All-American Taxi’s crisis tells about regulator’s coercive ‘good’

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Randy Van Hooser in Nooganomics.com’s first radio interview.

By David Tulis

The burly man with the beard standing next to me is Randy Van Hooser, owner of All-American Taxi Co. in Chattanooga. We are taking an hour out of his busy schedule to discuss the plight of his company at the hand of a city regulator, the Chattanooga Transportation Board.

One hour after we talk he is to appear before a circuit court judge, Neil Thomas, attempting to block the order shutting down his business. He feels oppressed, saying that his company has had far fewer complaints than others, and I expects will plead inadvertence in his disputed action.

Last week the board’s members, who have as adviser a taxi competitor, voted to revoke Mr. Van Hooser’s certificate to operate his service to common folks such as you and me.

The charge is that All-American charged an illegally high rate for fares, that it bought and installed its own meters and changed the rates. City Councilman Manny Rico, who sits on the board, says Mr. Van Hooser committed fraud, charging F$28.75 for a 10-mile trip that should have taken no more than F$23 from a passenger. It is claimed that All-American enriched its drivers by more than F$70,000 a cab. Mr. Van Hoosier says he owns about 35 permits but has about 30 vehicles and drivers. He employs 36 people. The charges came from Charles Topping, a city police inspector.

Mr. Van Hooser said he had raised rates temporarily with permission of the board. He knew the rate increase was temporary. But he assumed he was to have been notified of a change. He was not notified of the change, and as the rate was intended to have been temporary, he fell into violation when he kept the higher rate going on his fares.

Regulated reality; grown men in diapers

The story of a regulated profession is one of humiliation. Mr. Van Hooser is an entrepreneur and a businessman, yet he is treated by his betters in the regulatory apparatus as if he were a child. A friendly reading of chapter 35 of the city ordinance’s first 29 pages dealing with “vehicles for hire” suggests how the people who wrote the rules a century ago viewed taxi operators as potential despoilers and vandals.

This fictional — even malevolent — take on business operators assumes a priori that they are heartless and will ruin their customers by overcharging. That the regulator is so close to the taxi driver’s elbow suggests he views the driver and the owner of his company are those who will seek prosperity by malice and by overcharging.

Do you think I overstate?

➤ The taxi company is incompetent to serve the public without a permit, defined as “authority given by the Transportation Board to drive or operate a vehicle for hire *** .”

➤ Without directions, vehicles in taxi service would perhaps not follow the latest technology. “Taximeters *** [must be made] visible to [passengers] at all times of day and night. After sundown, the face of the taximeter shall be illuminated.” The rule specifies that the taximeter “shall be operated mechanically by a device of standard design *** , driven either from the transmission or from one of the front wheels *** .” Mr. Van Hooser probably wouldn’t have thought of it, but “every taximeter shall have thereon a flag to denote when the vehicle is employed and when it is not employed.” Yes, thank you. Thank you for this insight.

➤ “All taxicab drivers shall drive the shortest and most direct route in transporting a passenger from the point of pick-up to the point of destination, unless requested otherwise by the passenger.” Here, the taxi fathers assume that the feckless children in their care will routinely stiff and cheat the needy public, that drivers will have no sympathy with their fares, but double charge them by going the long way.

➤ Fares? The benevolent fathers of the taxi board propose to control the price of taxi service, as if they knew what is right. Ostensibly the rates of F$2 to start the meter and F$2 for each mile of movement are “just” because the licensor and grantor has imposed them. But are they right? How informed by the market is this price? By that I mean, are they the price the marketplace and competition would bring as correct? Very possibly the fare structure should be much different. Very possibly, the price is too low, which explains why the city has only a half-dozen cab services.

Perhaps, the operation should be F$4 to start the taxi and F$3.50 per mile afterward.

More than 30 people are being thrown out of work unless All-American Taxi can reinstate its license to operate amid a regulatory dispute.

‘Intelligence becomes a useless prop’

Yes, regulators turn sensible businessmen into boobs and incompetents, in the  particulars and in general. “All persons in the business of operating a vehicle for hire *** shall render an overall service to the public desiring to use vehicles for hire,” the rules state in Sec. 35-41. Yes, thank you. Thank you. Wouldn’t be serving the public if you hadn’t told me.

The great French philosopher Frederic Bastiat sees the dilemma posed by the regulatory premise. He points out that when force is used in the marketplace, initiative passes from the people to the state. When a rule for taxis seeks to bring about a good public service by regulating it, the state denies men their own means of being good and serviceable.

But when the law, by means of its necessary agent, force, imposes upon men a regulation of labor, a method or a subject of education, a religious faith or creed — then the law is no longer negative; it acts positively upon people. It substitutes the will of the legislator for their own wills; the initiative of the legislator for their own initiatives. When this happens, the people no longer need to discuss, to compare, to plan ahead; the law does all this for them. Intelligence becomes a useless prop for the people; they cease to be men; they lose their personality, their liberty, their property.

Mr. Van Hooser, by their machinery of control, is unmanned. By virtue of city rules, he is turned into a creature who is careless of others.

The taxi business is a positive good for society, and a vital service to people who don’t use or have automobiles (often poor people). Law cannot organize a labor such as taxi service without organizing injustice. Might we not leave to the marketplace the “regulation” of taxi services? Overpriced providers thinking of their bottom line first (and not the customer) will not survive. An unregulated taxi industry would very probably be better than a regulated one.

Regulatory capture

The problem of regulatory capture emerges in this story, as well. I mention it only in passing to show how pernicious the regulatory world can be on human morale. But Mr. Van Hooser is a victim of it, arguing on the Nooganomics.com talk show (1 to 3 p.m. weekdays at Copperhead radio in Soddy-Daisy) that he is glad the industry is regulated. It keeps out competition he suggests might be unsafe, unmarked, unreliable or just different. Regulation, I mildly suggest to him, creates a client class of insiders, of whom Mr. Van Hooser is one.

David interviews beleaguered taxi company owner Randy Van Hooser in his new radio studio in Soddy-Daisy.

Source:

Frederic Bastiat, The Law (New York: Irvington-on-Hudson: The  Foundation for Economic Education Inc., 1984).

Chattanooga City Code, Chapter 35

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