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Imagine you want to open a restaurant. You know that it will be successful - you've done your research, whatever, yadda yadda. The government charges you a hef
by tomdell 10y ago
Imagine you want to open a restaurant. You know that it will be successful - you've done your research, whatever, yadda yadda.
The government charges you a hefty initial tax to open your restaurant - it's a steep cost, but you expect that you'll be able to pay it off, because you know your place is going to do well. Seriously, you've paid attention to history - these kinds of things - the way you're doing it, anyway - always do well.
Time passes, and your restaurant does do really well. You get a few negative reviews, though - some people think the place smells funny, some customers don't like hearing you (the head chef) screaming at the cooks in the kitchen.
A couple years later, a competitor restaurant opens across the street. Similar price level, cuisine, prestige - all that. The only thing is, the government doesn't level the same tax against the competitor that you had to pay. In fact, that tax isn't being applied to them at all, because, even though you know and everyone else knows they're really basically a restaurant - despite that, because all the customers there order the food through an app, the place is legally classified as something else.
The competitor's head chef and owner has paid attention to what you did poorly - he makes sure his place smells good (he spends a lot of money on this), and he's careful to keep his speaking voice down while chastising his chefs. He starts to get good business, and as word spreads, you start to lose business.
Things aren't looking good for you. You're not really sure you're going to be able to stay open for long enough for that heavy tax you paid to be worth it.
- morgante 10y agoRegulatory risk is an investment risk which companies face all the time. I might spend billions on developing a nuclear power plant and then have the government outlaw nuclear power. That doesn't mean I'm entitled to a share of the profits from solar power plants, it just means I made an investment in a business which went badly. Taxis were part of a cartel. Any time you buy into a cartel, you should absolutely consider the risks of the cartel being broken up. That MA is passing this is a huge mark against them and really lowers my opinion of the state. They're basically being bribed to stop innovation.
- chillacy 10y agoYea, investments are risky. They're supposed to be risky to make up for the potential rewards. Sometimes you can pay to remove risk, in the form of insurance, which can be expensive. But if you aren't paying to remove the downside, someone else is.
- hx87 10y agoIf only taxi medallions were issued in a reasonably fair manner, such as a fixed fee with no quantity limits, or an annual auction with quantity limits... A better analogy would be if the government, starting in 1930, only allowed there to be 3 restaurants in the city, and sold you one of the licenses for a sum of 1 cent. Now it's 2015, there are still only 3 restaurants in the city, and because the license is permanent and transferable, now it's worth $50 million. Then food trucks come and take all your business.
- superbaconman 10y agoNY has some pretty fucked up food truck regulations. Because NY won't increase the number of food vending permits, a huge number are now sold on the black market. http://www.voanews.com/a/black-market-vending-new-york-city/3124847.html http://www.voanews.com/a/black-market-vending-new-york-city/...