NYC also hating on innovation, opportunity with interminable food-truck regulations

posted at 7:21 pm on May 8, 2013 by Erika Johnsen

The other day, I mentioned the disheartening case of Uber cab and New York City’s many rules and regulations governing their business model, which just so happen to allow established cab companies and their associations plenty of recourse for rent-seeking rather than coping with the competition brought on by Uber’s arrival on the scene.

Most unfortunately, that growth-discouraging pattern isn’t a random quirk of the transportation industry: The restaurant business is also rather displeased that some companies have been enterprising enough to put their operations on wheels, and the city most unwisely makes it worth their while to try and thwart the food-truck business from scooping up portions of their market share through means other than simply attracting customers. It’s one thing to require food vendors to have a health-and-safety permit, but what’s going on here is another thing entirely, via the NYT:

That’s because despite the inherent attractiveness of cute trucks and clever food options, the business stinks. There are numerous (and sometimes conflicting) regulations required by the departments of Health, Sanitation, Transportation and Consumer Affairs. These rules are enforced, with varying consistency, by the New York Police Department. As a result, according to City Councilman Dan Garodnick, it’s nearly impossible (even if you fill out the right paperwork) to operate a truck without breaking some law. Trucks can’t sell food if they’re parked in a metered space . . . or if they’re within 200 feet of a school . . . or within 500 feet of a public market . . . and so on. …

Economically speaking, the problem is a standard one, known as the J-curve, which represents a downslope on a graph followed by a steep rise. Some sensible changes to the current food-vendor system may have long-term benefits for everyone, but the immediate impact could spell short-term losses for those who now profit from the system. A small group of New Yorkers — particularly owners of commissaries and physical restaurants — are highly motivated to lobby politicians not to change things. And most of the potential beneficiaries don’t realize they’re missing out. Many of the rest of us would love to have more varied food trucks, but we don’t care enough to pressure the City Council.

The one group that clearly suffers from the current system — the ticketed vendors — are often poorly paid immigrants without legal status and virtually no power. This sort of dynamic more or less sums up the economies of the third world. Economists generally agree that one of the distinguishing factors between rich countries and poor ones is that it is much easier to start businesses in rich countries.

Mary Katharine has already written about the many problems imposed on would-be food-truck entrepreneurs in the nation’s capital, and it certainly sounds like Manhattan is no picnic, either.

Again, this is just a micro-example of the type of junk regulation and special-interest pandering happening all over the place, but the good news is that these tax-heavy, regulatory-raging cities and states can compete for residents just like businesses can compete for profits. I wonder if situations like this aren’t one of the reasons New York City is one of the slowest-growing cities in the United States, perhaps?


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