From Taxicab Freedom In Minneapolis To Central Planning In NYC

Earlier, Doug posted a story about an expansion of freedom in the taxicab market in Minneapolis. It seems that someone finally asked why it was necessary to set an arbitrary limit on the number of cabs operating in the city, and that someone was able to muster enough power to end the restriction.

Perhaps NYC might take it as a suggestion. NYC, of course, is one of the most restrictive taxi markets in the country. Virtually every portion of the taxicab business is regulated. The number of taxi “medallions” is limited to roughly 13,000, generating a competitive market where the cost of said medallion on the secondary market is into six figures. Of course, artificial scarcity is known to rise prices, so fares are also tightly regulated, to ensure that drivers cannot take advantage of the limit by raising rates. And on top of that, there are a host of other regulations on their operation, to the extent that taxi drivers in New York have very little control over how they execute their job. As with most regulations, it doesn’t really benefit the consumer, and often does not benefit the drivers, but is a big boon to the regulators and to the taxi companies who own the medallions.

So is NYC looking at reducing the restrictions, like Minneapolis? No! In fact, they recently decided to add another little wrinkle. Each cab will need to be outfitted with an information terminal with such features as GPS, credit-card services, and perhaps other services such as news, video, advertisement, and information on local attractions.

I can tell you, as someone who is familiar with these terminals, they’re not cheap. Even outside of the normal cost of installing the terminals, there are maintenance and replacement costs. The terminals have an LCD with touchscreen, and I’m sure the number of drunk and/or unruly passengers who put a fist or foot through the screen will make the total cost of ownership quite high on the cab owners. On top of those concerns, each transaction using a credit card will include a service charge to the company handling the transaction. Who will pick up all these costs? Well, the cabs cannot raise their rates, so the passengers won’t cover it. And the city certainly isn’t footing the bill. So who gets it? The cabbies themselves, of course! And let me tell you, they’re understandably not happy about it:

Taxi drivers angry about a new rule requiring the installation of global positioning systems and credit card machines in cabs are planning a second one-day strike in six weeks on Monday.

The city was preparing for the strike by the Taxi Workers Alliance by instituting a contingency plan that lets drivers pick up multiple passengers and charge zone-based fares.

The touch-screen monitors, which are being phased in as yellow cabs come up for inspection, let passengers pay by credit card, check on news stories, map their taxi’s current location and look up restaurant and entertainment information.

The alliance, which claims to represent about a fifth of the city’s 44,000 licensed cab drivers, opposes the technology, saying the 5 percent surcharge on each credit card transaction amounts to a wage cut and the GPS device allows cab companies to track drivers.

Furthermore, the alliance claims the technology doesn’t work properly.

As a consumer and a technology buff, I love the idea of information terminals in these cabs. But as an advocate of freedom, I am most certainly not in favor of forcing cabs to take the technology, and not in favor of them being unable to adjust their pricing to cover the additional level of service they’re offering.

But in NYC, what I want as a consumer doesn’t matter. What level of service cabbies want to offer doesn’t matter. The market has been replaced by the wishes, desires, and mandates of the New York Taxi & Limousine Commission. Freedom has no place in this brave new world.