Another Criminal Business Model

My favorite criminal business models involve large firms that subcontract or franchise work to small actors work which would get them into trouble. They usually hand the work over to small actors who lack the assets to be be effectively punished for the bad acts. But here’s an example of a criminal business model where they firm doesn’t even bother to intermediate the bad acts.

In San Francisco … “Last year, United Parcel Service paid $673,334 in fines for 11,788 tickets — an average of one ticket every 45 minutes throughout the year.

The traffic rules are a means society uses to keep things civil and moving smoothly. UPS has figured out that it can make it’s internal operations move more smoothly by making the rest of society run less smoothly. If you made the parking fines progressive, so that legal entities like UPS who abuse the system are progressively fined and escalating amount, then UPS would just restructure their urban delivery operations so the operators where a flurry of smaller operators. That’s what Herbalife does so it can strap butt ugly signs up all over town.

So next time you spend a few minutes stuck in traffic behind double parked UPS truck you can think of the this puzzle: of how is civil order is maintained when commerce trains it’s people to make these trade-offs to it’s advantage.

“McMillan Electric Co. contributed $74,375 toward the total. The family-owned San Francisco firm, which does most of its business downtown, received 1,497 tickets over the year. “It’s a business decision,” company president Pat McMillan said. “Is it cheaper to pay the ticket, or is it cheaper to pay the guys working for me to spend time looking for a legal parking space?”

McMillan pays his workers about $80 an hour and said risking a parking ticket often wins out. ‘I don’t like it, but we’ve got a job to do, and we have to get our guys in there to work.'”

Who’s the jerk, the driver, the firm, or the the boss?

(Nod to Faisal)

0 thoughts on “Another Criminal Business Model

  1. Todd Larason

    I can’t find a cite now, but I remember reading a few years ago about a court case where UPS was contesting $bigmoney worth of parking tickets because the “make” and “model” information, which just said “UPS truck” or the like, wasn’t technically a make or model. I don’t recall ever hearing the outcome of the case.

  2. Allan

    Why, exactly, is this a problem? The people of San Francisco it trading a very small amount of road access for $673k worth of green parks, trams, social services and all the other things that the municipal provides. I don’t know if it is a good trade, but both the city powers that be and UPS seems to think it is. Maybe the price is somehow wrong, but it is hard for me to see any moral reasons why the trade in and of itself is a problem. Trade freely entered into is good. More is better.

  3. bhyde

    Alan, your suggesting, I guess, that the city has effectively licensed these guys to break the rule and the fines aren’t fines but the license charges. That is an ethical view, right? I.e. it’s the view that once the punishments for rule breaking are clearly stated the breaking of rules is indistinguishable from the purchasing of a one time license to break the rule. That is a mind set consistent with a strong preference for commercial ordering v.s. civil ordering. I’m not such a person. Modeling such a person I must say I wonder then what is criminal?

  4. bhyde

    Todd – I can’t seem to find that on snoops; so you may have captured a previously unknown legend! None the less, the snoops listings for parking tickets is amusing.

    Meanwhile there is a blurb in one of the recent New Yorkers about a lawyer in NYC who’s specialty is playing games like that; you get the impression that down at the traffic court a certain kind of personality (hair splitters) have found their niche and are quite happy. The officer says “four way stop,” the lawyer moves to dismiss, the judge assents; since yeah it was a traffic light not a four way; don’t you know.

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