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February 8 2017

A Surprise Stand for Competition Over Cronyism in Battle for NYC Streets?

Patrice L. Onwuka

Sometimes politicians surprise you and take a stand for competition and fairness in the marketplace. New York City Mayor Bill de Blasio is demonstrating this point in a stunning turnaround from past positions.

De Blasio recently told taxicabs that the city has no plans to intervene and rescue them from financial challenges posed by ridesharing that have eaten into their profits, causing the value of taxi medallions to plummet.

In a radio interview the mayor noted:

“I think you will see some leveling off [of the market] over time, and that could strengthen the medallion values again, but I am not ready to commit to reversing course,” de Blasio said on his weekly WNYC radio show.

“I also think there were free-market dynamics that created an opening for Lyft, Uber and others, and the taxi industry has to learn from that . . . in every way possible.”

“The more the yellow-cab industry is competitive and updates itself, the better off it will be, and what we are seeing is, even now with so much availability of the other types of services, there is still a major market for yellow cabs.

Uber, Lyft, and other ride-hailing services have swept NYC streets – offering cheaper alternatives to traditional yellow cabs. The cab industry is hemorrhaging passengers and cab drivers find themselves unable to keep up with payments for their vehicle permits.

Taxicab medallions, a city-issued permit to drive cabs, were intentionally limited in number to make them more valuable. Values hit a high of $1.3 million in 2014, but have fallen as low as $250,000 today. Cab drivers who secured a medallion back when ride-hailing companies were unheard of counted on the steady assured income of driving cabs for decades. Then came innovation. The explosion of regular people using their vehicles to shuttle passengers around has cut into the cab business. Now, cab drivers are struggling and asking De Blasio for financial relief. They also want relief from the regulations on cabs, which would actually help them compete instead of going after taxis on other ways.

Cabbies told a local station:

“It’s unfair. We have a lot of regulation on yellow cab drivers, but Uber they got phone they’re using everything you know,” one driver said.

“They don’t get nothing from the police. As soon as it is early morning you will see the police just chasing yellow cabs,” another driver added.

Sadly, the cab industry is also growing more unsafe, because some garages are unwilling to spend money to fix broken cabs. Passengers and drivers are complaining that the cabs have broken doors, blown brakes, and other safety issues.

Riders are noticing the poor condition of some cabs. One customer said he was terrified when he got into a cab with his 5-year-old son and found that the brakes were barely working.

“Every time we came to a light, the car would screech and there was a grinding sound,” said the passenger, Jason Clark, 35. “It wasn’t stopping like it should have.”

Clark said the cabby was frustrated and told him the garage wouldn’t make the necessary repairs.

The taxicab industry flourished from a system where unions and industry leaders secured protections and rules that they could all abide by and to their gain. The medallion system is a perfect example. It’s a rigged system meant to artificially create scarcity in transportation options so that their value increases. Then came technology which expands choice and provided an abundance of transportation options – deflating the value of cabs to what they probably should be.

The taxicab industry has protested, whined, and lobbied policymakers to go after ride-hailing companies like Uber and Lyft, but the public outcry was enough to shut down those efforts. What if instead of trying to stop competition, they invested in ways to innovate as well? Perhaps their situation would not be so dire.

De Blasio’s response is a stunning turnaround from his positions only two years ago when he was willing to take on Uber and Lyft until he was resoundingly defeated. Furthermore, the $2 million study he commissioned last year confirmed that ride-sharing or ride-hailing doesn’t contribute to congested roads and should not be limited.

It’s time for taxicabs to smell the coffee. A market system that’s free and fair will serve customers better. They can either compete fairly or get out of the way, but trying to stand in the way of progress only guarantees that they’ll be run over.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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