Sunday, January 12, 2014

Council's vote to slash the miimum fee for vehicles for hire was a victory for freedom, a market economy and common sense.

Last night the Metro Council passed on third and final reading a bill to slash the minimum fee for vehicles for hire from $45 to below $10. This reverses a policy adopted in 2010 that imposed the $45 fee minimum.

In 2010 a new type of service had made its appearance in Nashville called "black sedans" although they do not necessarily have to be black. This service provides clean luxury cars and charges a set fee rather than a per mile fee like a taxi. They are a much nicer ride than a taxi but not as ostentatious as  a stretch limousine. This new service charged a minimum fee of only $25.  Soon they were proving popular and cutting into the market share of the luxury limousine people.

The limo folks went to the metro council and got legislation passed that set a minimum fee of $45 for a limo ride and imposed other onerous restriction on this new service to force them to operate like limousine companies. Other regulations required that the vehicles be centrally dispatched rather than a customer calling the driver on a cell phone, they restricted the vehicles to one fare per hour, they required a wait of at least 15 minutes between the time the request for the vehicle was made and the trip could start. They also set minimum age requirements on the sedans that did not apply to stretch limousines. These regulations served no purpose other than to drive the black sedan people out of business and to protect the luxury limousine people from competition. While a maximum price may be argued to protect the consumer from gouging, a minimum price protects no one but the provider of the service. This was deplorable and a violation of the principles of freedom and free enterprise.

This new policy made Nashville only one of seven cities in the nation that had a minimum fee for vehicles for hire. Not only did the city try to drive the black sedan people out of business by this regulation but the Transportation Licensing Commission engaged in a policy of harassment and intimidation of the black sedan drivers. Such intimidation included TLC officers illegally representing themselves as police officers. Nashville's shameful policy toward black sedans became national news and was reported by John Stossel, The Huffington Post, and others, and editorialized against by nationally syndicated columnist George Will.  Nashville's policy was challenged in court by the lead victim of the policy, Metro Livery. Metro Livery was represented by the conservative public interest law firm, Institute for Justice.  IJ lost the suit but only after a lengthy court battle.

Since that time, Nashville built the massive Music City Center and experienced a major uptick in tourism. It quickly became obvious that the city had insufficient modes of public transportation. Black sedans were becoming popular in other cities but were scarce in Nashville because of our regulation. Also, the city was only slowly increasing the number of taxi permits. Also, new app-dispatched services such as Lyft, Sidecar, and UberX had made their appearance in the market but were not legal in Nashville. The convention and tourism people realized Nashville had a problem.

The bill passed last night, undid the major part of the damage done in 2010. It will allow black sedans to charge a lower fee and it will make possible the app-based services such as Lyft.  It is not a perfect bill. The other onerous regulations that apply to black sedans are still on the books. I think the Council should have completely removed the minimum.  This bill however is a great advance. The minimum so low that it will have almost no effect. Last night's vote was a victory for freedom, a market economy and common sense.

I have reported on this issue extensively. To read more about Nashville's shameful record of transportation price fixing follow this link: Price-fixing. To read the Tennessean's report on last nights Council action follow this link: Minimum fee to hire limo or sedan in Nashville slashed to $9.75.

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