The price of taxis is held artificially high and really it is a loss for the consumer. We are left paying the higher prices for what should be a relatively free market.
For example, if the market was to become saturated with drivers undercutting the market, it is plausible that some drivers would be forced out of the market as they are unable to make enough to sustain themselves. If this happens to enough 'regular' drivers the service may become irregular and the goal of providing accessible, consistent public transport (or whatever the goal is) suffers.
I guess what I am saying is that a completely free market _might_ actually harm the market in the end. We expect free markets to self-correct, but are we willing to accept sub-par services whilst waiting for that correction?
I have seen this concern in the taxi market in Canberra Australia. Taxis there are tightly regulated, and the numbers are kept low to make sure it is profitable. Their numbers have recently been increased to try an accommodate the increased Monday morning and Friday evening rushes as more people are flying in and out every week. The traffic during the rest of the week has remained fairly constant. This means that profits are lower and so some taxi drivers are getting out of the business. In a free market it's possible that this inflation of service providers could happen unchecked for a time, before it is realised that there is not enough consistent work to support the new drivers. The possibility for extreme fluctuation in service provision is high, and this could have terrible consequences for anyone who happens to need a taxi home on a Wednesday evening after too many drinks at the pub.
It is hard to say for sure if a free market would deal with the irregular nature of taxi business in that city better than a regulated market, but I think it is clear that the purpose of a taxi system could be at odds with the outcomes of a free market. A free market could fluctuate between too many and too few providers, removing the reliability that is essential in an effective taxi service, even though the regulated service might provision a greater than optimal service cost.
Yes. When the service goes to shit, a competitor comes in, steps up their game, and if demand for a superior service is high enough, they succeed.
When does price fixing ever help the consumer? Honestly.
That is unless all of the landlords get together and price-fix, though I suspect that would correct itself rather quickly.
Only if you overvalue the benefits and ignore lots of costs.
Rent-control discourages turnover and maintenance. It also discourages building new capacity. The various tweaks to try to get around these things have other problems.
> the businesses hiring those people and by extension their customers.
How many biz want fewer potential customers and employees?
Whenever you hear a politician say "I remembered {group}", he's telling you that other people were "forgotten". (Actually, they weren't forgotten, they're paying the bills, and then some.)
It's not clear to me how/why rent stabilization (which merely limits how much rents can increase each year) would lead to less "building new capacity" -- an argument could be made that it forces new capacity to be created, because landlords can't make much more money off their existing units.
Rents are supposed to be set at fair market for new construction, but if you finish the unit in a downturn, or if there is oversupply, and you ever rent for less than you'd like, you'll never get out of the hole (without a tenant moving out) under rent stabilization.
There's also the risk of additional regulation -- part of why I won't buy in EPA is that it has rent control now (the only place on the peninsula), which is sort of tolerable as it exists now but which could easily get worse. Unincorporated San Mateo County is effectively never going to have rent control, so even for 5% more (on top of the "not being in the ghetto" premium), it's a better deal.
If they're not making "enough" off of a unit, why would they build more units?
Demand isn't the whole story. Demand that can be satisfied profitably will be satisfied. Demand that can't be satisfied profitably won't be satisfied.
For example, there's a huge demand for $1000 "supercars". Yet, the only supercars made cost far more.
I'd love to hear the argument for rent control, though.
I didn't say it made the market efficient, I said an argument could be made that it was a net positive. That's not the same thing.
Example: efficient markets sometimes produce monopolies, who then abuse their monopoly power. That's a net negative - but it isn't an example of an inefficient market.
Net positive? Sounds like some kind of value theory. Which "net positive" are you talking about? Can't argue something you don't understand..
In this instance it would mean that the sum total of the economic benefits to NYC that come from rent-controlled apartments outweigh the sum total of the negatives.
On your point, it could be argued that Google's overall platform dominance might not be attributed to barriers to entry, but rather barriers to exit. While Google offers some of your data back to you in a portable format it's still quite difficult to leave their services, and even when you do they will still be tracking you for advertising. To form their potential natural monopoly in your mind, you can imagine how difficult and inefficient it would be to have multiple different firms tracking you to the same extent that Google does (search, Google+, Gmail, calendar, Google Docs).
I am not an amateur economist.
I would go so far as to say: governments themselves are "free-market monopolies" in this sense. That is, there is no binding unilateral authority which solves intergovernmental disputes, and each government instead has to negotiate with other governments in an open and unregulated forum where even backstabbing and flagrant contract violations are permitted. If governments are monopolies on power, then the market of power is surely not a well-regulated one.
Pepsi and Coke are not a monopoly - as you explicitly acknowledge, there are at least two suppliers in this market.
Microsoft was never a monopoly, there were always other suppliers (Sun, Be, IBM, Apple, Linux, at different points in time).
Mission is another neighborhood which is pretty much a shit-hole, but IS a cool place. There are lots of great places to eat and drink and there are festivals, parties and parades most every night.
Usually when you hear about someone being shot, it's either in Oakland or the Mission.
It sounds like you're justifying rent control on the basis of aesthetics.
Same idea: You will lose the character without some sort of effort to not.
Combine that better experience with app convenience and for most people the extra money doesn't matter.
I also get really, really tired of the credit card dance that every cab driver does. Before I hop in a cab, "You take credit cards, right?" "Oh, sure! Of course!" Then we arrive at destination "Buddy, you don't have cash? C'mon? My machine doesn't work. There's an ATM inside, you could just run in and get some cash." "Not my problem, champ. You can take the card, or you call call your boss."
Not to be stingy, but complaining at me for paying you the way I said I was going to pay you is not the best way to get a good tip.
I'll definitely checkout the Uber service (If it is still around) next time I'm in DC.
Absolutely. In Bangkok there are more taxis on the streets than all other cars combined. You can find one anywhere, anytime and a ten minute ride costs about $1. No need to own a car, even if you can afford one.
Our minimum wage wouldn't allow for that but there is no reason it needs to cost $60 to take a 15 minute ride from San Bruno into SF. The gas cost + labor cost of that ride should be 1/10th of that. Double that to account for profit, administration and the car and you have a $10-15 ride.
Price it like that and a lot less people would own cars - and there would be a lot more taxis on the streets to account for the increased demand. And a lot of jobs.
The system is broken.
Not saying there aren't any inefficiencies or that there isn't established-player protectionism at work, just pointing out that a lot of the cost estimates floating around in this thread are clearly hugely inaccurate.
The over-supply of taxis has the opposite effect of a more regulated public transport. It does not reduce the total number of cars on the road. It's useful from a consumer standpoint but the low cost means people are less likely to use the state of the art elevated train and subway, both of which run under capacity.
"Price it like that and a lot less people would own cars." Possibly in other cities -- though I doubt it -- but it certainly didn't help in Bangkok. People don't buy cars because they need them, they buy cars because they want them. The number of news cars sold in the country per day is astounding (though the number escapes me) and that's despite the fact that they cost 50% - 350% more than the same cars in the US.
Bangkok needs to regulate the shit out of the taxi industry and make it more expensive to drive in the city if it wants to sort out its remaining traffic issues.
Uber can probably work in US cities that have the traffic capacity, but it's a horrible idea in congested areas.
That method of driving is not unique to taxi drivers - and those issues exist in several other Asian countries, regardless of the number of taxis on the road. I'll leave it at that.
"people are less likely to use the state of the art elevated train and subway, both of which run under capacity."
That's not accurate. Taking the BTS from Thonglor to MBK is faster than driving or taking a taxi at nearly all times. Thats an extreme example but traffic is so bad that its faster in a lot of cases. That's why both the BTS and MRT are always packed, with people of all classes.
You make some good points otherwise, some I disagree with like whether Bangkok is an example of an unregulated market failing or thriving, but I don't want to get too off into the weeds of a political discussion :)
Why is it bad that people are "less likely to use the state of the art elevated train and subway"? Is it because they're "state of the art"? That hardly seems compelling. Is it because the train and subway are faster or cheaper? Sounds like they're not, otherwise more people would take them. Why is train and subway usage important if no one wants to use them?
It sounds like you're advocating forcing people to do something they don't want to do, and I don't understand why you're advocating that.
The trains are faster in many cases (provided you're starting / ending close the line) but they're not cheaper. Making cabs more expensive would change this.
Take a look at what Singapore does http://en.wikipedia.org/wiki/Electronic_Road_Pricing to keep cars off the road. It might seem a bit draconian but it's effective.
If the trains aren't cheaper, why should that be the cars' problem? Why not make the trains a better alternative instead of making cars worse?
Why would you advocate something that "seems draconian" to you?
The shared resource in this case is traffic capacity.
It's proved ineffective to regulate traffic by making cars expensive in this market. That's because cars are not profit centers for people -- they give mostly intangible benefits (increased comfort, status, etc). Taxis on the other hand are cars that are used for profit and therefore will respond efficiently to regulation (if that regulation increases capital or operating costs).
What's your model here? That if there were fewer cars on the roads of Bangkok, it would be able to support more cars? What would there be more of, in total, if you confiscated a bunch of people's cars?
Would you advocate banning most people from a popular public beach on the grounds of overcrowding? Would you justify that as preventing a "tragedy of the commons"?
Congested traffic makes everyone's trip longer and less convenient. Any individual gains from using a car as opposed to not using a car as long as the traffic is not congested. Too many individuals doing what personally benefits them make it worse for everyone. This is the definition of tragedy of the commons. In the sheep example, every shepherd benefits from using the field, but if too many sheep use the field, it's ruined and noone can use it. Same with congested traffic.
Again, I just hopped into here, and haven't much evidence to back that up, but it's the sort of thing that seems likely.
As you continue to add cars, you reach a point where cars start to slow down, but throughput continues to go up. Once you reach a certain point, people begin to drive slower due to congestion. But at low levels, this is offset by the additional number of people using the road, resulting in greater total throughput.
Past that point, you reach another point where adding more cars does not increase throughput, as the added cars are balanced by the slowing of traffic as a whole. Beyond this point, adding more cars reduces the throughput of the road. Take this to the extreme, and you have a giant parking lot with people gradually inching forward, and people/cars per minute excruciatingly low.
No sources, but I'd think this is all fairly obvious.
Road. Fewer cars on the road would mean a more constant speed for the cars on the road.
"Would you advocate banning most people from a popular public beach on the grounds of overcrowding?"
You generally don't have to. Since the benefits of going to the beach are relatively low, people more efficiently self-regulate their usage. That is, if a beach is too crowded to put down a towel, you'll probably leave.
That's not the case with taxis. As long as buying taxies and renting them out is profitable, taxi operators will continue to do so. To make things worse, the profitability of driving a taxi is only indirectly related to the profitability of renting that taxi out. The cost of rental is relatively stable while the money made by the driver varies considerably. The drivers absorb short-term (even medium-term) fluctuations in the market.
Car is not the goal. There are other means to move people way more efficient.
If you'd ever been to Bangkok you'd know why it needs fewer cars. Pollution is terrible, and traffic is appalling - often a journey which should take 20 minutes takes hours, and safety standards are very low - the most popular form of taxi is a pick-up truck with bench seats in the back which is really unsafe in the event of an accident. They desperately need to encourage more public transport and get rid of some of the cars/trucks on the road to prevent rush-hour gridlock and massive pollution.
The easiest way to clear up the roads for public transport is to make driving more expensive and use some of that money for improvements in the public infrastructure. I doubt they'll ever do it, but they could do worse than follow the example of London with a congestion charge for central areas, and use the money to subsidise public transport, which is underused at present (because the train is so expensive, and the buses are so slow due to all the other traffic).
Driving is already fairly expensive in Thailand: cars and gas are both pretty expensive. Taxis in Bangkok are much more expensive than they are where I live (tourist areas are even worse with their taxi mafias). Bangkok already has a public transportation system that is much better than other cities in the area (barring Singapore), they aren't doing that poorly.
The public transport there is good (what there is of it), but the BTS and MRT are both expensive and therefore underused by anyone other than tourists and business people - most people don't use it and it's not as extensive as other cities. At least when I've been there the skytrain is remarkably quiet compared to the streets given how quick and easy it is. It's a shame they won't tax the cars more in town and use the money for improving public transport instead IMHO, and Bangkok is a terrible example of a place which needs less regulation - they need far more regulation on their taxis and traffic in general in order to manage it as at the moment it is bedlam at rush hour, partly because of all the taxis, motorbike taxis and trucks. It is a great example of the free-for-all which results from unregulated capitalism though.
Beijing cut the subway to 2 yuan during/after the olympics (it was 4 yuan before and even in 1999 it was 3 yuan). The result is that the subway is very elgalatarian and very packed; I avoid it for the taxi accordingly (spend about 80 yuan a day on taxis). But Beijing traffic is also worse than Bangkok's, and there is more regulation (no private minibuses, not many tuktuk that are useful). Whatever they do, the answer to our problems probably isn't more taxis but public transit is also a problem (for the middle class).
I like Japan the best, where the transit is affordable, convenient, and mostly comfortable (when not rush hour).
In Zhuhai (near Guangzhou) there are far less taxis on the street than demand would dictate, however plenty of citizens drive around offering people rides at similar rates and everybody uses them, locals and foreigners alike. It is obviously illegal but it is so widespread and common (happens right in front of you and the police on every major street all day) that it is clear the police aren't doing anything about it.
That system is very Chinese. They make laws that would seem to restrict business and then local officials tell the police to ignore them when they deem their area is better off without them. Unfortunately this also extends to things like drugs and even kidnapping in some areas. No system is ever perfect.
The pollution argument is valid and is a case of "tragedy of the commons", but the traffic argument isn't.
Yes, so that I can drive faster.
Or to show that they can afford them. "Oh you take the taxis? Poor you. I actually own my own vehicle, I don't have to share"
The big problem with regulation in general is that it sets a single value, static in time and across preferences, as both floor and ceiling. For some things, that might make sense ("levels of acceptable poison in baby formula"), but for other things it doesn't make sense ("housing").
For Bangkok, I think the right thing would be to encourage public transit over taxis, but to encourage taxis over private cars. Charging a per-day fee to have a vehicle inside the city (similar to London), combined with actual traffic law enforcement, open access to getting a taxi medallion once you pass minimum qualifications, and either market rates or at least fair rates for taxi rides, would probably go a long way.
If taxis substitute for several cars, increasing taxis should decrease congestion. That is the London model, but London taxi drivers are kind of the polar opposite of Bangkok taxi drivers. Other SE Asian taxi drivers are fine, though -- Hong Kong and Singapore -- and it's easy to convert taxi fleets to NGV or Electric compared to private vehicles.
While I'm pro drug legalization, testing for meth in drivers would probably be worthwhile too. I always checked the eyes of any driver I used, since so many of them were tweaked out of their minds and thus even more unsafe than usual. (I actually had one driver assault me, too, which was kind of funny afterward).
Public transport suffers because of prioritising cars in general.
It doesn't particularly matter if cars are privately owned or taxis but as long as the city infrastructure has been designed more for automobile traffic than pedestrians, cyclists, and public transit, then these other forms of transport suffer.
To make public transit relatively more efficient, the streets must be put on a diet and narrowed down. This frees more space for pedestrians and while car travel is still possible it's more cumbersome so it effectively taxes out all but truly necessary car traffic. Try driving through Central London versus taking the tube: you can do that but you don't want to.
And the city doesn't have a shortage of cabs.
And talking with drivers in my uneasy Spanish, I have found many are former doctors and lawyers who turned to taking cabs because it was more lucrative.
Fares are artificially high there but nobody is under any illusions who is in control. The city and the cab companies had an argument about pricing some time back and it lead to a taxi cab strike.... which meant cabs blocking traffic and the city was shut down (streets impassible) until the city backed down....
I was in Quito during a bus driver strike and everyone was talking about it. They even called in the army to tow busses.... It was amusing to see uniformed soldiers pushing busses around.... But there were fewer busses than cabs and so the streets were still passable.
This benefits politicians as well, because the ability to change regulations is useful for raising donations. "You gotta mighty fine business here, it would be a shame if we lowered your tariff...."
Yes, safety regulation costs money. The reason we accept higher prices is to avoid the catastrophic costs that could result if there was no regulation forcing taxis to maintain their vehicles, carry insurance, accept all passengers, etc. Licensing forces a minimum level of insurance on taxi providers to guarantee that injured passengers are properly cared for in the event of an accident involving the taxi provider. The cost of the insurance and maintenance requirements are the primary drivers (pun intended) of taxi costs. Uber avoids these costs (i.e, the disruption of its business model) by maintaining smaller insurance policies and pushing the maintenance costs onto drivers.
And then there's proposed laws like this, where they force a higher cost _just to prevent competition_.