Monday, June 20, 2011

More taxicab confessions

Today's Washington Post features an article on taxicab regulation in Prince George's County, Maryland. Among the highlights:
  • Elected officials in the county are attempting to reduce the number of taxi medallions (essentially licenses to operate a taxi) granted, after voting last year to expand them. Established taxi companies oppose any increase in the number of medallions.
  • There are disagreements over whether the number of medallions issued is sufficient to meet demand for taxi services in the county.
  • The measure to reduce the number of medallions is supported by County Executive Rushern L. Baker III. Coincidentally, one of the lobbyists for the taxi companies is former county executive Wayne K. Curry, who headed Baker’s transition team last year.
  • In neighboring Montgomery County, the number of cabs was capped a few years ago at 1,000. Most of the 770 cabs in the county are owned and rented to drivers by a single company, Barwood Taxi.
  • Campaign finance records indicate that cab companies and owners  have donated generously to local candidates.
  • Unsurprisingly, many cab drivers, typically immigrants, perceive the actions of local government as designed to assist the established interests and prevent competition. In other words, it's pretty much a classic case of regulatory capture.
I suppose that's one way of doing it. Another way -- call it the libertarian model -- would be to simply get government out of the cab business. No licenses, no regulations, no nothing:
  • Anyone could set up a cab company and offer rides in exchange for money (or a car wash, homemade cookies, or whatever).
  • Established players wouldn't be able to use government to stave off competition. Thus there would be less incentive to donate to politicians (another reason why limited government is the best form of campaign finance reform).
  • Rather than set taxi supply by government decree -- aka central planning -- markets would sort the matter out. If there isn't enough demand, the supply of taxis will decline to the point where the two are in equilibrium. This is how we do things in most industries with pretty good results. It's not at all apparent why taxis should be any different.
  • Competition would guarantee quality. If someone offers poor service, smelly cabs, etc. -- don't use them again and seek out a competitor. Again, this tends to work in other sectors of the economy quite well.
But hey, I'm just a crazy libertarian.

Related: Previous taxi blogging here, here, and here.

No comments: