National Policy Analysis Logo

 #219  

 October 1998




Regulatory Abuse Killing Equal Opportunity Nationwide

by John Carlisle



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


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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].




The National Center for Public Policy Research
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