Over the last four years we have continually covered stories of restaurant owners that have lobbied their local politicians to try and rid themselves of competition. Some have been unsuccessful however far too many have found friends in their local city councils and kept food trucks at bay. Yesterday, Daniel J Smith of investors.com used the mobile food industry as an example of how crony capitalism not only hurts our economy but also consumers.
This crony economy — when politicians choose which businesses get special breaks and benefits — is a tragedy for economic freedom and the well-being of businesses and consumers alike. Not only does this system create an unfair playing field, but it also erodes the quality and choice of products and services available to consumers.
Consider the food truck industry that has sprouted up and thrived in many U.S. cities. Culinary entrepreneurs have recognized food trucks as a way to test their ideas among the public without the high cost and risk that come with running a brick-and-mortar restaurant. From burritos and kabobs to cupcakes and doughnuts, the public welcomes the opportunity to try new foods at affordable prices from these mobile kitchens.
But not everyone welcomes choice into their neighborhoods. Threatened by the competition, restaurants have worked successfully with many local governments to regulate food trucks out of business.
In our nation’s capital, Washington, D.C., regulations were proposed earlier this year to limit food trucks’ ability to operate and serve customers. Before the changes even went into place, several food truck owners recognized that they wouldn’t be able to afford to stay in business and decided to close up shop.
It is cronies who win in situations like this, while customers and entrepreneurs lose.