An Army of Latkas

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It's a little long, but A.C. Thompson's expose of San Francisco's idiotic taxi laws is one hell of a parable of how the state can screw up something that less centralized systems can handle quite easily.

To get a medallion under Proposition K, a driver first puts his or her name on a waiting list. When the applicant's name comes to the top of the list after 10 or so years, the Taxi Commission runs a cursory background check — law-abiding cabbies who drive full time get preference. After getting the prized medallion, the hack must put in either 800 hours driving annually or 156 four-hour shifts per year, in order to keep it. Eventually, when the cabbie decides to retire from the business, the medallion is returned to the city, which passes it on to the next driver in line.

"The intent was clearly to make medallions available to people who were bona fide taxi drivers," says Kopp, an independent politician who went on to serve as a state senator and a San Mateo County Superior Court Judge. "It was supposed to be a strict system of rewarding those who actually drive." Medallions, he continues, "are government permits, and when you're finished you turn them back in."

Unlike New York City, where medallions are auctioned off for hundreds of thousands of dollars and can be sold from one person to another, in this city medallions are available to cabbies for a minimal processing fee and can't be resold.

Reason subscribers will get to read Kerry Howley's reporting (in a short citing) about similar problems in Anchorage. The gist: It's easy to get a cab in New York, less so in these cities.

NEXT: All for Philip Morris

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  1. And the city could make more money and have safer drivers if it just charged some good money and required that you have a very low point count on your license. Doing that, they could easily expect people to pay $2,000-$3,000 for a medallion, renewed every 5 to 10 years and have better results to show for it than even NYC.

  2. So wait, you’re not allowed to drive a cab without one? How then, are you supposed to become a “law-abiding cabbie who drives full time”?

  3. Yeah, I hardly see NYC as the model for hack licensing. All good libertarians know that all licensing is just institutionalized corruption.

    If I’m not mistaken, Reason has done a few articles on unlicensed taxi/bus/rickshaws.

  4. “It’s easy to get a cab in New York….”

    Does this mean New york has increased the overall number of medallions? Last I heard, there was a shortage; hence the high monetary value of the medallions.

  5. Taxi service pricing is one of those things that I haven’t been convinced that a fully free market is more beneficial than a market with some price controls. The problem with a fully unregulated taxi market in a city such as NYC, where cabs are used frequently for short trips, is that there is no efficient way for a consumer on a street corner to price shop, and for a driver on 5th Avenue to compete (via price advertising) with other drivers.

    My ideal market would be one that was open to any firm. Some firms could be “city sponsored”, whereby consumers would know the price up front simply by seeing a properly marked cab. Independent firms could compete freely with “city sponsored” firms in whatever manner they choose.

  6. Correction: it’s easy to hail a cab in Manhattan. Everywhere else you basically have to call a livery cab and wait around.

  7. MP
    What the hell are you talking about? There’s nothing that makes taxi’s any different than hot dogs or haircuts when it comes to price competition.

    Indeed, if cabs were deregulated and the price remained volatile, I predict they would mount signs on their roofs displaying the price, just as gas stations do.

  8. The collapse spelled the end of Yellow Cab’s San Francisco operations, sidelining 500 cabs. (Today’s Yellow Cab Cooperative, the area’s largest taxi fleet, is a separate outfit.)

    The bankruptcy proceedings ground on for years.Taxis became a rare commodity.

    Is this typical bureaucratic thinking? Instead of simply creating more medallions to get more cabs on the road they create a more complex system of distributing medallions.

  9. San Francisco’s idiotic taxi laws is one hell of a parable of how the state can screw up something that less centralized systems can handle quite easily.

    Seems to me that both systems suck, though the New York system is undoubtedly more flexible and market-based.

    The gist: It’s easy to get a cab in New York, less so in these cities.

    Which has nothing to do with how easy it is to get a medallion.

    Ease of getting a cab involves the number of cabs available per people who desire them and the ease of the mechanisms to actually hire one.

    While the numer of medallions available is certainly a factor in the first point, in neither of these is the ability to aquire a medallion a factor.

  10. What the hell are you talking about? There’s nothing that makes taxi’s any different than hot dogs or haircuts when it comes to price competition.

    The last thing I want to deal with when I stumble out of a bar on Bleeker St. is trying to figure out who has the best price and who is going to rip me off.

    I think having a roving taxi fleet in a dense urban area is a unique situation that is different from other consumables such as hot dogs and haircuts. When I’m trying to hail a cab on 5th Ave and I see five different companies, what am I supposed to do? “Hey you…no not you…you…stop…I want that guy! No you keep going…the other guy stop…hey! stop!”

  11. The Manhattan taxi system is awesome! That’s what I always say while I’m stranded in JFK wondering why taxi companies have worked so hard to prevent the subway from servicing the airport.

  12. Warren: I’m sure to be flamed by this comment, and I deserve it, but cabbies are probably too stupid to react to a functioning marketplace. These are the same people who go off duty when it starts to rain, hoping to negotiate an awesome fare, and generally riding around in an empty cab. There, I said it. I don’t trust cabbies to have even the slightest clue as to maximizing profits. Maybe I should go to rehab for being an anti-Cabite.

  13. MP,
    Maybe you should just stay home

  14. I never quite understood the economics of NYC taxis. On the one hand, medallions are limited in number, and trade for large amounts of money. Shortage, right? But throughout much of the day in Manhattan, taxis seem to make up literally 50% of the street traffic. Obviously, whatever the economics of the business are, it’s profitable enough that paying $200,000+ for a medallion is worth it. So there should be more taxis on the street? There really aren’t enough?

    To everyone who claims that unregulated taxis wouldn’t work because you wouldn’t know what the price would be: I guess I just have more faith in the market than you do. Arguing that it would be utter chaos if prices weren’t set by a regulatory agency assumes that no structure would evolve, which I think is provably untrue if you look at any other unregulated business. And if you want really similar examples, look at NYC’s pedicabs or gypsy cabs. They aren’t regulated and don’t display their prices…so when you get in, you just negotiate a price. Prices tend to settle around a common level, just like they do for gasoline or 2% milk or anything else, and no cabbie bothers charging an outrageous price, because what would be the point? You’d just leave, and then he’d get nothing.

  15. NYC used to be very zealous in its medallion system as a form of restraint of trade and “suffered” a large number of “gypsy” cabs as a result. Supply and demand. A case can be made for regulating city cabs, if only as one instance of the common carrier problem.

    For example, should cabbies be permitted to discriminate as to whom they pick up or which destinations they are willing to take them? Well, it’s their lives and livelihoods on the line, after all. OTOH, and strict libertarian scruples aside, the very point of taxi service is to take any paying passenger to any (city) location. Would a completely unregulated “system” even approach accomplishing that? Hard to say, really. I’ve had some experience with such free market taxis in some foreign countries and the experience has been, as one might expect, mixed.

    Same with the fare. Does anyone really want to negotiate more than a few seconds with a taxi over, say, the fare to the airport? Would anyone typically sample the market, getting bids from multiple cabs? Again, hard to say, though my own experience suggests, at the very least, a market in which the consumer is at a decided disadvantage.

    I tend to favor a mixed market: a non-mandatory regulated taxi system for those who want some assurances of “fair” price, etc., and a freelance system for those cabbies and passengers of a slightly more adventurous nature. (BTW, this is the model I would prefer for just about any regulated trade or profession, as well.)

    Oh, and by the way, anyone who thinks flagging a taxi in Manhattan is easy has obviously never stood on Broadway at rush hour in the pouring rain.

  16. and it’s not like some cabbies don’t rip off the drunk and/or stupid, of course. (taking the long way, etc)

  17. In the Twin Cities Somalian drivers (which are extremely plentiful) will not carry you if you have liquor or the smell of liquor on your breathe, because of their religious beliefs. Since alcoholism is a disease I think these guys could be sued under an ADA provision. The guvmint says call a cab if you’ve had a few, the Somali drivers won’t take you for a ride. Sounds like alcohol profiling to me. Sure wish we had gypsy cabs here so a drunk can get home safely.

  18. It’s fun to think that most cab drivers are liek the lovable losers from the ABC T.V. show…and that peppered amongst them are the occassional Judd Hirsch-character slumming while trying to bang out a novel.

    In my experience, however, they are much as Lamar describes, i.e. “too stupid to react to a functioning marketplace.” or they’re immigrants with their own pet market killers like language barriers, personality issues or the muslim cabby who refused to carry alcohol in his cab.

    None of this negates the rare find, of course…a driver with initiative who keeps his cab clean and creates an atmosphere of trust and competence. But those are the exeptions that prove the rule.

    The guys with brains drive limos.

  19. Who says you have to negotiate with the cabbie? Just make sure his prices are posted on the side of the car, and periodically inspect the cars to make sure they aren’t misrepresenting their prices by altering the speedometer and/or fare meter.

  20. “Indeed, if cabs were deregulated and the price remained volatile, I predict they would mount signs on their roofs displaying the price, just as gas stations do.”

    The cabbies in Madison have the rates stenciled on the side of their cars. I’m not sure precisely what the regs in Madison, which is admittedly small enough that observations of it may not be applicable to large cities like NYC, are, but they seem relatively loose compared to most cities (I think just some price controls and entry barriers that limit competition but don’t restrict quantity significantly) as we have companies that use both meter and zone pricing. I’ve never had any problems getting a cab except during special events. I’m guessing that in a deregulated market in an large American city you’d see some brands emerge (possibly accompanied by auditing of drivers by the company) to deal with trust issues around padding routes.

  21. I’m not overly familiar with the Taxis in NYC, when I go there I ride the subway.

    However, in Mexico you are expected to bargain with the driver. Some cabs are dirty, some are clean. However, the most I ever paid was $4.00, and that was to go to the other side of town.

    I also can’t help but wonder why American cabs tend to be so large. Mexican cabs were usually VW Beetles or Nissan Sentras. I would think that the gas savings could then be passed on to the consumers, making them more competitive.

  22. The last thing I want to deal with when I stumble out of a bar on Bleeker St. is trying to figure out who has the best price and who is going to rip me off.

    Assuming the cabs wouldn’t have their competitive prices clearly posted, and that you’re that unfamiliar with the city you’re stumbling around, you could fall back on a traditional tactic for negotiating a market you’re not familiar with: ask someone for a recommendation.

  23. But throughout much of the day in Manhattan, taxis seem to make up literally 50% of the street traffic.

    Yup, and for the most part they’re carrying passengers too. They recently increased the number of medallions and yes, there is still a shortage. Don’t forget that NYC is still increasing in population, and in Manhattan especially that increase is mostly in wealthy people – who like to take cabs.

    anyone who thinks flagging a taxi in Manhattan is easy has obviously never stood on Broadway at rush hour in the pouring rain

    Nor named a destination in one of the outer boroughs.

  24. I also can’t help but wonder why American cabs tend to be so large. Mexican cabs were usually VW Beetles or Nissan Sentras. I would think that the gas savings could then be passed on to the consumers, making them more competitive.

    Sometimes you need/want a bigger cab (airport trips or family/party trips), but it would be nice if you had the option to ride for less in a smaller car.

  25. An army of potato pancakes? What?

  26. Re: large cabs in America

    Most cabs in America are large domestic sedans because they are available as inexpensive fleet units from the Big 2.5. Often they can be ordered with special inner city driving accessories such as oil coolers and the like. So while they may cost more in terms of fuel consumption, they cost less initially and usually benefit from less expensive parts. Some argument could also be made that the larger size of cabs helps protect passengers in collisions and thereby reduces potential liability costs, but I don’t know if most companies think that far ahead.

  27. NYC medalians are onlyt for yellow cabs who do street pickups. You can call literally hundreds of car services for a taxi. they do not need a medalian. outside of Manhattan it is not a problem to call these services. Most neighborhoods have numerous competing services and they are usually always available within 10 to 15 minutes. They do not have meters and have a set price at the begining of the ride based on your destination. Prices do vary between companies. More upscale companies service corporations, law firms, banks etc.

  28. I lived in Astoria (Queens) for 7 years… my friend and I had a favorite car service: you dial them up, a machine answers & recognizes your number and knows your address (if you’ve called before), and a voice comes on and says “five minutes”. Average arrival time was around 2 minutes. The prices are only slightly above a yellow cab and you get a much nicer car. The only drawback is they all douse the interiors of their cars with enormous amounts of strong fragrance… But overall, an excellent resource for the outer boroughs.

  29. I live in SF. Catching a cab here isn’t really that difficult, at least in business areas. I could walk a couple blocks from my apartment and be in a cab in about 10 minutes. If you live in an outer residential area or you are trying to compete for a cab late on a Friday or Saturday night it can be a little tough. Of course you can always just call one – 333-3333, even a drunk can remember that.

  30. “I also can’t help but wonder why American cabs tend to be so large. Mexican cabs were usually VW Beetles or Nissan Sentras. I would think that the gas savings could then be passed on to the consumers, making them more competitive.”

    Not sure what part of Mexico you were in, but everytime I’ve been there the cabbies are driving large 1980’s vintage American sedans. Ive never been more than a couple hundred miles south of the border though so maybe it differs elsewhere.

  31. They still make DeSotos?

  32. anyone who thinks flagging a taxi in Manhattan is easy has obviously never stood on Broadway at rush hour in the pouring rain

    Nor named a destination in one of the outer boroughs.

    Well, that shouldn’t affect your ability to flag one down. It is, of course, illegal for them to refuse a destination in the city, which is not to say they don’t ever do it. But you do have a handy legal club to beat them with if they refuse – “Hold on, I’ll just get out a pen and write down your name and medallion number so I can report you to the TLC…” (Taxi and Limousine Commission, for those of you not from NYC.) Now, if you’d said “flagging a taxi while Black”…!

    I wonder how a “mixed system” like some people have mentioned would work – some cabs on the old medallion system, subject to the same old rules and price structure, and some “open cabs”, which could do whatever they wanted. Probably pretty well; probably more like what we have now than anyone would guess. Although I would also venture to predict that if “open cabs” started to seriously affect the profitability of medallion cabs, the medallion owners would go whining back to the TLC, and the TLC would ultimately be on their side (because medallions = control, and open cabs = no control, and bureaucracies always want more control), and they’d bring out people with sob stories about how this open cabbie wouldn’t pick me up because I have too much melanin, and this one wouldn’t take me to the neighborhood I wanted to go to, and we must smack these evil cabbies down for the good of mankind. And then the system would collapse for political reasons.

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