Center for Free Enterprise
Salt Lake City, enforcing its arcane, anti-free-market transportation laws, has been imposing $6,500 fines on Lyft and Uber drivers. City officials argue that its laws are necessary for public safety, which is false.
To help ferret out drivers operating in violation of these laws, Salt Lake City employs secret shoppers to hire drivers and then report them to city officials. Correspondence obtained by Libertas Institute through an open records request includes numerous emails from these secret shoppers.
One such shopper, whose name was redacted, reported the following after her first experience using Lyft in April:
In an exclusive interview published last month, we broke the story regarding Salt Lake City’s heavy-handed fines being imposed on Lyft and Uber drivers operating without the city’s blessing. Citations amounting to $6,500 and more have been issued to drivers for daring to drive consenting passengers without the drivers having jumped through the city’s regulatory hoops.
Records obtained by Libertas Institute this week suggest more reasons why the city may be resistant to the innovative disruption that these ride-share companies bring. In the last fiscal year, Salt Lake City received $362,361.65 in fees from the three authorized taxi companies for the ~200 authorized vehicles operating throughout the city. This is in addition to license fees paid by the three companies to the city.
“Freedom in capitalist society always remains about the same as it was in ancient Greek republics: Freedom for slave owners.” —Vladimir Lenin
Labor Day is an interesting holiday for those that love liberty. For some, Labor Day reeks of the success of the socialist workers movement and should be eschewed; for others, it is merely a celebration of those whose labor is critical to our diverse economy. I propose that for those that love liberty, Labor Day can be a positive holiday that recognizes the importance of voluntary exchange in a free society. While we disagree with Lenin’s assessment of freedom in a capitalist society, we understand the source of his frustration.
Capitalism in Lenin’s view is more about individuals than about a system. Lenin and other socialists saw powerful individuals as “capitalists.” These were the individuals who owned capital or the means of production. By owning machines and factories the capitalists could leverage their ownership into profits by hiring wage laborers to carry out production. In Lenin’s view, this employment relationship was exploitative of the worker in the same fashion as slavery. However, there is a key difference. In the slave relationship the master literally owns the slave and can coerce the slave’s labor to the master’s profit. In contrast, the employment relationship in a capitalist system is voluntary. The worker owns their labor just like the capitalist owns their factory. Thus, a worker voluntarily offers their labor to the owner in exchange for the owner’s voluntary payment of wages. If the owner feels they can profit more from the worker’s labor than from the wages they offer to pay, then the exchange is beneficial for the owner.
Under Utah law, cities are authorized to require permits of business owners—including home business owners—for “purposes of regulation and revenue.” A bill attempting to restrict that authority, specifically carving out an exemption for at-home business owners, struggled in committee and was referred to interim study.
That interim study came in the form of another committee meeting a few weeks ago, in which the same debate was had; many legislators struggled to understand how or why the legislature should “impose” something upon the cities. They voiced objections to the thought of “micro-managing” cities, and indicated a preference to allowing cities to do as they please.
What wasn’t brought up, however, was the fact that the legislature has in the past—in many cases—restricted the authority of local governments to ensure a state-wide policy is followed rather than enabling a patchwork of different treatment for citizens around the state. As it relates to the home business exemption, this also makes sense. Why should a (very part time) seamstress earning $200 a year on the side be forced to pay a $150 license fee for the privilege of working in her own home, while another seamstress earning the same amount in another city be free from that burden?
As mentioned, there are many instances in Utah law when cities and counties are prohibited from doing something. Here are a few examples.
Utah law explicitly recognizes the “individual right to keep and bear arms” as “a constitutionally protected right under Article I, Section 6 of the Utah Constitution.” As such, “the Legislature finds the need to provide uniform civil and criminal firearm laws throughout the state.”
Part of that uniform law includes the following:
(2) Except as specifically provided by state law, a local authority or state entity may not:
(a) prohibit an individual from owning, possessing, purchasing, selling, transferring, transporting, or keeping a firearm at the individual’s place of residence, property, business, or in any vehicle lawfully in the individual’s possession or lawfully under the individual’s control; or
(b) require an individual to have a permit or license to purchase, own, possess, transport, or keep a firearm.
Many cities might like to enact policy restricting or regulating firearm possession and transportation. Some would jump at the chance to collect revenue by requiring a permit and license. This power is denied to them by the legislature, creating a state-wide policy that recognizes and protects the right to acquire and possess firearms.
Andrea Scannel, a Utah mother, was at Mount Logan Middle School for a government-administered “free lunch” program for her three-year-old. While there, she nursed her infant. She was given a letter by the school’s principal, delivered by an employee, passive-aggressively inviting her to “use discretion” and to “find a way to discreetly feed the baby, whether with a small blanket or in a more private area.” Andrea was taken aback by the “request,” later commenting: “I just never expected anyone to have an issue with me feeding my baby while everyone is there to feed their children.”
Utah law states, “A woman’s breast feeding, including breast feeding in any place where the woman otherwise may rightfully be, does not under any circumstance constitute an obscene or lewd act, irrespective of whether or not the breast is covered during or incidental to feeding.”
It further stipulates that local governments “may not prohibit a woman’s breast feeding…” Some of the more conservative cities might otherwise wish to regulate how much breast can be exposed, and when and where, but this power is denied to them “irrespective of whether the breast is uncovered during or incidental to the breast feeding.” Mothers around the state now take comfort in a general recognition that their nursing of their infants is a legally protected activity.
One might imagine what Provo, Utah would do in regards to regulating alcohol availability if it had the opportunity, but Utah law states that it, and other cities, “may not regulate in relation to” an issue “related to alcoholic product control” if state law already addresses that issue, unless the legislature “expressly granted” authority to do so.
If the legislative committee reviewing the business licensure bill imposed their same logic on this issue, some cities such as Park City and Salt Lake City would have free-flowing booze while others, such as Provo or Orem, would be dry cities. The legislature has previously decided on requiring a more uniform set of policies throughout the state, denying authority to the cities to act contrary to its edicts.
Just a few years ago, the legislature passed a bill that prevents local governments from enacting “an ordinance or policy that limits or prohibits a law enforcement officer, local official, or local government employee from communicating or cooperating with federal officials regarding the immigration status of a person within the state.”
Whereas a more liberal city council might want to prevent coordination such as this to provide sanctuary to so-called “illegal immigrants,” cities and counties around the state have been denied the ability to intervene.
More examples exist, but these suffice to show that the legislature is perfectly comfortable establishing state-wide policies on matters where there otherwise might be diverse interests among Utah’s 243 cities and towns.
Of course, just because the legislature has done something in the past is not reason on its own to repeat it in the future. However, in cases where fairness and rights are involved, it makes more sense to have a uniform policy that recognizes and protects that right.
The right to work has long been recognized by the courts in Utah. For example, in Leetham v. McGinn: “The right to engage in a profession or occupation is a property right, which is entitled to protection by the law and the courts.” In another case, McGrew v. Industrial Commission, we read this:
[O]ne may be said to have a special property in his profession or calling by means of which he makes his support, and he can be deprived of it only by due process of law. . . . . The right to work, the right to engage in gainful occupations, the right to receive compensation for one’s work are essentially property rights. So too is the right to enjoy the benefits resulting from the work of one so employed. So also the right to engage in commerce or in legitimate business is property.
For this reason, we support a state-wide restriction on a city’s ability to siphon money from its residents through permits for operating businesses inside the home that do not impact the public. Legislators expressing concern over stepping on the toes of cities seems, in the end, to be more a concern of money than authority; local governments are not going to give up an estimated $4 million in revenue without a fight.
“It is well to be up before daybreak, for such habits contribute to health, wealth, and wisdom.” –Aristotle
Perhaps it was this Aristotelian proverb that led Congress to pass the Standard Time Act of 1918 establishing both a standard time and the practice of clock shifting known as Daylight Saving Time (DST)—or perhaps it was the industrial war effort of World War I instead. Either way, the clock shifting practice has been controversial over the years as it was repealed, vetoed, over-ridden, reinstated temporarily during World War II, observed in select localities, mandated nationwide, extended in duration by months for a brief period, and finally, most recently, extended in duration permanently by a few weeks.
Currently, observance of standard time and Daylight Saving Time is governed by the Uniform Time Act of 1966 as amended by the 2005 Energy Policy Act which extended the saving period by a few weeks starting in 2007. Under the act, individual states are permitted to exempt themselves by state law as have Alaska and Arizona.
Recently, Utah lawmakers passed HB 197 which directed the Governor’s Office of Economic Development (GOED) to conduct a public meeting to gather comments and input on the impact of exempting Utah from daylight saving. The meeting was hosted in the Clarke Planetarium in Salt Lake City where a demonstration of various sun movements could be simulated. GOED has created a website to gather votes and opinions on the issue. Thus far, it seems those individuals most ardently opposed to DST have volunteered their opinions (68%) while many unaware of the issue may not have chimed in yet. Whether you favor or oppose government mandated clock shifting, GOED wants to hear from you.
America has cancer.
I’m not talking about the various forms of deadly and debilitating biological cancer that many American’s suffer and die from, like those often related to years of smoking. No, I am talking about a cancer affecting the impersonal host that is our country, our government, and our economy. We have a cancer just as debilitating and dangerous, and just as difficult to treat, as any form of biological cancer. The cancer I speak of is crony capitalism.
At our recent Liberty Forum, Utah businessman Jonathan Johnson, an executive at Overstock.com, spoke of the debilitating effects of over-regulation and how the burden of compliance with government mandates threatens business at all levels, but is particularly deadly for small businesses.
Too often this debilitating regulation is by design—not the necessary function of government, but rather the tactic of private interests who have captured government power and wield it like a hammer to flatten their competitors. This nefarious use of government power is crony capitalism, a brand of capitalism that is anything but. Instead of free and fair competition in an open and level marketplace, the well connected few curry government favors, subsidies, and regulations to rig the game in favor of the influential.
Plenty of attention has been given in recent years to the newspaper industry, suffering one loss after another as advertisers flee to new markets and new technologies outpace old systems. This market disruption is nothing new, nor confined primarily to one or a few industries. It was satirized 170 years ago by Frédéric Bastiat in his humorous petition whereby candlemakers, whose livelihoods are threatened by the sun, call for its free and abundant light to be shut out.
The same disruption is now occurring in public transit. Enter Lyft and Uber, two young companies bringing the social networking revolution to transportation. These services pair drivers up with those who need a ride using geolocation on their mobile devices.
And because these emerging services pose a threat to longstanding institutions replete with their unionized and politically connected employees, it’s no surprise to see conflict. In Virginia, both companies were served a cease and desist last week by the state’s Department of Motor Vehicles because “the companies are illegal and have not received proper authorization from the DMV to operate in the state.” Both companies are wonderfully defiant of this order. For its part, Uber publicly announced its resistance, providing the following context:
During the recent legislative session, word broke out that the financially failing Swanson Tactical Training Center in Ogden, Utah, was looking for an easy exit. Having appraised the facility for north of $11 million, the Swansons were willing to sell to the county for under $4 million.
The problem facing the county was that they didn’t have the money. So, in unsurprising fashion, they ramped up their lobbying efforts in search of state funds. In late January, a free dinner and shooting event was held at the facility to dazzle legislators and encourage their support of an appropriation of tax dollars to help make the sale a reality.
Senator Allen Christensen, a proponent of the expenditure of tax dollars on the gun range, remarked: “This is a fantastic deal. You’re talking about tens of millions of dollars that have been expended on this whole facility, and we’re getting it for a fraction of that.” (Somehow we’re to believe that a price being discounted is sufficient to justify the government’s acquisition and ownership of something…)
It should also be noted that this wasn’t Swanson’s first attempt at approaching the legislature; in 2008, the Senate unanimously voted for a $2 million appropriation to the Tactical center, laundering our tax dollars through the Division of Housing and Community Development. The appropriation was never considered in the House, and therefore was not approved.
In addition to seeking an increase in the sales tax to help improve its services, the Utah Transit Authority has doubled the amount of bonuses awarded to its managers since last year.
A total of $1.74 million in bonuses was awarded to 389 employees, for an average of $4,473. Of course, most bonuses fell below that average, because many others were substantially higher: $30,000 to the General Manager, General Counsel, Chief Operating Officer, Chief Communications Officer, Chief Capital Development Officer, Chief Safety Officer, and the Chief Planning Officer. Three other managers received bonuses higher than $20,000, and another 21 were awarded bonuses higher than $10,000. All of this is on top of high base salaries.
The Salt Lake Tribune‘s editorial on this issue focused primarily on the public relations problem that such bonuses has generated. But the problem here is fundamental, not superficial. Throwing so much cash at the upper echelons of a bureaucracy is objectionable not only because it’s allegedly excessive or generates bad press—it’s bad because it’s our money.