Free Parking at Schools is a Regressive Handout to Wealthy Families

Before anyone goes raising property taxes, the lowest hanging fruit for raising revenue is parking fees for students and school employees. And yet, Saucon Valley School District is mulling the removal of parking fees.

Some of the Board members seem not to understand how this works. Here’s Lanita Lum:

It irks Saucon Valley School Director Lanita Lum that students must pay $20 to park in the high school parking lot while everyone else gets to park for free…

“It may seem like peanuts, $20 for a kid to pay for a parking pass, but they don’t charge anybody else,” Lum said. “I know it’s a little issue but I think it makes a huge statement.”

And here’s Susan Baxter:

While Baxter said she doesn’t have any strong feelings about the fundraising, she agrees students should be able to park for free. The board considered the parking fee along with a slew of other revenue-generating options, such as pay-to-play. Baxter opposed the fee then and still does today.

“We need a parking lot and it’s not because the students are driving to school that we need a parking lot,” Baxter said.

This is bizarre. Why else would you need such a big parking lot if students weren’t driving to school? Free parking is a strong incentive to drive to school, and fewer students would do it if it was more expensive.

Here’s the situation: the school district owns a limited amount of land. The physical school building takes up some of the land. Athletic fields take up some of the land. And parking takes up some of the land. The school building produces value, and the athletic fields produce value, but the parking lots consume value, producing nothing. It would be much better to shrink the amount of space devoted to parking, and replace it with uses that produce value for the school district and the taxpayers, such as more classroom space.

What Lanita Lum and Susan Baxter want to do is drastically increase the demand for parking by taking away pricing. If you take away the price, some kids who live in nearby neighborhoods will decide to drive instead of walk. Kids who could be taking the bus will drive instead. If you charge teachers and adminstrators to park, some will respond by carpooling or taking the bus.

Ms. Lum has a good point that it’s unfair to charge students $20 for parking if everyone else is parking for free, but it’s unfair because everyone else should be paying to park too.

The real “huge statement” the current policy makes, and what the auction shows, is that parking is valuable and it is expensive. Student drivers are subsidizing free parking for school district employees. If school district employees also paid to park, the money could be spent on replacing lost revenue from Tom Corbett’s budget cuts or reducing the fee for students.

The “huge statement” Ms. Lum and Ms. Baxter are making in their crusade to introduce a a commons problem in the school parking lot is that students who can’t afford a car ought subsidize wealthier students who can.

Cars are expensive. Lots of high school students are not wealthy enough to afford a car, so they walk or take the bus to school. They do not benefit when the school districts subsidizes free parking with higher property taxes. If wealthier families and school district employees pay for parking, everyone else can pay lower property taxes. If parking is free, property taxes must be higher to offset the cost.

Removing the parking fee for students who drive to school would be a straightforward regressive subsidy from poor families to wealthy families.

What’s the Case for Government Intervention in Easton’s Barber Market?

From Gail Scudder at Easton Patch, a useful demonstration of how rent-seeking works:

Urena is part of a small wave of barbershops that have all opened along Northampton Street in the last year. In addition to Legacy Hall, there’s Flow Factory in the 600 block, and R&R Barbershop, which opened under new management on the 100 block.

Their arrival has gotten a mixed reaction from the city’s existing community of barbers…

And Juan Mariano — whose Brooklyn Barber Shop is on the same block as Legacy Hall — is concerned about the increase of shops nearby, saying he doesn’t understand why city officials allow another barber shop so close to his.

Others were more accommodating, like barber James Birdsong, who says there’s enough business in the city for everyone…

Although Birdsong says he’s not concerned about the arrival of new barbers, he’s concerned that state officials in Harrisburg aren’t regulating the industry enough to keep it at professional levels.

If you own a barbershop, it’s definitely a bad thing to have another barbershop open on your block. Competition squeezes profits, pushing prices closer to marginal costs. You’re going to make less money.

But what’s the case for government intervention here? It’s hard to see how this is a bad deal for haircut consumers, or taxpayers, or residents. For all these people, it is a very good thing. It means more choices and lower prices. Free markets don’t always produce socially optimal results, but this is precisely the sort of thing they’re good at.

How Much Gas is There?

Matthew Kahn has a great post on the big NYT natural gas story:

Asymmetric information and fundamental uncertainty raise interesting issues in economics. Suppose that a natural gas company owns 10 plots of adjacent land and reports the “provable” quantity of natural gas that it can access at one of the plots. It is tempting to multiply this by 10 as optimists extrapolate that all of the plots are of equal quality. But, how do you know if the company is “cherry picking” and simply reporting the truth about its best plot (and hoping you will extrapolate) or is simply lying even about that plot? Do the executives of the firm have the right incentives to tell the truth? Their company’s stock price increases with announcements of “new proven reserves”. The NY Times is very concerned about this new case of winner’s curse. New accounting rules make it easier for gas companies to overstate their reserves and the NY Times is playing a useful role in spreading information about this point. Natural gas is the new thing as it offers domestic energy security and lower GHG emissions than fossil fuels. But, how much of this resource do we really have?

Radio Caroline and File Sharing

LVCI has a great post on pre-Internet music piracy. The pirate analogy feels more apt when there’s an actual boat involved.

The big change that’s occurred since Radio Caroline is that the marginal cost of reproducing music recordings has fallen to $0. I can send you a .zip file of an album for free and it doesn’t cost anything to “make” it. It’s also a non-rival good. If I have a physical LP, you can’t have the same LP. There’s a limited quantity. But I don’t lose an mp3 when I send it to you.

The recording industry says this means we need stronger and stronger intellectual property laws, but that doesn’t make sense. The goal of intellectual property is to grant someone temporary monopoly rents on their work, in areas where we think people wouldn’t try to invent without a financial incentive. But more music is being created than ever. It’s a veritable golden age for music listeners. Does anyone really think people won’t form bands if they can’t make a lot of money?

The Future is Job Density

Christopher Leinberger says firms are moving out of suburban office parks back into walkable urban cores to attract Millenials:

In spite of the U.S. Census data for the past decade showing continued job de-centralization, there is now much anecdotal evidence for the just the opposite…

The reason in nearly every case? The millennial generation is demanding it. Highly-educated young workers, the life’s blood of many industries, have been flocking to center cities in recent years. Trying to recruit this talent to Stamford, Conn., or Hoffman Estates, Ill. is exceedingly difficult. They are voting with their feet for a hip, high-density walkable lifestyle and a reverse commute to the ‘burbs is not in the cards for most of them.

The companies moved out to the suburbs to attract their baby boomer parents, raising their kids in suburban isolation. The millenials are doing what many generations have done in the past; they have rejected how they were raised. This once again shows that building a high quality residential base will lead to the attraction of jobs…only this time it is back to the future.

I think this needs to be read in the context of mounting evidence that rents will continue rising, increasing demand for multifamily housing construction in the second half of the year. The correct policy response from the core cities is to get ahead of these trends by relaxing anti-density zoning regulations in the core business districts.

The Street Food Strategy for Latino Integration

In today’s Patch column, I make the case for integration through relaxed food cart regulations:

The best integration strategy I can think of would be for cities to relax their food cart regulations, and offer financial incentives to street vendors or food trucks. Bethlehem’s food cart regulations are much too restrictive and make it unnecessarily expensive to start a food cart business.

Allentown in particular, which has spent a lot of money to attract trendy restaurants downtown, might consider how many taco trucks they could get for every successful Sangria. If you got enough vendors, you could even organize a Latin American Food Festival sometime during the summer months. I could imagine an annual block party with street vendors cooking cuisines from all over Latin America becoming a big hit.

These kinds of businesses cost a lot less in overhead than a traditional restaurant, and the profit margin is lower, so it’s ideal for people who have cooking skills, but not much formal education or access to the normal credit channels.

I wasn’t blogging during the Bethlehem Hot Dog Man debate, but if I was, I would’ve been saying that capping street food vendor licenses at just 5 licenses and requiring city council to approve all of them is a gross infringement on economic liberty too great for even a dirty hippie like me to countenance. If someone wants to sell food in exchance for money, and other people want to buy it, there is no problem there. No reason for city council to intervene.

The reason the regulation ended up as strict as it is – so strict that the original Hot Dog Man said it was no longer profitable for him to do business – is because city council caved to rent-seeking by nearby incumbent businesses (the Funhouse was particularly vocal) who didn’t want any competition. Now, the downtown businesses are certainly our friends, and of course we want to see them do well. But it’s just not city council’s job to protect incumbent businesses from competition by new businesses. The sensible response would’ve been to ignore the complaints, not pass a law regulating the guy out of business.

Over in Allentown, Michael Donovan told me that the city has some very old strict laws governing street food. That’s needlessly handicapping business activity, and preventing the city from capitalizing on what is potentially a key asset.

Response to Gerard on Parking in Easton

Jonathan Gerard has a blog post up at Easton Patch suggesting a number of downtown parking solutions. There are a number of good ideas, especially for making people feel better about paying parking tickets, but he stops short of endorsing the most obvious conclusion of some of his own ideas – that the key to getting the right number of vacancies per block is getting the pricing right.

Items 3 and 4 indicate that Mr. Gerard clearly understands the relationship between parking prices and demand. He says suspending meter fees during a specific time will encourage more business (low price creates higher demand), and auctioning off one space per block per month will raise lots of money (willingness to pay is the fairest way to allocate a scarce resource). The assumption is that a parking space near the city core is a valuable thing, and indeed it is. But why do this on a monthly basis, and for all day? Surely the winner’s car won’t be sitting in the spot all day every day for that month.

Electronic meters and sensors would allow you to run this “auction” in real time, all day every day. Other than meter technology, there’s no reason that meter prices should remain the same all day. They can and should fluctuate in response to demand. During periods of peak demand, prices would rise. During periods of low demand, prices would fall. That’s how the new system in San Francisco will work.

Probably variable pricing would result in much more revenue being collected from parking meters (unpopular!) so that’s why I like Mr. Gerard’s idea to donate the proceeds to a good cause. Personally I think this would be a good way to fund the Ambassadors and Easton Main Street Initiative. This would probably be more politically sustainable since people would see their parking money directly funding cleaner streets, facade improvements, business loans, etc.