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When Friends become Foes: City of Portland vs. the Citizens

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City of Portland propping up taxi industry at the expense of consumers.Pick up most any civics textbook, and it’ll contend that one of the purposes of government is to protect the common interests of the citizenry against the forces of corruption and special interests.

The idea is that government regulations can help curb the excesses of unfettered capitalism and help keep the playing field fair for everyone.

Unfortunately, we know from experience that things rarely turn out this way in practice. We have ample proof in the scads of lobbyists and special interest groups that swarm Washington, DC and the state capitals, holding sway over many politicians and the laws they enact.

Public opinion polls by Gallup and others show that the U.S. public sees the federal government as more culpable than state or local governments when it comes to special interests having undue influence over legislation.

But does the reality comport with the perception that “local” is less of a problem?

The latest example showing that this perception may be wrong comes from Portland, Oregon. The city council there has put in place regulations that require limousine and sedan services to charge a $50 minimum for transporting people to and from Portland International Airport … and to charge at least 35% more than taxis for trips to any other destination in the city.

In addition, sedan and limo services cannot pick up customers until at least one hour has elapsed after the customer has called for transportation.

Does anyone seriously believe that these regulations were put in place to benefit the citizenry of Portland … or to foster healthy competition for transportation services? If you believe so, you’re pretty naïve.

In actuality, the Portland city council is just doing the bidding of a small but politically powerful interest group in the city: the taxi industry. Frank Dufray, the administrator for Portland’s Private-for-Hire Transportation Program, says as much:

“The main thing is that you don’t want the Town Cars to take all of the best fares, which are to the airport, and not leave any for the taxi industry. That’s why there’s a minimum fare and a one-hour wait requirement.”

Basically, this is tantamount to stifling fair competition and protecting market share for the taxi industry by government fiat.

It gets worse: “Daily deal” companies like Group and LivingSocial have become a very popular way for local business to gain new customers by offering limited-time special offers that allow consumers to purchase goods and services at a discounted price. But when two Portland-area companies offered their chauffeur services at a discounted rate through Groupon last year, the city of Portland responded by assessing fines on every Groupon deal sold by these firms.

And these weren’t just “nuisance” fines. They totaled $259,500 for Fiesta Limousine and a whopping $635,500 for Towncar.com!

Rather than risk going bankrupt, these two companies did the only thing they could from a practical standpoint; they refunded all of the proceeds back to their would-be customers.

So, thanks to the city of Portland, we have customers who are unable to take advantage of special pricing for limousine services, plus we have two companies who lost both time and opportunity – not to mention the administrative hassle of refunding customers their money while also dealing with the potential legal fallout.

But there’s a winner, of course. It’s the local taxi industry, sitting pretty while being validated in the idea that political pressure placed on local politicians works.

But in an interesting twist, this may not be the end of the story. The Institute for Justice, a public interest law firm, has now filed suit in U.S. District Court against the city of Portland. Here’s how the group summarizes the legal question:

“Can the government bar entrepreneurs from offering competitive prices, online discounts and prompt service merely to protect politically powerful insiders from competition?”

The Institute for Justice’s complaint was filed on April 26, 2012, citing the U.S. Constitution’s 14th Amendment plus the Equal Protection and Due Process Clauses.

Expect this one to make its way all the way to the Supreme Court.

Gallup Sees Deterioration in Americans’ Perceptions of Major Industry Sectors

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Decline in perceptions of U.S. industriesThe past decade hasn’t been kind to the image of most industries in the United States. And given the economic and sociopolitical upheavals experienced by nearly every strata of society, it’s not hard to understand why.

This isn’t just conjecture, either. For years, the Gallup polling organization has surveyed Americans’ opinions of 25 major industry sectors every August to determine if their overall opinion of each of them is positive, neutral or negative.

The results of the 2011 survey of 1,008 respondents (age 18 and over) have now been released, and they show that a majority of Americans view just five of the 25 industries in a positive light:

 Computer industry: ~72% rate positive
 Restaurant industry: ~61%
 Farming and agriculture: ~57%
 The Internet: ~56%
 Grocery industry: ~52%

Interestingly, when comparing these results to ten years ago (August 2001), just two of these five sectors have improved their positive ratings: the Internet and the computer industry.

At the other end of the scale, seven of the 25 industry sectors scored 30% or lower in positive ratings:

 Banking industry: ~30% rate positive
 Airline industry: ~29%
 Legal field: ~29%
 Healthcare industry: ~27%
 Real estate industry: ~23%
 Oil and gas industry: ~20%
 Federal government: ~17%

The remaining 13 industries in Gallup’s survey came in between 30% and 50% on the scale – hardly stellar ratings, but not in the basement like the hapless sectors listed above.

Over the past decade, Gallup has observed that a clear majority of the industries – 19 of the 25 – have seen declines in their positive scores.

The most precipitous ones include the usual suspects, led by – you guessed it – the federal government:

 Federal government: Down 24 percentage points since 2001
 Real estate industry: Down 23 points
 Banking: Down 17 points
 Educational field: Down 15 points
 Accounting industry: Down 11 points
 Healthcare industry: Down 10 points

It’s little wonder why we’re seeing these six industries striking out so badly with the American public; they’re precisely the ones associated most with various political or economic problems.

By contrast, the positive views about the computer industry and the Internet reflect the continuing innovation and financial success of many businesses in this sector.

This can’t be lost on consumers – many of whom have directly benefited through the steady stream of new products and services introduced by companies in these sectors over the past decade.

And as for agriculture, groceries and restaurants … well, we all have to eat, no matter what the economic situation! Besides, there’s been little controversy seen in these categories, and they’re mature sectors have been smooth-running in this country for years.

One hopes the next decade will witness a reversal in the downward trajectory of the public’s perceptions of American industries. In at least a few of the cases, it’s hard to imagine how they could sink any lower!

The “Skinny” on 2010 Holiday Spending

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Consumer Holiday Spending
Holiday spending on the rise? Yes, but ...
The “early returns” from this year’s Black Friday retail sales are quite encouraging. Online retail sales are experiencing an even bigger bump in activity. The question is, do these positive early results foreshadow a strong holiday season overall?

Each year, Gallup attempts to answer that question in advance by conducting a poll every November in which it asks U.S. consumers for a prediction of the total amount of money they plan to spend on holiday gifts. This year’s poll findings were published this past week.

And the results? The good news from the consumer economy’s standpoint is that the average personal spending expectation has risen to $714 for 2010, which is ~12% higher than last year’s $638.

The not-so-good news is that we’re still in the doldrums when measured against most of the previous decade. In fact, only in the years of 2009, 2008 and 2002 has expected personal spending been lower than it is this year.

If we take an average of the ten years covering 2000-2009, the expected personal spending found by Gallup’s survey is $747, which means that 2010’s dollar amount doesn’t even come up to the average of the past decade.

Here’s another interesting finding from the survey: Evidently, the increase in expected holiday spending compared to last year is being driven by only a small percentage of consumers. Half of the Gallup respondents reported they would be spending “about the same” this year, whereas one third reported they would actually be spending less.

The remainder – fewer than 15% — reported they would be spending more.

And all of that activity on the Internet? We can be sure a goodly amount of it is driven by the desire to find the very best price available. And to prove that out, the latest online holiday shopping report survey from rich media firm Unicast finds that more than half of consumers are using the Web to research and compare deals between online stores and retail outlets.

The bottom line on all this: It’s a mixed picture with a slight lean on the scale in favor of optimism. Which is a darn sight more positive than what we saw in 2008 and 2009.

Happy Chris-kwanz-ukah, everyone.