Driving the little guy out

February 25, 1999|By George F. Will

LAS VEGAS, Nev. -- Asked how many hours he works as an independent limousine driver, Ray Vinole, 35, says, matter-of-factly, "Sixty to 80 hours a week, when I'm not scared." Come through the looking glass and see a small entrepreneur's experience in Nevada.

What scares Mr. Vinole is abuse that has driven out of business virtually all 65 other members of the Independent Limousine Owner/Operator Association. The coercion has been accomplished by contemptible hurdles to licensing, crude sting operations for the unlicensed, bankruptcy brought on by seizure of the $70,000-plus vehicles in which drivers have sunk their savings, and occasional physical abuse.

All this is orchestrated by the Transportation Services Authority (TSA), which, in a perfect example of perverse incentives, finances itself with the fines it levies. How convenient. The TSA makes accusations, conducts hearings, determines guilt and sets monetary punishments that can be used to pay TSA salaries and expenses.

In 1997, the Nevada legislature found time to accommodate a remarkably crass bit of what economists call rent-seeking -- the bending of public power for private advantage.

A 14-page bill, primarily devoted to deregulation of the electric power industry, disappeared into a Senate committee and emerged with 500 pages of amendments. One, almost certainly inserted at the behest of the operators of six large limousine fleets, and one operator in particular, increased the punishments -- prison, fines, impoundment of vehicles -- for operating a limousine without receiving a TSA certificate of "public convenience and necessity."

The thousands of such PCAN clauses in government laws mostly date from the turn-of-the-century Progressive Era. Then the emerging premise of the administrative state was that planning by "experts" would make markets anachronistic.

PCAN clauses grant government boards power to restrict entry into a field of enterprise unless a newcomer can demonstrate to objectors that the newcomer is necessary to supply an "unmet need." And a prospective new entrant bears the burden of demonstrating that he will not "adversely affect" others by competing with them. Of course, only the first provider of a product or service can demonstrate that.

Las Vegas operators of large limousine fleets defend their oligopoly by turning the licensing process into a nightmare of paperwork and interminable hearings that can produce $10,000 legal bills in a blink.

Independent drivers can get federal licenses for interstate trips and then try to survive by booking clients who want, or will pretend to want, to travel a few yards into Arizona on visits to the Hoover Dam. The TSA, in its forelock-tugging subservience to the oligopolists, stings the independent operators by having undercover TSA investigators pose as customers and try to book intrastate service.

The persecution of the independent drivers has come to the attention of the guerrilla litigators of the Institute for Justice in Washington, which specializes in fighting restraints on the right to earn a living. The Institute is in court arguing that the restrictions on entry into the limousine field serve no legitimate government interest.

Nevada, more than any other state, is defined by a single city. More than half of all Nevadans live in or around Las Vegas, which has a huge stake in coming to seem like a more or less normal place, capable of attracting business investment that will diversify its economy, thereby reducing dependence on gambling.

The city has an infectious individualism conducive to entrepreneurship. However, it also has a past it has not expunged from the present. Such was the, shall we say, colorful nature of Las Vegas' early postwar association with gangsters (Bugsy Siegel and the rest), the city actually felt elevated by its subsequent associations with the Teamsters pension fund and Howard Hughes.

Some elevating remains to be done. The state legislature, serving some powerful Las Vegas interests, is authorizing thuggish behavior toward admirably industrious individuals and their right to pursue upward mobility through entrepreneurship. Until that stops, the state will not have outgrown its past, or have grown up.

George F. Will is a syndicated columnist.

Pub Date: 2/25/99

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