26.10.16

THE CASE FOR MARKET TESTS.

Your taco truck just got voted off the Capitol Square.
There are only 40 spots available for food carts. Rather than let the customers decide with their purchases which carts will get to remain, the city of Madison conducts a popularity contest to see who gets voted off the isthmus. It being Madison, bonus points are granted for seniority, just like public employees before Act 10.

Those food testers that participate in the survey must try the food at 80 percent of the city's food carts. Since there are 60 carts, that means trying the food at 48 carts over two weeks, or three carts per day. Since some of them are not operating on Sunday, the wannabe food cart judge has to eat four meals per day from the carts just to meet the minimum. To sample them all, a person would have to eat five meals per day, provided the person took a (much needed) day of rest on Sunday to digest their experiences.
You'd think, if there are forty permits, and more than forty food vendors, that an auction might make more sense than a poll with a serious small-sample problem. Plus the food truck operator who paid too much for a slot would learn from experience not to bid so much next time. (It's not so difficult to write the rules in such a way that the lowest of the top forty bids would set the market for everybody; that's too large a set of bidders for a bidding ring to emerge.)

But this is the Peoples' Republic of Madison, and market tests are Too Tacky For Words.
But the free market isn't being allowed to work. It isn't Donald Trump's wall kicking the tacos out of the downtown, it's the city itself. Those that should have the most to say about the survivability of a food cart on the Capitol Square, the actual paying customers, are actually robbed of their ability to have a say. Their food dollars don't matter in the success of a business, just 15 people who may never eat a taco on the Capitol Square again.

This kind of instability, the success of a business subject to bureaucratic whims rather than market forces, will only hurt the quality of the food carts in the long term. Who would want to invest in the kind of quality ingredients and equipment to build a steady customer base when the location may be taken away from them in a year?
I suppose the logic is that the steady customer base maps accurately into preferences in a survey.  But why rely on a proxy when a market test elicits the information directly, plus the city might be pleasantly surprised with the lease fees it collects.

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