Center for Free Enterprise
A report before the Salt Lake City Airport Advisory Board this morning revealed that ridesharing companies Uber and Lyft have put a significant dent in the marketshare previously monopolized by taxis.
Just five months ago, only 14% of ground transportation at the airport was serviced by Uber and Lyft drivers. Since then, that number has increased to 26%.
These companies faced significant hurdles in become legally enfranchised. As first revealed by Libertas Institute, Salt Lake City imposed $6,500 fines on drivers who were discovered using a secret shopper program. Ironically, one of these secret shoppers hired to punish the new companies actually preferred them over taxis.
Political pressure mounted in favor of ridesharing, leading the legislature and city council to revise the laws to enfranchise these disruptive services. Following the deregulation an agreement was made between the companies and the airport, and since that time drivers have been able to legally operate.
Market disruption such as ridesharing is often controversial as upstart companies must navigate through a barrier of protectionist laws designed to shield the established industry from their competition. Utah’s constitution demands a free market; the difficulties government imposed upon these companies and their drivers clearly demonstrates that elected officials have been unwilling to abide by that rigorous constitutional provision.
In a nod to the federal government’s oft-ridiculed “Cash for Clunkers” program, Utah is giving away deeply discounted electric lawnmowers in exchange for gas-powered ones.
The Utah Department of Environmental Quality held its 2nd Annual lawnmower exchange event last week. This “clean air initiative” is funded by the Utah legislature through the “CARROT” program (Clean Air Retrofit, Replacement, and Off-Road Technology Program) and is administered by the Department of Environmental Quality (DEQ). The program seeks to find ways to replace higher emitting vehicles and equipment with lesser emitting alternatives.
This year, the program distributed 944 deeply subsidized electric lawnmowers, many in exchange for existing gas-powered mowers. Based on average lawnmower use and carbon emissions statistics, the program may lead to reducing carbon dioxide emissions by 668 tons a year—or 4,676 tons over the seven year life of a lawnmower. This comes at a cost to Utah taxpayers of $52.49 per ton of carbon dioxide emissions removed. For comparison, scholars estimate the social costs of carbon emissions to be between $3 and $24 per ton.
In other words, Utah taxpayers are likely paying double the social costs of carbon emissions to reduce them—notably emissions that are not created during the winter inversion season, either.
Like “Cash for Clunkers,” many consumers are not trading in new gas-powered mowers, but rather mowers they were likely to replace on their own in the near future with newer, more efficient models. Perhaps some may have even purchased electric models to replace older mowers anyway. Enterprising consumers might even proactively purchase barely salvageable used mowers in order to receive the trade-in discount while retaining their existing gas mowers at home.
Like any government intervention in the market, a subsidy merely leads to inefficiencies. In this case, an arbitrary reduction in the price for consumers from $399 to $100 per mower yielded overwhelming demand. Reservations for the nearly 1,000 mowers were exhausted in the first hour, crashing the DEQ servers. News stories called this phenomenon a “success” of the program and described the program as “popular.” In reality, it is merely the operation of basic economic principles—demand for a good increases when its price is lowered, leading to a shortage of supply at prices below market equilibrium.
Ripple effects in the market for used lawnmowers will now be felt for discount shoppers looking for a second-hand mower for the season. Undoubtedly, many likely purchased a used model to qualify for the discounted trade-in price, and others who might have sold an old mower will not be selling this year. Much like “Cash for Clunkers,” the real benefit here is to the lawn mower retailers; the state purchased the mowers from Lowes.
The “Cash for Clunkers” program was also criticized because of the small impact it had on reducing emissions. Some estimates projected the emissions offset to be a mere two days worth of nationwide overall emissions. The Utah mower program has an even smaller impact—it will reduce annual emissions in Utah by 1/1,000th of a percent (0.001%) of statewide emissions.
To put that in perspective, based on emissions statistics for Utah, the amount of emissions reduced by this program is equivalent to eliminating all emissions in the state for 5.5 minutes a year. At a total cost of roughly $250,000 for the mowers, that is an expensive five minutes.
Fortunately for Utah taxpayers, the legislature declined to appropriate more money for the program this year despite a $500,000 request in the Governor’s budget for the continuation of the CARROT program. Unfortunately, not appropriating funds to a government program one year only renders the government program “mostly dead.” Be on the lookout for the state to round up loose change to resurrect programs like these in the future.
30 annual mowings at 25 hours of operation a year for exchanged gas-powered mowers. 1 hour of gas mowing is equal to 100 car miles. 2,500 mi/yr * 23.6 mpg = 105.9322 gal/yr * 19.4 lbs of carbon per gallon = 2,055.08468 lbs of CO2/yr * 7 year useful life of the replacement electric mower (warranty is only 5 years) = 14385.59276 lbs of CO2 offset over the life of the replacement electric mower.
Subtract the carbon emissions (1,176 lbs) of electricity production to charge the replacement electric mower. 30 annual electric mowings. 3.5 KWH to recharge after each mowing * 1.607 lbs of CO2/KWH (Rocky Mountain Power’s carbon emission rate) = 5.6 lbs of carbon per mowing * 30 mowings = 168 lbs of CO2/yr. * 7 yr life (warranty is only 5) = 1,176 lbs of CO2 emissions over 7 years.
Net carbon emission offset of using an electric mower = 13,209.59 lbs (6.6 tons). This is further discounted as only about 75% of electric mowers distributed were accompanied by an exchange of a gas-powered mower being taken out of service.
Total carbon offset of the 944 electric lawnmowers distributed is approximately 4,676.2 tons over 7 years. At a state subsidy of $260/per mower ($399 retail cost, customer pays the state $100 and the state receives a bulk purchase discount from the retailer) the price per ton of carbon offset is $52.49.
Annual carbon emissions in Utah are 66.4 million metric tons. The annual carbon offset for the mower exchange program is 668.03 tons. As a share of Utah’s annual carbon emissions of 66.4M, the annual offset represents 0.00001 (or 0.001%) of emissions.
In an age where every cell phone user is a potential videographer, police tactics have come under increased scrutiny from the public as headlines of law enforcement confrontations gone wrong are captured by citizen bystanders. These stories underscore the growing call for reforms in policing tactics and transparency through department-issued body-worn cameras for officers. Some want to see increased use of body cameras, including mandates for their use all police departments, in the hopes that such transparency will yield a reduction in incidents of force.
Studies in Rialto, California, and elsewhere have shown the benefits of body camera programs—including significant reductions in use of force incidents. For this reason, many police departments are adopting the use of this new technology. The cameras not only help bring transparency and accountability for police actions, but more often than not, they show the good work officers do and frequently exonerate officers against false complaints. Camera footage can also be used as evidence in criminal proceedings and is more reliable than any one officer’s or witness’ memory of events. However, cameras also pose a number of unique challenges. These challenges mean that policies governing the use of cameras need to be well thought out, well written, and enforceable to ensure that cameras are used effectively and in a manner that protect the rights of all involved.
Libertas Institute has put in hundreds of man hours behind the scenes in an ongoing effort to develop and implement such policies in Utah. While the potential benefits of cameras are clear, we do not favor an approach that mandates all departments use them; implementation is very costly. The public budgets that govern police expenditures should control the decision-making process for each department. However, the inevitability is that law enforcement agencies see the immense value of cameras and adopt their use in the absence of a mandate to do so. As this has happened in recent years, the policies that govern the use of body cameras vary from department to department. While this might be reasonable for policies governing other equipment like vehicles or handcuffs, when the privacy rights of all Utahns are at stake—and when officers are often, if not primarily, enforcing state laws—it becomes a state issue.
Recently we wrote about some of the problems with Medicaid expansion and reasons why the Governor and legislature should not proceed with the Healthy Utah proposal. Simply put, the discussion over Utah Medicaid expansion under “Obamacare” ignores the fundamental policy question about whether Utah should be providing taxpayer-funded health insurance or health care for able-bodied, childless, working-age adults at all.
Historically, the state has never done so, and policy makers have made little effort to do so until now. Many agree that such a program falls well outside the traditional limits of government policy. Nothing has changed about the fundamentals of this debate.
The incentives, however, have changed; under Obamacare, the federal government has promised to the states that it will pick up all or part of the fiscal tab for such a policy—at least for a period of time. We warn that this is a false and empty promise—one that is predicated on burdening future generations with debt by expanding unsustainable deficit spending. It is a promise that leaves our children and grandchildren exposed to serious future fiscal problems. It is a promise that leaves existing needy patients exposed to doctor shortages. For these reasons, we join with others to call on the legislature to protect Utahns from the problems associated with Obamacare’s Medicaid expansion.
Around the country, states have imposed licensure requirements on a large number of professions, effectively requiring workers to seek government permission—and pass through a number of bureaucratic hurdles—in order to practice their chosen profession. Whereas in the 1950s only one in 20 U.S. workers were required to obtain a license, that figure today stands at almost one in every three workers.
For each licensed profession, state legislatures usually authorize and empower a governing board, comprised in most cases of members of that same profession. For example, in Utah, the licensure of chiropractors is regulated by a board made up of four chiropractors and a token “public member” who is not a member of the industry. Nurses are regulated by a board comprised of nine fellow nurses and two public members. Direct-entry midwives are overseen by four licensed people from the profession and one “public member.” The trend holds constant for the other several dozen licensed professions in Utah.
That trend may soon change in light of a U.S. Supreme Court opinion issued in February that may put these boards on the defense. The case at hand, North Carolina State Board of Dental Examiners v. FTC, arose due to the dental board—comprised primarily of dentists—engaging in non-competitive behavior and being sued by the Federal Trade Commission. Specifically, the board attempted to prohibit non-dentists from providing teeth whitening services, presumably because this competition undermined their monopolistic hold on the market.
Governor Herbert declared November 29th as “Small Business Saturday.” This was a well needed reprieve from the anti-business Thursday just one week prior when the Utah Insurance Department attempted to shut down online HR startup Zenefits, or the previous anti-business Tuesday when the Salt Lake City Council decided to impose unnecessary regulations on ridesharing apps Uber and Lyft. When it comes to creating a business-friendly regulatory environment in Utah, government officials know how to talk, but do they know how to walk?
We applaud the Governor for his recent work to reduce administrative regulations on business but are left to wonder, in light of recent events, if the momentum is beginning to sputter.
In 2013, a San Francisco startup, Thumbtack, surveyed 12,000 small business owners around the country to find out which states provided the best environment for business. They found that Utah was the most business friendly state in the nation and subsequently decided to locate their customer support operation here where they are now growing rapidly. Utah received an A in the regulatory category in the 2013 survey and improved to an A+ in 2014, indicating low regulatory burdens on small business in Utah. Utah has also ranked as the number one state for business for three years in a row by Pollina Corporate Real Estate and tops the list in a number of other rankings.
Next Tuesday, the Salt Lake City Council will be voting on a proposed change to its ordinances regarding ground transportation services.
After Libertas Institute broke the news of $6,500 citations being given out to Lyft and Uber drivers operating outside the parameters of existing ordinances, which neither contemplate nor address ride-sharing services, heightened public attention brought significant opposition to the city’s treatment of this innovative new service.
Both of these companies have now publicly opposed the proposal, arguing that it imposes unnecessary and onerous burdens.
Earlier this week, a new audit of the Governor’s Office of Economic Development (GOED) was announced and discussed, in which the government agency was accused of manipulating data, misleading the public, and giving special treatment to certain businesses over others.
GOED’s own press releases support the latter allegation.
On August 14, GOED published a press release in which they announced a new tax credit incentive awarded to Overstock, a popular online retailer headquartered in Salt Lake County. Upon committing to creating 333 new jobs over the next 10 years, with wages and benefits at 200 percent over the county average wage, Overstock was awarded a 20% tax credit by GOED over 10 years.
Standing alone, this is likely a welcome incentive for Overstock and a reduction of their tax burden which will facilitate job creation and business growth. Stacked against another incentive, however, it becomes clear that Overstock (and many other companies competing for employees) has been placed at a financial disadvantage.
A newly released audit of the Governor’s Office of Economic Development—an institution of which we have often been critical—claims that their primary tactic to lure business into the state entails “questionable incentive awards.”
The audit also alleges corruption within the office in the form of manipulation of data. “GOED regularly reports inaccurately” on certain items, and “provided special treatment for some companies by altering post-performance assessments for companies that failed to meet GOED’s contractual threshold.” Further, the audit alleges that GOED has:
- used existing company employees to inflate wages of new employees in order to gain corporate incentive awards;
- used incorrect benchmarks to improperly issue an economic development tax increment financing award;
- removed low-paying jobs from averages; and
- handed out incentives to companies that failed to meet the wage criteria under their contracts with the state.
House Bill 105 from this previous legislative session had two important but distinct parts. The widely popularized portion related to legalizing cannabis extract for medicinal use, and earlier this year the Department of Health created administrative rules to implement this program.
The second portion of the bill, which few realize was included, authorized the Department of Agriculture, or any qualifying higher education institution, to “grow or cultivate industrial hemp for the purpose of agricultural or academic research.” Last week, the department issued its proposed rules to administer this program.
Upon review of the proposed rule, Libertas Institute has identified four problematic portions that deal with the department exceeding the authority they were granted under passage of H.B. 105. We have issued a letter, embedded below, to the Department of Agriculture seeking amendments to the proposal prior to its final enactment.