the self-critic, Cha just believes he needs to step up his game. “I know there’s a need for grocery stores,” he says. “I have to be a better businessperson. I just have to be better.”

While Cha places the blame fully on himself, it might also be worth placing some of the blame on the process with which this store opened. Unlike the other locations which Cha invested in privately, this one was subsidized. His other locations are still in business from his 14th Street location, with a Whole Foods now just down the street, to his Brookland location in an area that still does not have many grocery options. His business model relies on charging a premium for food that is not otherwise available in the neighborhood, but as he said, opening in the Anacostia location would have been too great of a risk without public money. This is not to say that all businesses that receive subsidies will fail, but this one example provides for support for free enterprise over subsidies for businesses that seek to meet public policy goals.

Free Market Farmland

The Washington Post reports that across the country, new neighborhood developments are including farmland as an amenity for residents whose housing prices include funding for the provision of open space and readily available, hyper-local produce.

This trend demonstrates that developers, when legally permitted to do so, cater to the demands of their consumers. Recent changes in land use policy, allowing for more mixed-use development, have legalized the blending of residential and agricultural uses.

The article explains:

Most of these projects start with a matchup between a fine old farm to save and a smart developer with a vision, but in the case of Potomac Vegetable Farms (http://www.potomacvegetablefarms.com), west of Tysons Corner, the farmers saved it themselves. Hiu Newcomb and her family now have a co-housing project (a community with shared common areas and responsibilities) clustered in one area, but most of the popular farm remains.

In Northern Virginia and many areas of the country where development is being designed around farms, the concept is primarily a luxury for the Whole Foods set that values local farmers and produce. However, a similar trend is emerging in Detroit, as previously discussed here, as a way of putting deserted urban space to use.

Earlier this week, the Detroit City Planning Commission moved to codify this trend, working to update the zoning code to permit more agricultural uses within city limits. However, local television news station WLNS explains:

The draft includes recommendations such as allowing small projects to buy city land at reduced prices with lower tax rates. And it suggests larger farms would need to show how they would benefit the community to get such breaks.

The draft also suggests setting soil testing rules.

While allowing entrepreneurs to make valuable use of vacant land in Detroit makes great economic sense, the city should consider whether, particularly given its current budget condition, a subsidy program is advisable policy.

Maine Votes on TABOR

maineIn 2008, Maine set a shameful record. This past year we sent more money to Augusta, as a percentage of income, than ever before. Unfortunately, it gets even worse. According to the U.S. Department of Commerce, Maine is on pace to send almost forty cents of each dollar to the capitol in 2009.

For over a decade now, Augusta has been getting bigger. As a result, we have lost jobs, tax revenue, businesses, teachers and public services. Despite all this evidence, unions, legislators and bureaucrats want us to think that they can spend our money responsibly. There has to be a way to make the state both effective and affordable. Question four, the Taxpayer Bill of Rights, while not perfect, is the best solution for our cancerous growth of government.

Mainers trust each other; it’s one of the best things about life here. We know that if we ask for directions, get a flat, or need a hand, our neighbors will be right along to help. We take pride in our communities, and it makes living here special. TABOR allows Mainers to take responsibility for their choices, and use our famous common sense. The only alternative, the way things are now, is letting Augusta arbitrarily decide whether our communities thrive or die.
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