Reason magazine contributing editor Michael Moynihan has an important article in the Wall Street Journal (June 18, 2011) logging the confusing, costly, and anticompetitive regulations New York City has imposed on food cart vendors in the city. Unfortunately, the full article is only available to subscribers, but Moynihan does a nice job of showing how byzantine these rules can be and the fundamentally anticompetitive nature of those adovcating for the rules. Michael writes:
“It’s no surprise that the mayor who required fast-food restaurants to display the caloric content of every menu item would declaim food trucks. But while New Yorkers barely reacted to calorie counting with a shrug, the popular haute-cuisine trucks, where the adventurous eater can find gianduia-flavored ice cream, Korean “tacos,” and BBQ pulled pork Belgian waffles, is a rather different matter.
“The business of selling street food doesn’t lack for regulation. In Manhattan—and most cities in the U.S.—the legal proscriptions governing food trucks are baffling, and the barriers to entry for new businesses predictably onerous. To sell food cooked in a truck, one must possess a vendor license. But the city caps these at around 3,000, with a waiting list just as long. And with sometimes as few as a dozen new licenses dispersed in a year (via a lottery system), for most this means waiting a dozen years to start a legal operation.
“Baylen Linnekin, executive director of Keep Food Legal, a Washington, D.C.-based advocacy group devoted to “culinary freedom,” says that the regulatory hurdles faced by truck owners ensure the creation of an underground economy. Because the City Council has so limited the number of permits, often “the only way to open up a new truck is to pay a bribe and buy a permit on the black market.” While it’s technically illegal to resell permits, Mr. Linnekin estimates that over half the city’s trucks either “rent” or purchase permits, which can cost upwards of $20,000.”
Reason Foundation has researched this issue extensively in cities across the nation. One of more thorough studies is Giving a Let Up to Boostrap Entrepreneurship where we examined local regulations in Boston, Atlanta, Los Angeles, and Dallas. We’ve also used taxicab regulation to demonstrate the perverse and highly political nature of these local regulations (see here and here).