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An Innovator in Every Apartment

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from the magazine

An Innovator in Every Apartment

Cities should unravel their pre-digital regulations. Autumn 2010
Economy, finance, and budgets

In late August, a news item out of Philadelphia rippled across the Web: the city’s bloggers were being hit with a $300 tax. Outrage issued from America’s keyboards, though the initial report proved somewhat misleading. The City of Brotherly Love hadn’t imposed a tax on blogs. Its officials had merely called for bloggers to purchase the same “business privilege license” required of all local enterprises that earn revenue. That was bad enough, however: in practice, it meant that bloggers making a few dollars a year from Google ads faced a bill that would put their sites in the red many times over.

Upstart publishers in Philadelphia have endured tougher times. The municipality’s first printer, William Bradford, set up his unwieldy press in 1685, soon got arrested for seditious libel, and fled to New York City. Philly’s most famous publisher, Benjamin Franklin, started his own print shop in 1727, but only after apprenticing at his brother’s Boston operation, working on a ship’s press, and studying European publishing technology for two years. As late as the 1990s, the average Philadelphian still found it beyond his financial means to reach a mass audience on a regular basis. Now, in the digital age, anyone with a laptop and an Internet connection can publish and even get paid for it, though not nearly enough to justify government fees better suited to the old-media model.

The story of Philadelphia’s bloggers illuminates an issue that every city will grapple with soon. Technology enables city dwellers to engage in sophisticated, small-scale entrepreneurial activity as never before. That anyone can easily become a publisher enhances aggregate output and innovation, as do new opportunities in other industries where barriers to entry are falling. Too often, however, city ordinances that arose in a pre-digital economy stymie these efforts.

The taxi is a good example. Famously subject to municipal regulation, most fleets underserve their cities. It’s easy to hail a ride in Manhattan because of its density and singular geography—and orders of magnitude harder in most other cities, especially outside the Northeast. Enter UberCab, a smartphone application for the Bay Area that uses GPS to locate cabs, match them to passengers in real time, and facilitate their transaction, even calculating distances, determining prices, and handling payments. Similar technology could make every city dweller with a car a part-time cabbie, picking up passengers whenever convenient—except that most cities prohibit such informal arrangements.

Or consider the food truck. These snack bars on wheels once pulled into office parks, played “La Cucaracha” on a novelty horn, and served up banal fare. Their successors, the gourmet food trucks of today, are made possible partly by social-media networks like Twitter, where foodies communicate and savvy food-truck owners alert dedicated followers to their ever-changing locations. Consumers get a cheaper option for great eats, aspiring restaurant owners get a culinary laboratory at a small fraction of restaurant start-up costs, and cities enhance street culture and ultimately their restaurant mix. But permit costs and public-health codes written for traditional restaurants impede food trucks’ operations. And established restaurateurs stand ready to do battle against would-be competitors, lobbying for overly restrictive parking regulations and other red tape.

These are but two examples of the smaller-scale entrepreneurship poised to explode in the city of the future. Already common are the urbanite who sells used furniture via Craigslist, his roommate who hawks rooftop tomatoes at the local farmers’ market, and the man one stall over who brews his own kombucha, allowing twentysomethings to pay with debit cards that can now be processed via iPhone.

But when a bureaucrat hears about these budding businesses, he’s likely to wonder if the kombucha guy passed his mandated food-handler course, brewed his drink in a kitchen certified for commercial preparation, and obtained the liability insurance required of food merchants. That trifecta of red tape is required in New York State; a business license and a vendor permit are needed, too. So cumbersome are these barriers to entry that many a food entrepreneur is dissuaded from getting started (or else driven to sell underground). In tomorrow’s city, it might as easily be an experimental micro-manufacturer who is technically forbidden from running a small 3-D “printer” in her apartment, or any number of people who want to engage in local commerce but suffer from rules that benefit older, larger-scale operations.

City officials would do better to take lessons from the tech industry. Assume that everyone wants to be an active economic participant, rather than a passive patron of established firms. Allow for different degrees of entrepreneurship. Make submitting necessary forms as easy as uploading high-definition films to Vimeo. Craft minimal rules that aim to facilitate transactions, rather than regulate them out of existence. The successful cities of the future will very probably be those that harness the entrepreneurial ambitions of empowered citizens.

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