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.