A Town Car Named Bizarre

[December 10th, 2003]

Imagine this. You wander into your local neighborhood coffee shop for your daily tall nonfat latte. There on the wall is a sign saying that the Portland City Council has required owners of independent java joints to charge a minimum of $4 for all espresso drinks.

"That's absurd!" you sputter.

"Oh," counters your favorite coffee clerk, "that ain't the half of it." As he explains, Starbucks can still charge $2.30.

You'd be outraged. So would the Nose. And that's why he's frothing mad at Randy Leonard. The city commissioner hasn't (yet) mandated minimum coffee prices, but he's done something that strikes the Nose as equally bizarre.

Late last month, the city office which licenses taxis determined that town cars have to charge at least $45 for trips to and from the airport--but allowed cabs to keep their same metered rate, which is roughly 30 bucks for trips from downtown.

Since when is it the business of a city to tell private enterprise that they cannot charge less for their services? The Nose isn't a lawyer and doesn't know if this action amounts to an illegal restraint of trade and discrimination. What he does know is that this makes about as much sense as adding eggnog to a cappuccino.

Now, the Nose realizes that taxis and town cars, unlike coffee shops, are highly regulated. And, he knows that taxis, unlike town cars, must offer service to all comers, cover the entire city and stay open 24/7. Protecting the taxis' airport business, the Nose is told, is simply to "level the playing field."

But taxis already get a wheel up. The taxi industry is controlled by three companies that run the majority of the 384 city-licensed taxis. Taxi medallions allow cabbies priority spots at the airport and hotels and exempt them from federal laws that prohibit price-fixing and other practices that the government frowns upon.

No, the real reason to go after town cars is that the Portland taxi industry is in the toilet. On average, drivers take home about 50 percent less than they did five years ago, says Justin Dune, Leonard's taxi troubleshooter. "Too many hunters and not enough buffalo," Dune explains.

Exactly. But rather than letting the cab companies feel the logical pain of excess capacity, the city has rushed in and penalized the competition: the 117 city-licensed town cars. This is a group of small entrepreneurs, many of whom work 14 hours a day and for whom the idea of a "level playing field" does not include being required to charge more than the cabbie down the block.

Previous studies of Portland's taxi industry have found that there are simply too many cabs. Logically, the city should eliminate some of those medallions--either by buying them back, or letting the less successful taxi companies go out of business. Not by providing the sort of price supports that would make a Virginia tobacco farmer blush.

What's next, a surcharge on street-corner hot dogs to protect the owners of white-tablecloth restaurants?

Even George W. Bush figured out that you can't protect an industry that is defined by over-capacity: He dumped steel tariffs last week because he recognized that the cost of propping up domestic steel was far more than the benefit.

It's time for Leonard to wake up and smell the bitter aroma of this silly subsidy--one that is particularly pungent in a city that claims it wants to promote small businesses.