When my friends and I landed in St. Croix, US Virgin Islands (USVI) in the summer of 2023, we assumed getting around would be a breeze. It is a US territory, after all. We were unpleasantly surprised to find this was not the case. Instead—too young to rent a car—we were met with no rideshare apps (Uber, Lyft, etc.) and left with only a handful of dirty, expensive, dubiously safe, and slow-to-arrive taxis.

The government has essentially handed control of ride services on the islands to a cartel of licensed taxi drivers—and they abuse this crony privilege to the fullest.

The Taxi Cartel

Prices were a seemingly non-negotiable $20 per person regardless of distance, and they only accepted cash. It was only a few miles from the airport to our Airbnb yet still cost an astonishing $140 for the fifteen-minute, one-way ride for the seven of us. To add insult to injury, our driver was unfriendly, drove rather recklessly, and declined to stop for us at a nearby grocery store without charging an additional $20 fee.

I soon decided to inquire with the locals about possible alternatives. It was then that I discovered a seemingly lucrative, word-of-mouth, black-market taxi service. A woman running a beachside gift shop discreetly handed me a simple business card. I was told to call the number and keep it under wraps. (Note: Out of respect for privacy and legal concerns, I am omitting the real name of the unlicensed provider referenced in this article).

When I asked a local bartender about such illicit services, he told me the taxi cartel took these competitors very seriously, pointing ominously towards the ocean and saying “[the unlicensed taxi drivers] might end up dead out in the water.” While that may be an exaggeration, the government and their cronies on the island certainly aren’t fond of any competition, especially when that competition provides a cheaper and higher-quality service.

My experience is more than a mere transportation hiccup—it is a direct consequence of state-granted monopoly power, where regulations like price-fixing and licensing stifle competition and create artificially high-price, low-quality services, benefiting only the cronies and the regulators at the expense of everyone else.

The taxi industry in the USVI is operated under a strict, protectionist regime. Maximum rates are set by the government or, more specifically, by the Taxicab Commission, however, they seem to be ignored by many drivers in favor of a cash-only rate of $20 per person regardless of distance. Enforcement of these policies is seemingly non-existent.

Taxi operators must also obtain a medallion to operate legally. Only ten new medallions are auctioned off each year to the highest bidder and may be resold after a period of three years, resulting in an artificial scarcity of taxis on the islands and sky-high medallion prices for those who do manage to get their hands on one. All proceeds from the initial sale, of course, go to the Taxicab Commission—a blatantly obvious and harmful racket.

No medallion? No rideshare—no exceptions. Efforts to introduce these more affordable alternatives have been met with heavy resistance from insiders who benefit from the crony regulations. But entrepreneurs are fighting back—and winning.

The Entrepreneurial Revolt

According to Rothbard:

…the bulk of “organized crime” occurs not as invasions of persons and property. . . but as attempts to circumvent government prohibitions in order to satisfy the desires of consumers and producers alike more efficiently. . .

When I called the number I was given by the local shopkeeper, my friends and I were picked up within ten minutes. The car was cleaner, the driver was friendlier, and he charged precisely half the price of the state-sanctioned taxi operators. The only other difference? He didn’t have a medallion from the Taxicab Commission. We ended up using this under-the-counter service for the remainder of our trip. As it turns out, however, they aren’t the only ones challenging the taxi cartel.

VI Hail—a local app-based rideshare company—has publicly begun operations despite the illegality of the venture and it’s going quite well. Unlike the entrenched taxi cartel, VI Hail and other, less overt service providers offer 24/7 rides, enhanced safety features, more convenience, and lower prices.

The USVI government promptly launched an investigation into the company’s activities, stating:

If VI Hail or any other company is operating without proper licensure, we will take appropriate action to bring them into compliance and pursue legal measures as appropriate.

These legal measures include fines, cease-and-desist orders, and other regulatory actions aimed at ensuring compliance with the Taxicab Committee’s policies. When asked about these potential repercussions, VI Hail founder Clyde Daisley stood his ground, stating:

I know they can come find me. I’ll pay the fine. . . I might get an injunction at some point, which is okay. Everyone knows. I don’t hide this. . . They all know what we’re trying to do.

VI Hail has launched a petition (archived May 21, 2025) calling on the USVI government to legalize their operations and those like it, and public support for their efforts is increasingly prevalent.

In the meantime, VI Hail (and presumably others who are more discreet) continue to operate in the face of threats from the VI government. If they keep up their momentum, they’re likely to subvert the current taxi regime in favor of a market for ride services that benefits not the Taxicab Commission and their cronies, but consumers and drivers alike.

The Lesson

The USVI taxi cartel and the entrepreneurial response is a case study in what Austrian economists have been telling us for decades: regulations under the facade of “protecting the public” always benefit the select few—the regulators and their cronies—at the detriment of society at large. As Mises puts it:

The inefficient expert will always aim at bureaucratic supremacy. He is fully aware of the fact that he cannot succeed within a competitive system. For him all-round bureaucratization is a refuge. Equipped with the power of an office he will enforce his rulings with the aid of the police.

The Taxicab Commission’s opposition to free competition stems from their desire to preserve the racket through which they prosper at the expense of consumers, knowing they cannot compete on their merits alone with superior, more eager, more value-productive competitors.

The Commission’s regulations and policies are a masterclass in misunderstanding (or outright ignoring) sound economics—which makes for several valuable lessons to be learned from analyzing such policies:

Licensing requirements and price controls—in any industry—result in misallocation: shortages or surpluses and overpriced or underpriced goods and services. This is due to the inability of bureaucrats to access invaluable market data, namely, price signals. Mises puts it plainly: “It is just a system of groping about in the dark.”

Finally, the notion that the economy is a static state that must be preserved for the sake of stability is senseless. The economy is dynamic—constantly changing as consumer preferences, technology, the external environment, and entrepreneurial activity evolve. Attempting to preserve past conditions breeds inefficiency and stifles innovation—ultimately at the expense of everyone outside of the politically-preferred class.

The taxi cartel in the US Virgin Islands is a microcosm of a broader economic truth: when the state suppresses competition by any means, the result is higher costs, lower quality, and protection for the privileged few—unless driven entrepreneurs manage to flip the script.