Hailing Freedom for Milwaukee Taxi Entrepreneurs

By Anthony Sanders

The Institute for Justice is returning to its roots in a big way. One of IJ’s first cases successfully challenged the prohibition on new taxicab companies in Denver. That case allowed our clients to found Freedom Cabs, Denver’s first new cab company in nearly 50 years.

Another version of Freedom Cabs may be coming soon, this time to Milwaukee. IJ clients Ghaleb Ibrahim, Jatinder Cheema and Amitpal Singh are all experienced taxi drivers who simply want to own their own cabs. But, because of the city’s anticompetitive taxi regulations, they would have to pay an existing taxi owner about $150,000 to legally own a cab. This is because the city of Milwaukee only allows 321 taxis on its streets. If you want a taxicab license, you must buy it from an existing owner. Because demand for cab licenses exceeds their artificially limited supply, the price is more than an average Milwaukee home.

Owning a taxicab should not cost more than owning a house. And so, in September, IJ sued the city on behalf of these drivers asking the court to strike down the government-imposed cap on the number of cabs that may legally operate in Milwaukee. The cap violates our clients’ right to earn an honest living, protected under the Wisconsin Constitution.

All of our clients are immigrants simply following the American Dream. For example, Ghaleb Ibrahim immigrated more than 30 years ago and has driven a taxicab for much of that time. At first he liked the job. He was free to set his own hours and provide a needed public service—transportation. Then the city imposed the cap. Restricted by the monopoly, the price of permits then predictably rose, and cab permit holders began charging drivers exorbitant taxi rental rates, well above what would be allowed in a free market. Faced with this situation, Ghaleb had to leave the occupation. He wants back in, but only if he can own his own cab.

Entrepreneurs and consumers—not the government and a self-interested cartel—should decide how many taxicabs operate in Milwaukee. Running a taxicab does not require formal education or much financial capital, just hard work and the desire to succeed. The only things the city can constitutionally require are—at most—an insured and inspected vehicle and a clean driving record. Anything more than that stifles entrepreneurship and simply protects existing businesses from competition—the last thing the government should be doing in this economic climate.

This issue resonates with anyone who has tried to catch a cab in Milwaukee. Our launch was very successful, with favorable coverage in the Milwaukee Journal-Sentinel and local television news, as well as interviews on talk radio and public radio. The Journal-Sentinel editorial board endorsed our lawsuit, calling for the city to lift the cap and “let the market decide.”

Exactly right. Our clients are not looking for a handout or any special favors. They simply want to let the market—that is, freedom—decide what taxi services best meet consumers’ needs. And IJ won’t rest until we have ensured that both our clients and the marketplace itself, are free from these needless government restrictions.

Anthony Sanders is an IJ Minnesota Chapter staff attorney.