Servant of the Strong, Scourge of the Weak


Washington. -- The world, a wit has said, is divided into two kinds of people, those who divide the world into two kinds of people and those who do not. I say: The world is divided between those who do and those who do not understand that activist, interventionist, regulating, subsidizing government is generally a servant of the strong and entrenched against the weak and aspiring.

Consider the cases of the Houston jitney operator and of four men trying to launch the Quick Pick taxi company in Denver.

Alfredo Santos, 40, drove a cab in Houston until he became one of those disturbers of the status quo, a man with a new idea. He would run jitney services, particularly in the city's poorer neighborhoods.

Jitneys are small vehicles, usually automobiles or vans, that transport people along designated routes for fixed fares, usually higher than bus fares but lower than taxi fares. Jitneys often serve remote or low-density neighborhoods, or poor neighborhoods where automobiles may be luxuries, taxis are expensive and reluctant to visit, and municipal bus service does not meet all transportation needs.

Trouble is, Houston has a 69-year-old law proscribing jitneys. It was passed in 1924 to protect the electric streetcar company. The streetcars charged a flat rate regardless of distances traveled, so long-distance travelers were subsidized by short-distance travelers, who became customers for jitneys. In Houston, as in many other cities, the jitneys' revenues exceeded the streetcars' lost revenues, indicating that jitneys also attracted customers from taxis, and pedestrians.

Houston's streetcar company sought protection and, being strong, got it, partly because most jitney operators were black and primarily served blacks. This pattern of protection occurred in many cities, but in some cities illegal jitney services still flourish.

In 1989 some libertarian lawyers, now functioning in Washington as the Institute for Justice, filed suit on Mr. Santos' behalf and as part of a concerted strategy to resuscitate judicial protection of economic liberty. They charged that the anti-jitney law violated Mr. Santos' constitutional rights, including 14th Amendment rights to due process and equal protection of the laws, and to the full privileges and immunities of citizenship.

The institute concedes (not cheerfully) that government has broad powers to regulate economic activity. But the institute seeks enlightened application of judicial rulings that regulation must be reasonably related to the legitimate promotion of the public welfare. The institute wants to narrow judicial deference toward government regulation that is anti-competitive both in intent and effect.

Mr. Santos is a civil-rights litigant who seeks no quota or set-aside or other entitlement. He only seeks opportunity and he is still waiting for a judge to rule on his claim. Perhaps the institute's four Denver clients will get more expeditious consideration of their attempt to crack Denver's government-sustained taxi oligopoly.

The four men -- an African-American and three immigrants from Africa -- are frustrated by their experience working for the three existing companies, are eager to experience the satisfactions of entrepreneurship, and are determined to bring better taxi service to Denver's poorer neighborhoods. They want to start a taxi company. Trouble is, since 1947 Colorado's Public Utilities Commission has rejected every new application for a license to launch a competitor to the existing companies.

The taxi industry in America grew without significant regulation until the 1930s. Then the combination of rising industrial unemployment and falling car prices brought many new drivers into the industry. Soon there came a wave of regulations restricting entry into the field. The regulations were largely a result (according to the Federal Trade Commission) of pressure from public transit firms and established taxi fleets.

Today most cities have a fixed number of taxi licenses, or a fixed ratio of licenses to population (all-wise government knows just the right numbers), or require, as in Denver, a showing of "public convenience and necessity" to win a license. Such regulations often are rationalized as relevant to safety, but their clear aim is to protect economic entities powerful enough to hire lobbyists.

In 1974 a federal study concluded that regulations restricting entry into the taxi business, and restricting price competition, cost customers $800 million annually, and that removal of such anti-competitive measures would create 38,000 entry-level jobs. Nineteen years later, both numbers must be even larger.

When the four Denver men went before the Public Utilities Commission, two of the three existing taxi firms opposing them shared the same lawyer. The four men were bombarded by burdensome interrogatives from lawyers. (What was their five-year advertising plan?) Then their application was denied. So the Institute for Justice is bringing the 14th Amendment into play.

The world is divided into two kinds of people, those who want to prosper by competing, and those who want to prosper by getting government to cripple their competitors. America is divided between genuine entrepreneurs, and those persons whose entrepreneurship consists of turning government into a dispenser of privilege and injustice.

George F. Will is a syndicated columnist.

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