For a few weeks last summer, Boston was ground zero in an entertaining fight over startups trying to profit from public resources.
The whole thing was settled decisively when the City Council booted the offending startup, Baltimore-based Haystack, out of town. Its offense: Haystack wanted to let people sell access to public parking spaces and keep a cut for itself.
The whole messy fight is rearing its head again in the latest episode of Planet Money, an economics podcast from NPR.
Planet Money interviewed the former founder of Haystack, Eric Meyer, about the rise and fall of his bright idea. It also talked to some academics and tried an entertaining experiment, asking passersby if they’d be interested in paying to get access to a prime street spot.
But there’s a hole in the Planet Money report that’s so big, you could comfortably parallel park an 18-wheeler. From the moment it launched — despite warnings from city officials — Haystack was a clearly illegal attempt to extract private profits from public property.
In Planet Money’s telling, Haystack is just the bright idea of an ambitious young techie who was frustrated by the lack of parking on city streets. “Really, it’s an economics problem,” host Steve Henn said. “How do you allocate this scarce resource?”
That’s not exactly true. We’re talking about public property here, so it’s important to make sure everyone has a chance to access the scarce resource. Putting a free-market price on public parking spots could make them unaffordable for poor people, and that would be unfair.
How do we know that? In 1937, the Massachusetts Supreme Judicial Court actually had to decide whether the idea of charging the public to park on their own streets was even legal in the first place.
At that time, while parking had “a considerable problem in the regulation of traffic on highways,” the specter of the parking meter had “not yet become familiar,” the court said.
“We are informed that it consists of a post designed to be set near or inside the curb surmounted by an enclosed mechanism for receiving coin, measuring time and displaying a conspicuous signal at the expiration of some definite period of minutes, the whole being between four and five feet in height. Its main purpose is to aid the police in enforcing regulations governing the parking of automobiles. That end is accomplished by rendering it easy to observe the adjacent automobile which has exceeded the permissible period of parking.”
The court ruled that parking meters could be installed in the state, pointing to the already established concept of charging tolls to use a bridge or fees for using a city wharf. But the court also drew some limits.
Parking-meter fees, the court said, could be used to pay for the system itself — things like maintaining the meters and paying for the cops needed to hand out tickets. What a city couldn’t do was “turn this plan of using parking meters into a business for profit.”
“It cannot establish a commercial enterprise on the public easement,” the court said. “To do that would be to divert to alien purposes property taken for public uses and paid for by funds raised by taxation.”
There’s no mention of apps and startups here. But the big-picture idea is that the government, which takes care of the streets on behalf of the taxpayers, can’t let those streets become a moneymaking enterprise.
It’s a bit of social etiquette that a kindergartner would recognize as true: When you’re sharing something with the group, it’s not right to just grab ahold of that thing and start acting like it’s yours. In grown-up terms, imagine your reaction if someone posted ticket-takers at the entrances to Boston Common and started charging for a seat on the benches.
Funny enough, Planet Money found this out when it asked people on the street what they thought about the idea of paying to access a public parking spot. One person told them it was “rude.”
In the end, Boston’s City Council passed an ordinance explicitly banning companies like Haystack from making any money on public resources. Haystack shut down and no longer exists.
But that ordinance was just the icing on the cake. If Haystack had tried to keep going, the city probably would have been forced to take the small company to court. And you can bet your hard-fought parking spot that the city would have won.