It would appear that few people know as much about business as liberal spokespeople. One of them, Generation Opportunity’s Patrice Reed, recently wrote in the Washington Post that the rules governing food truck owners in Washington, D.C.—one of the few approved occupations in the eyes of app developers, community activists, and nonprofit spokespeople—are close to ideal. What’s more, she offered up the unique theory that food trucks, which are exempt from many of the costly taxes and regulations befalling the restaurants they compete with, are actually beneficial for the restaurants in this city because they create bring more lunch diners to the city, which ultimately boosts demand for brick and mortar restaurants.
It’s an inane argument but one completely in line with the liberal agitprop—peddled constantly over the last eight years—that laws increasing the cost of doing business are done for the benefit of business. It turns out, according the progressive logic, that higher minimum wages actually allow companies to attract better and more productive workers and health insurance mandates reduce absenteeism and increase tenure, saving businesses more money than these cost. If downtown restaurants knew what was best for them they would demand that the city subsidize their cut-rate competitors even more, but apparently they don’t know what’s good for them. Thankfully, the government’s got them covered.
I am sure that the food truck operators are happy with the current arrangement; after all, they are being given the opportunity to use a public space for private commerce at a cost to them of nearly nothing, a deal virtually no one but professional sports teams can extract from most communities.
But it’s not a good deal for the rest of us—not the taxpayers, who lose out on millions of dollars of potential revenue that could defray their own taxes, nor the nearby restaurants, which are losing sales and profits to their food truck competitors, Ms. Reed’s ridiculous protestations to the contrary notwithstanding.
The current arrangement, whereby the city holds a daily lottery to distribute (for free!) the various slots designated for food trucks throughout the city, may be vastly more preferable for food truck operators than the first-come-first-serve method that previously existed, but it’s immensely inferior from both the perspective of commerce and the taxpayer to auctioning these spaces to the highest bidder.
For starters, an auction would result in a more efficient allocation of slots. If food trucks paid the going rate for a space along Farragut Square—the hub for truck cuisine, within spitting distance of the White House and K Street—then the popular trucks would find it more valuable to operate there than the newer trucks or ones offering more challenging fare and they would bid accordingly, and less popular trucks would go elsewhere.
This notion isn’t controversial, it’s market capitalism 101. In fact, the food truck operators recently embraced this logic and set up their own secondary auction for food truck slots, with the only difference between their auction and what I propose is that in my version the city would get the revenue rather than the food truck owners who get lucky in the lottery.
An auction would also generate a nice chunk of change for the city. Based on the price of rents paid by restaurants around Farragut Square and other popular food truck locations, I conservatively estimated that an auction would generate roughly $2 million a year for the city. For perspective, that’s enough money to cover the estimated operating costs of one of the proposed mid-sized family homeless shelters that are to take the place of a shuttered D.C. General that Mayor Muriel Bowser says she cannot currently fund, to pick an example of something that might think is more important than subsidizing cuisine for office workers.
One objection to a government auction that I heard from a bureaucrat involved in setting up the lottery is that the government need not “milk every last dime” from private businesses. While I admire his munificence on our behalf, why then does the city charge private restaurants thousands of dollars to put tables on the sidewalk in front of their business? Many of these are family businesses that have seen their profitability take a shellacking as the government does them one supposed favor after another. Don’t they deserve a subsidy as much as a food truck? Perhaps so, but we charge them because when those rules were set it still made sense to make private businesses pay to use public property, a sound principle that ought to also apply to food trucks.
And the notion that the food trucks gin up more business for everyone is either profoundly ignorant or else incredibly condescending—pick one. The number of office workers in downtown D.C. who leave their desks at lunch is largely stable and having a couple dozen food trucks nearby doesn’t magically double that number, something that anyone could figure out by merely visiting a few of the half-filled diners and fast food restaurants on any Friday in the city, when the city sets up tables and chairs for the food truck diners in various parks—for free, naturally.
Failing to auction food truck slots is not pro-business and it’s certainly not pro-market: It’s a multi-million dollar favor being done for one select group of businesses that have a special appeal to an influential segment of the populace that comes at the expense of another group of businesses, as well as D.C. taxpayers.
It’s the progressive’s version of crony capitalism, and it stinks just as badly as any other version of it, no matter how much one happens to like food trucks.
Ike Brannon is President of Capital Policy Analytics, a consulting firm in Washington, D.C. Read a previous piece by Brannon on food trucks here.
