Slashdot Mirror
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!
When enough consumers have a "bad experience" with anything vaguely taxi-like, there will be demand that anything that looks of feels like a taxi be regulated to ensure minimal levels of safety and service.
Sure, perfect information is out there, but that takes effort. Measure the cost of regulation vs. the cost of determining reputation and you'll find that the populace goes for regulation every time. They want to be able to call anything cab-like and be safe. They want to eat in anything restaurant-like and be safe.
Even if it doesn't significantly increase safety, it doesn't really matter. The feeling of being protected by government regulation increases happiness significantly enough that regulation is pretty much whole-heartedly endorsed by most of the population.
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.
Yeah, because once I'm mugged and all my personal electronics are stolen, I can give quite the negative review to that driver through the website...
Or when I get home from being dead in the ditch, I can really lay into them!
Do not look into laser with remaining eye.
That system may be a pain to deal with, but in its defense, it provided predictability and security.
Well, I agree about that predictability in the fact that in New York, black patrons would hardly be able to [successfully] hail a taxi after 8 PM. I am sure our black friends are happy about the change in the taxi business that's well underway.
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.
Here is a 2006 article about the IGT Taxibus concept. It definitely wasn't conceived in Northern California air, but in the UK (circa 2001 IIRC).
The problem was they approached municipalities with the idea and no large cities climbed on board. So now the cities have to face the likes of Uber and Lyft who, I predict, will not collectively reach the scale needed to apreciably reduce traffic congestion (one of the aims of IGT). Combine that with no regulation and a consumer protection model that amounts to Yelp.com, and I'll guess that Uber and Lyft will in 7 years be less of a joke and more of a way to elict negative reactions from people (assuming you momentarily lack the gas to fart).
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.
I was talking with a former cabdriver just the other day, and the major reason he left the field was because of the danger. In his urban taxi career he had eleven "runners", or people who dash without paying, but it was the one robbery that unnerved him to the extent he left the field. Although Phoenix is one of the most gun-friendly cities in the nation, management forbade him to carry, a rule typically enforced by insurance companies who care more about their liability exposure than employee safety.
The great advantage of Uber is that because everyone has to sign up as a member of the system before getting rides, the company knows who the customers are, and who is riding with whom at a given time. The increased driver safety, not any abstract political philosophy, is why services like this will replace traditional cabs.
Over regulation is bad, just as bad as under-regulation.
One problem is that complete anarchy means no protection for anybody which is one reason pure Libertarianism failed (buy insurance from Joe's Pizza Palace) and is why all those classic Western towns you see in John Wayne movies hired sheriffs and were trying to become more civilized.
Over-regulation happens mostly because of regulatory "capture." After the initial public wave of disgust forces a new bureaucracy in place, it becomes beholden to the industry it regulates because no one else really cares to put in the work defining terms and setting up precise rules (precision is another problem in and of itself).
It's a conundrum-type problem, trying to find the sweet spot. You basically need to decide if the over-burden of regulation is going to cost more than what you are preventing. And that's if you're a corporation. If you're a government trying to please the public, you have a mess of moralists who don't care about economics and demand 100% perfection which requires a lot of rules and almost always costs more than accepting 5% graft.
In the taxi market, one trade-off is between having standard prices or having a boatload of vehicles charging different prices all the time. I remember reading about soda pop machines wired to change prices depending on the outside temperature. Seems like slashdotters hated that but I can't see why it's any different from Uber.
If you want a steady price or a steady supply, you need different kinds of regulations than if you want perfect supply for every demand.
We don't need the government to protect us from getting bad customer service during a car ride. We don't need the government to make sure drivers are "qualified" to give people car rides. It's just a car ride.
1. How often do you pick up hitchhikers?
2. Car-jacking took off last century only after anti-theft devices made it too hard to steal unattended vehicles. I'm thinking now it's pretty goddamn easy to steal a smartphone, then use that to rent a Hummer or Mercedes off Uber and now you have a nice car to drive around in all by yourself (along with the driver's smartphone and whatever cash s/he was carrying). New ways of business always provide new ways of crime. Human nature.
Before you decide government is a complete waste of resources, perhaps you should live someplace without government such as Yemen or Somalia. It's probably as hard for us to put a value on the government and society we grew up in as it is for fish to understand the value of the water they cannot see.
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.