David R. Henderson  

Unintended Consequences of Regulation

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Elves and Helicopters... War Debt and Entitlement Debt...

From yesterday's Wall Street Journal, two good old-style news stories on the consequences of regulation.

To Outfox the Chicken Tax, Ford Strips Its Own Vans

BALTIMORE -- Several times a month, Transit Connect vans from a Ford Motor Co. factory in Turkey roll off a ship here shiny and new, rear side windows gleaming, back seats firmly bolted to the floor.

Their first stop in America is a low-slung, brick warehouse where those same windows, never squeegeed at a gas station, and seats, never touched by human backsides, are promptly ripped out.

The fabric is shredded, the steel parts are broken down, and everything is sent off along with the glass to be recycled.

Why all the fuss and feathers? Blame the "chicken tax."

The seats and windows are but dressing to help Ford navigate the wreckage of a 46-year-old trade spat. In the early 1960s, Europe put high tariffs on imported chicken, taking aim at rising U.S. sales to West Germany. President Johnson retaliated in 1963, in part by targeting German-made Volkswagens with a tax on imports of foreign-made trucks and commercial vans.

The 1960s went the way of love beads and sitar records, but the chicken tax never died. Europe still has a tariff on imports of U.S. chicken, and the U.S. still hits delivery vans imported from overseas with a 25% tariff. American companies have to pay, too, which puts Ford in the weird position of circumventing U.S. trade rules that for years have protected U.S. auto makers' market for trucks.

So how to get around the tax? Import it as a "people" van and then rip out the people parts to make it into a delivery van.

Google's Phone Service Likely to Draw Scrutiny

Unfortunately, the article is gated. But the basic point is that Google Voice has so far been able to avoid regulations that hobble its competitors. Three key paragraphs:

One issue for the FCC: Google reserves the right to restrict calls to certain telephone numbers, such as adult chat lines or free conference-call centers, that have steep access charges.

Traditional phone companies such as AT&T Inc. and Verizon Communications Inc. aren't allowed to block those kinds of calls. These companies could cry foul if newer phone services like Google Voice aren't given the same treatment.

Several years ago, AT&T and others tried blocking calls to lines with inflated access charges. They were rebuked by the FCC, which said common-carrier phone companies can't pick and choose the numbers they will patch through and those they will block.

Notice that participants in the market are trying to sort out the business they want to do from the business they don't want and that the FCC is stopping them. This reminds me of the local access rules on local cable, rules that sometimes allow disgusting pornography. Sometimes people blame the market but in that case, and in the case of the "adult" chat lines above, the problem is due to the government overriding the market.


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COMMENTS (3 to date)
Matt C writes:

> Google reserves the right to restrict calls to certain telephone numbers,

Google is supposed to be a champion of "net neutrality". I'd like to hear what the net neutrality advocates have to say about Google's selective handling of phone service.

James writes:

Matt,

If "enforced" by some organization net neutrality would become just another form of regulation with its own unintended consequences. In this case it sounds like it might have the effect of shutting down their Voice service. How can you know in advance that there is no awesome future service that violates net neutrality?

I don't understand why people feel the need to judge and regulate the actions of corporations. Isn't it enough to simply avoid a service or product if you don't like it? Google isn't the government, you can avoid it, so it should be OK for them to block access to whatever.

Stephen Jones writes:

Considering the vast number of scams operated by premium rate calls the logical solution would have been to regulate to ban them.

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