Last year, two young college graduates had a great business idea that has become a huge success in the town of Delray Beach, Florida.
Observing the ordeal of vacationers lugging beach chairs and other heavy beach equipment for the long, hot walk to the beach, they introduced a free golf cart shuttle service called “The Delray Downtowner.” They are on call until 11 p.m. every night and can take anyone anywhere in the downtown area.
Not surprisingly, the Delray Beach city government is apparently doing everything it can to drive The Downtowner out of business.
It was an idea the entrepreneurs developed while studying business in college, and their parents provided them with the capital for the golf carts. They live on tips and advertising revenue from local merchants who advertise on the vehicles.
City Aims to Shut Them Down
The Downtowner is always fully booked, and for good reason: The young drivers are prompt, exceptionally polite and courteous, and it’s free! What a great way to start your post-college career as an entrepreneur.
The Downtowner may soon be history, however, and the young entrepreneurs unemployed, because the city government, in its quest to provide corporate welfare for politically connected downtown merchants, has spent more than $1 million to purchase two large buses called “Roundabouts” that run a fixed route and operate for “free.”
Of course, it’s not really free—the cost is just hidden from view. All salaries and capital costs are paid for by taxpayers. Since it is difficult, if not impossible, for anyone to compete with a government enterprise that has all of its capital and personnel costs paid for by taxpayers, the days of The Downtowner may be limited. At least it hasn’t been banned altogether—yet. That was the fate of early-twentieth century “jitneys” (fixed-route taxis) that were banned throughout the U.S. with the advent of city government-run buses.
‘Bootleggers,’ ‘Baptists’ Join Forces
The Delray Beach city government claims the purpose of the “Roundabouts” is to stimulate local business and reduce traffic congestion. It is an example of a “bootleggers and Baptists ” coalition, in other words. Economist Bruce Yandle coined the phrase to describe the proponents of alcohol Prohibition in the 1920s: Bootleggers wanted Prohibition because it kept them in business, and “Baptists” represented people who opposed alcohol consumption for religious reasons.
In this case the “bootleggers” are local merchants who think government-subsidized bus service will bring them more business, and the “Baptists” are environmentalists and urban planners who think the buses will reduce traffic congestion and air pollution.
But politicians have no business taxing some citizens to provide a veiled form of corporate welfare to other, better politically connected citizens—downtown merchants. Moreover, the buses create more traffic congestion, not less, because of their very existence. The Downtowner already had reduced traffic congestion. If there is a need for more competition—and there always is—then that is the job of entrepreneurs, not politicians looking to line their campaign coffers with “contributions” from local merchants.
Buses Run Nearly Empty
The law of unintended consequences recently added an element of farce to the saga of the Delray Beach “Roundabouts.” They have been running empty most of the time except for some homeless people who have decided sitting in an air-conditioned bus is better than being on the street in the middle of the South Florida summer. This has caused a panic among the city’s political dispensers of corporate welfare because the homeless people are apparently deterring others from using the Roundabouts, the ostensible reason for the million-dollar boondoggle in the first place.
The politicians are afraid city taxpayers might start questioning the propriety of using tax dollars to run empty buses (except for one or two homeless persons) all day and night, so they are proposing to start charging $1 each way.
The best use for the Delray Beach Roundabouts would be to dump them in the sea some place where they can form a reef and fish habitat. It would be good for the environment and for (non-subsidized) business in the city.
Used with permission of Mises.org, where an earlier version of this article appeared.