Persuading Politicians to Do Your Price Fixing

by: michael r. shannon | published: 07 17, 2011

Aaron Duncan probably won’t be the guest of honor at the Virginia Bail Agents Assn. Christmas party. In fact, he might not get an invitation. That’s because Duncan — a stranger to political spin — told the truth regarding a new law regulating bail bondsmen.

According to Duncan’s interview in The News & Messenger, here’s how bail bonds worked before the Commonwealth took an interest, … bondsmen charged competitive rates before the July 1 regulation was adopted. This made it difficult for clients to know what to pay beforehand since each bondsman had his own rate, according to Duncan.

Due to the aggressive pricing, it was also difficult, at times, for bondsmen to secure a customer and ensure that the bond agreement would be fully completed, Duncan said. He said that it was not uncommon to lose a customer at the last minute after another bondsman offered a lower premium.

“All bondsmen were getting into a bidding war at one point [over customers],” Duncan said.

Customers can’t predict the final bill? Clearly, this is a situation crying out for government intervention. Wait, on second thought this sounds a lot like buying a car, buying Farmer’s Market tomatoes or shopping at an outlet mall.

Yet average citizens daily endure this crippling uncertainty and wade through pricing variables in route to underwear ownership.

Duncan’s explanation sounds like a textbook description of how a free market works: many businesses competing to offer the best deal to the customer.

Bondsmen, understandably, were less enthusiastic. Sure customers liked competition because it saved them money, but competition shrinks profits. On the other hand, meeting secretly to solve the problem by conspiring to have everyone charge the same bond fees would expose conspirators to charges of price fixing.

So bondsmen solved the problem by persuading the Virginia General Assembly to fix prices for them!

The new law requires bail bondsmen to charge a minimum 10 percent of the bond, effectively ending price competition. Bondsmen now have a guaranteed profit and they can blame the Commonwealth if anyone complains.

For those who have not enjoyed the tender mercies of the criminal justice system, the new law means if the judge sets a bond of $10,000 you will owe the bail bondsman at least $1,000, regardless of whether or not you are found guilty. Try to negotiate a lower price and you’ll be asking the bondsman to break the law.

Or as the priceless Duncan put it, “The new law makes it an even playing field for both customers and bail bondsmen. It makes it less confusing.” Proving once again that anytime government makes a product or service “less confusing” it’s going to cost you more.

And how did the legislature arrive at a 10 percent minimum? Personal experience? No, that can’t be because Democrat Jim Moran serves in Congress, not the General Assembly.

And where’s the overriding public interest that justifies this gross intrusion into a functioning marketplace with government–approved price fixing?

I realize I’m getting wound up here but this boggles the mind. A Republican–controlled House votes unanimously to pass this travesty. It goes to the Senate — which under Democrat leadership is capable of anything — and passes. Then the governor, allegedly another conservative, signs off on the scam!

The criminal element is not a community that generates much sympathy, but many times it’s the family that totes the note on the bond. You’d think Democrats who were up in arms over “payday lenders” and want to issue voter registration cards to ex–cons as they exit the Big House would not want to inflict higher costs on part of their base. But you would be wrong. A Democrat introduced the bill.

You can’t even blame passage on campaign contributions. A VPAP.org search shows the entire bail bond industry contributed zero during the last election cycle, which obviously won’t buy a bowl of pottage, much less encourage anyone to sell out for it.

There is no rational explanation. Passage appears to be an outbreak of free market bi–ignorance.

But since the precedent is now established, I could use some government confusion reduction in my industry. Right now any yahoo with a cell phone and a laptop can claim to be a political media consultant. What's more, they work cheap.

Many of them discount the standard media commission. It’s time the General Assembly reforms political consulting and makes the 15 percent media commission fixed and immutable, like they did for the bail bondsmen's markup.

That will take the uncertainly out of pricing for politicians, plus they won't have to worry about their opponent getting a better deal from some sleazy, discount, competitive media consultant.

Of course this will never happen, because then politicians would be paying the price and not the public.

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