THE BALTIMORE PUBLIC SERVICE COMMISSION TAKES THE PUBLIC FOR A RIDE

"The PSC controls the market for taxicabs in the city of Baltimore..."

ByRobert McNamara

BALTIMORE - Popular outrage over a planned 72 percent hike in utility rates has thrust Maryland’s Public Service Commission into an unfamiliar place: The spotlight.

Yet, despite the decision by the Maryland Court of Appeals to strike down the General Assembly’s recent effort to fire all five members of the Public Service Commission, there is no reason to think this ends the effort to fix the PSC. Although the General Assembly may not remove the commissioners, it can remove some of the powers they so readily abuse — powers that go far beyond setting electricity rates.

In addition to its regulation of public utilities, the PSC controls the market for taxicabs in the city of Baltimore. It is illegal to drive a taxi in Baltimore without a government issued permit, and the PSC won’t issue a permit unless it would be “best for the public welfare and convenience.” And as far as the PSC is concerned, the “public welfare and convenience” has been just fine for 60 years.

That’s not a typo — the PSC hasn’t issued a taxi permit since 1946. The city, which now draws 20 million tourists a year, is making do with just 1,151 licensed taxis.

Imagine if a state commission had spent the past 60 years deciding whether the citizens of Baltimore needed a new restaurant, a new clothing shop or a new movie theater. The city’s commercial areas would look pretty moribund. They’d look, in fact, a lot like Baltimore’s taxi industry.

Baltimore’s taxi market, the most hostile to entry of any large city in the country, is bad for consumers. Anyone who needs transportation, especially in the inner city, is often forced to ride in an unlicensed “gypsy” cab — when they can find a ride at all. But the burden on would-be entrepreneurs is far worse.

Although taxi driving has traditionally been the “poor man’s gateway” to mainstream America — because it doesn’t require a lot of financial capital or formal education, just a solid work ethic and a driver’s license — in Baltimore, that opportunity is forestalled by the PSC’s anti-competitive licensing requirement.

Taxi drivers here have two options. They can try to buy a permit on the secondary market, created out of government imposed scarcity, which now costs upward of $12,000. If they cannot afford a permit, they are forced to lease a permit from someone who can — driving someone else’s car as a sort of modern day sharecropper.

The only people Baltimore’s taxi oligopoly is good for are the wealthy few who already have permits. No new permits mean no new competition. No new competition means no one trying to provide better service or nicer cars. It is not shocking that the existing permit holders don’t want new competition. It’s not even shocking that the PSC has shortchanged the interests of consumers and entrepreneurs in preventing that competition. What’s shocking is that they’ve gotten away with this sort of unabashed protectionism since the end of World War II.

The PSC’s surprising position at the center of a major public debate provides the people of Baltimore with a long overdue opportunity to shake free of the yoke of the state’s restrictive taxi regulations. The General Assembly should seize this opportunity to stop favor currying bureaucrats from deciding how many taxis the public needs and allow consumers and entrepreneurs to make these decisions as they do in every other industry. It’s time to set Baltimore’s taxis free.

Robert McNamara is a staff attorney at the Institute for Justice, which has helped open taxi markets in Denver, Cincinnati and Indianapolis.

THIS ARTICLE WAS FIRST PUBLISHED IN THE BALTIMORE EXAMINER OCTOBER 17, 2006.

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