Economics

How Market Forces Undermine Racism: Uber Cab Edition

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For a little over five years I lived in Harlem's famous Sugar Hill neighborhood, where the rent was cheap and I was surrounded by the echoes of history. My favorite local landmark was the stately apartment building where both W.E.B. DuBois and Thurgood Marshall once lived. One of the downsides of the neighborhood was that I could never, and I mean never, find one of New York City's otherwise ubiquitous yellow taxis when I needed speedy passage to lower Manhattan or a ride to the airport.

This anecdote would not surprise any longtime New Yorker. The city's yellow cabs, which enjoy a legal monopoly over the right to pick up paying customers on the street, are notorious for avoiding black neighborhoods (and customers). As a result, when Harlem residents wanted to hail a ride we turned to what New Yorkers call "gypsy cabs," essentially private car service drivers who pick up illegal street fares between appointments. These drivers negotiate their price on the spot and provide a much-needed service to willing buyers. In other words, a black market in taxis sprung up in order to fill the void created by government-empowered racism from the taxi cartel.

This little trip down Damon Root's memory lane was inspired by a very interesting post at the site Racialicious by the writer Latoya Peterson. Her subject is the hot new private car service Uber, which allows customers in a handful of big cities to purchase prompt, taxi-like service at the touch of a smart phone. Unsurprisingly, Uber is not exactly popular with the established taxi regimes in those cities. Indeed, in places like Washington, DC, the yellow cab cartel has turned to its allies in local government in an effort to eliminate this new high-tech competition.

Peterson adds a new dimension to the Uber controversy. As she notes, "most analysis of Uber's costs and benefits leave out one huge piece of the appeal: the premium car service removes the racism factor when you need a ride." As she explains,

In 1999, actor Danny Glover made headlines by filing a taxi discrimination claim in New York City, noting that cabs failed to stop for him due to the color of his skin. Good Morning America experimented with having a black man and a white man hail cabs again in 2009, and found that the racial profiling still continued. In 2010, Fernando Mateo, Head of the New York State Federation of Cab Drivers encouraged racial profiling in the name of safety. Though it has been over a decade since Danny Glover made the issue a national conversation, the landscape hasn't changed much.

As a black woman, I am generally seen as less of a threat than my black male peers. But that doesn't mean my business is encouraged or wanted.

Peterson goes on to narrate her own various positive dealings with Uber, though her post is by no means a love letter to the company. She is especially critical of Uber's high cost and "shady 'surge pricing' practices." But at the same time she raises an essential point: Market forces can and do undermine even the most well-entrenched forms of racism and discrimination. Here's hoping Uber inspires many competitors of its own, bringing even more choice to the transportation market in American cities.

For more on the debate over Uber, see Katherine Mangu-Ward's "Post-Sandy Price Gouging by Uber?" Econ 101, in Twitter Form."