IJ Continues to Free the Cabs

February 1, 2009

Driving a taxi is a longstanding and traditional way to achieve the American Dream. It does not take much capital or formal education, but rewards determination and a willingness to work hard.

Throughout the country, places like Minneapolis and Colorado changed their laws to eliminate outdated, protectionist taxi regulations and now permit new entrepreneurs into their markets. Following the successful effort of the IJ Minnesota Chapter to convince the city of Minneapolis in 2006 to abolish its cap on the number of taxis allowed to operate in the city, a wave of taxi reform is rising nationwide, and IJ is hard at work to make sure these changes happen.

It was almost 14 years ago that IJ helped a company called Freedom Cabs become the first new taxicab company since 1947 to enter the Denver market. Since that time, other Colorado entrepreneurs have tried, unsuccessfully, to follow Freedom Cabs’ path.

“We aren’t asking for a bailout—just the chance to try to compete on our own,” said taxi entrepreneur Abdi Buni. “Give us a shot. We shouldn’t be shut out of the business of our choice by the government.”

Through our Human Action Network members—individuals IJ has trained over the years—we reached out in the Denver community to find legal representation for a taxicab entrepreneur eager to begin work. This helped pave the way for a new round of legislative reforms, which in turn led to four new taxicab company applications last year. IJ then raised the profile of this issue by drafting an amicus brief, holding a large taxi rally on the steps of the Capitol and conducting radio and television interviews.

Just before New Year’s, the Colorado Public Utility Commission voted to allow Buni’s company, a cooperative of more than 200 individually owned cabs, to operate in Denver. It also expanded the vehicle allowance for Freedom Cabs thereby allowing the business to grow in response to market forces.

Unfortunately, the Commission denied the applications of two smaller start-ups; the future of a fourth remains to be determined. Although not perfect, the growth in competition is still a substantive step towards a free taxi market.

The Institute for Justice is similarly engaged in Connecticut. Last June, we organized more than 80 taxi drivers from across the state to rally outside the Capitol with a simple message: “Free Our Cabs.”

Currently, it is illegal for anyone to open a taxi business in Connecticut unless he can prove that it would be “necessary”—that is, that it would not take customers away from an existing taxi business. To make things worse, existing taxi companies are allowed to participate in the process, which amounts to full-blown litigation and can take almost a year.

Imagine this kind of system in any other industry. We do not allow Burger King to have a say in whether a new McDonald’s opens in town. The results of this system are predictable: consumers suffer and taxi drivers end up locked out of the market, forced to pay exorbitant fees just to work for someone else.

Americans deserve better. That is why the Institute for Justice is taking our message of freedom to policymakers across the country. From Denver to Minneapolis to Connecticut and beyond, IJ is working to clear the roadway to allow entrepreneurs their chance to earn an honest living.

Valerie Bayham is an IJ staff attorney.

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