In Praise of Inefficiency

A contrarian tech manifesto


February 26, 2010



Huzzahs could be heard across the country this week when Miami-Dade Circuit Judge Jerald Bagley ruled that Florida law doesn't allow cities to use red-light cameras. The case involved the city of Aventura, but it has other Florida cities wondering whether their traffic cameras are legal. Cash-starved municipalities are pushing the state legislature to change the law so that they can continue to use motorists as rolling ATMs. Illinois, by contrast, is considering a law that would raze the hated gotcha-cams in that state. And even the Los Angeles Times—sympathetic as it is to the needs of state and local governments to milk traffic citations—has become exasperated with the racket. The paper complained in an editorial this month that camera-generated tickets for making a mere "rolling right turn at a stoplight" have been jacked up to $446, "more than double what it cost in 2008."


Whenever voters get a chance to express their opinion on photo-enforcement, they give it the raspberry. But why do people despise the cameras so? The makers of the machines (and the many lobbyists they hire) express astonishment that anyone would object to anything so reasonable as enforcement of the law, especially laws that may save lives. Who can knock efficiency, either? Red-light cameras represent a dramatic improvement in citation productivity. When cities had to hire policemen to write tickets, there were all sorts of costs involved with traffic enforcement: hiring, training, patrol cars, salaries, benefits, pensions.


Yet I suspect that the cost-obliterating efficiency of the technology is the very thing that gets us riled. The old hurdles and hassles of manually issuing tickets counterbalanced the revenue side of the equation, creating a sort of equilibrium in which the number of citations was generally accepted as fair. Now, that equilibrium has been destroyed, and people find it alarming.


The problem is one that crops up with all sorts of technological fixes: Make it easier and more convenient to collect fines and fees, and soon you'll be collecting more fines and fees. Take Montgomery County, Md. Last month it started a new program that lets motorists pay at parking meters with their cellphones. How easy! How convenient! How civilized! No more digging around the ashtray for dimes and quarters. No more pestering passersby to change a dollar. Of course, when you have to scrounge for coins to feed the meter, you're painfully aware of just how much the parking regime is costing you. Not so with the mobile-phone parking app. According to a demonstration on the Web site of the company powering the service, you just key in how long you'd like to leave your car, and you're on your way. The pesky question of how much you've just paid doesn't come up.


No doubt you can find out later from your online statement, and surely there are some savvy and well-organized folks who do. Yet for most of us the cost fades toward invisibility, and that's when fees go to town. Policymakers have long understood that the less visible—or "salient," to use the economist's term of art—a tax is, the easier it is to raise. Which is why Milton Friedman, looking for ways the federal government could collect more money during World War II, recommended the creation of income tax withholding (an innovation he was not proud of ). It's also why "value-added taxes" act like steroids when it comes to bulking up government.


Technologies sold on convenience can prove to be awfully convenient for those setting prices. Consider electronic toll collection systems such as E-ZPass that let drivers blow past highway tollbooths. How wonderful to no longer have to wait in infuriating lines to pay our traffic tribute. And yet, zipping past the toll plaza, how many of us give a thought to how much we were just charged? Could it be that our new electronically induced ignorance gives a green light to those who would super-size the fees? That's the question that MIT economist Amy Finkelstein asked in a recent study of toll-collection nationwide. She found that there was "a strikingly lower awareness of the amount paid in tolls by those who pay electronically," and thus, not surprisingly, that "toll rates increase after the adoption of electronic toll collection," usually by 20% to 40%.


It's not only government that uses technology to keep us blissfully ignorant of what we're paying. Businesses love to tap customers' bank accounts quietly, discreetly and automatically. It's common for online-business plans to count on a revenue stream from people who will stop using a service but forget to cancel their recurring monthly charges. It's the electronic equivalent of the never-ending gym membership.


We rightly celebrate inventions that increase productivity and ease. But maybe we don't want to make every sort of transaction friction-free. When it comes to parking meters, I'd rather stick with the Paleolithic practice of feeding in coins. It's a frustration and an annoyance, and— believing as I do in every American's God-given right to park on the street free—those are just the emotions I want to cultivate toward the entire enterprise.