IJ Defends Free Market Taxi Reforms

J. Justin Wilson
J. Justin Wilson · May 1, 2007

Minneapolis, Minn.—Can an entrenched cartel of Minneapolis taxi drivers violate the civil rights of entrepreneurs and consumers?

Not according to the Institute for Justice Minnesota Chapter (IJ-MN), which filed documents today in U.S. Federal Court to join with the city of Minneapolis to defend the city’s free-market reforms that removed a cap on the number of taxis allowed to operate within city limits. The reforms, finalized on March 30, will open the market to entrepreneurs who are fit, willing and able to serve the public, increase the number of cabs by 180 in the coming years, and eliminate completely the cap on the number of cabs in Minneapolis by 2010.

In response to these free-market and consumer-friendly reforms, the established taxicab cartel sued the city on March 13, demanding the reversal of reforms and proclaiming its owners should be able to keep the spoils of the old law that excluded new competitors from the taxi market in Minneapolis for more than 10 years.

“Private companies cannot be allowed to force the government to outlaw competition,” said Nick Dranias, staff attorney with IJ-MN. “The city did the right thing when it opened the taxi market, but now the cartel is suing to maintain its stranglehold on the industry and keep out newcomers. The cartel’s action is the last gasp of a dinosaur that free market reforms have made extinct.”

The taxi reforms restore freedom of choice for consumers and open the door of economic opportunity to entrepreneurs. Further, they abolish the system that, in the words of Professor Jerry Fruin of the University of Minnesota’s Center for Transportation Studies, turned taxi drivers into “modern urban sharecroppers.” Importantly, the free-market reforms do not deprive anyone of the right to operate a taxi company or to obtain a taxi license as the cartel’s lawsuit attempts to do.

That is why Luis Paucar and Blanca Prescott joined the Institute for Justice today to intervene as a third party and join with the city in defending its reforms against the taxi cartel’s lawsuit. Luis is a taxicab entrepreneur who has tried for more than four years to provide service in Minneapolis and was finally granted 12 cab licenses on March 30, 2007. Blanca is representative of the thousands of consumers who gain when they are not taken for granted by an entrenched cartel that claims the right to be protected from competition.

“It’s hard to believe I lost my vision over ten years ago,” said Blanca, a single mother of three, who experienced firsthand the effects of the cartel one horrible afternoon in 2005. “But it’s even harder to believe that anyone wants to restore the old law when just two years ago it made a police officer order me out of A New Star car and leave me stranded in a parking lot just because my driver wasn’t part of the Minneapolis taxicab cartel.”

“The cartel violates the civil rights of entrepreneurs like Luis,” said IJ-MN Executive Director Lee McGrath. “Today, we are intervening in this case to defend the city’s free-market reforms because taxicab entrepreneurs have the right to earn an honest living in the occupation of their choice free from the anti-competitive barriers to entry that the taxi cartel wants to preserve. And like Blanca, we believe consumers should be free to choose who provides their transportation services.”

IJ-MN already has four economic liberty victories under its belt despite being just two years old. The group recently published a 21-page paper titled The Land Of 10,000 Lakes Drowns Entrepreneurs in Regulations, which exposed the shocking state of economic liberty in Minnesota, including the taxi industry in Minneapolis. The report is available online: www.ij.org/publications/city_study/index.html.

Chip Mellor, president and general counsel of the Institute for Justice, concluded, “We will not rest until this fundamental civil right—the right to economic liberty—is secure for all Americans.”

Legislators and journalists may download the report here.