The Right Opinion

Blocking the Paths Out of Poverty

By John Stossel · Nov. 30, 2011

Have you noticed how often government takes sides against the little guy?

Street vending has been a path out of poverty for Americans. And like other such paths (say, driving a taxi), this one is increasingly difficult to navigate. Why? Because entrenched interests don’t like competition. So they lobby their powerful friends to erect high hurdles to upstarts. It’s an old story.

Now, growing local governments are crushing street vendors.

The city of Atlanta, for example, has turned all street vending over to a monopoly contractor. In feudalist fashion, all existing vendors were told they must work for the monopoly or not vend at all.

“Vendors who used to paying $250 a year for their vending site must now hand over $500 to $1,600 every month for the privilege of working for the monopoly,” wrote Bob Ewing in The Freeman. Ewing works for the Institute for Justice, the libertarian public-interest law firm that defends victims of anticompetitive regulation.

IJ has sued the city on behalf of two popular vendors.

In Hialeah, Fla., if you operate a flower stand too close to a flower store or if you’re not constantly moving, you can be arrested.

Institute lawyer Elizabeth Foley says the regulations make “it virtually impossible to be an effective street vendor. You can’t be within 300 feet of any place that sells the same or similar merchandise. That’s absolutely ridiculous for the government to use its power to enact a law like that. … These people are just trying to make an honest living, and the city is making it impossible to do so.”

The law does seem designed to cripple street vending.

“You have to be in constant motion, which is completely unsafe.”

Raul Martinez, the mayor when the law passed, defended the rule.

“You don’t want to have everybody in the middle of the streets competing for space on the sidewalk without some sort of regulations. In the city of Hialeah, we’re not overregulating anybody.”

He says one purpose of the law is simple fairness: Street vendors don’t pay property taxes. Brick-and-mortar stores must.

“They also create jobs,” Martinez said. “What we did back then is we got all the groups together and we came with an ordinance that was satisfactory to all of the parties at the time.”

But they couldn’t have gotten “all the groups” together because people who hadn’t yet entered the business weren’t included. How could they have been? No one knew who they would be. What the mayor did was get the established guys together. Such “fairness” regulation kills job growth and reduces consumer welfare because the entrenched interests write rules that cripple new competition.

Mayor Martinez argued that “you create an unfair advantage when you allow that vendor selling in the front of a flower shop to sell the same flowers that the flower shop sells, and to sell them at a much reduced price. That’s unfair competition.”

It’s a fair point: Why open a brick-and-mortar store and pay property tax if you could save maybe $3,000 a year by selling from a cart?

“These are different types of business models,” Foley replied. “A florist can offer professional arrangement. A florist can offer delivery. A florist has a bathroom. Air conditioning. A street vendor is out there on the street, and the way they compete is on price and convenience; you can drive up and get your flowers and go home quickly. There’s nothing wrong with having two different types of business models competing near each other. It happens in America all the time.

"It’s not legitimate for government to use its incredible power to make one business model have an unfair advantage over another.”

As a libertarian, I’d say that the store owners' beef is with the local government that imposes the property tax, not the street vendor struggling to make a better life.

If government destroys all the paths out of poverty, the welfare state will look like the only way to help the poor.

Maybe, in addition to helping entrenched interests, that’s the bureaucrats' goal.



Howard Last in Wyoming said:

In the Senate there is a bill to allow states to tax internet sellers. Why as the sponsors say, to make them even with stores that pay sales tax. The question to ask the senate sponsors is why should the stores have to collect sales tax? Without sales tax both the stores and the internet sellers would be equal.

Wednesday, November 30, 2011 at 1:35 AM

JohnH said:

@ Howard Last,Simply put, our governments, local to national, never met a tax they didn't like. Fairness never enters the equation and their never ending goal is to have more money to spend. It's their answer to all our problems. But, as Reagan said, it IS the problem!

Wednesday, November 30, 2011 at 8:49 AM

Looking 4 Liberty said:

Just like any other professional criminal enterprise, governments require businesses to pay protection money. A business must provide a "taste" of the proceeds to keep the enforcers at bay if they want to operate on the government's "turf."

Wednesday, November 30, 2011 at 12:19 PM

Graciela said:

I usually agree, but there is concept of property, the streets are "public" property then pay or contribute like a regular "tenant" for occupying the "space"I have experienced these type of business form and in Caracas they take over the sidewalks, interrupt traffic, they don't comply with standards of hygiene, they dont compete at the same level. I dont know maybe I am off.

Wednesday, November 30, 2011 at 1:30 PM

CaseAce said:

To me the flower vendor situation seems like a fair compromise, I would not want to spend money advertising my location and business to have someone camp out in front to essentially steal my business. I usually agree w Stossel but not in this case.

Wednesday, November 30, 2011 at 4:12 PM

BrianK in Northwest Arkansas said:

"If government destroys all the paths out of poverty, the welfare state will look like the only way to help the poor.Maybe, in addition to helping entrenched interests, that's the bureaucrats' goal."Is there really any doubt?

Wednesday, November 30, 2011 at 5:19 PM

BrianK in Northwest Arkansas said:

@Graciela: "...they take over the sidewalks, interrupt traffic, they don't comply with standards of hygiene, they dont compete at the same level. I dont know maybe I am off."The rules of the free marketplace tell us that a street vendor which becomes a nuisance to traffic, or a health hazard that makes people sick, will not recieve any buisiness, and therefore, will be out of the market in short order. People will generally avoid businesses that either annoy them or make them sick.

Wednesday, November 30, 2011 at 5:25 PM

RJK said:

John, take a second and consider the overhead carried by a mom and pop, brick and mortar flower shop. Now compare this to a guy with a cart. The flower shop provides jobs, contributes to the tax base and is part of the community. The guy with the cart sells flowers. Although unlikely, if left unchecked we face the prospect of an urban retail economy consisting entirely of street vendors. One man's "path out of poverty" is another's highway to insolvency. And if we didn't have municipal taxes in some form, who would pave the streets the street vendors tread? Think, John. Think.

Thursday, December 1, 2011 at 10:55 AM

Will in Texas said:

Government regulations ALWAYS increase costs and stiffle growth. I sell insurance, Gov regulations of property insurance alone adds on average $300 per policy; Nevermind what regs have done to health insurance premiums$$$$! They wonder why we are suffering from a slow growth economy...IT'S THE REGULATIONS, STUPID!! (Not calling anyone here stupid, just those who think we need more regulations:)

Thursday, December 1, 2011 at 12:50 PM

Tom L. said:

I think that the interests of the brick and mortar folks do deserve serious consideration, since they are job creators and employers, and as stated, they do pay taxes; in fact, they pay for the cop who enforces the ordinances. I also think that in this situation, an accommodation could and should be reached, to allow all vendors to go on doing business.

Monday, December 5, 2011 at 8:16 PM

TAE said:

Where I live, we have street vendors ('taco' trucks, basically, and tamales) right in front of the City Hall. There's also a park on the premises, and they do good business. Two years ago, there were about ten of them, now there are three. The reason? First, they all had to buy a business permit, then they had to get the Health Department's certification. The reason that there are only three left is that they're subject to 'no notice' inspections by the health department, which closed down those not in compliance with temperature/cleanliness requirements. There are several nice restaurants in the next block and across the street, both do a great deal of business, and no one minds the competition. The street vendors provide a service, as do the restaurants. Both collect/pay taxes. Yes, the restaurants have a much higher overhead - they also have beer and wine, and much higher prices. There's room for both groups, and although they overlap, no one is going to go out of business unless they screw up.I think I need to stop by and pick up some tamales, tonight....

Wednesday, December 7, 2011 at 8:50 AM