Until I read Walter Williams’ The State Against Blacks I had no idea what forces were at work interfering with and hampering the taxi cab business in virtually every city. Almost everywhere the city government demands an expensive licensing procedure and sets a cap on the number of legal taxi cabs. In this way, the existing cab companies have a monopoly that allows them to charge higher prices. Williams wrote about this because, he argued, before such laws existed, starting a taxi cab service was a way anyone with a car could generate income. By criminalizing such entrepreneurship, the state was effectively keeping the poor in poverty—kicking out some rungs that had once made it possible to climb the ladder of success. And since African Americans were more likely to be poor for historical reasons, any law that especially hurt the poor especially hurt the African American population.
It seems that the people in Seattle are getting a lesson in economics and how the government messes up the economy.
“Habitu Sallehu pays hundreds of dollars a year to be a legal for-hire cabdriver in Seattle. The fees help pay for detailed city inspections of his records, his Toyota Prius, and the entire for-hire industry. Lately, the 43-year-old Ethiopian émigré has seen drivers offering the same services as he does in cars with furry, hot-pink mustaches attached to their grills. But the drivers for that company, Lyft, and a second outfit, Sidecar, operate without any licensing or inspections from the city. A third service, UBERx, also allows unlicensed drivers and vehicles into its ride-sharing fleet. The city says their lack of licenses makes the services of all three companies illegal and potentially dangerous.”
I’m really sorry about Mr. Sellehu’s endangered investment. But the situation was immoral. He was paying money in order to purchase an income stream within a government-imposed monopoly or at least within a cartel. What has happened is that the city has overstepped the economic patience of the city. Rather than feeling obligated to obey the law or turn in these people for the crime of taking them where they want to go at a price they can afford, they are simply using the service. The city government is finding itself forced to admit that these illegal cabs are performing a real service.
“The smartphone applications the companies use to pair riders with drivers have become a hit since the companies started competing against each other for Seattle business in April. And the City Council is open-minded about letting the companies stick around permanently. Seattle Councilmember Sally Clark said she’s impressed with the innovative approach to offering quick, affordable transportation in dense, urban areas, but she and other council members are on the fence about whether Seattle should find a way to make their services legal, as is. The current taxi and for-hire cab industry has been highly regulated in Seattle for decades, with caps placed on the number of licenses available and expensive fees used to fund the monitoring of drivers.”
Being “open-minded” seems to mean not much more than granting the current “illegal workers” within the expanded cartel and then taxing (and regulating) them. I suppose this means that the next new taxi startup will be opposed by the police. That would be sad. Despite all the claims about the need for regulation, the fact remains that these taxi companies have every incentive to avoid danger and keep their reputations spotless by operating safe vehicles.