Taxi Regulations Crush Immigrant Dreams (MORE: Or Not! See correction.)

Wednesday, February 29th, 2012

This story is a few months old, but my intern Jessica Greene just pointed me to it. A group of Ethiopian immigrants here in Nashville wants to start a taxicab collective in which the drivers operate independently, instead of being required to fork over thousands of dollars to one of the city’s cab cartels. The problem is that the Nashville Metro Board doesn’t trust that dastardly free market to determine how many cabs Nashville residents need. Instead, city planners determine this, after months of careful numbers-crunching and meticulous research, I’m sure. Lo and behold, just a couple companies have snapped up the vast majority of permits.

So back to our Ethiopian immigrants. Because of the limit on permits, their petition to the city really has nothing to do with them or their business plan. The primary reason they’ll be accepted or denied will be whether or not a bunch of politicians think Nashville needs more cabs. Once that’s decided, they’ll then get to argue that they should get some of the new permits. The cab companies are flexing their muscle, simultaneously claiming that the city is “saturated” with cabs (I can tell you that this is far from the case) even as they themselves are petitioning the city for more permits.

The coverage has been unfortunate, too. This piece in the City Paper twice mentions that cab drivers in the city can’t unionize—as if that’s the real problem here—before describing the immigrants’ cab collective idea, which the reporter calls “radical.” Imagine. Letting cab drivers own and manage their own cabs. Radical!

Unionizing might help the drivers get a better deal, but it would also create a new interest group with a strong incentive to support yet more regulations aimed squarely at independent drivers and startups. Notice whose interests are completely left out under that scenario? The consumer’s.

The article is full of industry insiders, government officials, and other city leader speculating about how many cabs the city really needs. (In addition to a regulator who worries that he won’t be able to sufficiently oversee more cabs.) It’s all rather ridiculous. The idea that maybe Nashville doesn’t need to compute a precise number of cabs that are allowed to service the city is never even considered.

This passage is just jaw-dropping:

“I think it’s a bad idea, a very bad idea,” said Trimble, the head of Yellow Cab. “It’s not because of who is applying for the company. It’s a free enterprise. I don’t have no problem with them guys owning their own company. The problem is, the amount of cabs that are on the streets right now, pertaining to the population of Davidson County. The convention center is not open. There’s too many cabs in Nashville right now.”

Other cab companies, however, have applied for more taxi permits, including Taxi USA of Tennessee, which is seeking an extra 40. Nonetheless, executives of this company — which operates under the names Nashville Cab, Allied Cab and 1-800-Taxicab — are skeptical of a driver-owned taxi company.

“It takes hard work, and it takes a lot of knowledge,” Michael Soloman, executive vice president of Taxi USA of Tennessee, said. “We have a team of people who have been doing this for 50-some years. Just because you’re a cab driver doesn’t mean you can run a company.

“They may do a great job, and God bless them if they can,” he said. “But if they can’t, the problem is the customer is the one that sacrifices.”

How customers “sacrifice” from too many cabs is beyond me. As Jessica reported in a piece for Huffington Post a while back, these same cab companies successfully lobbied to make it illegal for livery services to offer a ride in a nice, clean town car for a lower fare than a taxi would charge.

This piece in the Tennessean is just as ridiculous. Lots of talk about whether Nashville should expand its number of cabs. Or whether or not the city should move to a medallion system. No discussion at all about whether the city should just grant a permit to anyone who meets a few basic requirements (or, God forbid, not require permits at all) and stop trying to guess how many cabs the city needs.

Check out the naked protectionism in these passages:

Robbie Mann, who works for United Cab, which his father owns, said the Volunteer Taxi group hasn’t been able to justify entering the market with 81 new taxi permits. He said the demand for that much business simply isn’t there yet.

“Why flood a market that’s already not sustaining what’s there?” Mann said in an interview, echoing what a number of other industry players said at the licensing commission’s public hearing on Nov. 15.

I don’t know. Maybe because more competitors would mean lower fares for customers? Or more innovation, like implementing seatback credit card swipes, or integration of smart phone aps like Taxi Magic? And that’s assuming the market is indeed flooded, which certainly hasn’t been my experience.

Other people in the industry don’t necessarily agree that the market is saturated, either. But they say Volunteer Taxi and the other groups trying to break in — Green Cab and Green Light — aren’t the best solutions.

“We agree that there ought to be more cabs available to the public, and we’re in the best position to provide them,” said Gif Thornton, a lawyer representing Taxi USA of Tennessee, which owns Nashville Cab, Allied Cab and 1-800Taxicab and is seeking 40 new taxi permits. “We’ve demonstrated the ability to meet the need.”

Again, the notion of the city politicians able to discern which cab company will provide the best service to customers far into the foreseeable future is preposterous. This nonsense is happening all over the country. There’s a reason why the cab business and its regulation is so damned corrupt.

This is the sort of thing libertarians are talking about when we argue that clearing out burdensome regulations will create jobs. And better jobs at that. This stuff is passed in the name of protecting consumers—by giving them fewer options, and making them pay more money. If a few dozen entrepreneurial  immigrants are denied the chance to open small businesses in the name of said “protection,” well, that’s price we pay to have city politicians and bureaucrats looking out for us.

(CORRECTION TO HEADLINE: Per the comments, the Metro Board did in fact vote to increase the number of licenses and granted some of them to the new company. The headline is therefore wrong. (At least in this case. Immigrants still get hit especially hard by these sorts of regulations.) The gist of the post — that city governments shouldn’t be in the game of guessing how many cabs the city needs — still stands.

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42 Responses to “Taxi Regulations Crush Immigrant Dreams (MORE: Or Not! See correction.)”

  1. #1 |  bren | 

    You don’t need to construe this as a “liberals vs. libertarian” ideological argument. Its not like there are tons of liberals wanting fewer taxis. This is a governance issue that big to mid-size city voters (most of whom are liberal) need to quit ignoring.

  2. #2 |  Radley Balko | 

    Again, the point isn’t whether or not we need more cabs. The point is that it’s asinine to have city officials making that decision, and then deciding who gets to operate them.

    That’s where I think there’s a bit of a faultline between (some) liberals and libertarians.

  3. #3 |  C. S. P. Schofield | 

    Bren,

    While your point has some validity, I would point out that the “modern” (any time after 1815 or so. This is ‘modern’?) Liberal tends to be for City Planning and all that it entails. This despite Social Planning’s long history of messy failures, boondoggles, bribery, corruption, bigotry, and oppression. This is because “modern” Liberalism is the worldview of choice for a large block of the current self-selected elite of the West. Like all such elites (the European Aristocracy, the Plantation Aristocracy, the Social Darwinists of the Gilded Age, to name a few) the modern Elitists justify their position on the top of society based on the theoretical (and, frankly, largely invisible) need of the Masses for direction by “experts” (read; “Their betters”)

    Another thing that the “modern” Liberal Elite shared with the elites of the past, is the amount of good to society at large that would result if some person or persons stove their skulls on with a nine-iron. They are fatuous, deluded parasites.

  4. #4 |  (B)oscoH | 

    Maybe he meant “tubular” instead of “radical”?

  5. #5 |  Bren | 

    Ever wasted your time haggling with unlicensed Cabs in NYC? It is a slow, usually expensive,inefficient waste of time. Hopping in a regulated taxi with a meter is a lot less annoying, and its friendlier to tourists, who don’t know the going rates.

    So I do want meters (and meters = prices) regulated. But I don’t want a set number of medallions issued by the taxi commission.

    I can’t think of an ideological way to frame “meters good, medallions bad”, both of these policies are managed by city politicians.

    As for liberal elites, it’s pretty hard to figure out how rules changes impact cabs in a market, so I like to have some “elites” who actually “know something” about this involved. I think the danger of nine-iron swinging city planners isn’t very very high.

  6. #6 |  John Kohn | 

    I deem this a first world problem.

    NEXT!

  7. #7 |  a leap at the wheel | 

    Bren – seems like the easiest way to get at what you want is to require cabs to have a sign specifying how they charge, so you know before you get in. Mandating disclosure instead of mandating procedure is usually a win.

  8. #8 |  David | 

    Bren: is there any reason why unlicensed cabs can’t have meters? Because I’m curious about why they wouldn’t just install the thing to speed up their business and cut back on the number of customers who decide not to haggle and tough it out to wait for a “real” cab.

  9. #9 |  crazybob | 

    Your hysterical headline isn’t remotely true. The commission voted to increase the number of licenses including those for Volunteer Taxis. They did make it budget dependent – but have to see how that works out. How about a little fact checking next time?

    http://nashvillecitypaper.com/content/city-news/commission-votes-increase-number-taxis-only-if-next-budget-allows

  10. #10 |  Maria | 

    Don’t get me started on the cozy relationship between cab companies and city governments but isn’t complaining about taxi corruption as cliche as joking about the trash business and the mob? ;)

    I lived in a city where the international airport didn’t (and still doesn’t) have a direct link with municipal transit due to the influence of the cab companies. The city has for years had a decent transit system. It’s even in the midst of a huge expansion but still (i hear) no train line can connect to the airport. It’s not due to land or zoning issues since the city owns much of the land the line could go through. It’s not due to funding, even “in this economy.”

    The only city bus line that goes to the airport can meanders for 30 to 45 minutes through suburbs and an industrial park. The city couldn’t even get the companies to budge to run a dedicated bus from the last train station to the airport (a ten minute hop, max.) Thankfully the hotels still get to have their own shuttle services and sedans can operate (as long as they don’t charge under the cab rate.) But you’re shit out of luck if you live there. The cab companies really enjoy charging 45 $ to 55 $ a ride, on average.

    It’s the same arguments there, “The city is already saturated with cabs.” “We know what’s best.” “What do these outsider upstarts know about running a business and serving customers?” And so people wait an hour or more for a cab that might not even show up. It’s a running joke at this point. Call multiple brands, hope one shows up on time. The catch is, most of these brands are owned by the same two or three companies and operated from the same dispatch. Also, don’t even try flagging down a cab because they got the city to declare that they don’t have to stop if they do not want to.

  11. #11 |  Mattocracy | 

    “Ever wasted your time haggling with unlicensed Cabs in NYC?”

    No, nor would I. I’m not forced to do so. I don’t need to outlaw unlicensed cabbies so I can not engage in commerce with them.

    “I think the danger of nine-iron swinging city planners isn’t very very high.”

    Well, you’re wrong. The danger is very high for people wanting to start their own enterprises to move up the socio-economic ladder. Countless example exist of cities who do what they can to stiffle small business creation.

  12. #12 |  Cornellian | 

    Isn’t there a pro bono legal outfit that helps people facing these kinds of arbitrary barriers to earning a living? I can’t remember their name but I know they get mentioned over on Volokh Conspiracy every now and then. Maybe they’d be willing to get involved.

  13. #13 |  Mattocracy | 

    Seriously, volunteer taxi’s are the same as for profit taxi’s. These people don’t want to volunteer, they want to make a living. There should be no limit on the number of any services people want to provide for profit.

  14. #14 |  Mattocracy | 

    Are not the same…damnit.

  15. #15 |  StrangeOne | 

    Bren, your making a dangerous assumption that the “elites” know anything. Like all the congressmen who vote on bills they don’t read. Or the city planners who cut yellow-light time because red-light camera companies tell them too, even though it increase the danger of intersections. Or the regulators that push out all competitors because established cab companies tell them too, even when they provide costly and inadequate services. One thing I can never wrap my head around is the faith of modern liberals AND conservatives in the goodness of government (at least when their side is in charge). In my experience every government agency is overstaffed with dim, lazy, disinterested, spiteful human beings.

    You don’t see the bad results of regulation. You don’t see the people who lost jobs and had their companies shut down. You don’t see the diminished variety of choices you have, or the amount you are overpaying because of protectionist legislation. You see one cab that you had to haggle with and think it’s ok for the government to shut anyone and everyone down provided someone else has an economic interest to do so.

    How about we all just be adults and not use the services we don’t like? No need to bring out the men with guns to write tickets, seize vehicles, and put people in jail for it.

  16. #16 |  Maria | 

    #8 Unless I misunderstood both this article and your link, i think you missed the point.

    What does the city/municipal budget have to do with businesses providing a service to meet a demand?

    The city doesn’t regulate how many restaurants can operate. Yes, they review them once they are established and make sure they operate under set guidelines and standards. But they don’t tell a potential restauranteur, “Sorry, our town has too many places to eat. We can’t allow you to open your Italian Sushi BBQ place now. What do chefs know about running a business? Only Yum! brands really knows how to provide food that consumers want.” Which is exactly what goes on with taxi’s.

  17. #17 |  Radley Balko | 

    Isn’t there a pro bono legal outfit that helps people facing these kinds of arbitrary barriers to earning a living?

    The Institute for Justice. They’re currently suing the city over the livery service regulations, but I don’t believe they’re involved in the volunteer taxi case.

  18. #18 |  Bad Medicine | 

    #8 crazybob – the dream-crushing has nothing to do with whether the number was increased or not, it has to do with the fact that it is dependent upon the city *at all* to decide whether any new taxis can operate. Allow the entrepreneurs to determine whether the city has enough cabs by giving it a go and seeing if they have enough business to stay afloat, rather than commissioning some study that will decide how many cabs per cubit are allowed to operate.

  19. #19 |  BamBam | 

    It seems so evil to me that people are threatened via government fines etc. for voluntarily driving others around.
    At what point does someone tell these petty tyrants (other humans in .gov) to go to hell?

  20. #20 |  Peter Ramins | 

    I caught a cab in Chattanooga not too long ago and talked with the driver about the local cab companies and it’s pretty much the same situation there.

    I think what must happen is someone learns the business in a dirty permit-or-medallion city and then moves to an area with an actual free-market taxi setup and sets about killing it.

    This cab driver said the one huge cab company in the area has a whole lot of permits, but his boss is only allowed something like ten taxis, that his boss is one of the best in the area to work for, but that he still has to pay something like $75 per day to operate, whether he gets fares or not.

  21. #21 |  Kevin | 

    Dammit, Mr Balko. You know as well as I that those permits are the only thing stopping the good, honest, taxi drivers of Nashville from turning into chainsaw-wielding, shape-shifting, cannibals who hunt their fares for sport once they arrive at the destination. Such is the immorality people are driven to by the unfettered free market.

    Thank goodness we have the Nashville local government. Obviously, they’ll be able to both overcome the socialist calculation problem and resist pressure from interested parties to craft policies for their own ends to deliver the precise number of taxis needed by the population, without so much as a rounding error, doncha know.

  22. #22 |  picachu | 

    You shouldn’t need to purchase permission from the government to give people a ride from point A to point B for money.

  23. #23 |  picachu | 

    Americans hate freedom.

  24. #24 |  Onlooker | 

    This kind of nonsense is utterly ridiculous. This is the kind of economy-choking crap that has helped put Greece (and similar places) where it is.

    And yet some people still can’t figure out what’s so wrong about this kind of meddling and central control by govt. UFB

  25. #25 |  Leon Wolfeson | 

    @22 – And when unliscenced “taxi” drivers start robbing and killing people again, I’m sure you’ll call that the hand of the market too.

  26. #26 |  Brandon | 

    Leon, if your idiotic little masturbatory fantasy plays out, then the free market would dictate allowing people to carry concealed weapons to defend themselves from robbers and murderers. There is seriously CrazyBob-level stupidity in that particular objection.

  27. #27 |  picachu | 

    Leon what is it that makes unlicensed taxi drivers more likely to be homicidal maniacs than licensed ones?

  28. #28 |  picachu | 

    Thank you for proving my point though Leon. Freedom is scary, it removes the cherished illusion that government is protecting us. I guess that’s why Americans hate freedom so much.

  29. #29 |  Pugnacious | 

    They should open up an Ethiopian restaurant, instead.

    Great food, and spicy hot, if you prefer. I was introduced to Ethi-food back in the 60s while assigned to Addis Ababa.

  30. #30 |  Pugnacious | 

    Sadly, I learned from a Seabee just back from Ethiopia that Obama had sent them to construct launching facilities for homicidal drone attacks into Somalia, kenya and Uganda… the LRA’s Joseph Kony being the current target of these ground cockpit assassins.

  31. #31 |  crzyb0b | 

    Taxi’s in sacramento were unregulated until 7 years ago. Question is whether or not the availability, service and price improved after the regulations went in. According the the article the number of taxi’s increased by 66 percent since the regulations.

    http://www.sacramentopress.com/headline/50108/City_mulls_new_taxi_regulations

  32. #32 |  Ted S. | 

    Bren wrote:

    I think the danger of nine-iron swinging city planners isn’t very very high.

    Read up on what a wicked bastard Robert Moses was.

  33. #33 |  Mattocracy | 

    Ah yes, because licensing means that all the maniacs will not longer be able to attack innocent commuters. Cause shit’s just running rampant right now.

  34. #34 |  V | 

    If we’re using anecdotes, I have a friend in Nashville who told me people don’t take cabs when going out drinking. So I guess there’s one target group the cabs aren’t reaching. Unless that’s just military folk he’s talking about.

    I can see the logic of having city planning involved, just to determine the amount of vehicular congestion on the road.

  35. #35 |  J | 

    The headline isn’t as wrong as you state in your correction. It says they may grant new licenses if they can fund 2 more taxi inspectors.
    Which brings up another issue. The city says they need 2 more taxi inspectors at $50,000 each per year to inspect 88 new cabs? That sounds like a pretty easy job to me take a full year to inspect 44 cabs and make $50,000 a year.

  36. #36 |  Big A | 

    #31 Bob- Actually, the article you cite claims that during the unregulated period, Sacramento ended up with “about the worst taxi system”- but then makes absolutely no mention of what that actually means (too many taxis, not enough?). And following the regulations, taxi numbers did increase, to the point where there are now “too many”. In other words, the only actual problem listed in the article happened after the regulations, and now those regulations need to be altered to address the new issue.

  37. #37 |  John C. Randolph | 

    How about this for a constitutional amendment?

    Neither the Congress, nor any state or Locality, shall make any law or regulation to limit the entry of any Person or organization into any lawful business endeavor, nor impose onerous licensing fees, nor impose any regulation of prices, nor act in any way to grant a monopoly or privilege to any business to favor them over their competitors;

    -jcr

  38. #38 |  V | 

    An interesting intrusion by the federal government into the activities of the states.

  39. #39 |  tired dog | 

    #10 Maria must be in or near H-town where shiny trams to nowhere suck up all the dough and bus routes in the less fortunate areas are cut to feed those trams.

    H-town also enjoys the near monopoly of Yellow Cab which owns darn near every cab co. with another name…

    Several years ago when in city hall I spoke with a Yellow Cab rep who was there on cab co. business…we parted with his invitation to ‘call him’ if I ever needed things done at city hall.

    Yellow just got a rate hike from mayor and council monkees…but we bar jitneys and other ‘unofficial’ providers with extreme prejudice.

  40. #40 |  Maria | 

    @#25

    What does requiring a license to operate have to do with the city deciding how MANY get to operate (ie. WHO gets to provide the service to meet a demand)? Apples and oranges.

    Why is it one extreme (complete control by a small group of people) or the other (Murdering Gypsy Cabbies 4: Free Market Bloodlust Rampage Redux!)

    The problem for me in fact isn’t that you need a license to operate it’s that they are capping how many people get to operate and even controlling the pool of applicants who get access to the limited licenses.

  41. #41 |  Johnny | 

    Should anyone just say I “want” permits and I deserve them because I am so old, so pretty, a minority, a certain race, female or because of whichever combination you may find. Maybe the market should decide how many taxi’s should operate and regulations need not apply. Let any one who chooses either paint or not paint a car, regardless of safety, having an air conditioner, airbags, seat belts. No need to verify there criminal history, there drivers license, insurance requirements, and who cares that the rates they charge be monitored to keep over charging from taking place. Taxi meters need not be set and sealed, vehicle inspections are not needed, having a taxi company to be responsible, let along a licensing agency. Credit card protection not needed, letting any driver choose each and any run, why would persons with service dogs need taxi’s, persons with disabilities have no need for the regulating of taxi cabs and ensuring wheelchair vans are part of every fleet.
    Public transportation is a privilege more than a right, you place your most valuable possessions in there care and you deserve to know that they are safe and that checks are put in place to ensure that safety and security.

  42. #42 |  Keith | 

    So my friend and I were visiting New Orleans and decided we needed a cab to get from one side of town to another. We called a local cab company and a few minutes later a lady in a 1970something Cadillac showed up. She was wearing a hospital gown and a cowboy hat. She told us she was our cab. We sat at a stop sign for 15 minutes waiting for it to change. Finally we got to our destination but only after stopping and helping her siphon some gas from a car parked on a curbside. Is this the kind of taxi service we need for Nashville? I’m pretty sure that’s what will happen if they decide to let any fly by night company set up camp and also deregulate the rules that are in place to ensure that the taxi’s and the people that ride in them get to where they are going safely and soundly.

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