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| #219 | October 1998 |
Six years ago, Hector Ricketts lost his job as a hospital administrator.
Desperately needing to support his wife and three children, he opened a
successful private van service. Now Ricketts employs 53 people and provides
safe, reliable transportation to thousands of New York commuters who prefer
Ricketts's customer-friendly service to the not-so-friendly Metropolitan
Transit Authority.
And that is precisely why the City of New York is determined to drive Ricketts
and hundreds of other private van operators out of business.
The Metropolitan Transit Authority, the Transit Workers Union and franchised
private bus companies have united to pressure City Hall to ban businesses
like Ricketts's because the efficiency of these van services threaten their
monopoly. At their insistence, the city passed a number of harsh anti-van
laws. Ricketts is prohibited, for instance, from picking up passengers coming
out of subways because the city requires that all pickups be by prior appointment.
Likewise, he has been barred from picking up passengers on virtually every
major street because it is illegal to operate on any street that has a public
bus route.
Ricketts believes it is just a matter of time before New York City runs
him and remaining van operators out of business.1
What is happening to Hector Ricketts is happening to thousands of other
entrepreneurs around the nation. Rival business competitors, turf-minded
bureaucrats and legislators willing to do the bidding of special interests
are all-too-often passing laws and regulations that stack the deck against
successful enterprises. This behavior poses a serious threat to the principles
of fairness and equal opportunity that are supposed to be pillars of our
society, allowing political connections to triumph over entrepreneurial
skill. These abuses, often perpetrated by politicians who ostensibly profess
support for the free market, destroy jobs and hurt the economy. Most of
all, they hurt people like Hector Ricketts. And his is only one of many
stories.
Take the case of Ben Thomas of Kodiak, Alaska, who is losing millions of
dollars in potential business because of protectionist legislation that
prevents him from competing in his own country. Thomas operates a logging
company which, until recently, was doing quite well. Although Thomas shipped
90 million board feet of logs to Asian markets last year, he could not ship
a single board foot of timber to the American market. Why? It's because
of the Jones Act.
The Jones Act is a 1920s-era law requiring all U.S. timber companies to
use American-built and American-manned ships for transporting logs within
the United States. The problem is that there aren't any ocean-worthy American
ships capable of transporting logs. To transport logs from Kodiak, Alaska
to a West Coast port, Thomas has to use barges. These are so inefficient
that it costs double the amount to transport logs to the U.S. mainland by
barge as it does to transport them from Alaska to Japan by ship. Thomas
would like to sell in the U.S. market, especially given the economic downturn
in Asia. But the Jones Act prevents him from doing so. Now Thomas's company
is completely idle.2
This past year, Congress considered yet another law that would punish entrepreneurs
for being successful - the American Fisheries Act. Sponsored by Alaskan
Senator Ted Stevens, the bill - which will likely be reconsidered next year
- would destroy Washington State fishing companies that operate factory
fishing vessels (large fishing boats that both catch and process fish while
at sea). The reason? By virtue of their superior competitiveness, they took
business away from Alaskan on-shore fish processors.
Desiring to find an excuse to expel the factory fishing vessels from the
North Pacific fishing ground in order to use the government to promote Alaska
businesses over those based in Washington State, Stevens has emphasized
that a majority of stockholders in the U.S. corporations that own the Washington-based
factory fishing vessels are Norwegian. He neglects to note, however, that
most of the affected employees are Americans, and that shutting down the
factory fishing vessels will transfer the business of these ships to Alaskan
on-shore processors that are 75% Japanese-owned.
Stevens also claims that factory fishing vessels are overfishing the North
Pacific. He persists in this claim despite the fact that scientists with
the National Marine Fisheries Service, an agency not known for pro-business
advocacy, have repeatedly stated that the ships are not overharvesting fish.
If passed, the American Fisheries Act will destroy 1,500 jobs and cost the
affected companies roughly $500 million.3
It is intolerable that narrow-minded politicians can wipe out companies
with the stroke of a pen merely because they happen to be better at delivering
services than preferred constituents.
Bad politics should never trump good business. It's time to stop stacking
the deck against hard work.
Footnotes
1 Chip Mellor and Nicole Garnett, "Challenging Barriers
to Economic Opportunity," Litigation Backgrounder, Institute For Justice,
1997
2 John Carlisle, "The National Directory of Environmental and Regulatory
Victims, The National Center For Public Policy Research, 1998
3 John Carlisle, "The American Fisheries Act: Special Interest Politics
At Its Worst," National Policy Analysis #209, August 1998
John K. Carlisle is director of The National Center for Public Policy Research's Environmental Policy Task Force. Comments may be sent to [email protected].
