Tag Archives: cities

Tesla, Local Regulations, and the New Normal for Innovators

14 Mar

Tesla’s latest spat on its direct-sales model with the state of New Jersey is dumb, but it’s nothing new for the company or other rising start-ups. The case is another piece in a growing trend of local regulations stifling innovative companies. As the sharing economy has grown and technological innovation has made products electric cars affordable and reliable, local governments and regulators have found ways to impede their ability to reach consumers. Some research has discounted the impact of local regulations on start-up companies and entrepreneurs, while others havehighlighted significant regulatory burdens facing small businesses.

You cannot discount the real world examples of cases where state and local governments issued regulations that impair business operations of growing companies. There are Uber’s feuds with city governments and taxicab monopolists in Chicago, DC, Denver, Miami, Nashville, and San Francisco. Airbnb is facing its share of problems in New York City. California’s Bureau for Private Postsecondary Education is leading a crack down on ‘learn to code’ bootcamps. Let’s not forget the culinary innovators in local food truck scenes that are constantly hopping over regulatory hurdles.

In the case of Tesla, auto dealers are worried that this case will set a strong precedent for automakers circumventing dealers to directly sell to consumers. This despite the fact that buying a car is one of the least enjoyable consumer experiences. Tesla has faced similar issues in Arizona, North Carolina, Texas, and other states. In fact, Cornell University’s Journal of Law and Public Policy notes, “the franchise laws of at least 48 states ban or limit Tesla sales—get this—to prevent unfair competition. Franchise lawsrequire automakers to sell their cars exclusively through dealership networks.” There will be plenty of more battles down the line. Overall, these restrictions will hurt Tesla’s long-term viability to offer an automobile that will be more affordable in the coming years due to economies of scale and product innovation.

The surprising nature of these regulatory battles is that the come at a time when state and local governments are devoting significant energy and resources to streamline regulations and promote technological advancements to aid the local permitting process. What’s even more startling is that nearly every major city is supporting entrepreneurial incubators and vying to attract important venture capital funding to foster vibrant start-up environments. Yet local governments are doing all they can to limit the ability of start-up companies to grow and provide citizens with access to new services. Isn’t that a pity?

Why Is Funding the Future So Hard?

9 Feb

Funding the future has been a difficult task in Washington. Historically, the Federal government spends resources on important things like education, basic research, and infrastructure. These investments, in some form or the other, serve as conduits for economic growth. Miles Kimball from the University of Michigan and Noah Smith from Stony Brook University have put-forth a not-so-radical idea that would help solve this problem: treat government investments differently from other kinds of government spending through a separate capital budget. Expenditures in the capital budget would be marked as “investment in the future” along with an established set of criteria:

1) If experts agree that an expenditure will raise future tax revenue by increasing GDP, then it belongs in the capital budget. If it can pay for itself out of extra tax revenue in the future then it should be 100% on the capital budget.

2) Even if an expenditure will not raise future tax revenue, it can count as a capital expenditure if it is a one-time expenditure—that is, if it makes sense to have a surge in spending followed by a much lower maintenance level of spending in that area.

Government funding brought a network of interstates, expansion of ports, and rail lines that improved the flow of commerce throughout the United States. Funding of basic research allowed for the discovery of the Internet, GPS, and basic compounds that served as the foundation for important medical breakthroughs. Kimball and Smith’s policy proposal could be accompanied by test cases of how government contracts can be improved and streamlined, establish requirements for hiring the long-term unemployed, and develop a data-driven analysis that can better assess outcomes of government spending.

There is a more important reason why Kimball and Smith’s policy proposal matters: the reality that Congress has cut non-defense discretionary spending by $1.5 trillion over the past 10 years. Check out a chart from the Center on Budget and Policy Priorities:

Screen Shot 2014-02-07 at 1.05.17 PM

The concept of capital investment for public goods is an important discussion to have. Government plays an important role in the private sector economy to supply these basic investments. In the past decade, there has a been a major squeeze on these resources. This comes as America’s infrastructure receives dismal ratings and the capital investment necessary to overcome this shortfall is sizable. The reality is that, as a nation, we are spending much more on the present than the future.

The New York Times’ David Leonhardt, in his Kindle bookHere’s the Deal, probes this important topic:

“Does the country have the right balance of spending on the present and spending on the future? It’s hard to argue that the future is faring particularly well right now. Not only are we leaving future generations, in all likelihood, with large debts to pay. We also don’t seem to be bequeathing them the maximum means to pay those debts.”

And New York Times’ columnist David Brooks has echoed similar thoughts:

“The future has no lobby, so there are inexorable pressures favoring present consumption over future investment. The crucial point is not whether a dollar is spent publicly or privately; it’s whether it is spent on the present or future.”

Kimball and Smith’s proposal of the separate capital budget is directly aligned with both the perspectives of Leonhardt and Brooks (hardly ideological soulmates). Otherwise, these investments in future stock require more creativity. And that’s why the Obama Administration’s plans for ConnectED is such a huge deal. ConnectED will have funding commitments totaling nearly $3 billion in investments in the future. First, the Federal Communications Commission (FCC) announced a $2 billion commitment over the next two years to provide high-speed broadband Internet access to 15,000 schools and 20 million students. These efforts will connect 99 percent of students to high-speed Internet. Beyond the funding through the FCC, the Obama administration worked with major technology and telecommunications companies including Apple, AT&T, Autodesk, Microsoft, O’Reilly Media, Sprint, and Verizon have committed more than $750 million in direct funds and in-kind product contributions directly to classrooms.

These efforts are a welcome step in making broadband a public good, much in the same way that highways and runways are. We have a seriously flawed and short-sighted approach to funding basic programs that the government invested in throughout history. There are absolutely viable policy alternatives that can appease both Democrats and Republicans to make these efforts work.

Sharrows Do The Body Good

2 Apr

After roughly 6-years of dealing with WMATA metro delays, broken escalators, and sweating profusely in the dog days of DC summer, I became a bike commuter. Before I rode my self-propelled chariot to work, good days on WMATA saw a door-to-door commuting time from home to work was 25-30 minutes. On bad days, it was 35-40 minutes. Unfortunately, I only lived 3 miles from work. Biking to work just made sense. Of course, I first had to realize that you don’t need to be a super hero to commute by bicycle in a major metro area. After coming to grips with that, I shaved roughly 30-40 minutes off my total daily commute, got the heart rate up, and usually make it to the office in 10-12 minutes.

Just over one year later (and in much better shape), I can say that bike commuting has truly changed my life and how I approach each day. This has also fueled a fanatical cycling addiction, but that’s another story. Bike commuting has allowed me to be more focused, thoughtful, and productive at my job. It’s a helpful practice (daily exercise routines) for those of us who sometimes get distracted away from our daily job duties. I’m no modern medical miracle, researchers have been studying the link between physical activity and attention deficit since the 1970s. Clipping in for the morning commute and taking off is a zen-like experience for me to start the day. Continue reading