The Oregon moving cartel
By Timothy Sandefur
posted in the Oregon Live
November 28, 2008
Police officers in Fairview took a break from fighting crime last week to shut down some unlicensed moving companies instead. They ran a sting operation that netted 15 companies for moving people's belongings without having their competitors' permission.
You read that right. Under Oregon law, any time a person applies for a license to run a moving company, the department of transportation notifies all of the existing moving companies, and gives them the opportunity to object to the new license.
In short, the law creates a cartel of moving companies who enjoy the special privilege of keeping up their prices by shutting out competition.
Portland college student Adam Sweet learned about the law last year, when state officials ticketed him for operating a moving company called 2Brothers. He and his brother Jared started the business to help Adam pay his way through school -- just the sort of hardworking and responsible ethic that government ought to reward instead of punishing. But after fining him and towing away his truck, state bureaucrats ordered Adam to apply for a license or face further criminal prosecutions.
And to get a license, he would first have to run the gauntlet of his own potential competitors.
When an existing mover objects to a new license application-which of course they always do-the department holds a hearing and requires the newcomer to"prove" that there is a "public need" for a new moving business.
But proving a "public need" for an untried new business is impossible. For one thing, the law sets no standards for bureaucrats to follow when determining what a "public need" really is. What's more, new businesses succeed or fail based on whether they serve customers and charge low prices,not whether they meet some state official's definition of the public good.That may why the department hasn't issued a new mover license for more than two years.
The state moving cartel doesn't just hurt entrepreneurs like Adam Sweet; it also hurts consumers.
Competition encourages the innovation that forces companies to devise new,alternative ways of doing business, and creates the diversity of goods and services that keep consumers satisfied.
But Oregon's laws jack up prices and stifles new ideas. Existing companies charge as much as $110 per hour for full service moving. If allowed to compete, Adam's company could charge as low as $75 per hour for the same service. Yet the state's rules allow unelected bureaucrats to declare that consumers are getting "enough" service and to block the consumer's freedom of choice. This makes as much sense as prohibiting new coffee shops from opening because there's already a Starbucks in the neighborhood.
The only winners in the cartel system are the existing companies that can rely on the department of transportation to maintain their profitable market share. Sheltered by the government, they have little incentive to innovate and diversify their services. In contrast, new start-up businesses would invigorate the market with ideas to reach more customers with more services at lower prices.
The U.S. Constitution guarantees every American's right to liberty,including the right to earn an honest living through an honest trade. While government should protect the public health and safety, it has no right to protect established, politically well-connected companies against fair competition by entrepreneurs like Adam Sweet.
Most of all, states have no right to abuse their power to "protect" the public from low prices and fair competition.
When the court rules on Adam's constitutional challenge to the mover cartel, it will have a chance to vindicate the right to pursue happiness-not only on behalf of Adam Sweet, but of all Americans.
Timothy Sandefur is an attorney with the Pacific Legal Foundation (PLF),which represents Adam Sweet in his lawsuit against Oregon's moving-businesscartel. PLF is the oldest public-interest legal organization that litigatesfor free enterprise and limited government.