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The Great Taxi Upheaval
An anonymous reader writes: Uber, Lyft, and a variety of competitors are becoming ubiquitous. Their presence is jarring not because of how different they are from conventional taxis, but simply because they're different at all. Taxis really haven't changed much over the years. Watch a movie from the '90s and you can't help but chuckle at the giant, clunky mobile phones they use. But you can go all the way back to movies from '30s and scenes with taxis won't be unfamiliar. New York Magazine has a series of articles about the taxi revolution currently underway. "So far, Uber appears to be pinching traditional car services—Carmel, Dial 7, and the like—hardest. (They have apps, too, but Uber's is the one you've heard of.) The big question is about the prices for medallions, because so much of the yellow-cab business depends on their future value. ... [I]t's hard to see how those prices won't slip. Medallions, after all, are part of a top-down system formed to fight the abuses and dangers of the old crooked New York: rattletrap cars, overclocked meters, bribed inspectors. Its heavy regulation in turn empowered the taxi lobby and (somewhat) the drivers union. That system may be a pain to deal with, but in its defense, it provided predictability and security. The loosey-goosey libertarian alternative, conceived in the clean Northern California air, calls upon the market to provide checks and balances. A poorly served passenger can, instead of turning to a city agency for recourse, switch allegiances or sue."
What was previously missing from the free market was perfect information. We live in an age where perfect information can be possible. Over regulation is now a hindrance to society.
Fear, uncertainty, doubt.
You're going to end up in a ditch! Only the government can save you! The government never lets anyone die or have bad things happen to them. Because democracy!
I stopped driving 2 years ago, voluntarily. My SUV cost me around $800 a month in replacement costs. Another $200 in maintenance. I was burning through $12,000 a year in gas. I spent an average of 1000 hours a year in the car, for work, for groceries, for fun. 999 of those hours were spent focused on the road. I hate talking on the phone while driving.
Consider my annual total: about $25,000 + 1000 hours of my time. For the "privilege" to sit in Chicago traffic.
I'm a consultant. I now use UberX every day. I also use public transportation when I'm not in a rush or when someone isn't paying me to swing by.
I spent about $5000 a year on UberX. $100 a week. While I am being driven around, I can respond to emails, make phone calls. I bill for that time. When a customer wants me to visit them, I pass the UberX fee on to them plus 50%. No one scoffs at it. Some customers will realize the cost of me visiting them is more expensive than just consulting over the phone.
I figure I'm $20,000 ahead in vehicle costs, plus I've literally gained another 600-700 hours of phone and email consulting time a year. Call it $40,000 ahead.
I don't take cabs, because they don't like to come to where my HQ is (ghetto neighborhood). UberX comes 24/7, within minutes.
My little sister had an emergency surgery a few months ago. I immediately hired an UberX driver, who took me from the office, to the hospital. He waited. We then took my sister to her apartment to get her cats and clothes, then he took us to the pharmacy. After, he drove us to our dad's house to drop her off, in the suburbs of Chicago. Then he drove me back to work. 3 hours, $90. I can't get a cab to wait even 10 minutes while I drop off a package at UPS. Forget about them taking credit cards.
UberX charges my Paypal account and they're off. If they're busy, they charge a surcharge. I can pick it or take public transportation.
I know why the Chicago Taxi authorities want Uber gone. But a guy like me is their best customer. Next year I'll budget $10,000 a year for UberX, and it will make my life so much more enjoyable and profitable.
Driving yourself around is dead. It's inefficient. Ridesharing is "libertarian" because it is truly freeing.
The meters on traditional cabs may sometimes be tinkered with, but that's illegal, and in the vast majority of cases they're accurate and legally binding. Whereas with the new wave of rideshare apps there's no indication of what charges you're reacking up until you arrive. You can get an estimate to start with on at least some of the apps but it's not binding, and especially when surge pricing is in effect you can end up with large and unexpected charges that are difficult to predict.
I use Uber and Lyft a lot, and I'm the first to admit that traditional taxis brought this on themselves, by often refusing to take credit cards and by never adopting a convenient method of hailing a cab for the increasing pool of people who use smartphones. But traditional rules around taxis were put in place for a reason, and meters in particular were created and regulated to protect consumers against arbitrary price-gouging.
I don't think there is anything wrong with the idea of regulation.
However, regulation can be turned into a false barrier to entry when the regulatory system becomes a system with its own constituency, such as the labor unions, medallion holders, and bureaucrats. In those cases, where regulation might simply be updated to take into account new technology or ideas, the regulation blocks consideration of new things, and the constituencies have no interest in making any changes because they like their safe and familiar modes of operation.
Not to mention scenarios where members end up investing in regulatory artifacts like medallions, which have value due only to artificial scarcity and then something comes along and makes those less valuable. They're going to want to protect those investments, even if the underlying system they represent is outdated and less efficient.
The real problem isn't regulation, it is the effect that regulation can have, if allowed to harden into a particular structure that does not respond to outside forces adequately.
The reason for taxi medallions is to prevent competition, end of story. $1M in NYC, $800K in Chicago, yet DC has none and are DC cab known for being horrible?
Talking to a Chicago cab driver of 28 years, what happened was a Russian bought 80% of all cabs in the city. He talked to the mayor and a year later there was a medallion law in Chicago costing $800k to operate a new cab. Guess what? All existing cabs were grandfathered in and got their medallions free. So anyone who operated a cab on the day that went into effect got $800k for each one. They haven't sold any new ones since then, but now that Russian owns tens of millions in cab medallions, and I'd be willing to bet he donated heavily to help Rham get elected as mayor.
Its a corrupt system, pure and simple. People telling you different are part of the corruption or ignorant.