County Gets Something to Chew On

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The old Law of Unintended Consequences pops up in a funny way, sometimes.

It was just last year when the Los Angeles County Board of Supervisors tried to crack down on local taco trucks. But that effort had the unintended consequence of yes helping to create even more dining trucks.

As you can see in the article on the cover of this issue, some local folks last year read about the dust-up over the taco trucks and apparently rubbed their chins and said, “Hmmm.” Entrepreneurial types probably cared less about the crackdown (which basically fizzled), but read more intently about the low cost of entry for operators of truck diners. And it probably occurred to them that there are other advantages for truck owners. You can drive to where the crowds are right now, for example, and you can work when you want.

As a result, a new generation of mobile minidiners was created. Suddenly, pedestrian-intensive locations on the Westside have trucks parked radiator to tailpipe hawking all manner of Korean barbecue, sushi, vegan sandwiches and, of course, tacos and burritos.

Granted, established restaurants probably don’t like taco and untaco trucks parked out front their doors. And they may pressure the political class to try again to crack down on the proliferation of trucks.

But they should proceed with caution. Another crackdown like the last may have the unintended consequence of revving up a whole new convoy of dining trucks.

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If you wonder why many businesses feel abused and taken for granted by California, you don’t have to look any further than the IOUs that the state sent out this month.

Without so much as a thank you, California pushed its funding problem off on its creditors and the state’s banks by issuing the IOUs. The people and businesses that were paid with the IOUs but couldn’t find a bank to convert them into cash had been forced, in effect, to carry a piece of the state’s debt on their backs. And the banks that cashed the scrip for their customers ended up recording a part of the state’s debt on their balance sheets.

What’s more, banks that accepted the IOUs were engaging in unsound practices. A bank that cashes too many of those kinds of IOUs under normal circumstances could get rung up by regulators, including state regulators, because the bank was draining its liquidity. You can bet that little irony was lost on California legislators.

The message the state sent to banks: “Don’t do anything stupid or dangerous. Unless I make you.”

As reported last week in the Business Journal, many community banks were in a tight spot. They sure didn’t want to accept the state’s scrip but they felt obliged to do so in order to help out and keep their customers.

I liked the way one small California banker, quoted in a Bloomberg story, phrased it: “I don’t like the fact that this is getting jammed down our throats and we’re financing the incompetence” of the government.

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Speaking of the state’s money troubles, I’ll bet a budget agreement would have been reached in Sacramento long ago if, instead of constantly calling it a “$26 billion budget shortfall,” everyone had called it “$26 billion in overspending.”


Charles Crumpley is the editor of the Business Journal. He can be reached at [email protected].

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