The Government Is Forcing Businesses To Overcharge Their Customers
The wonderful Institute for Justice has taken on another case -- in Tampa, Florida, where all sedan and limo trips, no matter how short, are required to cost at least $50. Even if the driver wants to charge less. Even if the passenger wants to pay less.
As IJ's Mark Meranta wrote to me, "Consumers need the government protecting them from affordable prices as much as they need a government agency protecting them from pillows that are too soft."
More on their case:
Tampa, Fla.--It shouldn't be illegal for businesses to give their customers a better deal. And yet, in Tampa, Fla., the Hillsborough County Public Transportation Commission is making it illegal for limo and sedan entrepreneurs to give their customers a better deal when it comes to rides. That is why a coalition including a limo driver, his small business and consumers has joined with the Institute for Justice to sue the Public Transportation Commission today in state court in Tampa under the Florida Constitution.The limo driver and small limo business want to offer cheaper deals and better values to customers. The customers want to accept these offers. There is only one thing standing in their way--the Hillsborough County Public Transportation Commission.
The commission was created by the Florida Legislature, ironically, to protect transportation consumers in Hillsborough County. It is the only commission of its kind in the entire state of Florida. Not surprisingly, it has passed burdensome regulations and restrictions not common in other places. And these restrictions include requiring limo and sedan drivers to overcharge their customers.
One of the rules specifically mandates that limo and sedan drivers charge at least $50 per ride, no matter how short the ride. The drivers and customers are allowed to agree on a price above the minimum, but agreeing on a lower price is against the law.
"This law is blatant protectionism," explained Institute for Justice Florida Chapter Executive Director Justin Pearson. "Large, politically connected taxi companies love this rule because it prevents competition from limousines and sedans. Even some large limo companies like the rule because it prevents smaller limo companies from competing with them on the basis of price. With the commission's help, these entrenched interests have been able to divvy up the people of Tampa. But that is not the proper role of government. Government is there to protect public health and safety; not to protect businesses from giving consumers a better deal."
"Consumers and entrepreneurs--and not the government--should decide for themselves how much a ride should cost," Pearson said. "It is also unconstitutional for the commission to force consumers to be overcharged and to harm small business owners by preventing them from growing their businesses and creating jobs by offering better values to their customers."
"Tampa is one of only a handful of places where these minimum fare laws exist," explained IJ Attorney Ari Bargil. "Consumers need government protection from prices that are too low as much as they need government protection from pillows that are too soft."
Minimum price requirements alway benefit some privileged interest, the cronies of politicians who produce the law. A new business or inexperienced person cannot compete on reputation and proven quality; he must compete on price. Raising the legal price keeps competition out.
Business interests are far-seeing and amoral. They will support a restriction which nips competition in the bud. Businesses should have wide lattitude to operate as they wish, but not in collusion with politicians.
Minimum wage legislation did not arise from a noble effort to help the poor. Senator and future President John F. Kennedy of Massachusetts spoke at a Senate hearing for the minimum wage (link below):
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Having on the market a rather large source of cheap labor [hundreds of thousands of black workers] depresses wages outside of that group, the wages of the white worker who has to compete.
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Minimum Wage Prosperity: Using the Minimum Wage to Hamper Your Rivals
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Some employers benefit from an increase in the minimum wage because it raises the cost of labor for their rivals. This is why unions have typically been in favor of the minimum wage even when their own workers make much more than the minimum.
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( econlib.org/library/Columns/y2007/Robertspolitics.html )
The Economic Way of Thinking about Politics
12/03/07 - Russell Roberts at Econlib
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[edited] Politicians are just like the rest of us. They find it hard to do the right thing. They claim to have principles, but when their principles clash with what is expedient, they often find a way to justify their self-interest. If they sacrifice what is noble or ideal for personal gain, they are sure to explain that it was all for the children, or the environment, or at least for the good of society.
Bruce Yandle uses bootleggers and Baptists to explain what happens when a good cause collides with special interests.
When the city council bans liquor sales on Sundays, the Baptists rejoice. It is wrong to drink on the Lord's day. The bootleggers rejoice too. It increases the demand for their services.
The Baptists give the politicians cover for doing what the bootleggers want. No politician says we should ban liquor sales on Sunday in order to enrich the bootleggers who support his campaign. The politician holds up one hand to heaven and talk about his devotion to morality. With the other hand, he collects campaign contributions (or bribes) from the bootleggers.
Yandle points out that virtually every well-intentioned regulation has a bunch of bootleggers along for the ride, special interests who profit from the idealism of the activists and altruists.
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Andrew_M_Garland at August 28, 2013 5:42 PM
Why should any company need anything more than a business license?
Tell me where an individual community can override state law?
This is just disgusting.
Jim P. at August 28, 2013 7:36 PM
Jim P.: "The commission was created by the Florida Legislature, ironically, to protect transportation consumers in Hillsborough County." So it's not overriding state law. In at least some states, there are county-level and city-level powers that actually require a state law to implement.
silverpie at August 28, 2013 9:18 PM
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