Reforming Boston's Corrupt Taxi Cartel

Boston, like many cities, arbitrarily limits the number of taxicabs on the streets via a medallion system. Lest the resulting lack of competition tempt cab companies to overcharge passengers, the city also imposes rigid price controls. This system has its drawbacks.

According to Harvard economist Edward Glaeser, writing in the Boston Globe:

The purpose of taxi regulation is simply to protect passengers against being fleeced by unscrupulous cabbies, and to keep passengers, bystanders, and the environment safe. Yet the system instead has evolved mainly to enrich the holders of government-issued taxi medallions, even as taxi drivers struggle to earn a living and passengers pay some of the highest rates in the country.

The Globe reports after a months-long investigation of the industry that one fleet owner, who controls a fifth of the city’s medallions, routinely cheats cab drivers and skirts accident-insurance requirements. Last week, long-time Boston Mayor Thomas Menino called for a review of the city’s policies and floated the idea of creating a civilian review board to mediate disputes between cabbies and medallion owners.

Glaeser proposes market-based reforms: replacing the medallion system with an annual fee for whoever wants to drive a cab and allowing cabbies to compete on price.

Back to the Globe:

Better regulation would base the fees on a hard estimate of the burden each cab imposes on its surroundings. Just like other cars, cabs create congestion, pollution, and safety risks for pedestrians and other drivers; these and other problems associated with driving amount to a social cost of 10 cents per mile, by one estimate. So if Boston cabs travel an average of 60,000 miles per year, the annual … fee should be about $6,000.

Cab companies should be allowed to post and advertise lower rates—and then use electronic cab services, like Uber, to help customers find cheaper cabs.

Currently, officials have determined that “public convenience and necessity” dictates that there should be only 1,825 cab medallions in Boston, though there are 6,000 licensed cab drivers jostling for the opportunity to rent a car for 12 and 24-hour shifts. According to the Globe, those medallions can fetch $600,000.

In case you’re wondering, yes, established taxi businesses are obstructing Uber in Boston too. Reason has covered Uber’s regulatory travails in Denver, Chicago, and San Francisco.

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  • SIV||

    arbitrarily limits the number of taxicabs on the streets via a medallion system. Lest the resulting lack of competition tempt cab companies to overcharge passengers

    I see a future regulatory model for food trucks.

  • Virginian||

    Yeah, I could see that for sure. The only thing a SWPL progressive likes more then food trucks is knowing that they are being regulated in an intelligent manner by the benign and wise men of the State.

  • Fist of Etiquette||

    ...these and other problems associated with driving amount to a social cost of 10 cents per mile, by one estimate.

    Has anything with the word "social" attached to it ever been good?

  • Virginian||

    social drinking

  • Sevo||

    Every time there's a push to increase the number of cabs in SF, the cabbies swear that every one of them is within pennies of starvation, and additional cabs will put them over the edge.
    There's a medallion required to run a cab in SF, and since it allows you to legally starve, they're not worth anything, right?
    ..."veteran holders of taxi medallions [...] have been able to sell their coveted wares for $250,000"...

    Read more at the San Francisco Examiner: http://www.sfexaminer.com/loca.....z2PnER2G2y

  • VG Zaytsev||

    Every time there's a push to increase the number of cabs in SF, the cabbies swear that every one of them is within pennies of starvation,

    And of course, they are incapable of changing jobs.

  • riak||

    Where we are, my spouse earns around 23K as a cabbie. He's an 'independent contractor' with a government-approved cab company. They split the 'book' on a 12-hour shift. The cab company owner covers gas, car washes, maintenance. Being a small city (approx. 250,000) in a state with a population of aapprox. 1 million, there's not a lot of 'big' jobs. The 1st and 15th are the busy days - grocery and laundry runs, usually going home only, for those receiving government assistance. The cab companies here get 50-70% of their business from health facilities (physical and mental) who get transportation grants from the state which awards contracts to the companies. There are frequently days where my spouse earns take-home pay of $2/hour, so a day's take is around $48. A $6,000 fee to be paid by a cabbie here, who has a tax bill every year because, as independent contractors, they are responsible for the "employer" taxes (e.g., Medicare, Social Security) as well as income tax (our tax bill since the lousy economy pushed my spouse into the taxi-driver business runs around $5,000 annually - we'll die in debt to the federal government), is ludicrous; my spouse would end up paying $11,000 per year for the right to keep $12,000 (just a tad more than our rent which includes heat). Terrific!

  • Auric Demonocles||

    If the city is that much smaller than Boston, the effect of the cab would be less than the 10cents per mile calculated for a more urban area.

  • 21044||

    Boston model is probably not applicable to your city and as someone pointed out elsewhere, anything with "social" attached other than social drinking is BS anyway.

  • Sevo||

    So does the company hold the medallion? Are there enough people wanting the job that the companies won't negotiate a better deal?

  • Jerryskids||

    Too bad your spouse is the property of the taxi company and isn't allowed to look for a different line of work. Maybe instead of having the government impose wage and price controls they should look into the possibility of getting your spouse released from his bondage so that he can look for better-paying work.

  • Cdr Lytton||

    I don't think rlak was asking for price or wage controls, just pointing out that an arbitrary $6K government fee would push her husband's tax burden to 50%.

  • Auric Demonocles||

    The only time I take a cab is when I'm going to the airport for business so I don't really care if they charge me $30 to get there, and if I'm coming home from downtown after the bars close (because that means the T is already closed). Taxis around here don't offer me much incentive to use them: they are much more expensive than the T but not much faster.

  • General Butt Naked||

    Taxis around here must be called for, you can't wave them down.

    They take anywhere form 10 mins to 1.5 hrs, which sucks if you want to get home. Or when you're at a bar you need to decide if you're gonna wait out in the cold or sit by the window and drink. I drink because they take forever (unless you want extra time, then they're there in 10 minutes).

  • General Butt Naked||

    Are there any economists, or whatever, that can explain to me how these costs of things are calculated?

    "Eating red meat has social costs of 50 spacebux per person per year! something must be done!"

  • 21044||

    I wondering something similar. How is the "socialcost" of a cab Boston any greater than any other vehicle in Boston? If I was the Stateist douche pulling the number out ofmy butt, I would give cabs a discount for being an flexible mass transit system.

  • C. S. P. Schofield||

    Ah, but the Statist douches don't like public transportation if they can't control where it goes, because it undermines their city planning schemes by allowing poor people to get at goods services they didn't think of or don't approve of.

  • EDG reppin' LBC||

    Exactly. A more vigorous taxi system, which would lower costs per trip, would be a better "mass transit" system. Poor people could be just as mobile as wealthier folks. But proggies love their choo-choos. Especially when they bisect and destroy low income neighborhoods.

  • C. S. P. Schofield||

    But only if the tracks go through a low-income neighborhood that the proggies didn't plan. They LOVE the low-income neighborhoods that they plan, right up to the moment that it becomes obvious that such a neighborhood is devolving into Beirut, whereupon they can no longer see it.

  • 21044||

    You are correct, so ending my career as a stateist douche.

  • Sevo||

    If you look at the linked "discussion paper", you'll see a ton of 'estimates' of various costs, totaling some $X/mile in negative externalities.
    Amazingly, there is no discussion of positive externalities, like getting your groceries from a local market.

  • General Butt Naked||

    So, some harvard d-bag comes up with a figure that he thinks sounds good, round and enough to inspire taxes/regulation then estimates his way there?

  • Sevo||

    Yeah, with a healthy dose of Greek letters in the math.

  • General Butt Naked||

    Yeah, with a healthy dose of Greek letters in the "math".

    There, fixed that up for you.

  • Agammamon||

    Not to mention - wouldn't a large chunk of that "social" cost already be covered by the registration fees and taxes paid yearly for owning and operating like the rest of us do already.

  • Robert||

    Does it take an economist to figure these things? Some of the terms I'll admit are nebulous (value of pollution, contribution to congestion) but mostly they can be figured pretty easily. It doesn't take much research to figure out the wear & tear on the roads. For some maintenance items like policing & signage that don't depend on the weight of the vehicle, just apportion by vehicle-mile out of the total of vehicle-miles. Subtract out of that the registr'n fees and taxes on fuel that are already earmarked for some of those expenses. If the state's vehicle insurance doesn't include uninsured motorist coverage, add that.

  • ||

    It probably does not, but if the government doesn't complicate things so much, how will we know that they are doing such difficult work? They can't raise prices on public transport to make it self-sustaining because then poor people can't take it, but they can't relax zoning regulations to add more residences to lower housing costs because that would destroy historic neighborhoods, but they do want to get rid of slums, so they make sweetheart deals to developers to buy that land for cheap, but they have to allow 10% of the new residences to be affordable, so that poor people are not priced out of the neighborhood....so, um, this solves all of the problems, except the fact that public transport still isn't self-sustaining, so everyone in the state(and country because of federal public transportation funding) gets higher taxes to subsidize it. Government!

  • An0nB0t||

    "The purpose of taxi regulation is simply to protect passengers against being fleeced by unscrupulous cabbies"

    I know the good perfesser is writing to a lay audience to stir action against a despicable cartel, but those who still take the time to read an op-ed in the Globe are generally wise enough to know that this is not in any way the purpose of a medallion system.

    Or maybe he actually believes that, being a Harvard economist and all.

  • General Butt Naked||

    I've noticed that anything coming from the mouth of a "Harvard whatever" is usually intellectual diarrhea.

  • An0nB0t||

    Harumph. I will try not to take that personally, particularly since it's probably true.

  • General Butt Naked||

    C'mon man it's true. Everytime you read an article that uses a "Harvard whatever" as a source the things they say sound like they have no knowledge of economics/math/the constitution/humans/etc.

    Hell, look at the last two presidents.

    Jesus.

  • Irish||

    Penn Jillette explains why he always says 'cock' whenever someone says Harvard.

  • 21044||

    Yeah, but Boosh got into Harvard because of his family name.

    Obama got in because ... fuck you is why, cannot you clearly see what a genius Barrack is?

  • General Butt Naked||

    The boooooosh thing backs up my claim.

    Because, if someone of (below) average intelligence can get in and graduate, then it can't be that demanding. Right?

    If it's so tough and intellectually rigorous any idiot son should last no more than a few semesters.

  • An0nB0t||

    You seem very passionate about this point, even if you're unaware that HBS, Harvard Law, and Harvard College are dramatically different animals.

  • General Butt Naked||

    It's bleed-over from the other thread.

  • An0nB0t||

    Gotcha.

  • Ken Shultz||

    I hope Google replaces all the taxis with driverless cars.

    They gotta come up with a better word for them than "driverless car", though, 'cause it sounds like "horseless carriage".

  • Richard||

    How about "auto-mobile"?

  • Ken Shultz||

    I like it!

  • C. S. P. Schofield||

    Is there a city of any size in the United States that has something approaching a free market in taxicabs? I mean, do we have an example to look at?

  • General Butt Naked||

    In pittsburgh we have what are called "jitneys", which are just guys that perform the duties of a cab with their cars. It's illegal, (of course) but rampant.

    They are cheaper, and if you have a few of their cell phone numbers, faster than a regular cab.

  • C. S. P. Schofield||

    Thanks for the data. Do you like the jitney divers? Do you use Jitneys? Is there a narrative about how dangerous they are being flogged in the local media? Expand, please.

  • Agammamon||

    I've used jitney's in other parts of the world (Thailand for example).

    They work just fine - simple, easy to use. Costs are negotiated per trip rather than a set fee for miles/time. I guess that's what bugs the proggies - if you don't have a little knowledge of how jitney's price you can get a little screwed but you pick up what's a "fair* cost pretty quickly.

  • General Butt Naked||

    Do you like the jitney divers?

    Yeah, you can haggle with them, and they usually congregate where people need a ride, i.e. grocery store, train station. They're usually friendly and polite as well.

    Do you use Jitneys?

    Before I had a car I would on occasion.

    Is there a narrative about how dangerous they are being flogged in the local media?

    The stories in the media that you do hear are usually about jitney drivers getting robbed. They do a lot of work in the ghettos and get robbed quite often. I've never heard of a jitney driver robbing someone, and it's not portrayed as a particularly dangerous mode of transport. Though I did ride with one guy that had a van with no seats, and I had to ride on a milk crate.

    There are also cab drivers that will operate their taxis as jitneys. You get charged less because they keep all the money by not turning the meter on, so they make more. You have to know a guy to do this.

    I think the reasons that they are so popular is that they will come promptly if you call them, they go into the hood, and they're cheap.

    Getting a taxi around here is such a pain in the ass (on top of being expensive)that they could probably charge the same amount and still have tons of business.

  • C. S. P. Schofield||

    I'd say you have a system that works. Keep a close eye on your City Councilmen (or whatever) and local Uplifters, to make sure they don't screw it up in the name of "Social Justice".

    Translations from the Progressive: "Social Justice"; We can't actually identify anything anybody is doing wrong, and nobody has asked us for help, but we think things should be done our way anyway.

  • Robert||

    In some places "jitney" means "small bus". In Atlantic City such jitneys were (still are AFAIK) a regular and legal part of the transit system. Each seats slightly more than the shuttle vans some cities have operating to & from airports and some other locations, and instead of the types of runs those make, the AC jitneys run regular local routes like buses.

  • Robert||

    But the etymology AIUI is from slang for "nickel", indicating the $.05 fare jitneys once charged.

  • Rhywun||

    NYC law allows only full-size buses to run regular, legal routes. Which is why all the routes that can't fill a full-size bus got cut in the last round of massive cutbacks. Suckers who live in a neighborhood that might actually benefit from jitneys are shit out of luck unless they patronize illegal dollar vans.

  • The Late P Brooks||

    The purpose of taxi regulation is simply to protect passengers against being fleeced by unscrupulous cabbies, and to keep passengers, bystanders, and the environment safe.

    This is why the nation turns to Harvard for guidance on economic matters.

  • susandaved||

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  • ||

    Susan was kind enough to email me and explain how this amazing system works. She grows pustules on her cunt, squeezes them out, and sells it as artisanal mayo. It's a can't-miss system!

  • John C. Randolph||

    Glaeser proposes market-based reforms: replacing the medallion system with an annual fee for whoever wants to drive a cab and allowing cabbies to compete on price.

    I can totally get behind this, if the annual fee is zero. There's no reason why the city should single out cabs for an excise tax. Let them pay whatever everyone else does in that town.

    -jcr

  • Robert||

    I've long thought the best way to beat the resistance to deregulation there would be not to abolish the medallion system but to issue another, or better more, medallions to the current holder for every one they hold. A 2-for-1 or 3-for-1 split. There would be enough medallion owners who'd want to make money by selling extra medallions to successfully counteract the interest in them as a group in maintaining control. Divide & conquer.

    So why am I the only genius to think of this? I don't see it being tried anywhere.

  • Sevo||

    "So why am I the only genius to think of this? I don't see it being tried anywhere."

    In SF, any mention of increasing the number of medallions gets a cab parade in front of city hall.
    Most of the drivers aren't real conversant with econ, but nearly every one understands 'inflation' and the debasement of that particular currency.

  • Rhywun||

    I've lived in SF and the absolute hell of trying to get a cab when you need one is something I don't recall with any fondness. They do both hails and calls - which basically means if you're stuck anywhere outside downtown, every cab you see is on its way to a call somewhere else. Of couse, this was before cell phones - so maybe it's easier now.

  • Sevo||

    "Of couse, this was before cell phones - so maybe it's easier now."

    Not for legal cabs; they still won't bother going to where you are. But the mobile-app efforts are beginning to shake things up, as are 'limos' which are quoted-price (usually not much more expensive) and RELIABLE.
    Plus the restaurants are cutting into the business by offering valet parking; bet the cabs don't know that's their 'competition', but it certainly is. I'll pay $10 valet charges to avoid a $10 whacko cab ride any day.

  • Rhywun||

    "Limos" in NYC are expensive as fuck but they actually go where I live, unlike yellow cabs who typically (illegally) refuse to do so. The whole setup here is basically arranged to favor Manhattan elites - surprise.

  • LarryA||

    Just like other cars, cabs create congestion, pollution, and safety risks for pedestrians and other drivers; these and other problems associated with driving amount to a social cost of 10 cents per mile, by one estimate. So if Boston cabs travel an average of 60,000 miles per year, the annual … fee should be about $6,000.

    Bull.

    Cabs also reduce the number of cars on the street by transporting as passengers people who would otherwise have to drive. Subtract the "social cost" of those cars, and the city should be paying the cab drivers thousands of dollars.

  • ||

    I'm having trouble with the math.

    No cab- person drives a car. One ride = 1 car.

    With a cab- person is driven. One ride = 1 car.

  • DaveSs||

    More cabs = Fewer parking spaces required

    Then you convert more on street parking in congested areas to traffic lanes and you get less congestion.

  • WomSom||

    See, I never even thought about it like that.

    www.NetAnon.da.bz

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