Lawyers, like the rest of us, need to stay busy. One way they do so is by defending special interests -- by going where the money is, by writing rules to favor one client, by resisting rules to defend another. Isaac Kaiser and Freda Poundstone act as advocates for established companies like Yellow Cab, but they are not alone. Al Micklejohn is a state senator in Colorado who heads up a powerful transportation committee in the state senate that has persistently stifled efforts to deregulate the taxi industry in Colorado. He is also a partner in a Denver law firm that represents a number of established transportation interests. Micklejohn has repeatedly stated that he sees no conflict of interest in that arrangement.
In the spring of 1992, the Quick Pick case came to the attention of the Institute for Justice. It filed a civil-rights suit in federal court in Colorado, arguing that the PUC's "regulatory regime" was so onerous that it denied Quick Pick's founders "the basic right to pursue their chosen livelihoods and to operate a legitimate business."
The state -- represented by the office of the Colorado attorney general, Gale Norton, who also happens to be a staunch free-market Republican -- argued that no such right exists. In her motion to have the case dismissed, Colorado assistant attorney general Mana Jennings-Fader wrote that since the Quick Pick four were working, they had no case: "Has the regulatory scheme impaired [the plaintiffs'] ability to pursue a business or to seek employment? . . . The answer is a resounding no. . . . While it may not be the employment of their choosing, that is not the issue here. The fact of their employment is sufficient to overcome an asserted liberty interest."
In August 1993 the federal district court in Colorado dismissed Quick Pick's case, barring the four men from entering the Denver taxi market. The following month, the Institute for Justice filed an appeal in the case.
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Going Underground
Opportunity In the Shadow Economy
It is little more than three miles from Five Points, in the heart of Denver's inner city, to the gleaming skyscrapers of downtown, where people like Isaac Kaiser and Karen Mathis work, but across that distance you might as well be traveling from a third-world country into the developed world. Five Points is home to Ani Ebong's hole-in-the-wall convenience store, whose stucco facade butts up against the painted brick facade of the Church of Peace. Stand out front, and it won't be long before you'll see a drug deal going down across the street -- even in the middle of the day.
An outsider wandering into Five Points is greeted by Ani Ebong with a knowing smile and a wary laugh: "This is not the same America that you know. There are all these gangsters around here." But that doesn't intimidate Ebong, who emigrated from Nigeria about 20 years ago. "I used to be afraid. I wouldn't come down here. Now I know all the people, and I know, what I wish for myself and my life, they want the same for themselves," he says. "If you come here from a distance, you can't see that. You just think that everybody is running around crazy and nothing works. The closer you get to the community, the better your understanding."
Ebong, after all, is an entrepreneur, and he has an entrepreneur's native optimism. In addition to his convenience store, he is opening a restaurant next door. By the time he left Yellow Cab to found Quick Pick, he owned three taxis, which he leased to friends. If anybody can make a new cab company go in Denver, it is likely to be someone like Ebong. Moreover, he intends to base Quick Pick in the neighborhood, not only improving service but also spinning off jobs in the process.
But the sorry state of the inner-city market itself has become a barrier to many minority entrepreneurs, contends Jack Litzenberg, a program officer with the Charles Stewart Mott Foundation, in Flint, Mich., which focuses its philanthropic activities on education and on economic and community development. "The market has declined, so there is a lack of market opportunity," he says.
Katherine Stearns, the director of U.S. operations for Accion International, which has been doing grass-roots lending in the third world for more than 30 years and now is trying to replicate that model in this country, cites an additional structural problem. "The economy is so overdeveloped here. Our manufacturing companies must compete globally. In retailing and distribution you have sophisticated, technology-intensive companies." That leaves little room for undercapitalized, undertrained entrepreneurs gasping for subsistence. "You just need to be much more sophisticated to run a business in the United States," says Stearns. "You can't buy tomatoes wholesale, walk down to the corner, and sell them at retail. You can do that in Latin America and earn a living. Here you can't make enough of a profit."
The structure of the U.S. economy contrasts markedly with what Accion has found in Latin America, where from 1985 to 1992 the organization made 467,000 microloans totaling nearly $300,000. It's a part of the world where, as Stearns puts it, "there's a business behind every other door," and the typical loan might be to a street vendor for $100, allowing him or her to buy, not lease, a pushcart.
"Half of all the economic activity in Latin America involves the 'informal' economy," says Stearns. Much of that results from corruption and ineptness within the bureaucracy, which drives entrepreneurs who lack the right connections underground. That's also noted by Peruvian entrepreneur and economist Hernando de Soto in his book The Other Path (Perennial/Harper & Row, 1989). He says, for instance, that entrepreneurs operating in the nonregulated informal economy have built 43% of all housing in Lima and provided 90% of its public transportation. He writes, "We appear to be witnessing the most important rebellion against the status quo ever waged in the history of independent Peru."
