The issue with cabs isn't the test (it could be argued whether its a good idea to arrest people who transport others without having passed the test, I'd probably say no, but people might disagree), but the restriction in the number of licenses. Maybe Chicago is not so restrictive, but New York and Philadelphia and other cities are. You could know every single address in New York City and all its suburbs by heart, have a perfectly clean driving record, no police record, and otherwise be the best imaginable candidate for driving a cab, but that wouldn't enable you to start a cab company in New York.
Actually I think Chicago is restrictive as well. You where probably applying to be an employee of someone with a medallion (or who was renting the rights from someone who owned the medallion), not trying to start your own business. Try and to the later and see how much knowing the streets helps you.
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The Tribune (2/8/07) reports that a Chicago taxi medallion -- a license to operate a taxicab in the City-- now costs $77,000 1 . That's up from "over $40,000" in 2004 2 and $28,000 in 1991 3 -- an increase of about 175% in about 16 years.
Of course, fares were raised 11.7% in 2005 4 , 16% in 2000 5 , about 15% in 1997 6 , and about 9% in 1994 7. So since 1991, fares are up 48%, and the price of a medallion is up 175%. For reference, the Bureau of Labor Statistics says consumer prices rose 48% between 1991 and 2006.
I have little direct data on drivers' earnings (the Census Bureau reports that in 1999, "taxi drivers and chauffeurs" in Illinois had median earnings of $24,521), but it seems unlikely that these could have increased by more than the rate of fare. After all, operators face increased costs for vehicles, fuel, insurance. Are they perhaps carrying more riders, per hour worked, than in previous years? There is no reason to think so, and the number of cabs on the street has slightly increased.
Medallion owners seem to be taking an increased share of revenue produced by the cabbies. .
Medallions are Like Land
This is no surprise, since medallions are very much like land titles: Limited in number, provide an exclusive right to use land (city streets) to make a living (in a particular way). Since the tendency is for land costs to take an increasing share of total production, one would expect the same for medallions.
Meanwhile, in New York, medallions are going for over half a million dollars and there has been an effort to set up a working medallion exchange, where medallions can be traded on margin.
City Sells Medallions- Who Buys?
In one bit of encouraging news, according to industry newspaper Chicago Dispatcher, the City auctioned 50 new medallions in 2006, at an average price of $78,509.70. (Originally medallions were essentially given away.) Selling medallions does little to damp speculation or make them affordable for working drivers, but at least it brings some revenue to the public. With 50 medallions sold, does this mean that 50 drivers now have their own medallions, and no longer lease from others? No. There were only six successful bidders. Two got one medallion each, and four split the remaining 48.
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hgchicago.org
And its not just cabs as such, jurisdictions limit car services, limo services, private bus or "jitney' services (semi-fixed route buses or sometimes other vehicles), not just by putting up regulatory hurdles, but limiting how much they can be provided, or in some cases even outlawing them. Or by setting the prices they can charge (not just maximums, although that is bad enough, but also minimums)
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Rough Ride
Regulators punish a car service for charging too little.
Jacob Sullum | December 12, 2003
David Groh, who drives a taxi while impersonating Elvis, seems to have struck the fancy of Seattleites. After a taxi inspector fined him for failing to live up to the city's expectations of what a cabdriver should look like, Groh filed a lawsuit that gave rise to "Free Elvis!" bumper stickers and persuaded the city council to loosen its dress code. "Uh, a-thank you verrah much," he said after the vote.
Like Groh, Daniel Steiner, who owns a five-car limousine business in Tampa, is fighting the arbitrary dictates of local transportation regulators. But the most surreal aspect of Steiner's battle is the government's demand: It wants him to raise his prices.
The Hillsborough County Public Transportation Commission insists that car services like Steiner's charge passengers at least $40 per trip, a threshold it says he has failed to meet under his contracts for transporting elderly and disabled patients to their medical appointments. The commission, which has prohibited Steiner from fulfilling the contracts and put his business on probation for six months, does not even pretend that sticking it to the old and infirm is in "the public interest." The official rationale for the rule is limiting competition.
According to the St. Petersburg Times, the commission's executive director, Gregory Cox, "says Steiner is interfering with others' efforts to make a buck" by "undercutting the business of cabdrivers who would otherwise field the cheaper service calls." This is like saying that Dell is interfering with IBM's efforts to make a buck by selling cheaper computers, or that Sprint is undercutting the business of AT& T by offering lower rates for mobile phone service.
There is nothing sinister about such interference and undercutting; it's the way markets work. But not in Tampa, where Cox says regulators strive to "keep a balance between the taxi industry and the limousine industry so that both remain solvent." As Steiner remarked after the commission put his business on probation, "They're saying that competition, the driving force of the economy, is unlawful."
To be fair, Hillsborough County is not alone in its medieval approach to economics. As University of Denver law professor Robert M. Hardaway observed in a 2000 law review article, the taxi and limousine businesses are "one of the few remaining fields of economic endeavor" regulated "for the specific purpose of limiting competition and protecting an incumbent oligopoly."
Hardaway noted that such regulations include New York City's limits on taxi medallions, which in the early 1990s raised their value to more than $150,000 each, and Las Vegas' restrictions on limousines, which created a situation where each company was serving 5.3 million visitors a year, compared to 109,000 in Los Angeles and 300,000 in Orlando. Artificial shortages like these benefit existing operators at the expense of consumers and potential competitors.
The same is true of Hillsborough County's price regulations. Steiner, who is challenging the transportation commission's disciplinary action with the help of the Pacific Legal Foundation, argues that the regulators have misinterpreted their own rules, which set a minimum price of $40 per hour, not per trip. Under their reading, a 15-minute ride to the doctor's office would cost the same as a one-hour trip, yielding hourly rates higher than insurers and clinics are willing to pay.
The upshot is that patients like Dorothy York, a 72-year-old with Parkinson's disease who attended the commission's hearing, will be left scrambling for a ride. "Don't cut him off," York begged the commission. "Let him continue helping old people such as myself."
For Steiner, who had been planning to expand his fleet with another five Lincoln Towncars, the commission's action could be the difference between thriving and going out of business, since the nixed contracts were his most important source of revenue. After immigrating to the U.S. from Brazil 20 years ago, driving a cab for a while, and working hard to build his business, Steiner is understandably dismayed that it could all be taken away by bureaucratic fiat.
"I see this country as being built on freedom to work and equality of conditions," he told the St. Petersburg Times. "The strength of the United States is its free market. This is against the American dream." The Pacific Legal Foundation argues that the commission's meddling is also against the U.S. Constitution—specifically, the right to pursue a livelihood guaranteed by the 14th Amendment.
So far there are no bumper stickers for Daniel Steiner, but there should be.
reason.com |
