Taxi Reform

Free to drive

Anchorage is home to more than 270,000 residents-two-fifths of Alaska's population-but has issued only 158 permits for taxi cab operators. Residents complain that getting a cab is a struggle, and it's no wonder: The city has offered only four new permits in the last 13 years. According to the city, the market value of the permits (which are transferable) hovered around $120,000 each as of December.

Ryan Kennedy was an undergraduate at the University of Alaska-Anchorage when he learned about the city's cab cartel. His microeconomics professor had intended it to be a simple lesson in fettered markets. Kennedy decided to try to unfetter them. He roped his professor, a few fellow students, and some members of the local Libertarian Party into a coalition he calls Anchorage Citizens for Taxi Reform. The group says any qualified person should be able to get a permit for the $875 application fee. It has collected thousands of signatures to force a vote on the issue.

Current permit owners, many of whom live out of state and lease their rights to cab operators, are not pleased. They say their livelihoods depend on keeping competition to a minimum, and they argue that allowing freer entry would constitute a "taking" because the value of their permits would plummet. "We paid top dollar," one complained to the Fairbanks Daily News-Miner. For his trouble, Kennedy says he has had his tires slashed and his car windows smashed and been shadowed by "some guy dressed like something out of The Sopranos."

The city initially refused to put the taxi initiative on the ballot, convinced it would have to compensate the permit owners for whatever hit they took when competition increased. Kennedy and his pro bono legal team sued. The state Superior Court bought the permit owners' takings argument, but the Alaska Supreme Court rejected it on appeal. In April, more than five years after Anchorage citizens first started agitating, the permit issue will finally go to a vote.