Originally posted at www.foxandhoundsdaily.com
Is a deregulated market a messy market? You bet. Just look at the airlines. They change flight schedules more often than Republicans change front-runners. It’s difficult to recall which airline is in bankruptcy this month.
But those are problems for the airlines to figure out. Airline deregulation in 1978 gave consumers a true benefit: Command of the market. We have a bounty of flights to choose from. At dramatically lower prices than before 1978.
I’m bringing this up because now in the city of Los Angeles, there’s a serious effort to go in the opposite direction, at least with trash haulers. The city may create a franchise arrangement, which essentially would create a regulated system out of a deregulated one.
Now, about 60 trash companies are free to contract with individual apartment complex owners, factories and commercial building operators and the like. (Residential trash hauling is done by the city.) But under the franchise system, 11 districts would be created and one hauler would be responsible for each district.
Proponents of the franchise system argue that the current arrangement is a messy marketplace in which different trash haulers drive past each other to various parts of the city to serve their individual customers. It’s a free-for-all, one said in an article in the Feb. 12 issue of the Los Angeles Business Journal. You never know who’s going to pick up trash in any given area.
Well, that’s for the trash companies to figure out. The benefit of our deregulated trash-hauling system is that the customers have command. Customers can shop for a new trash hauler if they don’t like the price or the job performance.
The real motive in creating the franchise system, of course, is to help labor unions. By creating 11 big zones, the city would kill off a lot of the small trash haulers and create 11 big companies – big companies that would be prime targets for union organizing efforts. No surprise that labor unions and a union-affiliated group are pushing this franchise plan.
And the city government would benefit. The city would wring greater fees out of the franchisees. What’s more, City Council members would get lobbied by the franchise holders and the wannabe franchise holders. There’d be more union members to funnel money to City Council members.
The customers – L.A.’s businesses, landlords and building owners – would lose under a franchise system. Prices will go up. Competition will go down. Trash haulers will become about as responsive as cable companies, which also operate under the protection of a franchise system.
If a franchise system is created, we’d be going backwards. Back to an inefficient, expensive system like the airlines used to have and the cable systems have today. To a system in which businesses must pay more while the city gets more money and favors.
The city of Los Angeles should trash this plan.
About the Author
Charles Crumpley is the Editor of the Los Angeles Business Journal