When my buddies and I landed in St. Croix, US Virgin Islands (USVI) in the summertime of 2023, we assumed getting round could be a breeze. It’s a US territory, in any case. We have been unpleasantly shocked to search out this was not the case. As a substitute—too younger to lease a automotive—we have been met with no rideshare apps (Uber, Lyft, and many others.) and left with solely a handful of soiled, costly, dubiously secure, and slow-to-arrive taxis.
The federal government has primarily handed management of journey companies on the islands to a cartel of licensed taxi drivers—and so they abuse this crony privilege to the fullest.
The Taxi Cartel
Costs have been a seemingly non-negotiable $20 per individual no matter distance, and so they solely accepted money. It was just a few miles from the airport to our Airbnb but nonetheless value an astonishing $140 for the fifteen-minute, one-way journey for the seven of us. So as to add insult to damage, our driver was unfriendly, drove fairly recklessly, and declined to cease for us at a close-by grocery retailer with out charging an extra $20 charge.
I quickly determined to inquire with the locals about doable options. It was then that I found a seemingly profitable, word-of-mouth, black-market taxi service. A girl working a beachside reward store discreetly handed me a easy enterprise card. I used to be instructed to name the quantity and maintain it below wraps. (Notice: Out of respect for privateness and authorized considerations, I’m omitting the true identify of the unlicensed supplier referenced on this article).
Once I requested a neighborhood bartender about such illicit companies, he instructed me the taxi cartel took these rivals very severely, pointing ominously in direction of the ocean and saying “[the unlicensed taxi drivers] would possibly find yourself useless out within the water.” Whereas which may be an exaggeration, the federal government and their cronies on the island actually aren’t keen on any competitors, particularly when that competitors offers a less expensive and higher-quality service.
My expertise is greater than a mere transportation hiccup—it’s a direct consequence of state-granted monopoly energy, the place rules like price-fixing and licensing stifle competitors and create artificially high-price, low-quality companies, benefiting solely the cronies and the regulators on the expense of everybody else.
The taxi business within the USVI is operated below a strict, protectionist regime. Most charges are set by the federal government or, extra particularly, by the Taxicab Fee, nevertheless, they appear to be ignored by many drivers in favor of a cash-only fee of $20 per individual no matter distance. Enforcement of those insurance policies is seemingly non-existent.
Taxi operators should additionally receive a medallion to function legally. Solely ten new medallions are auctioned off every year to the very best bidder and could also be resold after a interval of three years, leading to a man-made shortage of taxis on the islands and sky-high medallion costs for individuals who do handle to get their arms on one. All proceeds from the preliminary sale, after all, go to the Taxicab Fee—a blatantly apparent and dangerous racket.
No medallion? No rideshare—no exceptions. Efforts to introduce these extra inexpensive options have been met with heavy resistance from insiders who profit from the crony rules. However entrepreneurs are preventing again—and successful.
The Entrepreneurial Revolt
In accordance with Rothbard:
…the majority of “organized crime” happens not as invasions of individuals and property. . . however as makes an attempt to bypass authorities prohibitions as a way to fulfill the wishes of customers and producers alike extra effectively. . .
Once I referred to as the quantity I used to be given by the native shopkeeper, my buddies and I have been picked up inside ten minutes. The automotive was cleaner, the driving force was friendlier, and he charged exactly half the value of the state-sanctioned taxi operators. The one different distinction? He didn’t have a medallion from the Taxicab Fee. We ended up utilizing this under-the-counter service for the rest of our journey. Because it seems, nevertheless, they aren’t the one ones difficult the taxi cartel.
VI Hail—a neighborhood app-based rideshare firm—has publicly begun operations regardless of the illegality of the enterprise and it’s going fairly effectively. Not like the entrenched taxi cartel, VI Hail and different, much less overt service suppliers provide 24/7 rides, enhanced security options, extra comfort, and decrease costs.
The USVI authorities promptly launched an investigation into the corporate’s actions, stating:
If VI Hail or every other firm is working with out correct licensure, we’ll take acceptable motion to convey them into compliance and pursue authorized measures as acceptable.
These authorized measures embrace fines, cease-and-desist orders, and different regulatory actions geared toward making certain compliance with the Taxicab Committee’s insurance policies. When requested about these potential repercussions, VI Hail founder Clyde Daisley stood his floor, stating:
I do know they’ll come discover me. I’ll pay the effective. . . I would get an injunction sooner or later, which is okay. Everybody is aware of. I don’t cover this. . . All of them know what we’re making an attempt to do.
VI Hail has launched a petition (archived Could 21, 2025) calling on the USVI authorities to legalize their operations and people prefer it, and public help for his or her efforts is more and more prevalent.
Within the meantime, VI Hail (and presumably others who’re extra discreet) proceed to function within the face of threats from the VI authorities. In the event that they sustain their momentum, they’re prone to subvert the present taxi regime in favor of a marketplace for journey companies that advantages not the Taxicab Fee and their cronies, however customers and drivers alike.
The Lesson
The USVI taxi cartel and the entrepreneurial response is a case research in what Austrian economists have been telling us for many years: rules below the facade of “defending the general public” all the time profit the choose few—the regulators and their cronies—on the detriment of society at massive. As Mises places it:
The inefficient skilled will all the time intention at bureaucratic supremacy. He’s totally conscious of the truth that he can’t succeed inside a aggressive system. For him all-round bureaucratization is a refuge. Outfitted with the ability of an workplace he’ll implement his rulings with the help of the police.
The Taxicab Fee’s opposition to free competitors stems from their want to protect the racket via which they prosper on the expense of customers, understanding they can not compete on their deserves alone with superior, extra keen, extra value-productive rivals.
The Fee’s rules and insurance policies are a masterclass in misunderstanding (or outright ignoring) sound economics—which makes for a number of priceless classes to be realized from analyzing such insurance policies:
Licensing necessities and worth controls—in any business—end in misallocation: shortages or surpluses and overpriced or underpriced items and companies. That is because of the incapability of bureaucrats to entry invaluable market knowledge, specifically, worth indicators. Mises places it plainly: “It’s only a system of groping about at midnight.”
Lastly, the notion that the economic system is a static state that should be preserved for the sake of stability is not sensible. The economic system is dynamic—always altering as shopper preferences, expertise, the exterior surroundings, and entrepreneurial exercise evolve. Trying to protect previous circumstances breeds inefficiency and stifles innovation—in the end on the expense of everybody exterior of the politically-preferred class.
The taxi cartel within the US Virgin Islands is a microcosm of a broader financial reality: when the state suppresses competitors by any means, the result’s greater prices, decrease high quality, and safety for the privileged few—until pushed entrepreneurs handle to flip the script.
