If you’ve thought of starting a small business — say a taxicab or a home beauty salon — you would probably be shocked to learn of the regulatory maze and requirements you would have to meet. The rules vary from city to city. Recently I talked about this issue with Tyler Younts of the North Carolina Institute for Constitutional Law. NCICL is looking into these regulations in an effort to showcase how and why they impede economic freedom and the right of each person to earn a living from his/her labor. Here’s an excerpt from our Carolina Journal Radio conversation.
Younts: You would find that it would be fairly difficult in many cities in North Carolina. In North Carolina, taxicabs are regulated at the local level. And, in many cases, they’re actually regulated, oddly enough, by the police department. And there are a couple of different kinds of regulations that you would run into.
One would be cab maximums. So, various cities have different numbers of cabs that they will allow to operate in their cities, so there might be a cap of 140 cabs in a city. If you were the 141st cab, you would not be allowed to open up your cab company. Another type of regulation would be a cab minimum. So in certain cities, there is a minimum number of cabs that you must own before you can open up a taxicab company. The number varies from city to city. It could be two. It could be five. It could be as many as seven.
Martinez: I’m fascinated, Tyler, by the maximums and the minimums. So you’re saying that if I decided that I wanted to convert my personal car to a taxicab, and it was safe, and I was able to get people to pay me to take them somewhere, I couldn’t do it if I just had one car?
Younts: Depending on the city that you want to operate in, that would be a problem. For instance, Mount Airy has a five-car minimum. High Point has a seven-car minimum. And, as I said, it varies from city to city, but that is a real impediment for people that are trying to enter this industry. And it really creates almost a cartel-type mentality, to where the established businesses can use the power of the state to keep competitors from entering the market. And that really has an impact, not only on these businesses, these entrepreneurs that want to start up their own company, but also on the consumers. And the consumers are not getting the benefit that they would under competition.
Martinez: Tyler, why would a local government or a local official think that it’s a good idea to try to put these limits on taxicabs?
Younts: I think that some city leaders operate under the false premise that they can somehow determine how many cabs are needed in their town. And they believe, evidently, that there’s a number that they can choose that works for their city, and that that’s a better determination than what the free market would decide.
