Free The Taxi Cabs

Posted: Oct 26, 2013 12:01 AM

Until recently the taxi cab business in virtually every city in the country functioned like a medieval guild. And as Adam Smith might have predicted, we consumers are worse off for it. But for me at least, things have changed.

Say I need a ride to the airport. I can tap an icon on my cellphone and a car will arrive, usually within five minutes.

I normally take whatever vehicle is available; and that's most likely a black town car. But if I have several passengers with me and we have a lot of luggage, I can order a van. A map appears on my cellphone and I can actually see the car's avatar as it wends its way in my direction. I'm continuously updated on the expected time of arrival.

Despite the marvels of modern technology, GPS is not always perfect. The car might arrive at the back of a hotel, while I'm standing at the front. So I tap another icon that puts me in telephone contact with the driver. That way I can communicate my location orally.

When the car arrives, it's clean. The air conditioner works. And it doesn't reek of fried chicken or curry or anything else the driver had for lunch. The driver opens the door for me as I enter and exit the vehicle. He addresses me by my name, which he learns electronically when I order the service. And he has likely undergone a far more thorough background check than the driver of a garden variety taxi cab.

When we arrive at my destination, billing is automatic. I don't have to worry about whether I need a credit card or cash. No worrying about what is an appropriate tip. Within minutes after my arrival, an email message tells me how much I owe and asks me to approve the charge. It also asks me to grade the service on a five point star system.

Normally the charge will be from 20% to 50% more than a taxi cab fare. Most of the time I think the service is worth it. If it's a short haul and a regular taxi is handy I might take the cab. Competition and choice. That's the beauty of the free market.

The company that provides the service I am describing is called Uber. It is fast expanding to cities across the country. And the public loves it.

Who wouldn't love it?

Taxi cab companies, it turns out. They seem to think they deserve a monopoly on local transportation. And they are on a campaign to stop the Uber intrusion into their market or regulate them out of existence in cities all over the country.

The danger is that they will get help from City Hall. In Dallas that's everyone from members of the city council to the city manager to the police chief. These supposed public servants are acting as though they are on the payroll of Yellow Cab.

An investigative report by The Dallas Morning News reveals how far all this has gone. As part of the local campaign against Uber, the police used undercover passengers to try to detect insurance and licensing violations. They discovered none. Then they issued 36 citations, claiming Uber cars were violating local ordinances. Those issues are now in court.

If the police department devoted as much time and ingenuity to the pursuit of common criminals, think how much safer Dallas would be.

That brings us to the public policy question: Why are we regulating automobile transportation services at all?

Did you know that in most cities it's illegal for you to haul your neighbor to work in return for a fee? It's also illegal for you to arrange carpooling services for a fee. Or to take people to the airport. Or to transport people from south Dallas to a job site in north Dallas. Or to bring them back home after work.

The taxi companies claim these regulations protect the public. In an unregulated market, how would we know what the fare is going to be? How would we know if the drivers are properly trained and reliable? How would we know if they have insurance to pay for damages in case of an accident?

It would be comforting to think that the cab companies really have our interests at heart. However, they are lobbying the city government to make us wait at least 30 minutes before we can use an Uber vehicle and they want to ban the use of smartphones. Sorry, that doesn't sound like our welfare is their top priority.

In response to the legitimate concerns the cab companies raise, there are far less intrusive answers. Uber does almost no advertising. Its phenomenal growth has been due to word of mouth endorsement. People who use the service and like it tell their friends and neighbors. Every time a customer rides in an Uber limo, the company's reputation is on the line. It has a self interest in customer satisfaction.

Things are very different in the regulated market. When is the last time you heard the words "wonderful experience" and "Yellow Cab" used in the same sentence? For Uber, the rider is the customer. But for Yellow Cab, the drivers — who pay the company about $1,000 a month, regardless of their income from fares — are the customers. Uber is trying to satisfy you. Yellow Cab is trying to satisfy your driver.

If there is a legitimate role for government in this market, it's certification, not regulation. Let the city government monitor the car services and make public its findings. Publish in the newspaper statistics on traffic accidents, price gouging, customer satisfaction and other pertinent information.

Then let the rest of us make our own choices.

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