Greater Greater Washington

Taxis


Uber case is really about purpose of regulation

Do we regulate taxi rates in order to make the experience a better one for the public? Or do we do it to keep taxi drivers from having to face competition and pressure to improve their service?


Photo by thisistami on Flickr.

The controversy around Uber, a service which lets people reserve for-hire sedans via a smartphone app, has brought this question to the forefront, even though the issue itself goes far beyond Uber alone.

On its face, the Uber debate revolves around a set of questions that seem simple enough: Is Uber breaking laws, or not? Are the individual drivers? But the underlying question is different and far more complex: Should the law permit what Uber is doing, or shouldn't it?

A TechCrunch article argues that Uber's business model is legal, while in DCist, Ben Freed defends the sting in which Taxicab Commission chairman Ron Linton personally got involved in hiring and then punishing a driver.

Freed disagrees with the analogy in my Post editorial that taxis complaining about Uber is like Safeway complaining about upscale cupcake shops. Freed writes,

Not quite. Cupcakes, however widespread they've become, are not a regulated utility. Taxis are. ...

Linton, though, said he's responding to complaints he's heard from cabbies who say Uber's eating into their business and from customers who feel they've been overcharged. The sting was necessary reconnaissance, he said.

But this is exactly crux of the issue. Why are taxis a regulated utility while bakeries aren't? Why is electricity a regulated utility but backyard propane tank sales are not? Why are tap water fees regulated but not the bottled water prices we pay in the supermarket?

To say that taxis are different from cupcakes because taxis are regulated and cupcakes are not begs the question (in the grammatically correct sense).

It's not uncommon for one business to complain that another is "eating into their business." Whole Foods is eating into Giant's business. But Giant doesn't go to the DC Supermarket Regulatory Commission and ask them to take action to stop Whole Foods. Amazon has taken a lot of business away from brick and mortar retailers, which is too bad for our neighborhood corridors, but we don't respond by banning Amazon (though it would be fair to insist that both pay the same amount of sales tax).

But, many are saying, the difference is that Uber, or more specifically its drivers, may be breaking existing rules, while Whole Foods and Amazon are not. In some regards, this may present an important distinction, but from a public policy standpoint, it is somewhat irrelevant.

We can ask 2 questions: What are the rules now, and what should they be? Regulations can be beneficial or they can be harmful. There are many rules we don't have which ought to exist, and many that do exist which should be repealed.

If Uber is doing something which is not permitted to regular taxis, we can either stop Uber from doing that thing, or we can allow regular taxis to partake in the same behavior. As I said in my Post editorial, I've never used Uber, don't plan to, and don't care that much about Uber specifically as a company. But if they are competing unfairly against taxis, then let's let taxis compete against Uber rather than shutting down the competition.

When deciding which approach take, the Taxicab Commission should bear in mind one and only one principle: What's good for customers? The degree to which Uber is "eating into the business" of existing taxis is immaterial, and Linton should not be making decisions on that basis.

A common criticism of many regulatory agencies is "regulatory capture," shorthand for the way that an agency becomes more sympathetic to the needs of the industry it regulates than the interests of consumers. This happens because regulators tend to get to know their counterparts at regulated companies well, to see issues from the companies' point of view, and also look to those companies for future jobs.

The starkest example of regulatory capture is the Minerals Mining Service, which was supposed to be regulating deep-water oil drilling but instead ended up just speeding approvals and overlooking dangerous practices, ultimately with disastrous consequences.

Taxi drivers' main gripe against Leon Swain's leadership at the Taxicab Commission was that he didn't do enough to protect drivers' interests. They are suing Mayor Gray and Ron Linton as well, for not giving them more of a voice on the board. In short, drivers want DCTC to be more captured by its industry. However, that would absolutely not benefit customers.

That said, Linton's proposal for taxi rates does seem customer-centric. He wants to raise rates, but eliminate many of the confusing surcharges that annoy riders and make it easier for drivers to cheat customers. When the government has to set taxi rates, as it does for street hails, those rates should be high enough to ensure that driving a taxi brings in a decent living, not because it's a jobs program, but because having a lot of taxis is good for people who want a taxi. In turn, this also benefits drivers, a prime example of how public interest and the interest of drivers needn't always be in opposition to one another.

The debate over whether Uber is breaking a law right now is an interesting one, and it's fine for DCist and others to discuss it. But let's not lose sight of the longer-term question, as well. What are the right taxi regulations? How much do we need to regulate to advance the public interest, and which regulations are just protecting a small group of people from needed competition?

David Alpert is the Founder and Editor-in-Chief of Greater Greater Washington and Greater Greater Education. He worked as a Product Manager for Google for six years and has lived in the Boston, San Francisco, and New York metro areas in addition to Washington, DC. He loves the area which is, in many ways, greater than those others, and wants to see it become even greater. 

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What is this -- five articles about Uber in one month?

Great PR for a company that 1% of GGW readers will use.

by charlie on Jan 17, 2012 1:00 pm • linkreport

Taxis need to be regulated so that you have some assurance when you get into one that it is going to take your to your destination safely and charge you appropriately. Cupcakes are also regulated BTW. The cupcake bakeries, distributors and retail outlet have to comply with numerous safety regulations. The price is not regulated because it doesn't need to be: the cost is reasonably low and if you don't like it, don't buy another. That is different than taxis that primarily pick up passengers on the street.

I'm not convinced about the need to regulate the price that can be charged by a livery service such as Uber that is not picking up passengers on the street. But assuming the regulations are reasonable, why doesn't Uber simply charge by the hour when it picks up a passenger in DC (as required by the law in DC?) and then immediately switch to it normal billing rates when it cross the line out of the District?

where the pass

by Alan on Jan 17, 2012 1:01 pm • linkreport

The UBER case has nothing to do with "purpose". It is far mor eblack and white than that.

Can UBER operate some hybrid taxi/limo service in a middle area seemingly not regulated by either laws, as they think they can? From the regulations I've seen thus far, they are in violation of the current regs.

I despise the DC Taxi system we have. I go to extremes to limit my taxi usage to a couple times a year because I can't stand the drivers, their service, their cars and their historical hysterics (getting meters in cars took nearly a decade). I also think Linton's personal "sting" was the height of d-baggery done to win points with the cities taxi drivers.

I will also go on the record saying I see nothing wrong with Ubers business model and I am all for it...BUT,

It has to be done within the bounds of the law, and if current law doesn't permit it, the laws needs to be changed first.

I don't go and buy a building zoned for industrial and start flauting zoning laws by renting it out as office just because I and the blogosphere thinks its a good idea. I get the "regs" pertaining to it changed to suit my purpose.

Uber says they researched the legality of their business in DC. Maybe they did but their proof seems pretty think so far and considering the COmmision got pretty irate with them starting a few weeks ago, they should have reached out long before now to the commissioner or his deputy. That is their mistake.

And this made me laugh...

"When deciding which approach take, the Taxicab Commission should bear in mind one and only one principle: What's good for customers?"

Nothing the DC Taxi Commission and its membership does is remotely related to doing anything "good" for the customer. Thats been clear for about 15 years, and includes their latest protest of the proposed new fare structure.

by freely on Jan 17, 2012 1:12 pm • linkreport

@freely,

Nothing the DC Taxi Commission and its membership does is remotely related to doing anything "good" for the customer. Thats been clear for about 15 years, and includes their latest protest of the proposed new fare structure.

Not sure what you're talking about here. Since the new fare structure was proposed by the DC Taxi Commission, how is the DC Taxi Commission protesting the new fare structure?

by oboe on Jan 17, 2012 1:18 pm • linkreport

@Oboe,
The structure was proposed by the commission, it is being heavily protested by the drivers (membership).

by freely on Jan 17, 2012 1:25 pm • linkreport

It has to be done within the bounds of the law, and if current law doesn't permit it, the laws needs to be changed first.

Uber is engaging in a common practice. When you're talking about regulations (securities regulations, environmental regulations, etc.) you have to have standing if you want to sue.

The best way to do that, in a practical sense, is: (1) start your business and (2) wait for the government to object. It's difficult (possible, but difficult) to get the government to enjoin a regulatory action. It happens when the opponents are very, very powerful but it's also expensive for the litigants.

So if Uber thinks the regulation is illegal, or otherwise wishes to challenge it in court, their action is consistent with normal practice.

by WRD on Jan 17, 2012 1:47 pm • linkreport

If it moves, tax it.
If it keeps moving, regulate it.
If it's dying, nationalize it.

I'm not a completely laissez faire libertarian, but situations like this make me confident that the regulators have no idea what they're doing.

by Adam L on Jan 17, 2012 1:50 pm • linkreport

Alpert-

It seems like you're echoing many of the arguments that MPC had made over the last several years concerning the fact that regulatory boards will almost always get captured by the relevant special interests.

I recall quite clearly, actually, on instances where he would bring up the very phrase "regulatory capture" only to be ridiculed.

I find it ironic that you, who calls for increased regulation when it will help your vision of urbanism, all of a sudden is against regulation when it hurts your own personal preferences.

by long-time reader on Jan 17, 2012 2:27 pm • linkreport

@freely,

The structure was proposed by the commission, it is being heavily protested by the drivers (membership).

It was my understanding that the DCTC was a regulatory body (albeit one with token formal industry representation). The DC taxi industry including "the drivers" is that which is being regulated.

It just seems odd to conflate the two, it's like saying "the DMV is protesting an increase in car registration fees" because DC drivers are protesting, and the DMV regulates DC drivers, therefore they're "members", therefore they're the same thing.

The DCTC historically has had a bad problem with regulatory capture, but DCTC and "the drivers" are not the same thing, are they?

by oboe on Jan 17, 2012 2:32 pm • linkreport

The DCTC isn't entirely beholden to the taxi drivers. See the example of the new rate structure proposed by the commission. It would probably be a benefit to both customers and the drivers, but the drivers are fighting it tooth and nail because it gets rid of their precious surcharges.

If Uber thinks they have researched the issue and DCTC disagrees, let them settle it in a hearing. Each side can present its evidence for why it believes the other is wrong.

DCTC is probably not wrong about the issue of a VA cab picking up and dropping off in DC, and honestly that regulation should probably go.

by MLD on Jan 17, 2012 2:37 pm • linkreport

@Adam L

There are a few basic reasons for taxicab regulation that boil down to two key points:

1) Safety
2) Competition

Safety is obviously an important concern for both riders and passengers, and Uber should absolutely be held to the same standards as cabs are, if not better. This would be a good thing for WMATC to regulate instead of the Taxicab commission.

Competition is a tricky point for taxis, because it's difficult or impossible for taxicabs to compete with each other. You're not going to flag down several different cabs, and compare their amenities or rate structures. You flag down the first cab, with the comfort that each cab will be virtually identical, and charge the same rate. (Although DC's regulatory body has done an exceptionally poor job of enforcing consistency or quality of cars compared to places like NYC)

It also protects consumers from cab drivers charging hidden or exorbitant fees, and in theory also allows for equal access to cabs across the city (ie. drivers can't refuse to give you a ride to Anacostia).

People generally feel that it's important for cabs to be able to take you to any destination within the city, and that you'll know approximately what that trip will cost.

On the other hand, the Livery services can exist in a different realm. Because you're calling around or browsing on a smartphone, you can compare prices and amenities before calling the dispatcher, and there's less need for regulation, especially since cabs are always available as a fallback. Apart from safety issues, you wouldn't need much regulation, apart from a few rules requiring the businesses to be up-front about their policies and prices (possibly requiring the car services to quote the exact fare over the phone/web).

The free market would kick in, and different black cab operators could compete on costs. It's not surprising that the taxicab drivers/owners hate this system.

by andrew on Jan 17, 2012 2:39 pm • linkreport

I find it ironic that you, who calls for increased regulation when it will help your vision of urbanism, all of a sudden is against regulation when it hurts your own personal preferences.

It's not black and white. There's good regulation, bad regulation, and theoretically good regulation being applied by a corrupt body.

Right now, we have a case of the latter. In the case of DCTC, we either need better regulation, or a new paradigm that allows us to use less regulation.

If we can produce the same positive outcomes as regulation with alternate measures, that's a good thing, and we should probably do it, because regulation does have pitfalls (ie. Regulatory Capture). However, in cases where that's not possible, regulation will continue to be a necessary evil.

by andrew on Jan 17, 2012 2:43 pm • linkreport

long-time reader,

I find it ironic that you, who calls for increased regulation when it will help your vision of urbanism, all of a sudden is against regulation when it hurts your own personal preferences.

There's nothing wrong (or indeed ironic) about someone who has no problems with market regulation per se to be for certain regulations and against others. If you think he's wrong to agitate for change in the way DC regulates taxis, you're going to argue on that basis.

by David on Jan 17, 2012 2:46 pm • linkreport

@long time reader:

You probably oppose regulations that prevent orange haired people from serving in public office, while wholeheartedly supporting regulations that seek to prevent one person killing another for arbitrary reasons.

HYPOCRISY!

I recall quite clearly, actually, on instances where he would bring up the very phrase "regulatory capture" only to be ridiculed.

We'll need a quote to judge the context here.

by oboe on Jan 17, 2012 3:10 pm • linkreport

1) Safety
2) Competition

There's a third factor too - which falls under 'tragedy of the commons' or a similar heading: you may also need to regulate how many cabs there are on the streets.

The obvious problem with too many cabs is that too many unregulated taxis will be a nasty mess that simply chokes out other uses of the streets. But there's also the less intuitive problem you can run into where there's too much competition - too many taxis competing for too few customers making it impossible for any of them to actually make a living at it.

The degree to which this either of these is a major problem probably depends on where you are in the world, whether local income and unemployment levels make driving a taxi attractive or not, etc.

(Fare regulation partly serves this or a similar function too - theoretically, fare price setting is not only to protect consumers, but also to establish a stable market by trying to guarantee a certain level of income for drivers/operators and prevent price wars from driving everybody under.)

by jack lecou on Jan 17, 2012 3:18 pm • linkreport

@jack lecou:

Let's just adopt whatever regulations they have in Alexandria/Arlington wholesale, and be done with it. It's actually pretty funny, if you're in a cab listening to a DC cabbie bitch and moan about DC cab regulations, suggest we adopt the same rules as in MD or VA and you'll *really* hear them complain.

by oboe on Jan 17, 2012 3:48 pm • linkreport

As nice as is to see Oboe admit his neighboors to the west having a superior legal and regulatory system, isn't his point the crux of the issue?

DC cab drivers don't want a system like Arlington, where independent cabbies are driven out of business and 3 or 4 companies dominate the trade?

I suspect it comes down the tourist trade again. You can make a living as DC cabbie if you target tourists. Otherwise life is not great. Obviously, that doesn't help city residents much.

by charlie on Jan 17, 2012 3:58 pm • linkreport

DC cab drivers don't want a system like Arlington, where independent cabbies are driven out of business and 3 or 4 companies dominate the trade?

Absolutely, this is the bottom line. Under a regime where the interests of DC *residents* were being represented, the system would look a lot like VA's. That system works. Hell, when most of my neighbors call a cab to catch a plane at National, they call Red Top, because NoVa cab companies are the only ones that are likely to show up.

The problems is that for decades, the DCTC has been focused on balancing the interests of "the drivers" versus "the customers" with about 80% of the weight being given to the desires of the drivers.

Since very few DC cabbies even live in the city, it makes no sense whatsoever. Having one or two companies that dominate and are highly regulated makes sense. That some small number of MD and VA residents will lose their jobs is sad, but should not be something the DCTC even considers in its decision-making.

In ten years' time, my guess is that's what we'll see.

by oboe on Jan 17, 2012 4:11 pm • linkreport

Well-reasoned arguments here...refreshing. Safety and competition are often brought up as the reason for regulation. Actually, I agree that the limo service via smartphone hail can be equally "safe," and an unregulated market would lead to competitive pricing and more competition in general as prices naturally rose.

But what we have seen over 100 years of history in the hack business is that when we deregulate (which has been done cyclically in many cities over the years), things become a mess, and the cost of a ride either goes up beyond what normal people can afford to pay (in cases where the number of hack licenses are still restricted) or prices crashe as the market is flooded with drivers, making it impossible to earn a living.

For a variety of reasons covered in several academic and journalistic texts (e.g., Taxi! A social history of the New York City Cab Driver), pure markets don't balance out in the case of livery services. Hence regulation. Bottom line: it is in the city's interest to ensure that grandma can get a ride home from the Safeway for a reasonable price.

When we allow either open pricing or alternate pricing schemes, prices rise above grandma's ability to pay, in part because of the ability of wealthy people to pay higher rates and dominate the supply (again, assuming supply remains regulated). In such a situation, drivers only respond to high-value rides and leave grandma on the corner waiting.

Bottom line: city transit systems are a delicate balance. It is a good thing that companies like Uber make us reexamine how this works, but they should not make us ignore the reasons the system operates as it does. Grandma is still there. The reason for taxi meter regulations persist. Can we get smarter about them? Yes. I know Cabulous and other apps are cooking up great ways of improving things while still respecting regulation how complex cities work - and in some cases how they need to work.

As a long-time innovator with the scars to prove it, I can say that sometimes disruption is the way to go. Other times, a more nuanced approach is better. But never is it wise to disrupt simply because you can, without deeply understanding what you are trying to change.

by John Wolpert on Jan 17, 2012 4:23 pm • linkreport

@oboe; I'd rather frame the debate that way than "regulation."

Although, given it is legal for VA cabs to pick up people in DC after a call, you'd think the free market would just work it out.

Much harder to hail a cab in Arlington than DC, however.

by charlie on Jan 17, 2012 4:27 pm • linkreport

@oboe

Bang on! I wonder why no one talks about the noVA cab regulations in any of the articles related to the Uber-DC fiasco!

David Alpert: Is it possible for you to shed some light on the differences between the noVA and DCTC regulations ?

[Uber/Limos are for the 1%, good regulated cabs are for the rest, bad regulated cabs helps only the corrupt DCTC members]

by tintin on Jan 17, 2012 4:33 pm • linkreport

taxis and other transportation services are regulated because they are "common carriers."

- http://en.wikipedia.org/wiki/Common_carrier

The issue of how the regulatory process works and how it supports innovation and how it presents barriers to entry is a different question.

This is why I argue that taxis should be addressed under the context of a city transportation plan, and that the taxi commission should be folded into a more general transportation commission. (Although an exDDOT official argues with me that DDOT lacks the capacity to do this at present.)

FWIW, I agree with you that Uber should be allowed to operate, under regulation. Being relatively poor, I wouldn't use it, but I have no problem with other people doing so.

wrt jack lecou's point, the difference probably in arlington and alexandria is that they likely have a statutory limit on the number of cabs. (PG and MoCo do also.) DC doesn't. Because of this lack of barrier to entry, and limited options for immigrants to enter business etc., taxis are a job of first choice/last choice so more people enter the business than the business generally can support (which is why in theory, a regulator limits the number of licenses).

Not being able to make a decent living at cab driving because of too many drivers and not enough business is likely why there are customer service and other issues... just like in commercial district revitalization if the commercial district doesn't have the customer base to support renting spaces at market rates, the storefronts are either vacant or have marginal businesses operating in them, and the buildings are under-maintained.

by Richard Layman on Jan 17, 2012 4:55 pm • linkreport

I don't know the answer to this, but I seem to remember that Uber charges customers by distance and time. It seems like the inspection of the devices they use to measure distance and time should be a function of the taxicab commission. Don't they also certify the meters that are installed in cabs?

by Phil Lepanto on Jan 17, 2012 4:57 pm • linkreport

But there's also the less intuitive problem you can run into where there's too much competition - too many taxis competing for too few customers making it impossible for any of them to actually make a living at it.

or prices crashe as the market is flooded with drivers, making it impossible to earn a living.

I think people arguing this need to do so more explicitly. The job of regulation, in my opinion, should not be to help cab drivers "make a living." Imagine the SEC saying their job is to help investment bankers "make a living"!

I'll say it again: who cares about cab drivers making a living? They make their living directly at the expense of that Grandma John Wolpert mentioned. You cannot have it both ways!

by WRD on Jan 17, 2012 5:49 pm • linkreport

@WRD

One effect of limiting supply is that cab drivers are able to make a living.

Another effect of that same limit is that the cab industry doesn't devolve into price crashing that will eventually result in no cabs.

Our primary goal probably shouldn't be to protect a certain income for people. But a primary goal definitely should be that you should be able to get a cab when you want one. If every cab driver can only get two fares a day, pretty soon there won't be enough cabs.

Disliking regulation simply because it's regulation is just as dumb as liking regulation for the sake of regulation.

by MLD on Jan 17, 2012 5:54 pm • linkreport

@Layman; I wouldn't take the common carrier thing to far.

Taxis are licenced; they aren't regulated. Yes, they are common carriers. They have a set of responsiblities as such, and more importantly from a legal perspective.

However, you could abolish the taxi cabi commission -- and revokke the license for every cabbie. Anything that forms after that would be a common carrier as well, but it wouldn't be a "cab". De-regulated mini-buses wouldd still be subject to varous common carriers laws (discrimination, liability, etc)

As Linton said, he is investigating in part because of consumer complaints. I don't have a problem with that.

by charlie on Jan 17, 2012 6:06 pm • linkreport

Another effect of that same limit is that the cab industry doesn't devolve into price crashing that will eventually result in no cabs.

Our primary goal probably shouldn't be to protect a certain income for people. But a primary goal definitely should be that you should be able to get a cab when you want one. If every cab driver can only get two fares a day, pretty soon there won't be enough cabs.

The bolded sections are where we disagree. Yes, the price will drop and cabbies will exit. However, there is a floor on price and that floor is how much people value taxi cab rides versus how much they cost.

In Alpert's scenario, your analogy works as follows: once cupcakes are deregulated, the price will drop so much, no one will buy cupcakes and we're doomed!

The counter is that consumers value cupcakes. As firms stop making them and quantity drops, price increases again.

I just don't see any evidence whatsoever that regulation reduction would result in the doomsday "NO CABS FOR ANYONE!!1!!1!" scenario.

Overall, I see this as a red herring. No, deregulated taxis will not result in no taxis.

(Also, I'm not against all regulation by any means. Just these particular regulations.)

by WRD on Jan 17, 2012 6:31 pm • linkreport

It's interesting, there are parallels between DC cab stewardship and a theoretical deer population: allow too much hunting and rhey're in danger of extinction, but allow their numbers to grow unchecked, and you end up with the diseased, malnourished, sickly population that we have now. Time to cull the herd.

by oboe on Jan 17, 2012 6:52 pm • linkreport

To me this situation calls out for regional regulation of the cab system.

When I take a cab, it is almost always from one jurisdiction to another (DC to airport and back). Yet right there I am involved in at least 2 different jurisdictions (3 considering the airport authority has its own rules for cabs on its property) with different rules and standards. So if I want to take a cab from DC to DCA, I can call Red Top and get a new, clean, and likely hybrid cab. But at the DCA taxi stand, I have to take a DC cab and must take a DC cab for trips within the city.

But business, and tourism in "DC" goes beyond DC. I may have a meeting at NASA in SW today, one at NSF in Balltson tomorrow and then one at Goddard in Greenbelt. A tourist may want a cab to the Capitol this morning, then one to Arlington Cemetary in the afternoon. It makes about as much sense to have DC, and each county regulating their own cabs, as it would to have 5 or 6 different Metro systems.

Just like Metro and the airports are run by a "tri-state" boards, so should the taxis.

Then, once this regional board is in place, that board should let the market dictate their regulations, not the other way around. Is there a market for a hybrid service like Uber? If yes, the regulate it for safety reasons, but let it exist. Don't regulate to pick winners (cab drivers) and losers (everyone else),

by dcdriver on Jan 17, 2012 7:07 pm • linkreport

Yes, DCTC is a fine example of regulatory capture.

Just as in London, taxis that cruise the streets for passengers are pubic transportation and should be highly regulated. However,also like London, private cars that only come when called should be unregulated. The prices for private cars there are very low and the cars are much nicer.

by Tom Coumaris on Jan 17, 2012 8:17 pm • linkreport

Tom Coumaris; err, private hiri and minicabs are still licensed in London. I'd argue they are NOT nicer than the black cabs. However, the regulations are much less strict.

by charlie on Jan 17, 2012 8:46 pm • linkreport

I think a huge issue that plays into DCTC hostility to Uber (and popular change in general) is off-books income. The easiest way to for DCTC to keep fares relatively low while simultaneously keeping driver income relatively high, is to continue to look the other way and allow drivers to under-report. As this isn't openly acknowledged, there are no political consequences and DCTC can continue playing constituencies off one another.

by c2b16e on Jan 17, 2012 11:54 pm • linkreport

Charlie, whether or not the taxi industy is "regulated" is moot. It is. And the licensed taxis operate within a set of regulations. You can call it "overseen" if you want, but it's still a regulatory process.

by Richard Layman on Jan 18, 2012 7:04 am • linkreport

In NYC where the number of cabs are limited (number of medalions) there are "gypsy" cabs that are off-the-books drivers that are easily found near the subway stations, that will drive you someplace and charge by the mile. They cost less than a regular cab and operate in the outer boroughs where there are few "official" cabs.

Apparently in DC we have the opposite problem -- too many cabs with drivers barely making a living. Otoh this Uber outfit seems to have found a niche at the other, high end of the market.

by goldfish on Jan 18, 2012 8:20 am • linkreport

Just to clarify my earlier post:

I was referring to regulation in the most general sense, without reference to any of the specifics in the DC area, which I'm not really all that familiar with.

If I had a specific example in mind, it was Lima, where the regulations that are in place are more or less completely unenforced (at least they were when I was there). In theory, you're supposed to have a license/medallion/whatever, but in practice, pretty much anybody with a car can just stop and pick someone up. That's a tempting proposition for a lot of people that might have access to a car, but not a decent job. The result is that cabbies, both "legit" and non-, are scrabbling for the same limited supply of passengers. It's not a good living for anyone, nor is it safe, or especially good for the streets or the air quality. (There's also the issue of the collectivo/bus system, but that's another discussion.)

DC obviously has a different set of institutions and problems, but maintaining an optimal number of taxis on the streets is still, in principle, an important objective for the regulations, along with interrelated objectives like safety, access, and affordability.

by jack lecou on Jan 18, 2012 10:16 am • linkreport

In Alpert's scenario, your analogy works as follows: once cupcakes are deregulated, the price will drop so much, no one will buy cupcakes and we're doomed!

No, the analogy is not that prices drop and nobody buys. It's that if the prices drop too much, many or all of the people still selling will be the shadiest of the shady. The analogy to food products is something we've seen before, and still see occasionally, especially in places like China.

If prices drop too far, or regulations disappear, the only people still in the cupcake business might be the ones willing to use cheap, unsafe (maybe even fake) ingredients. Or make the cupcakes in unsanitary conditions with improperly trained workers. The resulting "cupcakes" probably wouldn't kill anyone outright (usually) but they also certainly would not to be the sort of food products you want to risk buying either.

(A secondary, parenthetical, concern is that the marginal nature of the business -- lots of low-skill jobs in an already shady industry where no one is really legitimately making much money -- is going to cause additional problems. It's a recipe for mixing marginalized/victimized/desperate populations in with a leavening of criminals and scam artists. Which probably isn't good for anybody.)

With taxis, the problems are similar. You really don't want to force prices so low that operators feel like they need to skimp on proper vehicle maintenance or efficiency upgrades, for example. (Nor do we necessarily want to create a form of employment which is only attractive to the desperate -- and even then, is so marginal it may often as not only impoverish people further.)

Is the result, with cupcakes or taxis, necessarily going to be apocalyptic? Probably not. Are the negatives serious enough that these are legitimate issues to keep in mind when formulating regulations? Absolutely.

by jack lecou on Jan 18, 2012 11:10 am • linkreport

Just an anecdote: I called Diamond Cab - after an hour and three phone calls, they still hadn't shown up. I booked my first Uber trip and the nice clean car was there in 10 minutes. And the fare was just a few dollars more than it would have been in the DC taxi.

by Chris on Jan 18, 2012 6:15 pm • linkreport

@Chris

That is the experience of everyone I know who has called a cab in DC, myself included. I don't think DC cab companies have dispatchers or make appointments, they just have someone who answers the phone and tells you that a cab will come pick you up.

by MLD on Jan 18, 2012 6:32 pm • linkreport

@MLD:

Yep, everyone I know on Capitol Hill knows to call Red Top cab of Arlington if you need to get to National Airport--they're the only company that will actually come and pick you up when scheduled. Can't call them unless you're headed out of the city, though, since they're VA-based.

Such comparatively awful service is the small price we pay for a thriving entrepreneurial market for MD and VA residents, though!

by oboe on Jan 19, 2012 2:03 pm • linkreport

It seems that may of the people addressing Uber are missing the point. Most of the cab drivers don't own their cab. They are leasing it from a corporation the owns a large amount of taxi medallions. The average taxi driver works 8 to 12 hours before they ever break even, this is why the quality of the cabs and drivers is unacceptable. In most major markets taxi medallions are bought or sold for for hundreds of thousands of dollars. Allowing Über to operate black cars as taxis will reduce the value of these medallions. By ordnance taxis are the only public passenger vehicles that can charge by time and mileage traveled and can pick up passengers that hale them on the street.

Black cars (livery) medallions have a minimum or no value in most cities and are easy to accuire. They can not charge by the mile or distance traveled. They can not pick up haling passengers on the street. They must by ordinance only charge a flat rate or hourly rate which is set at the time the reservation is taken. No surge pricing.

While Über offers a major convience they are operating illegally in most of the markets they are in. They are using liveries and charging as if they were a taxi. Municipalities are afraid of the bad press that would come form regulating them and quite honestly don't really know how to deal with them.

Worse yet ÜberX, Lyft and a host of other IT companies are now offering ride sharing applications. These ride sharing applications have found a way for a large part of the population to give the public rides in personal automobiles for a fee. In the event of an accident the vehicles insurance carrier does not have to cover the claim because the vehicle was being used as a public passenger vehicle.

I own and operate black car (livery service). Regulators need to take a real look at where these industries are headed and come op with regulations that protect the public while at the same time allow the conviences that Uber has brought to the market. I can't speak for the taxi industry but the livery industry wants nothing more than a level playing field.

by AJR on Sep 28, 2012 12:56 am • linkreport

1. DC does not have medallions. But the supply is limited since the taxi exam has been closed since 2010.

2. I'm not sure what the problem is with Uber reducing the value of taxi medallions, if most taxi medallions are owned by profiteering taxi companies that take advantage of drivers.

3. Lyft and UberX are not "personal automobiles" giving taxi rides. They work similarly to Uber in that the cars are licensed with cheaper, easier to get licenses like livery licenses. It's not slugging with an app and paid fares.

by MLD on Sep 28, 2012 8:43 am • linkreport

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