Cab Fair
Tuesday morning, per what the Institute for Justice's Mark Meranta told me, the IJ "launched a huge economic liberty case that provides a textbook case of protectionism and regulatory capture."
Currently, Milwaukee allows only 321 taxicabs on its streets--almost half of which are owned by Milwaukee County Supervisor Joe Sanfelippo. That is about one cab for every 1,850 residents, one of the highest ratios in the country. This cap on taxi permits has sent permit costs skyrocketing, from $85 to $150,000--putting the dream of owning a taxi business out of most people's reach.
Here's a quick video about the case:
Bruce Vielmetti writes for the JSOnline:
The lawsuit, which the institute intends to file in Milwaukee County Circuit Court, asks that a judge block the city from denying new taxicab permits, and award nominal damages of $1, plus the plaintiffs' attorney fees."In addition to the harm plaintiffs suffer, the artificial scarcity of cabs harms Milwaukee citizens and visitors through limiting competition in the taxicab industry and creating inferior customer service - including longer wait times for cabs and a lack of available cabs in modest and minority neighborhoods," the lawsuit asserts.
A spokesman for the mayor's office did not return a phone call Monday seeking comment, nor did Ald. Bob Donovan, whose public safety committee oversees taxicab permits.
The lawsuit contends that each plaintiff has the means to start his own taxicab business - to buy a car and a meter and pay for insurance and dispatch service - except for the $150,000 permit cost.
The suit states the city's current practice violates the plaintiffs' due process and equal protection rights under the Wisconsin Constitution because it denies the plaintiffs the right to earn a living of their choice but does not further a legitimate government interest.
"In the classic story of entrepreneurship, someone starts a taxi business in order to save up enough money to buy a house," said Institute for Justice staff attorney Anthony Sanders, lead counsel for the plaintiffs. "In Milwaukee, you need to save up enough money to buy a house just to start a taxi business."
Before the 1991 change, the city issued permits that were not transferable. But longtime taxicab operators wanted to be able to sell their businesses, and the value of built-up goodwill, so the city decided it would not issue new permits, but make existing ones transferable.
The free market needs to remain free -- and free of government intervention.
More government meddling here and here. The DC taxi racket here.
Grrrr. One of my pet peeves. Restricted taxi licences where I live have made cabs almost impossible to get at certain times, and yet the value of those plates (upwards of $500k) makes it politically impossible to issue more. Because their value would drop, and government has created an artificial "property" that apparently they have to compensate for.
And yet, every time the suggestion that the industry might be deregulated comes up, the answer is always "but the drivers would suffer, more competition, too many cabs chasing fares, race to the bottom, yada yada yada". Never mind that half the fare goes to the taxi plate owner to pay their mortgage on the license, and that the drivers have to pay for anyone who does a runner or damages the cab.
As far as I'm concerned - create a simple list of rules you have to follow to operate a cab (similar to food safety), then anyone who wants to can. The existing plate owners, quite frankly, can go jump. Compensation? Forget it. You had a good run.
Ltw at September 28, 2011 12:59 AM
Just to prove I'm not kidding
http://melbournecabs.com.au/Taxi%20Licence%204%20Sale%20$480,000.aspx
$150k? Chickenfeed.
Ltw at September 28, 2011 1:04 AM
I grew up in Milwaukee and go back to visit family frequently. And drunken driving is more commonplace and visible there than ANY place I've ever lived (and I live in Austin now, so that's saying something). I suspect a lack of cabs might have something to do with it -- it's like bumper cars at bar close.
Last time I was there, a bunch of us were going out, and we were having the "OK so who's gonna be DD?" conversation. And I said, "Oh, well we could just grab a cab to J's house, crash there, and then go get our cars in the morning." And everyone was like, "A CAB??? Are you kidding? This isn't New York!!" *sigh* I was then told that it's rare to find cabs cruising the hotspots -- you have to call and schedule one and then wait for an hour or so.
sofar at September 28, 2011 7:39 AM
And people wonder why Milton Friedman railed against asinine licensing regimens....
Mark at September 28, 2011 11:14 AM
There is a disproportionately high number of Austinites on here, Amy. How heavily have you marketed to newspapers here? Your blog readers stats might help you if you don't have one here. (I don't read the alt paper here, so don't know...)
momof4 at September 28, 2011 11:40 AM
Anchorage is even worse -- taxi licenses go for $20k each.
Gov't has a role in setting standards, to avoid free-rider problems.
After that, get the [bad words] out of the way.
Jeff Guinn at September 28, 2011 10:03 PM
I can see a minimal requirement for registering taxis -- such as a business license, and having extra inspections on the vehicles on a monthly, quarterly, semi-annual basis for safety. The rates need to be posted.
But these restrictions are a lottery ticket.
Jim P. at September 28, 2011 10:50 PM
Where I lived some years ago the county I lived in sold as many taxi licenses as they could (call A), the next county over had a limited number ( call it B). There was similar complaints reported in the paper at the time, though not as bad. Not Limo service had lesser licences - they can only do pre scheduled.
This is as I remember the news paper article (Yes, a newspaper, this was quite some time ago.)
Costs / mile were about the same. In A, about 20% of cabs were controlled by one company, the rest were small ... usually 1-3 cabs. In B, it was about equal divided between 3 companies and only a few individuals. In A, you never knew when cabs would be available and you almost always had to call, sometimes more than one company. Companies also came and went often. B often had cabs avaialbe at high demand areas, but generally not enough to meet desire. Cabs in B were generally considered cleaner and more professional than those in A.
The survey done by the paper indicated most people thought B was a better model, but that needed to issue some more licenses.
The Former Banker at September 28, 2011 10:51 PM
The whole industry is like this the world over
CABiT
Adam at May 22, 2014 7:04 PM
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