Page 328 - The Principle of Economics

334 PART FIVE FIRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRY
IN THE NEWS
Public Transport and Private Enterprise
IN MANY CITIES, THE MASS TRANSIT SYSTEM of buses and subways is a monopoly run by the local government. But is this the best system?
Man with a Van
BY JOHN TIERNEY
Vincent Cummins looks out from his van with the wary eyes of a hardened crimi- nal. It is quiet this evening in downtown Brooklyn . . . too quiet. “Watch my back for me!” he barks into the microphone of his C.B. radio, addressing a fellow out- law in a van who just drove by him on Livingston Street. He looks left and right. No police cars in sight. None of the usual unmarked cars, either. Cummins pauses for a second—he has heard on the C.B. that cops have just busted two other drivers—but he can’t stop himself. “Watch my back!” he repeats into the
radio as he ruthlessly pulls over to the curb.
Five seconds later, evil triumphs. A middle-aged woman with a shopping bag climbs into the van . . . and Cummins dri- ves off with impunity! His new victim and the other passengers laugh when asked why they’re riding this illegal jitney. What fool would pay $1.50 to stand on the bus or subway when you’re guaranteed a seat here for $1? Unlike bus drivers, the van drivers make change and accept bills, and the vans run more frequently at every hour of the day. “It takes me an hour to get home if I use the bus,” ex- plains Cynthia Peters, a nurse born in Trinidad. “When I’m working late, it’s very scary waiting in the dark for the bus and then walking the three blocks home. With Vincent’s van, I get home in less than half an hour. He takes me right to the door and waits until I get inside.”
Cummins would prefer not to be an outlaw. A native of Barbados, he has been driving his van full time ever since an injury forced him to give up his job as a machinist. “I could be collecting dis- ability,” he says, “but it’s better to work.” He met Federal requirements to run an interstate van service, then spent years trying to get approval to operate in the city. His application, which included more than 900 supporting statements
VINCENT CUMMINS: OUTLAW ENTREPRENEUR
from riders, business groups, and church leaders, was approved by the City Taxi and Limousine Commission as well as by the Department of Transportation. Mayor Giuliani supported him. But this summer the City Council rejected his ap- plication for a license, as it has rejected most applications over the past four years, which is why thousands of illegal drivers in Brooklyn and Queens are dodging the police.
DOING NOTHING
Each of the foregoing policies aimed at reducing the problem of monopoly has drawbacks. As a result, some economists argue that it is often best for the govern- ment not to try to remedy the inefficiencies of monopoly pricing. Here is the as- sessment of economist George Stigler, who won the Nobel Prize for his work in industrial organization, writing in the Fortune Encyclopedia of Economics:
A famous theorem in economics states that a competitive enterprise economy will produce the largest possible income from a given stock of resources. No real economy meets the exact conditions of the theorem, and all real economies will