Friday, May 13, 2011

Taxicab confessions

Today's New York Times features an article on taxis which serves as a stark illustration of the folly of government and central planning. Some highlights:
When it comes to improving taxi service in the boroughs beyond Manhattan, the Bloomberg administration is quickly learning that even the most well-intentioned plans can get swept up by politics and the sometimes divisive preferences of the taxi and livery cab industries.

But this week, the city’s efforts gained some momentum when the City Council unanimously passed legislation that would increase fines for taxi drivers who refuse to take passengers to any requested destination in the five boroughs. Some drivers with multiple offenses would even face having their licenses suspended. Mayor Michael R. Bloomberg is expected to sign the legislation in the coming weeks.
What an absurd situation. Taxi drivers being threatened with fines over in order to perform a service? Why would taxi drivers turn down the opportunity to make money? Likely because fares are set by government instead of the market, thus rendering trips to outer boroughs potentially uneconomical.

If the New York City government really wants to assure service to all five boroughs, it simply needs to let cabbies charge the fares they deem appropriate. After all, for the right price I'm sure a cabbie would drive to North Dakota. Of course, this would upset a lot of passengers (read: voters), who want a free lunch in the form of artificially cheap rides.

The article then explores the possibility of increasing the number of taxi medallions (essentially permits to operate a taxi, which due to artificial scarcity now cost nearly a million dollars):
If a plan to create new medallions moves forward, some livery drivers are lobbying to make sure they benefit from these changes. Fernando Mateo, founder of the New York State Federation of Taxi Drivers, said that he had met repeatedly with City Hall officials and that he had recently shared his concerns with Councilman James Vacca, chairman of the Council’s Transportation Committee.

Mr. Mateo argues that his livery cab drivers have spent decades toiling in the more dangerous neighborhoods, where yellow cabs will not venture. He has asked the city to set aside half of the proposed medallions for livery drivers, at affordable prices.

“Offer it to the people who have worked in these neighborhoods,” Mr. Mateo said. “Don’t just put the medallions out there for the big-money corporations.”

But the yellow cab community contends that it, too, has struggled to purchase medallions, and deserves to receive new business in the boroughs outside Manhattan as well.

“These guys aren’t rich. They borrowed money from their families and friends,” said Vincent Sapone, the managing director of the League of Mutual Taxi Owners. “It’s got to work out in a way where someone can make some sort of a living.”
Taxi drivers have organized themselves for political lobbying purposes, with the article noting the existence of both the New York State Federation of Taxi Drivers and League of Mutual Taxi Owners. And why wouldn't they? Government regulates access by potential competitors to the market, dictates how much they can charge and even what types of cars they can drive (land of the free!). Also note that one of the groups is attempting to obtain a 50 percent set-aside for new medallions.

Now, compare this nonsense with a libertarian approach towards taxis: taxis offer a service and customers pay them money. Problem solved. No medallions, no Taxi and Limousine Commission, no clashes at city hall between various interest groups -- just the consumers and taxi providers hashing it out amongst themselves. Those who provide good service and competitive fares will prosper while those that do not will fall by the wayside.  

But of course this approach would deprive politicians of power, which is why we are unlikely to see it anytime soon.

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