- The Washington Times - Wednesday, June 5, 2013

The meter has run out for the insiders and their taxi monopoly in Milwaukee. A county judge has ordered city officials to issue permits for any qualified cab drivers who want to start a new business. The ruling is a small one, but it’s a significant blow against the crony capitalism that threatens the economic freedom of the rest of us.

Private companies are sometimes eager to embrace legislation they can use to hobble competitors. In Milwaukee, taxi companies hit the jackpot in 1991 when they successfully lobbied the city to impose a cap on new taxi permits. In a city of nearly 600,000 people, there are only 321 permitted taxi drivers. More than half of the permits are owned by one person, who rents his licenses to drivers for $400 for each 12-hour shift. It’s a windfall for him, but a rotten deal for those seeking a piece of the American Dream and a bad bargain for anyone trying to find a ride.

The artificial scarcity of licenses sent their value from $85 in 1992 to $150,000 today. The lawyers at the Institute for Justice found the situation so outrageous they sued the city on behalf of three immigrants who met all the legal requirements, but were denied a permit anyway. The institute lawyers argued that the city’s limit on the number of taxicabs was arbitrary, anti-competitive and unconstitutional. This time, the good guys won.

Turning basic history and economics on their pointy heads, the city officials claimed that limiting competition would make taxi drivers more “professional.” They insisted that lifting the cap would cost taxpayers because the city’s Taxicab Review Board would have to hold annual meetings on the topic. Judge Jane Carroll rejected those arguments, finding that the city could not write laws just to save itself the bother of attending meetings. She said the cap did nothing but fill the pockets of a select group of persons. “What this looks a lot like is protecting the property interests of the permit holders as of January 1st of 1992, which has clearly been found to be not a legitimate government purpose,” she said. “This law does interfere with the plaintiff’s right to obtain a permit from the city. There is no rational basis, and it also fails under substantive due process.”

Anthony Sanders, the lawyer for the Institute for Justice, drew the right lesson. “The court understands that the city purposefully created an unconstitutional taxi system, where only the privileged few would benefit and competition would be outlawed,” he said. “Thankfully, those days are over.”

Ghaleb Ibrahim, one of the plaintiffs in the lawsuit, said, “I believe in the American justice system.” If only the city of Milwaukee shared this faith. Victories for free markets are often few. In Milwaukee, however, the lady in the blindfold arrived at her destination. It’s a rare victory that citizens everywhere can celebrate.

The Washington Times