Russ Roberts  

The Summer of Sharing

Bets On Whether We Will Succes... Our Regulated Society...

(I'm Russ Roberts, the host of EconTalk, a sister site of EconLog here at the Library of Economics and Liberty. I'm going to blog here from time to time about what's going on at EconTalk.)

It has been the summer of the sharing economy at EconTalk. (See here, here, and here.) The latest legal twist comes from the midwest. Milwaukee's cab drivers are continuing to try to stop Uber and Lyft after a court case lifted the cap on the number of medallions in the city. They're invoking the Takings Clause (HT: Cullin Spellings):

The Milwaukee Common Council responded in July of this year by voting unanimously to abolish the cap on licenses and simply require that drivers meet basic guidelines on insurance and other health and safety standards. The move, effective September 1, also opened the door for Uber, Lyft, and others to enter the market.

But the industry has kept swinging, filing suit in federal court on August 25 seeking to block implementation of the ordinance or, failing that, to secure financial damages. Among other claims, the cab companies contend that, by dismantling the barriers protecting them from competition, Milwaukee has violated the federal Constitution's Takings Clause, which prohibits the government from seizing private property without just compensation. They argue that the value of their cab permits will be "destroyed" under the new system, so the city -- or, more accurately, the taxpayer -- owes them millions of dollars to make them whole.

The argument, while imaginative, ignores the inconvenient fact that the taxi permits were not a property right. Rather, the system was a gift from lawmakers at the expense of consumers -- and one that violated the Wisconsin constitution, a court has found. The lawsuit is akin to "the last gasp of the gaslight industry trying to hold off electricity 100 years ago," Milwaukee alderman Bob Bauman told the Milwaukee Journal Sentinel.

Mike Munger, in the episode that kicked off the sharing summer discusses the takings argument, here.

Coming Monday to EconTalk: Elizabeth Green talking about her book, Building a Better Teacher.

Comments and Sharing

Twitter: Russ Roberts @EconTalker

COMMENTS (3 to date)
Andrew_FL writes:

Incredible! One wonders if a thief could similarly invoke the Constitution as requiring he be compensated when the authorities seize stolen property from him.

Well, it's not even that, is it? What's actually being claimed here is that the government is "seizing" property by virtue of allowing the market price for the their permits to fall by allowing competition. One wonders if every government policy change that occasions a shift in the prevailing price of a good or service could be similarly argued against.

But then, perhaps not. After all that would probably disallow the government from interacting with the economy at all. And we can't have that.

awp writes:

I believe that regulations (generally related to wetlands) that erase the use value of a (real) property have been declared not constitutionally a taking if that regulation serves a broader purpose. I think that is wrong, but that is essentially what is happening here, which I don't think should be compensated. Not sure what consistent principle applies.

Ben Kennedy writes:

I think the cab drivers have a good point - what makes their case different from other types of incumbent protection laws is that they paid actual chunks of cash. It is at least plausible to say they purchased a property right. I think it would be reasonable for them to be able to sell their medallions back to the state at their original purchase price (as opposed to pre-Uber fair market value). It helps the right people, who are those that bought into the system recently and didn't create it. They get made whole while those who bought their medallions a long time ago and captured a lot of rents on the way get almost nothing

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