Tag: Justus Armstrong

Metro Should Let Transit Customers Drive Transportation Innovation

By Justus Armstrong

ABC’s Shark Tank may be coming to the Portland region—not in the form of a reality TV special, but as a taxpayer-funded project that positions the Metro regional government to act as a venture capital firm. Rather than investing in the success of growing businesses, however, the Sharks at Metro plan to fund temporary pilot projects that test new transportation technology.

Metro proposes that its Partnerships and Innovative Learning Opportunities in Transportation (PILOT) program—a component of the Emerging Technology Strategy—would help meet its “guided innovation” goals, but the shortsighted approach of this program ignores a vital question: Are risky technological investments the best use of taxpayer funding?

In a presentation at a Metro work session in July, Senior Technology Strategist Eliot Rose suggested the PILOT program would “guide innovation in transportation technology toward creating a more equitable and livable region.” Embedded in the presentation were numerous contradictions, beginning with the oxymoron of “guided innovation.” In Metro’s case, guided innovation more than likely means “hindered innovation,” with PILOT funding being a carrot-and-stick method of ensuring that emerging technologies take the direction technocrats deem appropriate, not the direction consumers are demanding.

By allocating government funding to the transportation projects of its choice, Metro risks preventing better ideas from emerging and hampering the innovation necessary for real progress to take place. As Metro strategist Rose noted, ridesharing, bikesharing, and other technologies PILOT wishes to foster have already been expanding in Portland. This technological progress has taken place with private investment, yet Rose still concludes that public money is needed for it to continue.

During the July work session, Metro staff claimed that the government “needs to intervene to bring technology to people and communities that the market doesn’t serve.” This assumption presents another contradiction: If an investment isn’t cost-effective for a private actor, what makes it a cost-effective investment to Metro? And how can successful projects be expected to continue without public funding, if the projects’ functions wouldn’t otherwise be demanded by the market?

Furthermore, Metro’s plan risks sinking taxpayer money into potentially unsuccessful projects. The $165,000 Forth-Hacienda project was presented by Metro as an example of a successful pilot project—not because the project itself was successful, but because its failure offered a great learning experience. The desire to better understand new technologies is not without merit, but the experimental nature of such pilot projects hardly makes them a good fit for taxpayer funding.

For all the project’s flaws, discussion about Metro’s Emerging Technology Strategy has included some promising aspects. For instance, during the work session, Metro Councilor Shirley Craddick brought up the idea of transitioning some of TriMet’s responsibilities to ridesharing networks. Considering more innovative modes for public transportation would be a step in the right direction and likely would improve cost-effectiveness, quality, and ridership of transit while meeting the needs of the populations Metro seeks to assist.

Perhaps a more effective Emerging Technology Strategy could focus solely on ways to improve existing public transportation through new technology, rather than interfering with private transportation markets through subsidies and attempts to shape private development. Instead of subsidizing companies with PILOT funding, Metro could offer open-ended transportation vouchers directly to transit users, especially transit-dependent and underserved populations.

Transit vouchers could be spent on a variety of transportation options, including TriMet and the newer technologies the PILOT program intends to target, such as rideshare, bikeshare, and electric vehicle and autonomous vehicle rentals. Putting the money directly into the hands of transit users could drive innovation through consumer sovereignty on the demand side, encouraging competition and making companies work to meet transit users’ needs instead of Metro’s project specifications.

With its PILOT program, Metro seeks to encourage innovation while managing risk; but any risk associated with developing new technologies should be borne by the companies driving the innovation, not by the public. If Metro moves forward with the PILOT program, it will only hinder its own goals. Instead of shaping existing markets in the private sector, Metro should focus on applying technological improvements to public transportation options.

Moreover, Metro should reform the regulatory framework and barriers to entry that may be preventing the emerging transportation technology market from functioning at its best. After all, the expansion of Uber and Lyft in Portland didn’t take place because Portland subsidized these companies. It happened because Portland stopped banning them. Metro councilors and staff can’t foresee the direction that new technologies will take, so they can’t know enough in advance to guide the direction of innovation or adequately manage its risks. The best they can do is get out of the way.

Justus Armstrong is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Metro’s Poorly Thought-Out Grants Program

By Justus Armstrong

Portland’s Metro Council plans to award grants for its Investment and Innovation program this fall. The program seeks to strengthen the local infrastructure for waste reduction; but with a combination of corporate welfare and vague performance measures, its methods are murky at best and unethical at worst.

With $9 million in funding over three years, Metro’s program offers grants of up to $500,000 to both non-profit and for-profit organizations for projects in line with Metro’s waste reduction goals. The grants are limited to costs tied to waste reduction projects; but padding companies’ expenses to benefit these projects goes outside the scope of Metro’s stated goals and undermines the competitive marketplace. Most citizens, and Oregon’s Constitution, would oppose tax funding for privately owned corporations. Apart from its good intentions and “green” packaging, what makes this project any different?

Metro’s Investment and Innovation program lacks clear direction and accountability to taxpayers for results. Since the grants outsource waste reduction to third parties, Metro can offer no estimates of the program’s ability to actually reduce waste. Metro is handing out taxpayer money for hypothetical benefits that are unlikely to match the price tag.

Justus Armstrong is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Metro’s Waste Reduction Program Lacks Direction and Accountability

By Justus Armstrong

This October, the Portland-area Metro Council will award the first round of grants for its Investment and Innovation program. The program’s goals include strengthening local waste reduction efforts and fostering economic benefits for those from marginalized communities; but with a combination of corporate welfare and vague performance measures, the means by which Metro hopes to obtain these goals are murky at best and unethical at worst.

The program, which sets aside $3 million a year from Metro’s solid waste reserve fund over a three-year pilot period, offers two tiers of grants—one tier ranging from $10,000 to $50,000, the other from $50,000 to $500,000—to nonprofit organizations and for-profit businesses alike. Metro directs the larger capital grants toward “investments in equipment, machinery and/or buildings” for projects in line with its waste reduction goals. In awarding capital to businesses, Metro seeks to improve regional recycling and disposal infrastructure, but seems to have no regard for the program’s marketplace consequences.

By matching assets with public funding, Metro grants an unfair advantage to businesses that follow its environmental agenda. While the grants program limits funding to costs tied to waste reduction projects, padding companies’ overhead and capital costs to benefit these projects goes outside the scope of Metro’s stated goals and undermines the competitive marketplace. Businesses should earn investment capital such as buildings and equipment by themselves, not through taxpayer handouts. Most citizens would oppose the use of their tax dollars to prop up privately owned corporations. Apart from good intentions and “green” packaging, what makes this project demonstrably different? How does it fit into Article XI, Section 9 of Oregon’s Constitution, which states that no municipality shall “raise money for, or loan its credit to, or in aid of, any such company, corporation or association?” Many questions have yet to be addressed.

Even for measuring success, the program’s standards are unclear; and Metro has been down this road before. Metro’s Community Planning and Development Grants program awarded around $19 million from 2006-2015 to help local governments prepare land for development. Like the Investment and Innovation program, these grants were intended to advance Metro’s long-term vision, but a 2016 report from Metro auditor Brian Evans found problems with clear direction. “The program has become less aligned with certain regional planning priorities over time,” Evans wrote. “Changes to the program reduced clarity about what was intended to be achieved and there was no process in place to evaluate the program’s outcomes.”

The Investment and Innovation program faces similar risks. Since the grants outsource waste reduction goals to third parties, Metro can only guess at their potential effectiveness. In a pre-proposal workshop for prospective applicants, Program Manager Suzanne Piluso could offer no estimate of the program’s effect on waste, saying it would take until after the pilot period to “determine if it’s moved the needle.” To be clear, that’s $9 million for a waste reduction program that can’t promise to actually reduce waste. Metro is handing out taxpayer money for hypothetical benefits that are unlikely to match the price tag.

Justus Armstrong is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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Direct Primary Care Puts Patients First, Lowers Health Care Costs

By Justus Armstrong

Could forgoing health insurance make health care more affordable? That’s the approach taken by many physicians practicing direct primary care, or DPC, an emerging medical movement that seeks to cut out the middleman and put patients first. Instead of billing insurance for individual services, physicians charge a regular fee as low as $60 a month directly to patients, increasing patient access and letting doctors focus on quality of office visits over quantity. Under a direct primary care model, your doctor is more available, with easier appointment scheduling and direct access to medical advice via phone, text, or email. A better doctor-patient relationship allows more personalized care, and research into DPC has yet to find a single instance of malpractice.

Health care without a third party brings entrepreneurship to medicine and saves patients money. While most direct primary care providers recommend patients carry a high-deductible insurance plan to protect against emergencies, taking insurance out of the equation for regular medical expenses allows physicians to reduce their overhead and provide better quality at a lower price.

Oregon is home to many direct care facilities; but current law requires direct providers to obtain a separate license through the state insurance agency, making direct primary care unnecessarily difficult. Let’s get rid of the red tape and take health care in a new direction.

Justus Armstrong is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

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