John Stossel‘s latest column offers the following observation: “Politicians care about poor people. I know because they always say that. But then why do they make it so hard for the poor to escape poverty?”
Outside my office in New York City, I see yellow taxis. It’s intuitive to think that government should license taxis to make sure they’re safe and to limit their number. It’s intuitive to believe that if anyone could just start picking up passengers, we’d have chaos. So to operate a taxi in NYC, you have to buy a license, a “medallion,” from an existing cab company (or at a once-in-a-blue-moon auction). Medallions are so scarce, they now cost hundreds of thousands of dollars.
Licensing prices poor people out of the business.
“Compare New York City, where a license to own and operate a taxi is $603,000, to Washington, D.C.,” George Mason University economist Walter Williams told me. “There are not many black-owned taxis in New York City. But in Washington, most are owned by blacks.” Why? Because in Washington, “it takes $200 to get a license to own and operate one taxi. That makes the difference.”
Regulation hurts the people the politicians claim to help.
People once just went into business. But now, in the name of “consumer protection,” bureaucrats insist on licensing rules. Today, hundreds of occupations require expensive licenses. Tough luck for a poor person getting started.