A few years ago, during a job interview at a think tank, I was asked why I believed that free markets worked. I had read the usual thinkers by that point, but none of them provided my answer. The effectiveness of markets became clear to me over years of living in places full of street vendors, whether on the sidewalks or coming up to cars during red lights. Their stock, whether books or tools or food, was responsive to changing customer tastes and current fads, because the low price of entry meant that that they had low “menu costs” and could quickly change what they sold. There was something spontaneous and dynamic about it all, epitomizing human action unfettered and showing a way in which people without much capital could make a living.
In Los Angeles, such sidewalk vendors are commonplace across the city — but for years their work has been technically illegal, owing to legislation designed to protect brick-and-mortar shops that did not want to face competition. (This is not unlike the situation faced by food trucks in many places.) There, even plans to legalize street vending have included some pretty onerous restrictions, such as giving brick-and-mortar shop owners the ability to appeal vendors’ permits.
A new statewide law, signed by Governor Jerry Brown in September, changes that. Senate Bill 946 prohibits cities from over-regulating vendors: There will be no more bans on vending in parks, other limits on vendors’ location must be justified by health or safety concerns, and brick-and-mortar businesses will not be given a vote on which vendors operate where. Should a city not pass SB946-compliant vending rules by January, it will be prohibited from regulating vendors at all. As a result, the city of Los Angeles passed rules to legalize vending last Wednesday.
Certain areas will be off limits to vendors and, per the Los Angeles Times, “vendors must pick up trash; ensure that people can pass on the sidewalks; and do business at a minimum distance from fire hydrants, driveways, curbs, building entrances and other street features. They must have any business and health permits required by the city, county or state.”
This seems like a healthy balance, and it brings out of the shadows a sort of economic activity that was already widespread. The opportunity to vend on the books allows people to better their situations by taking advantage of the market. When commonplace, peaceful practices such as vending are banned, they open the door to arbitrary enforcement and empower bad actors to harass people by claiming a regulatory violation.
This is a real win for economic freedom, and it removes an arbitrary barrier from people who want to contribute to the economy. Vending should not have been banned in the first place, but California and LA ought to be commended for correcting the problem.