By the time Paucar got here in 1999, 343 taxis were permitted. He wanted to launch a fleet of 15. That would have required him to find 15 incumbent license-holders willing to sell their licenses for up to $25,000 apiece. As a byproduct of government intervention, a secondary market arose in which government-conferred benefits were traded by the cartel. In 2006, Minneapolis had only one cab for every 1,000 residents (compared to three times as many in St. Louis and Boston), which was especially punishing to the poor who lack cars.
That fact -- and Paucar's determination and, eventually, litigiousness; he is a real American -- helped persuade the City Council members, liberals all (12 members of the Democratic Farmer-Labor Party, one member of the Green Party), to vote to allow 45 new cabs per year until 2010, at which point the cap will disappear. In response, the cartel is asking a federal court to say the cartel's constitutional rights have been violated. It says the cap -- a barrier to entry into the taxi business -- constituted an entitlement to profits that now are being ``taken'' by government action.
The Constitution's Fifth Amendment says no property shall be ``taken'' without just compensation. The concept of an injury through ``regulatory taking'' is familiar and defensible: Such an injury occurs when a government regulation reduces the value of property by restricting its use. But the taxi cartel is claiming a deregulatory taking: It wants compensation because it now faces unanticipated competition.
When the incumbent taxi industry inveigled the city government into creating the cartel, this was a textbook example of rent-seeking -- getting government to confer advantages on an economic faction in order to disadvantage actual or potential competitors. If the cartel's argument about a ``deregulatory taking'' were to prevail, modern government -- the regulatory state -- would be controlled by a leftward-clicking ratchet: Governments could never deregulate, never undo the damage that they enable rent-seekers to do.
By challenging his adopted country to honor its principles of economic liberty and limited government, Paucar, assisted by the local chapter of the libertarian Institute for Justice, is giving a timely demonstration of this fact: Some immigrants, with their acute understanding of why America beckons, refresh our national vigor. It would be wonderful if every time someone like Paucar comes to America, a native-born American rent-seeker who has been corrupted by today's entitlement mentality would leave.