Austin controversies

Austin controversies

Prop 1 fallout: The Austin fuzz crack down on the working folk

June 21, 2016

More or less the entire world knows that Austin imposed such onerous regulations on Uber and Lyft that they withdrew from the city rather than suffer under the burden. Since taxis are too expensive for many people, generally suck, and in any case are in short supply in Austin because the local politicians have so decreed, a massive black market — a fleet of “gypsy cabs,” to those of us of a certain age and incorrectness — has emerged. More than 30,000 people (as of early June) have joined a Facebook group and arrange for entirely unregulated rides off the grid, thereby vitiating the disingenuos “safety” rationale put forth by the “progressives” on the Austin city council.

Well, apparently the Austin Police Department has decided, or been instructed, to put its jackboots down on the necks of the now illegal — or, because it is Austin, perhaps “undocumented” — drivers trying to recover some of the income they lost.

The city of Austin is using sting operations to crack down on drivers working for unlicensed ride-hailing companies, issue fines and seize cars, authorities told the American-Statesman on Tuesday.

The cars of four drivers for Arcade City, a peer-to-peer service that connects passengers with drivers through its Facebook page, were impounded Friday after the city’s Transportation Department conducted a sting.

Yeah, don’t issue a ticket to these poor slobs. Impound their freaking cars so they cannot get to any other job, either. That’ll fix ’em just right.

Addendum: Here’s an interesting post with a lot more detail around the illegal ridesharing cooperatives. The significant safety issues compared to Uber and Lyft ought to make anybody realize how much safety the established companies imposed by the operation of the apps.

Austin controversies Austin politics Freedom ain't free

Austin “exports poverty”. Thank God.

June 2, 2016

Austin’s mayor, Stephen Adler, who had the best undergraduate education obtainable by man, is alleged to have said this:

We are not sure what it means to “export” poverty, but we are certain of this: It is better for a city to export poverty than to import it, all the more so if the city’s government spends money as if rapid growth will continue forever.

We rather like Mayor Adler notwithstanding our frequent policy disagreements, so we’re going to hope that he was taken out of context. Regardless, we will vote for politicians who vow to export poverty rather than import it, and you are nuts if you do otherwise.

Austin controversies

Liberal death match: Nau’s Enfield Drug and the Old Austin Neighborhood Association

May 31, 2016

Take a careful look at the once grand — OK, reasonably nice — and now profoundly dilapidated house below:

611 west lynn

Yes, Virginia, it is a dump, an eyesore, and a pox on the landscape. Yet the amateur preservationists at the Old West Austin Neighborhood Association, your Editor’s “own” neighborhood association, believe that the owners of this fire hazard should be deprived of the right to sell the valuable lot to a developer who might build something nice on it.

Because that would “change the character” of the neighborhood, itself a silly notion in a neighborhood that is a wonderful eclectic mix of new and old houses, apartment buildings, townhouses, and commercial buildings. The character of Old West Austin is its ever-changing diversity of architecture. Preservation for its own sake is not this neighborhood’s friend.

And, no, the house in question isn’t even “old” by the standards of much of the country, having originally gone up in 1890. The house is of no known historical or architectural significance.

Ordinarily, neighborhood busybodies destroy property rights without compunction simply because they can, but in this case there is a complicating consideration: It is owned by the same family that owns Nau’s Enfield Drug, an ancient and old school pharmacy with an actual soda fountain that everybody reveres and almost nobody patronizes. Nau’s is a genuine local landmark, having supported our neighborhood, which until quite recently was not so nice, since the 1930s. Sadly, Nau’s is now losing money, or making so little that it cannot sustain its owners (the Labay family), because much nicer places making much better food — yes, that must be said — have eroded the lunch counter trade, and other retailers, including HEB, chain pharmacies and convenience stores, have killed the rest of its business. Affluence has all but done in Nau’s, just as it has made the .62 acres underneath 611 West Lynn Street more valuable by an order of magnitude.

The neighborhood hanky-twisters purport both to love Nau’s, even if they don’t actually buy anything there, and to prefer the Labay family’s unairconditioned and collapsing house over literally anything else that might be built there. Since the sale of the latter is considered essential for the survival of the former (please do not ask us to explain that reasoning, we only report on the Austin liberal’s mind), this has put the Old Austin Neighborhood Association in to a defensive crouch. And, as everybody knows, an activist’s defensive crouch is comedy gold for normal people.

First up, one Rosemary Merriam, bold emphasis added:

“OWANA has long opposed the demolition of this house,” Rosemary Merriam, then the chair of the Old West Austin Neighborhood Association, told the Historic Landmark Commission on Jan. 25. “We think it has considerable historic value to our neighborhood, and we support the (city) staff’s recommendation that it be given historic status.

“I sympathize with the Labay family,” she said. “I understand the expense. We also pay taxes in our neighborhood, which are extraordinary.”

Ms. Merriam claimed the needed repairs are mostly cosmetic (something Labay disputes), and, she said, “I’ve never seen any attempts at major upkeep” on the house. Labay told the commission the family can’t afford the repairs.

Merriam knows not whereof she speaks. Or maybe she is being disingenuous. Your Editor has twice renovated — or underwritten the renovation of — old homes of roughly the same vintage (1870 and 1900), including one in Austin. It would cost at least $1 million to bring that house up to snuff, by which we mean to suitability for occupants willing to pay $1.5 million for the lot under it, the current appraised value. The house in question does not have air conditioning. This is Texas. When the hapless contractor rips off the walls to install HVAC, he will find that the wiring is dangerous, the plumbing is shot, and that raccoons have been living in the walls for seven years. It will be re-framed, rewired, and plumbed room by room, floor by floor. No doubt all of the windows will need to be replaced — we guess that expense alone would exceed all of the profits of Nau’s Enfield Drug for years. And we shudder to think what the bathrooms and kitchen will cost for a house that needs to be worth $2.5-$3 million when finished.
Point is, Ms. Merriam is either entirely ignorant of such things, or disingenuous. We suspect the latter. (And this rather brilliant letter to the Statesman agrees.)

Ms. Merriam is, however, an economic genius compared to this dude:

Alexander Shoghi, who is doing a substantial rehab work on an 1890 home across the street from the Labays’ vacant house, told the Historic Landmark Commission that allowing demolition of 611 West Lynn could “set a very dangerous precedent where a person can choose to not reinvest in one’s property, not maintain it to the point of it becoming uninhabitable and then eventually be able to sell it at a higher profit than would otherwise be available had they maintained it.”

Never mind that the trucks supporting this guy’s renovation — which we are certain has exceeded $1 million and probably $2 million — has been snarling morning traffic on West Lynn, your Editor’s regular commuting route, for at least the last year, that may be the most economically illiterate thing ever said by somebody who is not Bernie Sanders. It takes decades for a house to fall in to this level of disrepair. The economic value lost in that period would vastly exceed the upkeep, never mind the wear and tear on the people who have to manage the mess. People with once nice houses do not let them deteriorate to the point of collapse because they are long-term investors. They do so because they do not have the money to keep their house up. The argument that the Labay family let the house fall apart because they were hoping for a killing in real estate is so silly we’re surprised Milo Minderbinder didn’t think of it. And we know Shoghi is disingenuous, because he is a rich guy who used to work for Lehman Brothers. Investment bankers are first and foremost salesmen, and Shoghi is definitely selling in this case.

We have only the greatest sympathy for the Labay family. This is Texas, and ought to be a free country. They should be permitted to sell their property to a developer who will build a beautiful even if new home or homes on the land, whether or not they use the proceeds to keep Nau’s going. As for Old West Austin? We could do with fewer power-crazy control freaks.

Austin controversies

Austin and the “affordable housing” fraud

May 25, 2016

Your Editor has been very busy and hither and yon and such, and therefore away from, er, editing. We’re back, and we’ve noticed that “affordable housing” is again in the news in Austin. Or, more precisely, “mandates” that would impose on developers the requirement that they cough up some “affordable housing” in return for permission to build any housing. The motive, which will not achieve its desired result, is to fix the condition that “soaring rents have pushed poorer and minority residents out of the city.” Gentrification in this booming city with a history of segregation being a hot topic.

Let’s get a few things out of the way. Here are some basically irrefutable facts.

Austin has a sad history of segregation, not unlike most cities in the country.

The people who run Austin today had nothing to do with that sad history. Nor are they descendants of such people. Since most people in Austin are fairly recent transplants, few of the people here had anything to do with the old ugliness. They nonetheless feel guilty about it.

The consequence is that Austin’s blacks and Latinos have been concentrated in neighborhoods with historically cheap housing.

The city and its moderately liberal mayor boost the shit out of the city, promoting its coolness and its hot tech-centered economy.

The city has spent a fortune on amenities that appeal to affluent people such as your Editor, including endless “hike and bike” trails, redeveloped parks and event venues, mass transit initiatives, and so forth. This has caused property taxes to soar.

Austin has a very strong economy, with an unemployment rate so low that wages are rising rapidly, especially for “new class” types around the tech economy.

Austin is the fastest growing real city in the United States. Lots of people are moving here, because of the foregoing.

So, in other words, the city has been pursuing policies with the objective of attracting affluent people who can afford Austin. Those policies have been successful, and affluent people are moving here, further driving up the cost of already heavily taxed housing. Quite predictably, the slightly less affluent among the new transplants are buying up the less expensive housing in the historically black and Latino neighborhoods. The result is that the black population of Austin is declining.

This being considered lamentable, the city’s government — or a subset thereof — is hoping to create more “affordable” housing by imposing huge new costs on developers who propose to build… housing.

It is fairly well-established that affordable housing mandates do not actually work. See, for example, this study [Word file] of the many cities in California that have experimented with “inclusionary zoning.” Money shot (emphasis added):

Using panel data and a first difference model, we test how the policy affected the price and quantity of housing in California cities between 1980, 1990, and 2000. Under various specifications we find that cities adopting below-market housing mandates end up with higher prices and fewer homes. Between 1980 and 1990, cities imposing below-market housing mandates end up with 9 percent higher prices and 8 percent fewer homes overall. Between 1990 and 2000 cities imposing below-market housing mandates end up with 20 percent higher prices and 7 percent fewer homes overall. Consistent with Ellickson’s hypothesis, the program may not be about increasing the supply of housing or making it more affordable overall.

Our question is this: Are the liberal flower and chivalry of Austin unaware that their big ticket policies designed to appeal to affluent people have succeeded wildly in both driving up costs and attracting er, affluent people? Or — and this would be the only sane alternative explanation — are our “leaders” cynically dangling a counterproductive “affordable” housing mandate to deflect the rage of the anti-gentrification activists from the politicians and to the real estate developers?

With politicians, it is always hard to know whether “stupid” or “cynical” is the dominant consideration. Given our city council’s terrifyingly poor grip on economics and reflexive preference for more regulation rather than less, we lean toward stupidity.

But we could be wrong.

Austin controversies

Will Austin deregulate taxis to bring back Uber and Lyft?

May 11, 2016

While the righty-libertarian wing of the blogosphere is a-twitter mocking Austin for regulating Uber and Lyft out of town, the executive branch of the city government seems to be moving against the city council and the Democratic establishment. Today brings news of an “internal” memo, dated just days after the offending referendum, proposing deregulation of the taxi cartel to level the playing field with the ridesharing gig. This is good news, even if the city council does not go along, because it suggests intelligence in the actual management of the city of Austin.

Several things might be said about this idea.

First, literally the first sentence of the internal memo says that it is “an update on the effort … to provide a ‘level playing field'” for taxis, which is essentially an admission that the Austin ordinance was to protect a cartel in an industry that should die a reasonably abrupt death anyway (if ridesharing had existed before taxis, would anybody in their right mind start a taxi business that did not have a monopoly guarantee from government?).

Second, props to Mayor Stephen Adler for this maneuver. We have a new regard for his capacity to play the long game.

Third, all of this sad business might have been avoided if the city had followed the freaking brilliant advice in this letter to the editor of the Austin Statesman back on October 10:

The City Council’s proposals to burden Uber and Lyft with substantial new regulations, which may well drive them out of Austin or diminish services, are misguided. Thousands of Austinites provide these services safely, and hundreds of thousands use them. They work — and because there is real-time documentation of a specific rider getting into the car with a specific driver, the possibility of crime against one another is lower than using taxis, which have no evidence connecting driver and rider. If the problem is asymmetrical regulation with taxis, consider adopting Sarasota, Florida’s sensible solution, which is to deregulate both taxis and ride hailing. If the problem is revenue — and one gets the sense that ever-higher taxis are the real agenda here — consider a simple revenue-neutral tax that applies equally to both taxis and transportation networking companies. But do not drive out ride-hailing apps, which, as evidenced by demand, [are] solving a genuine transportation problem here in Austin.

People really need to listen to that guy.

Austin controversies

The sad message in the Uber app this morning, and the problem with fingerprinting

May 9, 2016

We’re sure we’re not the only person to have tried the Uber app this morning…


The question that remains unanswered in the post mortem: How far apart are the Austin city council and the ridesharing companies? Positions seem to have hardened in the political fight leading up to the vote against Proposition 1.

The question comes up, why do the ridesharing companies resist fingerprinting so much? In Texas, in what seems to be a very un-Texan attitude, you need to be fingerprinted for virtually any government permission, including, until very recently, to get a driver’s license. Many of the locals your Editor engages in his neighborhood coffee shop therefore do not understand the resistance.

The answer is that fingerprinting is a huge pain in the neck in many other states. In New Jersey, for example. Your Editor has the experience of driving 15 miles through local Trenton area traffic to a particular office of the state police, and then waiting around for a particular copper charged with the finger printing of corporate executives and other miscreants who need certified fingerprints to cough up to regulatory agencies in, say, Florida. If the Austin rules were imposed in Newark, far fewer people would get their act sufficiently together to qualify. So in many places, fingerprinting is a real barrier to entry with no obvious security benefit.

And never mind that Texans who love freedom should be calling for less fingerprinting in general, rather than more, if for no other reason than we ought not feed the data hungry security state more than absolutely necessary.

But we digress. Given the foregoing, what are the odds that Uber and Lyft can agree to fingerprinting in Austin without opening up similar fights in cities across the country? We speculate that they are unlikely to concede the point, and we further speculate that this city council is unlikely to give up its hard won victory. We therefore doubt that Uber and Lyft will be back in Austin soon, which will be a great loss for both customers and drivers, even if a windfall for the opponents of “corporate greed” and their allies, the three authorized taxi corporations and their tightly rationed number of cars.

Austin controversies

Austin voters speak, and vote to turn Uber and Lyft into taxis

May 8, 2016

Over our fondest wishes and most eloquent argument, the voters of Austin have voted to defeat Proposition 1, which would have overturned an Austin ordinance that regulates the ridesharing companies Uber and Lyft. These regulations are so onerous that Uber and Lyft threatened to leave Austin if Proposition 1 did not pass. Both firms have now announced that they will in fact stop doing business inside the Austin city limits starting tomorrow morning. (This is personally annoying in a very specific way, insofar as your Editor’s travel plans for the coming week, involving complex logistics with his daughter, depended on Uber. Sad!)

The opponents of Proposition 1, which included the flower and chivalry of the city’s Democratic establishment – the politicians, media, liberal activist groups, and so forth – made the election about “corporate greed,” and if you did not believe that they argued it was about safety, and finally they claimed that Uber and Lyft would not leave town anyway. Regarding the last point, the same Luddites made much of Uber and Lyft spending more than $8 million campaigning for the referendum, which to your Editor and other economic thinkers amounted to virtual proof that Uber and Lyft indeed considered the city regulations to be an existential threat to their business model. Why would two money-losing companies waste that much coin on a lark?

In fact, the fight was really over political power. The city’s politicians by and large believe that one must not disrupt local monopolies, however poorly they perform, without seeking permission. Uber and Lyft offended this sensibility by taking the point of view, after reading the existing taxi law, that they did not need permission. We know this to be true, because “senior city officials” — household names in this town — told us as much in private conversations.

All of that being the case, why did the town’s Democratic establishment come out so strongly against Uber and Lyft (and why are they trying to push out Airbnb and HomeAway)? Because progressives hate the “share economy.” For more than 50 years progressives have been using employers as leverage to push social change, whether in opportunity, health care, or political speech, and they do not want to lose that lever. The share economy, which turns workers into capitalists — their cars and houses become working capital in the truest sense of the term — is anathema for progressives who believe that the purpose of government is to change the way people behave. Austin’s new city council is surprisingly extreme in this view, considering that the new economy has produced the tax base that enables Austin’s municipal profligacy, but cause and effect has never been very important to politicians of any party, at any time.

The battle is not over, either in Austin or in general. We suspect that the thousands of people who will come to Austin for next year’s session of the Texas legislature will be universally irritated that they cannot use Uber to get around. We would wager more than a plug nickel that the “lege” will extend the logic of last year’s ban on local fracking ordinances to ridesharing and perhaps to other local regulation of disruptive businesses.

More generally, ridesharing is here to stay, because its underlying logic is too powerful. Uber, which reduces traffic and the demands on scarce parking, enables carpooling among strangers, reduces drunk driving, and allows the livery business to respond quickly to hour-by-hour changes in demand, is such a quantum improvement over taxis that it will win eventually. After all, if Uber and Lyft had existed first, would anybody have said “let’s establish a fleet of yellow cars, give them a local monopoly, and impose fixed fares so there are chronic shortages when people need them most”?

Not in Bernie Sanders’ wildest dreams.

Austin controversies

Go tell ’em how you’re going to vote on Prop 1

May 7, 2016

An unscientific online poll on Austin’s Proposition 1, through the tweet below. As of this writing, “for” Prop 1, which is a vote for freedom and for the customers and drivers of the big ridesharing companies, is way ahead of “against.” But we’re going to go out on a limb and say that the local liberals who think of this as a fight with “corporations” are not big followers of the Austin Business Journal.