The Minneapolis Taxi Cartel

George Will reports on Luis Paucar's right to work:

In 1937, New York City, full of liberalism's itch to regulate everything, knew, just knew, how many taxicab permits there should be. For 70 years the number (about 12,000) has not been significantly changed, so rising prices have been powerless to create new suppliers of taxi services. Under this government-created scarcity, a permit ("medallion") now costs about $500,000. Most people wealthy enough to buy medallions do not drive cabs, any more than plantation owners picked cotton. They lease their medallions at exorbitant rates to people like Paucar who drive, often for less than $15 an hour, for long days.

Attracted by Minneapolis-St. Paul's vibrant Hispanic community, now 130,000 strong, Paucar moved here, assuming that economic liberty would be more spacious than in New York. Unfortunately, Minnesota has a "progressive," meaning statist, tradition that can impede the progress of people like Paucar but who lack his knack for fighting back.

The regulatory impulse came to the upper Midwest with immigrants from Northern Europe, many of whom carried the too-much-government traditions of "social democracy." In the 1940s, under a mayor who soon would take his New Deal liberalism to Washington -- Hubert Humphrey -- the city capped entry into the taxi business.

By the time Paucar got here in 1999, 343 taxis were permitted. He wanted to launch a fleet of 15. That would have required him to find 15 incumbent license-holders willing to sell their licenses for up to $25,000 apiece.

As a byproduct of government intervention, a secondary market arose in which government-conferred benefits were traded by the cartel. In 2006, Minneapolis had only one cab for every 1,000 residents (compared to three times as many in St. Louis and Boston), which was especially punishing to the poor who lack cars.

That fact -- and Paucar's determination and, eventually, litigiousness; he is a real American -- helped persuade the City Council members, liberals all (12 members of the Democratic Farmer-Labor Party, one member of the Green Party), to vote to allow 45 new cabs per year until 2010, at which point the cap will disappear. In response, the cartel is asking a federal court to say the cartel's constitutional rights have been violated. It says the cap -- a barrier to entry into the taxi business -- constituted an entitlement to profits that now are being "taken" by government action.

It time to get rid of licensing and let the market decide how many cab drivers are needed.