Freedom To Work

If a person wants to go into business as a taxicab owner, what requirements should be imposed to protect the public? The prospective taxicab owner should show that he is honest and can operate a vehicle safely. His vehicle should pass a safety inspection, and he should have a liability insurance policy. Some cities require the purchase of an existing license, sometimes called a medallion. A medallion has cost as much as over $1 million, as in the case of New York City, and the cost has reached $700,000 in Boston and $360,000 in Chicago. There is no public protection interest served by forcing a person to go into debt to purchase a taxi medallion, but doing so does serve an interest.

Before we talk about that, let’s look at some good news for prospective taxi owners. The Arlington, Virginia-based Institute for Justice is a nonprofit libertarian public interest law firm that has been on the forefront in the fight for economic liberty for 2 1/2 decades. During that time period, it has piled up numerous victories. The most recent is its Oct. 7 win in the 7th U.S. Circuit Court of Appeals, which issued two groundbreaking decisions that will help

In the Chicago case, Judge Posner, who is very knowledgeable about economics, applied the great economist Joseph Schumpeter’s notion of “creative destruction.” He explained that Uber, Lyft and other companies that are wreaking destruction on the old taxi cartel are examples of companies engaging in a natural part of free market behavior. Posner wrote: “When new technologies, or new business methods, appear, a common result is a decline or even disappearance of the old. Were the old deemed to have a constitutional right to preclude the entry of the new into the markets of the old, economic progress might grind to a halt. Instead of taxis we might have horse and buggies; instead of the telephone, the telegraph; instead of computers, slide rules. Obsolescence would equal entitlement.”

Some city officials gain from taxi monopolies. New York Mayor Bill de Blasio says he’s against more taxis because of traffic congestion. However, it could be because New York’s taxi industry contributed more than $550,000 for de Blasio’s mayoral campaign. And whose side do you think black politicians and civil rights organizations are on, the side of incumbent taxi owners and taxi unions or the side of prospective taxi owners who have the physical means to get into the taxi business but not hundreds of thousands of dollars to buy a medallion?

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