Tag Archives: business

Spare Room Hotel

The virtual hotel Airbnb is a website that lists rooms for rent all over the world. You can rent out your room to a stranger for a couple nights to make some cash. If you like meeting new people and you don’t have personal space issues, you can find a similar setup during your own travels.

However, the state of New York Attorney General is trying to shut down short-term room rentals because some are upset at the lost hotel tax revenue which cannot be collected from these low-cost and low-ammenity “hotel rooms.” But the city of Portland, Oregon is taking a different approach. Rather than strike down the movement to save the status quo, they would set up a framework to support the new “shared economy,” essentially creating a path to legality for the creative businesses that already exist.

The Oregonian reports that the city is looking to establish appropriate taxes and permitting requirements to allow homeowner occupied residences to operate as part-time hotels on the real market rather than a black market.

Most of the angst in New York and elsewhere seems to be with the short-term rental of apartments rather than single family homes, or with those who rent rooms in houses where they do not themselves live. Rules against subletting are fairly common for any kind of rental and homeowners associations and property management companies frequently decide for themselves that they don’t want to participate in this sort of thing.

But any homeowner should have the right to invite whomever he wishes into his own home, even to stay awhile – and why not charge those who are willing to pay? Yes, I know we have the neighbors to consider, so I’m not about to suppose a regulatory desert. But New York is going about it all wrong. Their opposition to sharing is driving up costs and challenging innovation.

Portland, with it’s increasing love for really tiny living spaces, has shown that it also has an affinity for really tiny hotels, (and really tiny food carts). If your spare room is just collecting dust, start collecting dollars instead.

Fearless Flyby

Not long ago, the Portland Development Commission threw a big bag of money in the air and hit Trader Joe’s in the back of the head. Now the once-sought-after national grocer has laid that bag of ill-invested coins on a vacant lot in Northeast Portland and has decided to walk away from the fuss and the negative vibe. Hopefully without a bump on the head.

It’s not as if the bag of money wasn’t big enough. As mentioned in an earlier post, the PDC wanted to roll a few million dollars in front of Trader Joe’s to tempt them with the empty corner of NE Martin Luther King Blvd. and Alberta Street – hoping the lot could be paved with specialty grocer gold. At the time, the potential tenant remained a “mystery.”  A cloak and dagger scheme at best.

The neighborhood spoke out and said they didn’t want the City to throw their money away.

And Trader Joe’s chose to live in the light, and this week said in a statement that, “if a neighborhood does not want a Trader Joe’s, we understand, and we won’t open the store in question.” They are wisely looking at the long-term effects of their investments.

You can’t give away something that no one wants. But we all love Trader Joe’s, which goes to show that you can’t even give away something everyone does want, if you’re going to throw big bags of someone else’s money around. It might bruise us all.

Now we can buy our chocolate covered pretzels.

Mystery Portland Grocery Store

The city of Portland might sell a long-vacant parcel of land on the corner of NE Martin Luther King Blvd. and Alberta Street way below cost in order to attract a grocery store. What amounts to a $2 million subsidy is so shady and ill-advised that the proposed store has asked not to be identified until the deal has closed. It’s hard to run a successful business, but who wouldn’t reach out for some free cash? They should be embarrassed. And it’s easier to criticize the deal before we know the store involved, since no doubt that store is dear to our food-loving Portland hearts. 

The land is said to be worth $2 or $3 million dollars, and has apparently been for sale for some time but no one wants it at that price. The neighborhood is considered a risky investment with a history of racial tensions, but is often targeted for bigger and better things. The land might sell for only half a million.

The Portland Development Commission really, really wants a grocery store to go in here, so they’re willing to take a loss to make it happen. But as pointed out by the Oregonian there are plenty of other groceries stores nearby, so there is low demand for another. The development only pencils out with a large subsidy. This means the land and the potential opportunity aren’t worth very much, so semi-interested tenants are looking the other way until a big enough bag of money hits them in the back of the head.

In his book Economics In One Lesson, Henry Hazlitt outlines situations very similar to this, and warns against this kind of government intervention as never ending with a net positive outcome. This northeast Portland property is a great example to illustrate his point. The land had already been purchased with taxpayer money, so the city as a whole has entrusted their money to the City in the hope that some good will come out of it. But seeing as the money doesn’t belong to them, it doesn’t surprise me that the PDC is reckless with the investment of other people’s money. They have their minds on high ideals such as helping the public, saving a blighted neighborhood, and even bringing in a much desired tenant such as Trader Joe’s (or whomever this mystery grocery store turns out to be). They might think, “It’s what the people want – right? We’ll making it happen. It’s worth the cost.”

But really, Portland would be giving away a store. They would take taxpayer money and give it to a private company to spend on a business in a location that no one has been willing to build. Then the profits go to that business – not the taxpayers. That is $2 million dollars that could have been spent on something else. Anything else. Portlanders are exactly that much poorer as a result. If the money has to be spent on something, it could be spent on something that is actually worth $2 million dollars. If taxpayers still had the money in our pockets, having not been taxed, we would have exactly that much more money in our pocket when we shop at this mystery store. We could spend it on a bag of chocolate covered pretzels. Now we can’t and there will be fewer bags of chocolate covered pretzels sold.

This location is certainly not the neighborhood most deserving of a new grocery store, if one must be given away. So east Portland and the often discussed food desert lose out. Nearby existing grocery stores will lose some business. The people who live down the street will love it, but the entire city will take a loss on a bad investment, but especially those who live nowhere near the proposed sale. Another grocery store might have been interested at a lower sale price, but as explained by someone from Whole Foods as to why they were not interested in the food desert, “Selected sites must model profitably for us since we cannot fulfill our company’s overall mission without the profits our stores provide.”

Sure it’s just a couple dollars from me, and a couple dollars from you, and a couple dollars from everyone. But add this to the other couple dollars they’ll take for the next project. And the others. Is this really what you want to spend your money on? I doubt a new Whole Foods is about to appear here, but I’d love for a Trader Joe’s to be built at this location. It’s exactly one mile closer to my home than the one I usually visit and is bound to have better parking.

But even if the deal is good for some people as Henry Hazlitt says, we must look “not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

Technology is Taxing. So is Driving.

There’s a great new technology in auto insurance where drivers can pay per mile, which rewards lower mileage driving with lower insurance costs, and is surely less boring than insurance-as-usual. Using a device that plugs into the car, data is sent  out to one of these entrepreneurial insurance companies, such as Metromile, to track the actual quantity of miles driven by the insured car, rewarding your good work. In paying for only what is used, infrequent drivers can save some serious money and avoid paying what the “average” user “like” them pays. But you’re better than average, right? Sounds like a great business model – use technology to help people save money on a product they use infrequently but must pay for anyway!

We’re giving it a test drive this month to see how many miles we actually drive. We’ll compare the cost to our current traditional auto insurance and I expect to save a lot. The small device plugs into a port I didn’t even know existed, located below the steering column. I now know I’m averaging about 8 miles a day, having only driven over 20 miles on 6 separate occasions.

But hey, that’s a great idea and so the government is ready to reach between your legs and plug one of these into your car to generate tax revenue! Unsatisfied with the nation’s growing trend towards driving fewer miles (which means less gas purchased and fewer tax dollars paid), the government is looking for ways to make those who pay less – pay more.

I’d like to think most people try to consider the environment before they make choices (some think about it more than others, but it helps when more green equals more $green$). Big Government certainly thinks about the environment and tells us to play nice and drive less. But penalizing drivers who choose to drive high-mileage hybrids and electric cars (and who pay fewer or no gas taxes) with a new kind of tax that removes all the benefits by collecting taxes on a per mile basis is not going to do a lot for promoting gas efficient cars and economical use of resources. Recently the Obama administration mandated new regulations in fuel efficiency “with the goal of slashing greenhouse gas emissions and fuel consumption.” They even said that “families will save money.” Save the world and save money! Sounds nice, but we knew it was too good to be true. Start riding your bike before they tax the bike lane.

Paying for what you use is better than paying for the average of what everyone uses, if you’re going to have to fork over your first fruits anyway. So much for trying to save money. We might as well stay home and not go anywhere. Until recently we didn’t have a car, so I wouldn’t have cared. I won’t be surprised if they charge a fee, penalty, or “tax” for not participating.

Eminent Domain and The Keystone Pipeline

Get ready for the next great land grab! You might be surprised at the beneficiary and the accomplice.

The beneficiary is none other than Canada, our unassuming large friend to the north.  While not actually Canada itself,  the Canadian company TransCanada is looking to put up a nice tidy oil pipeline through the heartland of the United States. Based in Alberta, this corporation wants to build the next leg of the Keystone pipeline, extending thousands of miles south of the border to Texas. Once President Obama signs the appropriate paperwork, all they have to do is acquire the land and start digging.

But who does the land belong to, and how does the Government acquire such land? The answer is eminent domain. How does a foreign corporation acquire land that absolutely does not belong to it? It uses the American Government to manipulate the meaning of the Constitution and Natural Law, so the answer is still eminent domain.

Imagine a scenario where the humble Canadian businessman knocks on your door. He seems like a nice guy, but alongside him is his hired muscle the American Government. The frowning accomplice offers you a sum for which he thinks your property is worth, lettuce garden and all. He demands to buy your land and hand it over to his friend the Canadian businessman because there is some money to be made for everyone. Do you feel resistant? It’s for your own good, Citizen. The common good.

There may be valid arguments for eminent domain, as the practice is an inherent attribute of state sovereignty. Whether the state is Oregon, Ohio, Oklahoma, or the Federal Government, they all lay some claim to this privilege. However, Canada should not be in a position to meddle in the middle of Oklahoma.

The Constitution and judicial precedent lay the groundwork for ways in which the government may take the land of a private citizen; providing there is just compensation, and that the land be used for the common good. Over the years, the Fifth Amendment and the common good has become such a broadly interpreted position that it is now good enough that one person simply wants the land because the grass is greener there and everyone should be able to enjoy green grass. They do not recognize that if the owner does not want to sell, no matter the end use, eminent domain simply is theft by force.

With abuses such as this proposed land grab in their pocket, the interpretive ponderings of the American Government toward the use of eminent domain may grow deeper and wider than previously imagined. The Government can take your property away from you and give it to a corporation in another country. We’re not talking about building an irrigation ditch so local farmers have access to nearby river water. We’re not talking about tearing down dangerous slums to build a tree-filled city park. We’re not even talking about building a strip mall to liven up the neighborhood to attract more consumers with fat wallets. This is a situation where a company in Canada can lay a pipe through your lettuce garden to make it easier to move oil.

When a government feels entitled to take what does not belong to it, it can succeed through politics, strong marketing, and fear. We’ve heard about “the public good.” Now we’re hearing cries for “critical energy security,” and “strengthening the American economy.” Other excuses include the claim that someone else will build it if we don’t, and that we’re being as careful as anyone possibly can be, and that the construction of the pipeline is a job creating extravaganza! Who could be against that?

This is not to say foreign individuals or companies should not buy property in this country, but only that they should not benefit from the use of eminent domain. A private company should negotiate with individual land owners to purchase the properties with free will exercised on both sides.

There is plenty of pipe already in the ground. It carries oil to every conceivable corner of the country. This particular pipe is enjoying fifteen minutes of fame as it violates our natural rights for the sake of the common good. Sure hope it doesn’t leak.

USPS: Postal Delivery Fail

This week the United States Postal Service (USPS) announced that they will discontinue most Saturday mail delivery in an effort to save their sinking ship. They will continue to deliver packages, however, and keep the early afternoon oil burning at your local post office six days a week. Some fans are overly distraught at the prospects of receiving less junk mail.

Though the USPS is not fully a government organization, it is the Federal Government’s  fault that they can no longer deliver the mail “rain or shine,” with a fixed commitment to deliver to every address, every day. With well over half a million workers, only the Federal Government itself and Walmart employ more people. Thousands of post office branches process billions of pieces of mail every day. They are really, really big and they don’t do their job very well.

The organization is billions of dollars behind budget, whereas competitors UPS and FedEx make healthy profits. But competitors are limited, as first class mail is protected by legal monopoly and private companies are not allowed to compete. Essentially, they are forced to charge higher prices to deliver the same package, in the same amount of time, to your door rather than your mailbox. Luckily they do a pretty good job.

Major problems with the government run system include a requirement to deliver to every address six days a week for the same cost, the pre-funding of health care benefits for employees, and the ability of Congress to change rates. What does Congress know about the cost to ship a package from Portland to Oregon City? And shouldn’t it be cheaper than Portland to New York City?

How can we save the USPS? With this be the downfall of America?

If the USPS is America, we have a problem. Who cares if they collapse? Cut loose the binds that tie the competition and let the moaning beast sink. There are plenty of capable organizations who will successfully compete to deliver the mail if the legal obstacles are removed. And those obstacles must be removed or we really do have a problem. If the Postal Service can figure out a way to come up breathing without tax money or legal training wheels, good for them – they can compete with equal opportunity for my business.

But sometimes failure just needs to fail. 

Congress is understandably outraged at this insubordination. How dare they act without approval! Don’t they know prudent trimming of withered branches is frowned upon?