Taxi regulations harm consumers, cost jobs

Commentary — By on July 20, 2012 at 9:18 am

The Metro Nashville Transportation Licensing Commission, which regulates taxicabs, limos, sedans, and horse-drawn carriages, recently came under fire after it was revealed that its inspectors were posing as police officers. Beacon Center research associate Steven Strausbaugh pens an article in today’s Tennessean calling for the elimination of the commission and a return to free market principles in the local transportation business.

by Steven Strausbaugh

The Nashville Metro Transportation Licensing Commission is taking away our freedom of choice. The commission is responsible for regulating taxicabs, limousines, and horse carriage transport in Nashville.

If left to their own devices, consumers in the free market would decide naturally the optimal number of drivers, appropriate rates, and preferred services across the board for higher transportation. The existence of a centralized authority making decisions that should be left to citizens is currently preventing the local economy from growing.

Centralized planning disrupts natural market forces and cannot effectively adjust to market demands. For example, if Nashville consumers demand 1,200 cabs as a result of the new convention center, what happens when the Transportation Licensing Commission only authorizes 700 cabs?

That leaves 500 citizens desiring to work without jobs, something that is an ongoing problem in our country. Those are 500 jobs that would be created if the market was allowed to operate without government interference.

The market demand for cabs fluctuates naturally. The commission puts a ceiling on the upper threshold of cabs and prevents consumers from deciding how many cabs are necessary.

Taxicabs are subject to massive amounts of inspections and licensing fees, and the commission prevents the taxi industry from setting its own prices. Similarly, limo and sedan companies now have a government-mandated minimum fare they can charge – set at a whopping $45 per ride. The commission has an annual budget of more than $450,000, which is not fulfilled by revenue generated from fees within the industry, putting the burden directly on taxpayers.

The proper process to determine the amount of cabs and price of rides in a free society would allow for markets to decide what is best and arrange itself in an appropriate fashion.

To make matters worse, the commission’s director recently resigned amidst a controversy involving his employees presenting badges emblazoned with the words “Metro Police,” which is likely illegal since they are not police officers.

A Huffington Post report on this incident says the Transportation Licensing Commission was conducting stakeouts in unmarked vehicles and using blue lights to make traffic stops of limo and sedan drivers.

Tennessee law makes impersonating a police officer a class A misdemeanor, punishable by up to 11 months in jail and fines. This incident is further proof that the commission is out-of-control and unaccountable to the very consumers it claims to protect.

The commission has proven to be a miserable failure. It’s time to let go of the Transportation Licensing Commission and let consumers, not bureaucrats, call the shots when it comes to hired transportation.

Steven Strausbaugh is a research associate at the Beacon Center of Tennessee, a Nashville-based think tank dedicated to changing lives through public policy by advancing the principles of free markets, individual liberty, and limited government.

 


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