Would someone explain to me…

Years ago, when I was first teaching environmental policy, my students correctly pointed out that I was serving a neoclassical theory of it with externalities, Pigovian taxes, and all that good stuff, and they wanted to know the “radical” theory. Fair enough; I asked my most lefty colleagues to tell me the Marxist theory of environment.  I got:

  • “I don’t know but there are people who do. I don’t actually know who they are. “
  • “After the revolution, pollution will be impossible because the people will own the means of production.”
  • “[what was just coming out about] environmental disaster in the Soviet orbit is irrelevant, because that’s not real socialism.  You should look at China.”

Somehow this didn’t make me feel ready for class.  I tried an easier question: “After the revolution, what should the fare on the subway be, and why?”  I didn’t get much further with that one; still waiting for it.

This all flashed back to me when I read Stephen Bainbridge’s very elliptical response to Keith’s DMV story.  OK, I’ve got the Kool-Aid poured out: when Keith and I show up at the Libertarian temple ready to learn, what will the priests tell us about the DMV?

  • Automobiles and drivers should not require licensing at all. Anyone who can afford a car has the right to drive it on the public ways [are there public ways in Libertaria?] and if he hurts someone, it’s a matter for litigation. And no job-destroying regulations about speed limits and working taillights, either.
  • Licenses (both kinds) should be provided by private firms free of job-destroying regulation, competing for business.  “Our road test is so easy a blind cave man could pass it!”  “Our patented license plate font is guaranteed illegible in broad daylight!” “With our operators license, you get a free portfolio of head shots suitable for sending to casting directors!”
  • The antidote to regulatory abuse at the DMV, as everywhere, is to defund the agency so its service will be worse.

I’m sort of teasing, but it’s a serious question.

Author: Michael O'Hare

Professor of Public Policy at the Goldman School of Public Policy, University of California, Berkeley, Michael O'Hare was raised in New York City and trained at Harvard as an architect and structural engineer. Diverted from an honest career designing buildings by the offer of a job in which he could think about anything he wanted to and spend his time with very smart and curious young people, he fell among economists and such like, and continues to benefit from their generosity with on-the-job social science training. He has followed the process and principles of design into "nonphysical environments" such as production processes in organizations, regulation, and information management and published a variety of research in environmental policy, government policy towards the arts, and management, with special interests in energy, facility siting, information and perceptions in public choice and work environments, and policy design. His current research is focused on transportation biofuels and their effects on global land use, food security, and international trade; regulatory policy in the face of scientific uncertainty; and, after a three-decade hiatus, on NIMBY conflicts afflicting high speed rail right-of-way and nuclear waste disposal sites. He is also a regular writer on pedagogy, especially teaching in professional education, and co-edited the "Curriculum and Case Notes" section of the Journal of Policy Analysis and Management. Between faculty appointments at the MIT Department of Urban Studies and Planning and the John F. Kennedy School of Government at Harvard, he was director of policy analysis at the Massachusetts Executive Office of Environmental Affairs. He has had visiting appointments at Università Bocconi in Milan and the National University of Singapore and teaches regularly in the Goldman School's executive (mid-career) programs. At GSPP, O'Hare has taught a studio course in Program and Policy Design, Arts and Cultural Policy, Public Management, the pedagogy course for graduate student instructors, Quantitative Methods, Environmental Policy, and the introduction to public policy for its undergraduate minor, which he supervises. Generally, he considers himself the school's resident expert in any subject in which there is no such thing as real expertise (a recent project concerned the governance and design of California county fairs), but is secure in the distinction of being the only faculty member with a metal lathe in his basement and a 4×5 Ebony view camera. At the moment, he would rather be making something with his hands than writing this blurb.

20 thoughts on “Would someone explain to me…”

  1. Private companies will own the roads and decide who can or cannot access them, based on drivers' licensure by one or more firms they determine to be credible. Much like the FAA is unnecessary because airlines don't wish to lose their capital investments in airplanes or their customers to fear, both the road and licensure firms will adhere to the level of safety that consumers demand.

    Or something like that!

  2. Automobiles and drivers should not require licensing at all. Anyone who can afford a car has the right to drive it on the public ways…

    Funny you should mention that…

    When I read this story in my newspaper:

    A bus crashed with a truck in southern Egypt on Sunday killing eight tourists from the United States and injuring another 21 people, Egypt's news agency Al Ahram reported.

    The road accident occurred when the bus was taking 37 U.S. tourists from Aswan to a historic site of Abu Simbel. … Motor vehicle accidents are a major cause of concern in Egypt, where enforcement of traffic rules is lax and roads are often in disrepair. A group of French tourists suffered injuries along the same two-lane southern roadway earlier this year.

    I jotted in the paper's margin:

    Perhaps we should deregulate driving laws. Oh wait….

  3. Libertarians seem to me quite like five year olds. They just don't want to have to go to the DMV. They aren't actually prepared to help make something different, yet still nutritious, for dinner. They just don't want to eat what's on the table.

    Back to the question of any Marxist theory of environment, I've generally had the sense that this is one of the places where it's easiest to see that classical Marxist thought is essentially a flipped version of classical liberal capitalist thought, at least in that it starts with (and fails to transcend) the same essentiallly instrumentalist assumptions about man's relationship to nature as does the capitalism of the industrial revolution. It's quite clear now that the actual environmental practices of most regimes that claim Marx as an inspiration have been still worse than those of most capitalist countries, but maybe not a whole lot different than totalitarian regimes on the right.

    I would be interested to know if there's been any solid work done looking at, for example, Cuba or the Marxist parts of the Indian subcontinent in terms of their actual environmental policy.

  4. Not being a Capital L libertarian, I freely concede we need some sort of regulation of driving rights. But why must it be done so badly? Options: (1) Outsource it to somebody who does customer service well. An Apple not a Dell of the service world. (2) Automate so more can be done online. (3) Pay for performance. Fire for bad performance. (4) If you say having an appointment gets you a fast line, make sure there is a fast line. (5) It's a customer service agency. Try teaching people to provide the damned service efficiently.

  5. Steve Bainbridge,

    We've had a number of commenters on these threads, including me, who report that transactions with the DMV in their home states (I live in decidedly non-libertarian and patronage-infested MA) have been quite easy, and often handled completley online.

    Given the differences, it doesn't seem to me that it makes much sense to say, "it's all because the government does it." Some state governments do it well, others badly. Shouldn't the discussion be on why this is, rather than more anti-bureaucracy ranting?

  6. The recent furloughs in California may also contribute to the horrible customer service experience.

    No funds there to keep the workers doing their jobs, no funds to modernize either.

  7. But why must it be done so badly? Options: (1) Outsource it to somebody who does customer service well. An Apple not a Dell of the service world. (2) Automate so more can be done online. (3) Pay for performance. Fire for bad performance. (4) If you say having an appointment gets you a fast line, make sure there is a fast line. (5) It’s a customer service agency. Try teaching people to provide the damned service efficiently.

    Wow — I can easily think of at least twenty or thirty private corporations for which this same critique is at least as applicable (if not more applicable — and some of them aren't even airlines or banks!) as it is for the DMV — and I live in California like you, Professor B.

    As to (1): nobody — not even Apple — does customer service well. They only do it slightly better than someone else. (2) In my experience, government organizations allow much more to be done online than private corporations do. (3) Define "performance" — and then show me a private corporation which (a) defines it using anything like the words "customer" or "service" and (b) actually fires people for providing poor customer service. (4) First, I've been to the California DMV multiple times, with appointments, at various locations, and every time there has actually been a fast line. It is also interesting that you bring this up in that I don't know a single private corporation that even offers the option. (5) I have never in my life had as frustrating, stressful, or maddeningly inefficient dealings with any government office as I have had with United Airlines, Delta Airlines, Bank of America, DirecTV, USAA, SWB, or Dell. If they don't think it is worthwhile to teach efficient service, why do you expect it from anyone?

    Libertarians — big or small "L" — have a serious selective perception problem. No matter how many times they get worse service from private corporations, they'll always bitch and moan about the DMV — and usually just mention the DMV. Well, sometimes the Post Office, but not so much lately. If there are any others, they're usually private corporations which folks think are governmental but are really private corporations (like many utilities). Geez . . . what is it that makes government — on the whole — so much more efficient (and customer friendly) than profit-seeking corporations?

  8. I go back and forth on whether I count as a Big L Libertarian; I think right now I'm in a "no, I don't" phase. But I think the answer a Libertarian-who-accepts-the-need-to-have-the-DMV would give is, more or less, that DMV's are by their nature going to be sucky because they're government-run bureaucracies; and there's no way to fix this; but why in god's name would we want to set up more things like the DMV?

    As Bernard Yomtov says, though, it's clearly the case that government offices can be run better or worse; as a small-l libertarian I tend to think that it's as a general rule preferable to have fewer things routed through the government, but also to exert pressure to make sure that what the government does do is done non-horribly.

    Of course, I also have the (apparently weird?) experience of basically never having had a bad experience with private-sector customer service in the States. Basically every time I've needed to call someone's customer service they've been friendly and efficient and usually gotten me more than I was really supposed to be entitled to.

  9. (1) Outsource it to somebody who does customer service well. An Apple not a Dell of the service world.

    A private company's incentives do not line up any better than the government's. For Apple, incompetence at the customer-service desk makes them lost business. For the hypothetical private-DMV-service-contractor, that's not at all true. The number of customers and transactions is almost perfectly inelastic (modulo Keith-like errors that bring people back in five times). Anything the contractor could possibly do wrong is an externality: long lines? No effect on profits. Lots of bad drivers slip through? No effect on profits. Lots of deserving drivers are kept off the road? No effect on profits.

    It's an invitation for the contractor to lower service to the absolute barrel-scraping minimum that prevents them from getting dropped. (Add some inertia, noise, minor corruption, or regulatory capture, and service will go even lower than that.)

    The only thing that will keep the subcontractor in line is … well, hypothetically there's a wise and benevolent bureaucrat who wrote and monitors the contract and its performance metrics, which happen to be the Magic Ur-Performance Metric That Gives The Same Results As Market Incentives. I think there's a conservation law in there somewhere—if you've found a person smart enough to bid out and monitor a DMV-operator contract, you might as well just put that person in charge of the DMV.

  10. Here in Virginia, there are DMV's (state-run) and DMVExpress offices (run by private firms and counties), paid by the state per transaction.

    The DMVExpress is effectively a way of outsourcing, and it has in my experience worked well.

  11. Following up on SamChevre's comment, it occurs that the solution I'd offer is a form of privatization. Everyone has pointed out, correctly, that if you outsource the entire DMV operation to a private contractor you don't gain anything. But if you make it possible for multiple providers to open DMV outlets they're now competing with each other to attract customers–so you pass laws saying what requirements and tests people have to pass to get a license, or whatever, and then let private DMVs actually do the testing and licensing. I'd incline to allow them to charge whatever they wanted, but you could also fix a price and they'd be competing on quality to attract customers–there is a serious race to the bottom that way, though.

    For that matter, we sort of have this going in California. For my license I went in to the DMV and it was really annoying. But when I needed to transfer registration on a car, I was really tired and stressed out, and wound up finding a third-party service to do it for me. I went in, was immediately seated in a comfortable chair, had the proprietor walk me through the paperwork in about fifteen minutes, took the car to get a smog check across the street, and left. He called me back a day later and gave me my plates. I think I wound up paying him a couple hundred over and above what CA would have charged, but totally worth it to avoid what Mr Humphreys describes.

  12. I also have the (apparently weird?) experience of basically never having had a bad experience with private-sector customer service in the States. Basically every time I’ve needed to call someone’s customer service they’ve been friendly and efficient and usually gotten me more than I was really supposed to be entitled to.

    Good lord above, this sounds like heaven. At some point, I think I'd buy a crappy product (Droid?) if they gave great customer service — just so that I could know what it's like to get great customer service.

    DMV’s are by their nature going to be sucky because they’re government-run bureaucracies; and there’s no way to fix this; but why in god’s name would we want to set up more things like the DMV?

    Well, no. They're going to be sucky because by their very nature they're a hassle, not because they're government run. While some specific people may have a pleasant experience at the DMV — myself included, I've got to say — the fact is that there is no way to make it across the board enjoyable, for a private or public entity. People dread it, they have to take off from work, they have to wait, they have their picture taken (lots of people really hate that), etc., etc. It's going to have a bad rep no matter who's running it. But then again, Dell isn't government run, and it's got much more suck than the DMV, which at least I can leave secure in the knowledge that I won't have to return for a very specific length of time. Why in god's name would we want to set up more things like Dell?

  13. In all this I have yet to hear about the impact of actual profit, rather than the profit motive. At the very least, we're talking about 5-10% on top of actual costs. At the most, we're talking about the 100% or more markup Jadagul mentions. And of course in practice there will be serious barrier to entry, so one can expect the private concerns to become effective monopolies once they've been established.

  14. I think you should get your long-awaited answer on socialist transportation policy!

    Frank Zeidler, the Socialist mayor of Milwaukee from 1948 to 1960, took the bus to work every day. He thought it far better to sit and talk with his neighbors than to be isolated in a private automobile. I think he had that right.

    One of the features of capitalism is that it privatizes benefits, and socializes costs. An example is the huge government subsidy for private automobiles, in the form of road spending, traffic enforcement, etc., that is always thought of as "basic services" and never as "government subsidy" or "the government picking winners and losers" in transportation technologies. Government spending on public transit, on the other hand, is always thought of as a government subsidy, and people often feel that public transit should "pay for itself" instead. The political disadvantage for public transit is obvious.

    A socialist government wouldn't necessarily wipe out all subsidies for private cars, but it should at least CALL them subsidies, and any discussion of government transportation policy should feature a bigass pie chart comparing the total private-auto subsidy to the total mass-transit subsidy. (I would hope Libertarian transportation wonks start with the same.) Then there'd be a discussion of how to move people and goods most efficiently in terms of inputs like money, fuel, and time, and I expect a socialist government would increase spending on public transit over current levels.

    No-fare transit would make sense for a couple of reasons. First, utilization of the equipment is maximized if we have the highest ridership, and lower fares would make public transit more attractive. Second, just the activity of collecting and accounting for fares consumes a lot of labor and time. I've been a rider on a successful no-fare bus system, and the passengers just load a lot faster if you aren't waiting for each of them to produce the correct change. Those little delays really add up.

    We'd also have an interstate passenger rail system that wasn't run over rails owned by commercial freight railroads.

    Socialists don't like regressive taxes, but I think I'd make an exception for a fuel tax to encourage fuel efficiency. Perhaps it would work to have the tax start at an unnoticeable rate, gradually increasing over several years, so people would know future fuel prices are going to be higher, but there wouldn't be acute dislocation now. I'd have time to wear out my new gas-guzzler, but I'd know not to replace it with another one.

  15. In the past few months, my family has had to wrestle with Best Buy’s “black tie” warranty repair service (it took them over three weeks to fix our washing machine, during which we were running all the laundry for a family of five to our local laundromat) and Ford’s recall of Windstar minivans (the dealer claimed that we would get a “free” rental minivan until our minivan was fixed, and then they refused to pay CDW on the rental… which would cost more than the monthly payments on a new car; and the minivan has sat on the dealer’s lot since mid-September).

    If only these private-sector institutions could deliver the same level of customer service as the Massachusetts Registry of Motor Vehicles. If only.

  16. Don: sadly, most libertarian policy wonks don't acknowledge the subsidies to cars and driving. As a libertarian, this seriously annoys me.

  17. If you want to privatize then you have a 'who guards the guardians' type of issue.

    The whole literature from Oliver Williamson and Ronald Coase is replete with the 'make or buy in' decision within companies: the Transactions Costs Approach to the firm, and Williamson and 'Markets and Hierarchies'. See also the excellent Milgrom and Roberts textbook.

    This is no different for governments.

    If you outsource, you have to contract, and you have to contract for outcomes.

    A libertarian with any intellectual depth will recognize these problems and the necessity of monitoring and enforcement mechanisms.

  18. Valuethinker: yeah, that's why I don't think it gains anything to, say, outsource the _entire_ DMV to a private contractor. Same incentive problems. I'd incline (at the moment; have thought about this for maybe ten minutes) to have the state set the regulations: you must provide this information and pay this fee to the state to get a registration. You must pass the following test and meet these other requirements to get a license. But have private businessmen–many different private businessmen–run the actual DMV offices.

    Anyone who wants to open a DMV has to post a large financial bond. State employees regularly go through the DMVs and make sure the legal requirements are being met–am I allowed to cheat on the test? Do they actually check my vision? Etc.–but otherwise things are left up to the providers. Maybe there's a niche for a low-cost DMV office with crap amenities and a nicer one that's more expensive. Maybe one guy figures out a way to make everything more pleasant at low cost and so everyone goes to his DMV.

    The key issue here is that "privatization," per se, gains you nothing. The problem with bureacracy is that there are no market pressures on anyone; the same thing holds true whether the bureaucracy is run by the government directly or by a company hired by the government. Markets work because of specific competitive pressures, not because of the magic of having "CEO" on the letterhead rather than "Secretary of Transportation."

  19. Don, re "Socialists don’t like regressive taxes, but I think I’d make an exception for a fuel tax to encourage fuel efficiency. Perhaps it would work to have the tax start at an unnoticeable rate, gradually increasing over several years, so people would know future fuel prices are going to be higher, but there wouldn’t be acute dislocation now. I’d have time to wear out my new gas-guzzler, but I’d know not to replace it with another one."

    Wouldn't it be more effective more quickly if manufacturers paid more to sell gas guzzlers?

  20. For environmental issues, classic Marxism is no more radical than classic semi-liberal Capitalism.

    If you want radical (and I'm not saying I am personally this radical), a radical environmental economics would probably say something like "Ensuring that factories really do pay the costs for the externalities of their polluting emissions isn't bad, but it doesn't go far enough. A factory also has externalities with the extraction and depletion of the resources it consumes, with the evironmental harm from the roads and infrastructure necessary to build and run the factory, with the social organization necessary to have minimum-wage factory workers, with the concentrated political power in the hands of the factory owner (and the devaluation of the environment in political choices), and with the social and emotional damage from separating people from their connection with the earth and understanding how things are made. With this many issues, taxes on the factory aren't going to be enough (particularly since the physical infrastructure and political/economic power concentrations are already in place). We need to restructure the economy on a more fundamental level."

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