Until recently, Nashville, Tenn., was a city with a vibrant transportation network. Robust competition between taxicabs and the Music City’s many limousine and sedan services meant you could take a cab from downtown to the airport for just $25, or you could pay the same price to go in a limo or sedan. As a result, everyday people in Nashville could hire a luxury car to get them to work or to take them out on the town.
But in June 2010, Nashville passed a series of regulations designed to prevent limos, sedans and taxicabs from competing with each other. Today, consumers and transportation entrepreneurs are paying the price. Nashville’s new regulations require limo and sedan operators to charge a minimum of $45 per trip—an 80 percent increase on their average fare.
Additionally, car services (as limos and sedans are collectively called) cannot use leased vehicles, but must hold the title; they must dispatch only from their place of business and wait a minimum of 15 minutes before picking up passengers, delaying response times; they cannot park or wait at any place of public accommodation, such as a hotel or bar; and, as of January 2012, they cannot put any vehicle into service if it is more than five years old, no matter how well-maintained it is, and they will have to take cars out of service once they are more than seven years old (or ten years old for a limo).
These regulations have nothing to do with public health or safety; they have everything to do with economic protectionism. The trade group representing Nashville’s most expensive limo companies was so closely involved in the genesis of these regulations that its president claims to have written them. “Not many organizations get the opportunity to contribute and steer the actual content and wording of pending legislation,” he said. “It’s a win-win.”
But the new regulations are anything but a “win” for affordable car services and their customers. A number of transportation businesses, burdened with these pointless requirements, have simply shut down. Nashvillians who use limos and sedans are being forced to take taxicabs or spend double for exactly the same service.
Now, with the help of the Institute for Justice, affordable limo and sedan operators are suing Nashville in federal court, seeking an injunction to stop the new regulations. This case will build on IJ’s landmark 2002 victory against Tennessee’s funeral director cartel, which wanted to keep casket retailing all to itself. That case—which was the first federal appeals court victory for economic liberty since the New Deal—established that economic protectionism is never a legitimate function of government.
Similarly, Nashville cannot put affordable limo and sedan companies out of business just to help out their expensive competitors. There must be a legitimate public health or safety reason for regulations, and, in this case, there are none.
This is another sad example of what happens when public power is used for private gain. But we are going to put a stop to that. Consumers, not the government, should pick winners and losers in the marketplace. The Institute for Justice will continue to work to vindicate that principle.
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