Challenging The Milwaukee Taxi Cartel

The city of Milwaukee capped the number of taxi permits at 321 way back in 1992, and consequently the price of a permit on the secondary market has risen to $150,000. That’s excellent news for people who made well-timed investments in Milwaukee taxis, but obviously it’s bad news for would-be taxi entrepreneurs who’d like to get into the market. Fewer permits means fewer jobs for cab drivers, and it means less access to taxis in the city. Dynamics of who uses taxis, what they cost, and where they’re available differ a lot from city to city and I’m not familiar with Milwaukee so I can’t say who in particular is disadvantaged by taxi scarcity but it’s not the sort of thing that helps a city’s quality of life or economy.

Apparently the Institute of Justice, a libertarian law firm, thinks they have a chance of winning a legal argument that this is unconstitutional which I actually would find pretty surprising, but there’s no doubt that it’s bad policy. As I’ve noted before, when it comes to taxi cartels the proponents normally don’t even bother to make a public interest argument:

One of the biggest permit holders is Michael Sanfelippo, who controls 162 permits. He says that when Milwaukee had more permits, no one could make a decent living and the quality of cabs and service suffered.

Obviously it’s true that Milwaukee can only support so many cabs and that in an open competitive market it might sometimes be the case that too many people get in the game. What will happen then is that some people leave the taxi market and balance is restored. It’s not in the public interest to have “no business ever fails due to competition” as your policy objective.