"Politicians are interested in people. Not that this is always a virtue. Fleas are interested in dogs." — P. J. O'Rourke
A victory for fair play and the free market has put local politicians and bureaucrats in a tizzy. A jury has brought in a verdict here in tiny Key West that will probably end one of our city government’s most blatant protection rackets.
The spectacle of dissembling hogwash that city officials are using to justify the monopoly they granted to a local tour company is almost worth the price of having to pony up to pay the winner.
Many years ago the Key West City Commission sold a monopoly for motor tours on city streets for a 5% cut of the action. The tour business prospered. Some time in the ninety’s city leaders put police and code enforcement officers to work to drive a competitor out of business. Key West’s finest succeeded and the competitor sued. After ten years of legal wrangling the case arrived in front of a jury. The jury decided the city had gone too far, confirming that Americans prefer to be fleeced by politicians equally, with favoritism toward none. They awarded the plaintiff something north of $13 million, which is a substantial cut of the $32 million the city is scraping by on this year.
“Where on earth will we get the money?” exclaimed one of our representatives. Where, indeed. Where did we get the money to drive the man out of business? Where did we get the money to fight him for ten years in court? Where will we get the money to appeal? We get it from the usual sources — other protection rackets. Licensing, permitting, inspections, and, of course the mother of all protection rackets, property taxes are the traditional and reliable sources of local government resources. Charging rent on someone else’s property under threat of legally stealing it just can’t be beat for steady, growing income.
In the tour monopoly case, the City of Key West pursued the wrong extortion model. The city’s sale of a profitable privilege to a single company which they were then obligated to protect from other companies is a perilous model for small governments. The “pay for privilege” model works better at higher levels of government, where “access” is granted for “campaign contributions” and no victim is likely to be strong enough to wrestle with Leviathan.
With enough power, lawmakers can generate protection money literally for doing nothing. The cash flows when they threaten to pass bills that will damage selected private businesses — specifically, businesses that can pay enough to stop them. These legal strawmen are so common they even have nicknames. In California they call them “milker bills.” Politicians draft legislatively useless “milkers” to threaten some private group who will pay to defeat it. “Juice bills” is another term for laws designed to squeeze cash from the private sector. In Illinois they call them “fetchers,” as in “Go fetch us up some money, boy, or we’ll hurt you.”
City governments can’t squeeze much juice out of their limited markets. They have to stick with the traditional protection racket. It is always easier and more certain to sell protection from yourself than from some unpredictable third party. It’s the reliable business model used by street punks who offer to watch your parked car, “… so nothing happens to it.”
Even after their crushing defeat, however, it still isn’t clear whether our city officials have learned the lesson taught so well by Al Capone and Bugsy Siegle. It is a lesson that forms the basis of modern government finance. You don’t have to own the cow to get the cream.
Just recently one of our commissioners suggested the city break its deal with a trash container advertising business. The business is paying the city protection money. The company performs the public service of placing and maintaining trash containers. They earn money selling advertising on the containers. The commissioner suggested the city could make some easy money by running the company out and starting an identical business with city staff.
Clearly he doesn’t have a clue about how government works. Confiscating a cow and then keeping all the other cows out of the field won’t make you rich. This is especially true if you don’t know anything about cows. In a month Bossy could be dead. Instead you milk every cow you let into the pasture, or maybe just the biggest ones. Then take in all the cows you can. If the farmers don’t pay, you sacrifice a fatted calf or two. You won’t lose many before you’re hip deep in whipped cream.
That’s the democratic, free market extortion that Americans prefer. After years of being herded and protected we’re used to being milked. But when local governments favor one farmer over another we can get a little surly.