Friday, 1 February 2013

one of the reasons

why Spain is poorer than the rest of most of Europe - lack of competition, protection of insiders, low competitive intensity. You want proof? I give you one image.

Like many European cities, Barcelona has a bike renting scheme, run by the city. You pay a modest fee per year, and you can rent bikes as often as you like, all over the city. Use it for less than 30 minutes each time, and you don't pay a penny extra. For the most part, it works great. Visitors are VERY keen to use this - and they can't. Why? Because the firms that rented bikes to tourists made sure through a major lobbying effort that they can't. The public system even advertises where to rent a bike if you are not a local (picture). The idea is to protect local businesses. Hmmm.

And it is not just the slightly unsavory let's-rip-off-the-foreigners; it costs the public system real money. Half the day, stations are either overflowing (with no place to leave your bike) or empty. Why? Because people live in one corner of the city, and work in another. If tourists used the system (as they can with great ease in Paris, say), there would be many more matching flows - tourists going one way, to areas with tourist attractions but where people live (Sagrada Familia, say), and citizens going the other (down to the sea, where many jobs + hotels are). So protecting insiders a. raises the cost of the public system, with lots of little vans driving around redistributing bikes (yes, all very ecological) b. costs revenue c. keeps firms in business that add nothing to social welfare, other than redistributing money.

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