Sunday, July 05, 2009

D.C. taxis

Mark Perry points out a story in the Washington Examiner that just makes you want to shake your head. Apparently a member of the City Council has decided that there are too many taxis in the city and has introduced legislation to tackle this supposed problem:
The District’s open, all-are-invited taxicab industry is so saturated with drivers that the entire enterprise is threatened, according to a D.C. Council member who has filed a bill to cap the number of cabs allowed on city streets.

Ward 1 Councilman Jim Graham introduced legislation Tuesday to limit the number of taxicabs in D.C. through either a medallion system, like ones used in New York City and Chicago, or a certification system.

The soaring number of taxicab operators in D.C. -- roughly 8,000, most of whom own their own cars -- is a "pressing and urgent problem," Graham said. There are more licensed drivers in D.C. per capita than any place in the world, he said, and new applicants continue to take the required class, giving them access to the driver exam administered by the D.C. Taxicab Commission. A glut of drivers could jeopardize the chances of any cabbies making an adequate living, Graham has said.

"Whatever system we use, we need to limit the number of operators or this boat is going to sink by its own weight in terms of the number of taxicab operators that we have," Graham said. "We're going to determine which of these two approaches we should take, but we're going to have one or the other."

A few points:
  • Yes, we have a lot of taxis in D.C. Yesterday I walked over to a main street to hail a cab and spotted four at a stoplight. As a consumer this is a good thing.
  • If there is no money to be made in driving taxis then people will not enter the market. Graham's legislation assumes that he has a better understanding of the supply and demand of the taxi cab market than the people that actually operate in it.
  • Existing cab drivers have every incentive to stop new drivers from entering the market who bring new competition. While prices will not go up due to regulation, it will make it easier for taxis to find customers. The losers here, of course, are customers that will have fewer cabs to choose from.
  • In other words, the established interests will win while the little guy, both in the form of the consumer and those who wish to enter the taxi market, will lose.
  • Taxi drivers are probably more likely to go out of their way to support City Council members that attempt to restrict the supply of taxis. Consumers are unlikely to go out of their way to vote or donate money to City Council members who fight to keep the market open to new entrants.

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