Reform motor coach industry to promote more competition

The Rio Grande Foundation recently completed a report in which it analyzed dozens of state regulations that are holding back our economy and need to be eliminated or reformed. The need for deregulation has never been more apparent with our economy losing jobs and seeing an outflow of workers (according to a recent report from United Van Lines).

Unlike many issues in Santa Fe, deregulation has not historically been a partisan issue. At the federal level, President Jimmy Carter deregulated trucking, freight rail and airlines to positive effect in the 1970s. President Reagan continued those efforts in ways that led to significant economic growth throughout the 1980s.

To further illustrate the point that deregulation can and should be bipartisan, we are pleased to see that Think New Mexico has embraced the concept of deregulation, at least insofar as motor carriers here in New Mexico are concerned.

Think New Mexico has been working to pass House Bill 194, legislation sponsored on a bipartisan basis by Republican Rep. Tom Taylor and Democratic Rep. Carl Trujillo. The bill attempts to overcome many of the most absurd barriers to free competition in transportation services. These barriers harm both New Mexico’s economy and reduce options for consumers.

Today, entrepreneurs seeking to open new taxi, shuttle, or moving companies must gain the approval of the incumbent providers. Imagine Wendy’s having to gain the approval of McDonald’s before opening up a restaurant. One Albuquerque man who dreams of owning his own taxi business has been working for eight years to overcome this barrier.

According to (a staff response in a case before) the New Mexico’s Public Regulation Commission, which is charged with actually regulating motor carriers, “The Albuquerque Cabs appear to operate as a cartel: they are the only certificated taxicab companies in Albuquerque, they share the market evenly, they charge identical rates, and they have the same attorney. As a cartel, their interests may be best served by maintaining rates above the market rate and by discouraging competition, not by ensuring that the public is served by quality, affordable, and plentiful taxicab service.”

Cartels are creatures of government policy, not the product of a healthy free market.

Another barrier is pricing. In a free market, price competition is a primary determiner of market success. Under New Mexico’s arcane motor carrier laws, the state/government must approve all prices charged by these companies. Making matters worse, motor carriers have a special exemption from state antitrust laws that encourages them to form state-sponsored cartels and price fix. HB 194 would change all that.

With an active push for regulatory reform under way, the existing motor transport oligopoly is not going to give up without a fight. They have worked to introduce their own more industry-friendly legislation, SB 328, which muddies the waters and continues to allow existing providers to smother their potential competitors under a blizzard of legal filings using the current antiquated law.

Rio Grande Foundation does not always see eye to eye with the folks at Think New Mexico, but when it comes to regulating motor carriers, we agree that policymakers should stick to safety regulations, not micromanaging a potentially-competitive market for the benefit of a few well-connected special interests.

The aforementioned PRC staff brief concluded, “There has been a great deal of economic analysis of taxicab regulation in the past thirty years, with most experts agreeing that the public is best served by increased competition and limited barriers to entry.” We agree. It is time for the New Mexico Legislature to do what is in the best interests of consumers and entrepreneurs alike by truly deregulating New Mexico’s motor carriers by supporting HB 194.

The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization.