Anchorage Daily News

It's easy to understand the concern that put Proposition 8 on Anchorage's election ballot. If you want to start driving a taxi, why should you have to spend $100,000 for a government-issued permit to do so? Government is artificially limiting competition, which normally drives up prices for consumers and produces excess profits for favored businesses.

The key word there, however, is "normally." In the ideal world of the Economics 101 textbook, wide-open competition is supposed to provide consumers better choices at lower prices.

But real life is messier than any textbook. And in the taxi market, wide-open entry can quickly get messy.

Lots of cabs flood the market, and there is not enough business from riders to support them all. Nobody makes any money. The quality of service falls as taxis skimp on maintenance and zero in on the busiest, most profitable routes.

That's not to say Anchorage's current restrictions on taxi permits are ideal. When government permission to enter the business is so restricted that it costs upwards of $100,000 just to get started, that says something is seriously wrong. With the cost of entering the taxi business so high, there are noticeable gaps in service. Anchorage riders can expect long waits at peak times, like New Year's Eve or during the AFN convention. Service is thin or nonexistent in outlying areas, like Chugiak-Eagle River and Girdwood.

It would be better if the city automatically increased the number of permits as population increases. Anchorage has added only four taxi permits since 1994, even though population has increased by 29,000. The burden of proof is on those who want to add more permits. Instead, the burden should be on those who want to restrict competition to current levels.

Instead of auctioning off permits to get the most possible money for the public treasury, the city could charge a modest fee. In return, the city could seek arrangements that would increase taxi service at peak times and in less profitable areas of the city.

Proposition 8's defenders point out that it is a very limited deregulation measure. And that's true. It does not create a Wild West market, where anything goes. It does not let taxis charge whatever rates they want. It does not end rules intended to ensure safety and protect customers from exploitation.

But Proposition 8 will create too much chaos in the local taxi market to the detriment of most everyone -- current and future drivers, passengers and current permit owners. It takes a blunt ax to the city's taxi rules, when what's needed is a scalpel. Vote no on Proposition 8.

BOTTOM LINE: Proposition 8 will cause more problems than it fixes.

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