Posts Tagged ‘regulation’

What else would you expect in Philly?

January 31, 2016

Tim B. Lee has an interesting piece about the Philadelphia Parking Authority’s attempts to throttle Lyft and Uber (edited for continuity):

The PPA is a taxpayer-supported government agency, so you might have expected it to remain neutral. But according to records obtained by the Philadelphia Daily News, senior PPA officials actively strategized with taxi officials to preserve PPA’s authority over Uber and other ride-hailing companies and appears to have used taxpayer funds to lobby against Uber.

Well put, but the phrase “might have expected” suggests a curiously innocent view of government regulation — and Philadelphia. It’s not all bad: My sister tells me Parking Wars was terrific.

Regulating taxis

October 11, 2015

In Global Economy, our discussion of the pros and cons of regulation goes like this:

  • There’s often a legitimate rationale for regulation (eg, safety).
  • Real-world regulation often goes well beyond the rationale, typically because incumbents use it to protect themselves from competition (eg, Tesla, chickens, braiding hair).

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Electronic money in India

July 9, 2014

Here’s another one from Leo Mirani at Quartz. It seems e-money has failed to take hold in India, not for lack of need, and not for lack of suppliers. The bottleneck is a regulation that prohibits telecom companies from entering the business without bank partners. The irony is that e-money is largely a response to failure by the banking system to provide the services people need.

If you know more about this, please let me know, either by email or in the comments.

Narrow banking reconsidered

April 28, 2014

Here’s an idea that makes sense on its surface:  to stop bank runs, we should limit the activities of banks and make them safer — what you might call “narrow banking.” Makes sense, doesn’t it? Steve Cecchetti and Kim Schoenholtz argue the opposite in their new blog: If banks are too tightly regulated, runs will simply move to other financial institutions and markets. That’s what we saw in the recent financial crisis, where runs occurred in money market funds and the repo market.

Rajan gets fast start at India’s central bank

September 9, 2013

Distinguished academic economist Raghu Rajan took over last week as head of the Reserve Bank of India, the central bank. On his first day, the FT reports, he starting tearing down decades of red tape restricting competition among banks. The template comes from a 2008 report, most of which had been ignored till now. Initial steps include freedom for banks to open new branches (duh!) and easier entry by foreign banks. The rationale is to make banking services available to a broader cross-section of the population, which remains underserved by international standards.

The downside of fighting corruption

December 5, 2012

I just heard a novel analysis of India, whose economy seems to be slowing down.  The question is why. The suggested answer: an overly aggressive anti-corruption campaign.

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Shrink the banks?

November 6, 2012

Another one from the IGM Forum:

The US government should make further efforts to shrink the size of the country’s largest banks — such as by capping the size of their liabilities or penalizing large banks more heavily through taxes or other means — because the existing regulations do not require the biggest banks to internalize enough of the “too-big-to-fail” risks that they pose.

Does that sound right to you — or not?  The statement gets reasonably strong support from their panel of economists: 54% either agree or strongly agree; 35% are uncertain, have no opinion, or didn’t respond; and only 10% disagree.

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Bureaucracy in NYC

September 26, 2012

One of the themes of the Global Economy course is that you need balance on regulation:  enough to keep things honest, but not so much that you get in the way of legitimate business. The latter — red tape or bureaucracy — is a good source of stories. Like the Indian restaurant owner who needs approval from three different police stations.  Or who must post a sign asking neighbors if they would like to complain.

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Housing stimulus in the UK

July 7, 2012

The executive summary of the first part of our Global Economy course goes like this:

  • Prosperous countries are prosperous because they’re more productive:  they generate more output from the same inputs.
  • Productivity comes from institutions:  the thousands of things that make it easier or harder to run a productive business.

The second bullet is a wonderful opportunity to share stories about bad institutions:  corruption, fraud, red tape, etc.

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Form vs substance in US financial regulation

April 17, 2012

A post by Kim Schoenholtz

Lawyers are accustomed to distinguishing entities by their legal form — this is a bank, that’s an insurer, over there is an investment fund.  Economists are used to distinguishing by function:  these are all financial intermediaries.  If we have to regulate economic activity, it pays to regulate by function, rather than form. Otherwise, entities simply change their form and avoid the regulation.

In practice, lawyers usually write and enforce regulation, not economists.  The Dodd-Frank reform act is no exception.  Its aims are lofty.  Limit systemic risk.  End too big to fail.  Prevent financial crises.  Protect taxpayers.  Where Dodd-Frank falls short of these lofty goals, often it’s due to the form vs. function problem.  As a result, some intermediaries can still shop for their preferred regulator and bypass Dodd-Frank rules limiting systemic risk.  For more on this, see my Bloomberg op-ed with Tom Cooley.