Free rides, no — freed drivers, yes

Paul Jacob
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Posted: Nov 04, 2007 12:00 AM
Free rides, no — freed drivers, yes

What do New York and Minneapolis have in common? I mean, besides being big American cities whose denizens tend to talk a bit funny.

The answer? Taxicab troubles.

A few months ago, some New York cabbies went on strike . . . not against their employers, but against the city. The city has insisted on micromanaging their businesses, forcing cab companies to install expensive and costly electronic devices.

In New York, the city government is so “pro” consumer that it decides not only what taxi businesses may charge for their services, but what, precisely, must be offered. The one thing the city government can’t stand is consumer and producer options. Or competition.

This really upsets many cab drivers, as well as a few cab companies. Last I heard, there was talk of another strike. The city government, headed by this guy named Bloomberg, remains resolute, however. The cabbies will remain under his thumb.

Meanwhile, the city of Minneapolis went the other direction, towards deregulating taxis. The number of allowed cabs will increase, and in a few years all caps will be removed. Yes, Minneapolis is trying that always radical, always common-sense idea, the free market.

So of course the taxicab cartel sued.

In New York, cab drivers are upset about too much government. In Minneapolis, the previously cartelized cab companies are upset about too little.

A lot of small-business cab drivers are on the city’s side, however. Yes, they are all for deregulation. With a freer market, they finally get the chance to work as cabbies in the previously heavily regulated Minnesota city.

Into the fray came the Institute for Justice, a national group of lawyers defending individual rights. These lawyers have a simple approach: they defend the freedom of contract, private property rights, that kind of thing. In their ads they call themselves “IJ.” And they aim to bring back the U.S. Constitution one case at a time.

The group is based not far from where I live, in Virginia, but I was surprised to learn that IJ has a Minnesota chapter. And I was not surprised — I was pleased — to learn that the chapter has taken up the Minnesota case, the freedom of individuals to go into the taxi biz.

Even more pleasing? Their work has been successful. (So far.) U.S. Magistrate Judge Franklin L. Noel sided with the city and IJ and against the taxi cartel. The judge was matter-of-fact: “The [established] taxi vehicle license holders do not have a constitutionally protected freedom from competition.”

Nice choice of words. We have a lot of freedoms, but freedom from competitors isn’t one of them. Freedom to trade with potential customers is.

IJ may have defended a Minneapolis policy, but it was an individual — one Luis Paucar — whom they represented. Mr. Paucar had tried for years to get a taxi license in the city — he’d operated several cabs in a suburb, but the city gave him the run-around. He approached IJ, and they worked with the city council to liberalize taxi licensing. After enactment, the new law allowed two rounds of 45 new licenses to open up competition in the city. Mr. Paucar got his, so he’s understandably thrilled: “All I ever asked for was the ability to enter the market and to compete.”

But there are more speed bumps for the future of taxi service liberalization. Alas, this case is far from over. The Magistrate merely ruled on one point of contention, the value of licenses in the secondary market. The taxi cartel can appeal, providing the District Court a 3,500 page brief on their side; IJ would get 3,500 more for freedom’s side.

Lee McGrath, Executive Director of Minnesota’s IJ chapter, expresses hope about the ultimate outcome, and is understandably pleased about the recent ruling — the Magistrate, he says “got it right.” Yes, the Constitution does appear to favor freedom, and certainly doesn’t forbid cities from relaxing regulations.

But, as with all litigation, it’s not over until the final verdict . . . and the exhaustion of the last appeal.

Still, Mr. Paucar — along with other Minnesotan business people — have new licenses to provide taxi services in Minneapolis. Minnesotans and visitors to Minneapolis now have a few more cabs at their service. Things are looking up for the future.

Competition? Ya, sure, you betcha.