Why You Can't Get a Taxi

Why You Can't Get a Taxi

Many defenders of regulation argue that restrictions are necessary because cabdrivers make so little money as it is. But there's very little evidence that restricting the number of cabs improves the lot of the people who drive them, rather than the lot of the companies that, by and large, own the licenses. It's simply too easy for new would-be drivers to show up at a taxi service and compete cabbies' earnings down -- in these days of GPS, you don't even need to be familiar with the area. So any excess profits from restricting entry tend to accrue not to the drivers, but to the people who own the right to drive. Last October, two New York City taxi medallions sold for $1 million apiece.

"In New Haven, nearly every taxi is owned or controlled by [the same] person," Robert McNamara, an attorney at the Institute for Justice, which litigates against these sorts of rules, told me. Restricting entry "hasn't made the drivers better off."

Nonetheless, the public fights usually get framed as consumers-against-drivers. And regulators respond with a patchwork of policies to pay off various constituencies -- entry restrictions in exchange for lower fares, "fuel surcharges" in exchange for laws requiring drivers to take you anywhere in the city.

Almost all the everyday complaints about cabs trace back to this regulatory cocktail. Drivers won't take you to the outer reaches of your metropolitan area? The regulated fares won't let them charge you more to recover the cost of dead-heading back without a return customer. Cabs are poorly maintained? Blame restricted competition, and the inability to charge for better quality. Cabbies drive like maniacs? With high fixed costs for cars and gas, and no way to increase their earnings except by finding another fare, is it any wonder that they try to get from place to place as fast as possible?

[...] The real threat to [Uber] is the promulgation of new regulations that would make business expansion impossible by cutting off the supply of licensed limos, and other regulations designed to shut down Uber entirely -- that is, just the sort of measures being proposed in D.C.

Previously, previously.

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17 Responses:

  1. J says:

    The closing paragraph raises a valid concern, but the DC Taxi Commission is very much an existential threat to Uber's existence (or rather, their operations in Washington). The DC taxi lobby is notoriously strong and mostly effective. Certainly, it doesn't completely dictate the rules (or else we'd be still be on the dreaded zone system), but it exerts undue influence as a result of both legitimate and illicit means:

    I've avoided setting up an Uber account because I know if I do, I'll start using it, and that'll lead to me spending money that could be better spent on my mortgage, but I have traveled in them with friends a handful of times. It's a pretty nice service:
    - No need to carry cash
    - Tip included
    - Friendly and/or quiet drivers
    - Speedy arrival
    And it's hard to bullet point this, but a black friend does say he is very frequently passed by vacant cabs when trying to hail them. It's sad, but that's part of the reason he ends up using Uber. He and other friends also use the service when they are in areas of the city with lower density that don't often have cabs driving by. It's tremendously useful for them.

    And the part about rating customers seems legit. I love a friend of mine, but I understand why he's been blacklisted from the service..

  2. On the one hand, this is fascinating.

    On the other hand, the byline is Megan McArdle. Which means that any assertions made or implied need to be triple-checked for accuracy, and you should also make sure that your wallet and glasses are still where you left them.

  3. DaveL says:

    DC is famously in the pocket of the taxi companies and has been for decades. The "zone" system alone (which boiled down to essentials is: "Congress gets nearly free rides, everyone else gets screwed" is sufficient to show that. They were also at the forefront of un-re-electing the last mayor, because he tried to tweak their privileges.

  4. Perry says:

    Interesting how often you post things that push libertarian positions while claiming to dislike libertarian positions.

    • AK says:

      I think a lot of libertarian positions make sense. It's just they're advocated by well... libertarians.
      Like socialists, they're great at pointing out problems, but their solutions are often bugfuck crazy.

      • Nick Lamb says:

        Also, whether a system works in practice depends on people far more than on words on paper. If everybody is willing you can get away with a system that seems, on the face of it, utterly crazy, and if people are stubborn they can use their discretion to deliver unfair consequences using a system which appears superficially to be completely fair. If you want to have a lasting impact on the world, change people not laws. The laws will catch up, eventually.

        Thus "benefit of clergy" looks like a terribly unfair mechanism by which priests can escape punishment for their crimes. But it was actually used to provide a rough approximation of conditional discharge for first offenders (lots of things about this trick fall short of ideal, but it's pretty humane by the standards of the time).

        Whereas "literacy tests" at voter registration just seem like a way to ensure your voters know what they're voting for, but were actually used as an excuse to prevent blacks and poor people from exercising their vote regardless of whether they could read.

    • jwz says:

      I hold a lot of opinions that you would probably think are God Damned Socialist, too, because I'm not a cartoon.

      • Perry says:

        Libertarians generally aren't the cartoon you portray them as either. They just disagree with you on a fairly small number of points. We're all just people, and our opinions (on all sides) are generally well intentioned.

        • pavel_lishin says:

          Isn't there some term for the loudest minority being perceived as representative of the entire movement?

        • jwz says:

          Sadly, most of the self-identified Libertarians who post comments here on my blog are that cartoony. Either that or they're all trolling, but trolls aren't usually that convincing.

          • DaveL says:

            You clearly need a Turing Test for trolls, or libertarians, or perhaps both.

            Crap. I was gonna write you one in MacLisp but I've forgotten how. I could do it in Muddle though.

            Sadness. All die.

  5. The Atlantic doesn't seem to appreciate your hotlinking: http://cl.ly/GZso

    • Oh, cool, that's from your server since it's on every RSS post. My bad. And thank you.

      • jwz says:

        Honestly, I can't figure out why this happens. Apparently Google Reader sometimes sends a stupid referer which triggers the hotlinking redirect, but not for everybody, and not always. (E.g., the last time I got a complaint about this was almost a year ago. Lots of people read this blog through Google Reader without problems.)

        I see only two hits from your IP on that image: one has this page as the referer, so you would have gotten the proper image. The earlier one has the referer "http://www.google.com/reader/view/feed/http%3A//hanzismatter.blogspot.com/feeds/posts/default%3Falt%3Drss", which looks to me like you saw this post via hanzismatter.blogspot.com which had hotlinked the image. But, looking at that blog, it doesn't appear to be using that image at all! So I have no idea why Google Reader and/or Chrome chose to send that referer from you.

        The hotlinking stuff is there at all because my server was getting seriously hammered by idiots on message boards.