On Wednesday, I shared a story about the Lemon Race, where drivers take to the track using cars that are worth $500 or less. At the top of that email, in that little italicized blurb above the headline (you’ll see it in your inbox, not on the archived version), I said that “the way I learned about this story is pretty fun — I’ll try to remember to share it on Friday!.” Well, I remembered! So here’s the story.
I came across a totally unrelated fun fact from 16th-century Denmark: the Danish Crown wanted to charge ships a tax to transverse Øresund (in English, “the Sound), the waterway that separates modern-day Sweden from Denmark. (Here’s a map.) At the time, Denmark controlled both shores of the Sound and therefore, could basically demand whatever they wanted, within reason. At first, the Crown apparently charged a flat rate for passage, which was easily enforced, but that left money on the table — ships carrying a very valuable cargo would likely pay a lot more. But how do you charge a variable rate without hiring an army of inspectors? And even then, how do you quickly determine what a ship’s cargo is worth?
The solution is an elegant one, as articulated in an academic paper from 2011. The shippers had to estimate the value of the goods themselves and disclose that to the Crown. And, per the paper, “to give skippers an incentive to declare the true value of their cargo, the Danish Crown reserved the right to purchase it at the declared value.” You could provide a deflated declared value, sure, but if you did, you risked the King buying up all your cargo and with it, your profit. That’s bad. And apparently, the tax worked — the paper concludes that even though “this rule does not induce truth-telling,” it “does allow the authorities to effectively implement a given tax rate.” (That seems inconsistent so I probably need to find the full paper to figure out how that works, but I wasn’t going to spend $27.95 to access it for 48 hours.)
I looked into the Danish tax idea a bit more, hoping I could make it into a larger story, but there really wasn’t much there — and, to make matters worse, I couldn’t find any other sources (beyond that paper) that spoke about the tax. What I did find, though, was a reddit thread discussing the paper linked above. And one of the comments there shared this:
I came to mention Lemons Racing in the US which operates on a very similar principle. Their price limit is $500, not $2000, with penalty laps being assigned for each $10 over the limit. People cheat here and there, and a certain amount of bluster (or let’s be real, straight bribery) with the judges is expected, but the real reason costs stay down is because the rules state the organizers can buy any car entered in the race for exactly $500, no questions asked.
So, my research led me to the Lemon Race! But that’s not the end of this adventure. If you re-read Wednesday’s email, you’ll see that I make no mention of rules allowing organizers to buy the car for $500. The reason? I read the rules — you can find them here, and they’re pretty funny — and I couldn’t find that specific rule. There’s a very good chance I missed it (there are a lot of rules!) and if so, oops. But having not seen the rule, I couldn’t include it in Wednesday’s story.
That said, I think the redditor probably had it right, at least in general. In 2014, Car and Driver reported that the founder of Lemon Racing “has the right to claim a car for 500 bucks, and he’ll only do so in cases of outrageous, rub-his-nose-in-it cheating and/or super-egregious racer idiocy of galactic proportions.” But I figured I’d rather share the journey of me finding the story on Friday than bog Wednesday’s story with that aside.
The Now I Know Week in Review
Monday: A City Fit For a King: A Martin Luther King, Jr. story for his birthday.
Tuesday: The Birds That Gave The Bird: Birds of a feather swear together?
Wednesday: Yes, This $500 Piece of Junk is a Real Racecar: See above!
Thursday: Why Diet Coke Loves Mentos: A fun science experiment.
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