Heavy Lifting - thoughts and web finds by an economist
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Sunday, July 11, 2004
This from Friday's Wall Street Journal opinion page describes a hairbrained idea by the Democratic National Committee to provide vouchers for convention delegates to get from Boston Logan to downtown.
The plan is a great example of how the Democrats view the world, markets, individual choice, and entrepreneurial action:
Under the DNC's proposal, taxi drivers would be required to accept the vouchers, worth $12 per passenger, in lieu of payment, even though the meter fare from Logan into the city, including tolls and an airport surcharge is typically over $40. And to add insult to injury, they'd [the cabbies] then have to apply to the DNC to redeem the vouchers. (italics mine)It doesn't seem to matter that the cab business is a market, that the price of a cab fare is determined (somewhat) by a competitive market process. Indeed, it seems that the DNC is unsatisfied with the price of the cab ride to downtown precisely because it is determined by the market process.
Hell, we all want to pay lower prices but very few of us can throw our weight around like the DNC. In essense what the DNC wants to do is to use its market power to reduce the price of cab fares. This is known as monopsony power and it is consistent with the idea that the government can use it's "buying power" to get lower drug prices while at the same time ensuring that more and better drugs are developed, something Democrats seem to cherish and believe in like the Tooth Fairy and Santa Clause.
Therefore, if it is supposed to work with prescription drugs, why not with cab fares?
Yet, it is very rare that the government (or a political party) can dictate market prices, and it especially unlikely for taxi rides. As the story goes on to point out, many cabbies are considering taking the week off during the convention. At least Boston cabbies understand incentives, as do most who are attempting to make a living. It is a shame that one of the two major parties doesn't.
The other aspect of the story consistent with the top-down approach that the Democrats (and at times the Republicans) are so fond of is that all cabbies would be required to accept the vouchers. What about school vouchers?
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