Why would Nashville force limousine companies to nearly double their prices to consumers? The Institute for Justice highlights the plight of independent limo operators who find themselves at the mercy of a partnership between city politicians and big limousine operators in Music City. The Tennessee Livery Association, a trade group formed by the largest competitors in the field, pressed the Metropolitan City Council to pass a wide-ranging set of mandates that not only forces customers to either pay more or opt for taxi services rather than the more comfortable limo services, but also imposes onerous new costs onto smaller, independent operators. The net effect will reduce demand for limo services and squeeze small businessmen like Ali Bokhari out of the market:
Until 2010, sedan and independent limo services were an affordable alternative to taxicabs. A trip to the airport only cost $25. But in June 2010, the Metropolitan County Council passed a series of anti-competitive regulations requested by the Tennessee Livery Association—a trade group formed by expensive limousine companies. These regulations force sedan and independent limo companies to increase their fares to $45 minimum.
The regulations also prohibit limo and sedan companies from using leased vehicles, require them to dispatch only from their place of business, require them to wait a minimum of 15 minutes before picking up a customer and forbid them from parking or waiting for customers at hotels or bars. And, in January 2012, companies will have to take all vehicles off the road if they are more than seven years old for a sedan or SUV or more than ten years old for a limousine.
These regulations have nothing to do with public safety. Nashville could have limited its requirements to those regulations that are designed to genuinely protect the public’s health and safety, such as requiring insured and inspected vehicles, and driver background checks, but instead, Nashville is stooping to economic protectionism to put affordable car services out of business in favor of more expensive services that happen to have more political power. Many Nashville residents who regularly use limos and sedans will be forced to spend twice as much money for exactly the same service and hard-working sedan drivers will be driven out of business.
Yeah, you know, that Ayn Rand was a nut, huh? That Anti-Dog-Eat-Dog rule doesn’t happen in real life. And government doesn’t partner with favored businesses in “trade associations” to destroy competition and innovation. All that Atlas Shrugged nonsense is, like, totally unrealistic.
Until, that is, it happens to you, either as a businessman like Bokhari, or as consumers, as those who used to use the services of Bokhari and others at a fair price that satisfied everyone. As in Atlas Shrugged, the intervention is supposedly to save consumers from danger, but in practice just eliminates upstarts that threaten the market position of the powerful — and makes those powerful even more reliant on interventionist government.
This kind of mercantilism doesn’t just happen on the federal level, and IJ is fighting to keep it from spreading on all levels. Be sure to follow this case as it proceeds.