Additional Regulation Limits Competition
When is the last time you recall a corporation or business asking the government that more regulation and red tape be imposed on them? If you answered “huh?” then you answered correctly. I’m not saying it’s never happened, but even Google came up empty when I ran a search for, “Why would a business want the government to punish them with more regulation?”
To begin, I have no vested interest in the pedicab industry in Charlotte, nor am I writing on behalf of any pedicab company. My interest lies solely in opposing the anti-competitive efforts of the Charlotte Pedicab Assocation as expressed in a presentation to the Charlotte City Council on July 23 and in a WFAE article earlier this month. (http://wfae.org/wfae/1_87_316.cfm?action=display&id=8913) The title of that article may be “Pedicab Owners Lobby for More Regulation,” but I read it as “Pedicab Owners Seek to Limit Competition.”
Who is the Charlotte Pedicab Association? It is an informal group consisting of only Noah Tagles Hagerman (Cycle Taxis USA) and Thomas Richards (R&R Pedicab). Both are owners of pedicab companies operating in Charlotte and they both spoke with me in preparation for this article. The Charlotte Pedicab Association is not an organized trade association authorized to speak on behalf of the pedicab industry in Charlotte, nor is it a non-profit organization.
The pedicab industry in Charlotte is still rather small, only about four companies operate on a regular basis. But as Charlotte-Mecklenburg continues to grow, and by extension the Uptown area, the demand for pedicabs (aka rickshaws, bike taxis, etc.) will likely increase. This increase in demand will either be met by current businesses expanding their fleets, or by new operators entering the market. As a proponent of the free market (and I mean a truly free market, not the system of corporatism we currently have in this country – (http://reason.com/archives/2012/08/19/where-free-market-economists-go-wrong), I have no preference for how the pedicab industry responds to an increase in demand, but I do not believe imploring the Charlotte City Council to increase regulations is the proper course of action.
Thomas Richards spoke before the City Council on July 23 during a consent item agenda regarding transportation during the upcoming DNC convention (http://charmeck.org/city/charlotte/CityCouncil/meetings/Pages/default.aspx). Due to his presentation dealing with pedicab regulation and not transportation during the DNC, Mayor Foxx interrupted Mr. Richards and informed him his issue would be more appropriately heard before a committee. After a brief exchange on the dais, it was agreed the issue would be referred to the Community Safety committee. What I found interesting were the comments of committee chair Mayor Pro-Tem Patrick Cannon (D) – Patrick D., that is – who said that it wasn’t the “norm” for people to come to council asking to be regulated. Indeed, I would agree with Mayor Pro-Tem Cannon – Patrick D., that is – that it is highly questionable for a business to voluntarily request a government entity make it more expensive to do business.
And what are the reasons put forth by Mr. Richards and Noah Hagerman as to why their industry needs regulating by the city? I’ll let Mr. Richards’ words from his company’s facebook page (http://www.facebook.com/rrpedicabcompany) speak for themselves:
It is our hope to protect the licensed peidcab company’s in the Queen City from company’s that come into Charlotte during special events, that take away from local pedicab operators potential income, and ensuring that all operators have the proper equipment, licenses, and insurance, providing a safe and memorable experiance.
When I asked Mr. Richards why he is in favor of increased regulation, he again referred to a loss of potential income as a justification using the phrase “cannibalizing on income for our drivers.”
Along with a potential loss of income, both Mr. Richards and Mr. Hagerman claim to be asking to be regulated on the basis of the health and well-being of the potential pedicab customers of Charlotte, and I have no reason to question their motives (just like we can’t question the motives of any legislator putting forth regulations “for the children” or “for clean air and water”). But I can question the economic and political realities that will inevitably result from government regulation. More regulation leads to an increase in the cost of doing business, which usually results in a narrower profit margin, which influences whether new participants enter, or leave, the market. A static market may be good for those currently operating within that market, but the reduced competition is not good for consumers. Alas, once any government entity becomes heavily involved with regulating any industry, political calculations soon begin to outweigh economic realities, and the end result is all too often corruption.
Let me stress that in speaking with both Richards and Hagerman, they both stated their efforts were not aimed at limiting the number of pedicab operators in Charlotte. The point of this article is not to paint Cycle Taxis USA or R&R Pedicab in a negative light, but to focus on the economic reality of higher costs associated with additional regulation.
Because I’ve already written close to 800 words on the super exciting topic of pedicab regulation in Charlotte, let me go ahead and wrap this up while the dedicated few are still reading. If Mr. Hagerman himself travels to various cities throughout the U.S. to operate pedicabs during large events, why is it not acceptable for other businesses to do the same here in Charlotte during large events such as the upcoming DNC, Panthers games, or Speed Street? Mr. Richards refers to outside pedicab operators who come into Charlotte to make a profit as “gypsies.” Does that make Mr. Hagerman a “gypsy” as well? Neither Hagerman nor Richards could cite to me a specific incident they were aware of when a passenger of a pedicab here in Charlotte was injured or involved in an accident of any kind. When pressed on the statement in the WFAE article about pedicab drivers or businesses operating without a business license or insurance, Mr. Richards said he didn’t know for sure of any pedicabs operating without a license or insurance and that it was primarily speculation on his part. So why such an effort to fix an industry that isn’t broken?
The pedicab industry is still small in Charlotte, but in this period of economic uncertainty and with unemployment still over 9% in North Carolina, why should we attempt to limit growth opportunities for any small business owner? There may be a need for greater safety measures, such as requiring pedicabs to be specifically built to handle a large load rather than just being a standard road bike with a trailer loosely attached. But I trust consumers enough to make their own decisions regarding which pedicab they choose to tour Charlotte; I don’t believe City Council needs to impose additional regulations.
Besides, they can’t afford to have any issues distract them from Mayor Foxx’s CIP debate this fall…
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