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Comment by freehunter | Hacker News Reader

What it boils down to, though, is it doesn't matter how much investment money you have if you're declared to be operating an illegal business and ordered to shut down. At this point, Uber and other ride-share companies are still in that danger zone. They're operating against the law in many cities (mine included, not that I'm complaining), and could be fined or forced to close at any moment.

Think it won't happen? It happened to Aereo. Sure, they didn't have as much money and weren't in as many locations, but its a similar vibe: if they closed their doors tomorrow, nothing would change. They might be in the process of disrupting the market, but they haven't won yet. They could lose everything overnight.

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> They're operating against the law in many cities (mine included, not that I'm complaining), and could be fined or forced to close at any moment.

This plays into their "Uber vs. The Taxi Cartel" trope perfectly. In reality, Taxi regulations vary by city, state, and country. Uber is now operating in over 90 cities in the US and in 44 other countries. They couldn't possibly be "forced to close at any moment" since their business is legal or at least 'not illegal' in the vast majority of those territories.

The "Taxi Cartel" is really several hundred independent locally granted monopolies that exist to attempt to ensure requirements that Uber is going to ignore. The highly profitable airport routes exist to subsidize the requirement that taxis are handicap-accessible and can't discriminate against customers. Medallions were created to ensure that cars were properly maintained, drivers could earn decent wages, and that there wouldn't be reoccurrences of the crime waves against taxis and customers that led to medallions in the first place.

Obviously the number of medallions has been restricted to an unreasonably small number in most places causing the terrible service that many are used to. Also fairly obviously, the advent of the smartphone with personal profiles has reduced the crime potential facing the typical cabbie as well as the issues hailing cabs in outer boroughs or less populated neighborhoods. All of that said, it's not like cab companies or taxi drivers are widely profitable. The only public Medallion company (NASDAQ: TAXI) only makes $35M in revenue/year and about 1/3 of that in net income. If the claims surrounding Uber are true, they're projecting close to $2 Billion in net revenue in the very near future.

If Uber does indeed take all of the profitable routes, Taxi companies will close their doors. Some might consider that a net win, but consider the Uber app and the demographics of Smartphone owners (http://i.imgur.com/T5JpmQE.png) and then try and estimate how many Ubers are handicap-accessible. This would only be a net win for the wealthy, young, and non-handicapped, which was the entire point of taxi regulation in the first place.

I don't mean to argue that Uber = Bad and Taxis = Good, and there are other options to solve these problems rather than local monopolies and route protection, but the simplistic "Uber vs. Taxis" analysis usually ignores all of the externalities that would accompany a taxi-less world.

It's interesting to me that the main defenders of the status quo with respect to taxi regulation tend to invoke themes of social justice and egalitarianism (and criticize, either overtly or covertly, their opponents' privileged perspective).

This is interesting to me because none of the studies I have come across concerning taxi regulation emphasize these arguments; they mention them only in passing, if at all.

Take this paper from the November 2007 issue of Transport Policy, "Entry Controls in Taxi Regulation: Implications of US and Canadian experience for taxi regulation and deregulation": http://schallerconsult.com/taxi/entrycontrol.pdf

In its discussion of the rationale for taxi regulation (section 3), these reasons are given:

  - economies of scale may disproportionately favor larger companies
  - regulations guarantee availability of off-peak and low-density service
  - many aspects of taxi service cannot be examined prior to consumption
  - insufficient barrier to entry may lead to oversupply

Or take this OECD Policy Roundtable debating taxi regulation from 2007: http://www.oecd.org/regreform/sectors/41472612.pdf

The reasons given there (p.22) are:

  - lack of regulation leads to "excess entry" into the market
  - high taxi supply could take people away from more "economical" transport options
  - arguments about pollution and congestion
  - cyclical demand could lead to wage downturn when demand subsides
  - cyclical demand could harm service quality, since long-term players can't become established.

So out of all of those arguments, maybe one has anything to do with these egalitarian concerns that Uber/Lyft critics invoke. And many of these arguments are very directly obsoleted by Uber/Lyft-like business models (particularly the ones concerning incomplete information prior to the hail).

So why suddenly are taxis the champions of the underprivileged, and their competitors the tools of young rich person oppression? If protecting the underprivileged is "the entire point of taxi regulation in the first place," why are these social arguments missing from pre-2009 (when Uber was formed) literature?

> Why are these social arguments missing from pre-2009 (when Uber was formed) literature?

Potentially because you only cited two studies when discussing a massive industry and are probably purposefully ignoring all of the work done to support the point you claim is ignored?

There are decades of research on the very points you claim are ignored. A small sample:

* Do Economists Reach a Conclusion on Taxi Deregulation (http://www.emmanuelcombe.org/moor.pdf)

> Because taxis are more expensive than other transit services, they must offer something that other transit modes do not. In particular, taxi services are important to certain segments of the population. Seniors, housewives, the disabled, and the poor each account for a much higher share of taxi trips than their share of the population (Rosenbloom 1985; Weiner 1982).

* Factors Affecting the Use of Taxicaps by Lower Income Groups (http://trid.trb.org/view.aspx?id=92135)

> Previous studies and our data suggest that the poor often choose taxis because they are the principal option when an automobile is not available. Taxis appear to be chosen over conventional transit (when it exists) because they offer greater service flexiblity, convenience, and duration of service, as well as better meeting the security demands of the poor. Increased availability of taxi service by reduced market entry restrictions and reduced cost of taxi service by permitting group riding and providing subsidies would increase the mobility of the poor.

* Subsidized Taxi Programs for Elderly and Handicapped Persons in the SFBay Area (http://trid.trb.org/view.aspx?id=70030)

> The objectives of the report are: (1) to describe six programs which deliver transportation service to elderly and handicapped persons utilizing the subsidized taxi mode; (2) to identify the essential similarities and differences among these programs; (3) to illustrate, in qualitative terms, the nature of the costs, efficiencies and impacts on taxi operators, subsidizers, and users of the six approaches; and (4) to interpret this information and identify those findings which appear to be transferable to planners in other localities. The subsidized taxi programs are successfully delivering transportation service to elderly and handicapped residents in all locations as evidenced by rising client enrollment and ridership volumes. Overall, response to the programs has been and continues to be extremely favorable.

* The determination of acccessible taxi requirements (https://dspace.lboro.ac.uk/dspace-jspui/handle/2134/2284)

> This report describes the results of a programme of ergonomic research undertaken to provide a scientific basis for the generation of regulations concerned with the introduction of accessible taxis in the UK.

* Modeling urban taxi services with multiple user classes and vehicle modes (http://front.cc.nctu.edu.tw/Richfiles/22015-Wong-Wong-Yang-W...)

> One of the main issues is the provision of several modes of taxi services in many large cities. For instance, there has recently been a concern about the provision of easily accessible taxis for the handicapped, whose travel characteristics are very different from those of other customers.

* Compromise & constraint: Examining the nature of transport disability in the context of local travel (http://invent.newmobility.org/library/wt8-2.pdf#page=42)

> While major advances have been made over the last twenty years in the planning and provision of transport that is accessible to all, the links have not yet been effectively made between applied work on transport planning and the major developments in theoretical understandings of disability which have been taking place during a similar period. Existing studies have attempted to measure transport disability, but have generally failed to link it to wider theoretical or structural concerns, or to explore disabled people’s responses to transport disability.

* Taxi - Why Hailing a New Idea about Public Accommodation Laws May Be Easier Than Hailing a Taxi (http://heinonline.org/HOL/LandingPage?handle=hein.journals/v...)

> Municipal policies have also been developed to combat the problem, some demanding automatic confiscation of the cab if a complaint is alleged, others requiring cab drivers to take at least one fare a day to underserved neighborhoods or face suspension.

> probably purposefully ignoring

Thank you for the accusation of intellectual dishonesty, but you are wrong about this. My process was: Google for articles about taxi regulation, and see what percentage of them make the argument that regulation protects the underprivileged. In my sample of 3 or 4, the answer was 0%, which seemed a clear argument against the sweeping claim that protecting the poor is "the entire point of taxi regulation in the first place" (note: not taxis, taxi regulation).

Furthermore, your links (or the few that I had time to investigate) do not support the central thesis that taxi regulation specifically protects the poor and underprivileged. In fact, many of them are specifically contrary to your shallow analysis.

> Seniors, housewives, the disabled, and the poor each account for a much higher share of taxi trips than their share of the population (Rosenbloom 1985; Weiner 1982).

This says nothing about taxi regulation benefiting the poor. And in fact much of this paper is criticizing regulation; it even cites evidence arguing that regulation hurts the poor (emphasis mine):

> Others (such as Eckert 1970, Beesley and Glaister 1983, and Frankena and Pautler 1986 advocate removing entry restrictions and eliminating monopoly rents. Beesley and Glaister (1983, 611) estimated that entry and price restrictions lead to nearly $10 million per year in welfare losses in the city of London alone. Embedded in those welfare measures are the poor without cars, the elderly, the disabled, and others who now and then need affordable door-to-door transportation services and would benefit from a more competitive market. They are on the wrong side of the political calculus, with their dispersed costs overlooked in a regulatory process dominated by the concentrated benefiaries (Taylor 1989).

> Factors Affecting the Use of Taxicaps by Lower Income Groups

The abstract of this paper specifically argues that the poor would benefit from reduced market entry restrictions!

"Increased availability of taxi service by reduced market entry restrictions and reduced cost of taxi service by permitting group riding and providing subsidies would increase the mobility of the poor."

I have to run and don't have time to see if any of your other evidence is any better. But maybe you can narrow it down to a more compelling list.

To prove your point, you can't just show that taxis are good for the poor, you have to show that taxi regulation is good.

I apologize, I didn't mean to imply dishonesty, but my initial Google search showed very different results than yours and the tone of your last paragraph didn't exactly confer respect.

I actually do largely agree that most taxi regulations only serve to increase costs to consumers without much benefit but that's not really the end of the story. You really need to define 'taxi regulation' in order to have a productive conversation.

Handicap-accessible vans are much more expensive than the typical Prius. The handicapped market is small enough that no Homo Economicus would buy a van to serve the handicapped population without a subsidy or mandate. It's a big enough problem that just about every jurisdiction on earth has defined the issue and worked on their own solutions (UK for example: http://webarchive.nationalarchives.gov.uk/20100104171434/htt... or Houston: http://www.houstontx.gov/ara/regaffairs/Houston_Taxi_Study_R...).

No matter what some people would have you believe, regulations aren't just enacted to entrench power. They're almost always in response to some continuing problem. There's probably a way forward that largely deregulates the existing taxi industry, but acknowledging the reasons for the existing regulations will greatly limit the 'unforeseen' side effects.

I probably should also apologize for getting as snippy with you as you picked up on.

I'm a bit sensitive to these sorts of arguments, and not because I'm deaf to arguments about social justice -- actually the opposite. Most of us on this website were born into incredible privilege that we did nothing to earn. We grew up able to focus on our studies without being distracted by instability in our homes or violence in our communities. We didn't struggle to feed ourselves. Some kids that grow up in poverty acquire mental habits and social patterns that they will never be able to shake completely that identify them as poor and limit their mobility no matter how hard they try (or anyone else tries to help).

This is heavy stuff that all of us who are privileged have to live with. The world is deeply unfair and we're the beneficiaries of it. Nothing we can do can undo all the unfairness. All the money in the world can't buy a magic wand that will turn Africa into Europe. The best we can do is try to be part of the solution and not part of the problem, as much as we reasonably can.

It's because this injustice is so real that I get so cranky when the social justice card is, in my view, played without sufficient foundation. A human's most natural state is to value themselves and the people close to them more highly than everyone else. When you make a social justice argument, the only people who will be impacted by it are the people who have accepted the idea that they have a moral obligation to care more about justice than their own personal well-being. So you are, in essence, cashing in on the blank check they have written to the world promising to value the welfare of other people more highly than their own wants and needs.

This might sound a bit melodramatic for a discussion about a ride-sharing service. But people who like Uber and Lyft really like it. If you confront them and say "your joy dance is deaf to the poor and sick that you're trampling under the soles of your shoes," that is a very serious charge.

So if I see someone say that "the entire point of taxi regulation" is to protect the poor, handicapped, etc. and then I find that the first several articles I find concerning taxi regulation have nothing to do with this (and in fact, some authors argue the opposite, that reduced regulation would benefit the poor), I get a little cranky. Because it, in my view, overstates the connection between this issue and the very real injustices of the world, and makes an unwarranted claim on the moral obligation of people who have decided to value justice above themselves.

> No matter what some people would have you believe, regulations aren't just enacted to entrench power.

I would never argue that they are. Few things in life are just one thing.

And I wouldn't argue that 100% of taxi regulations are automatically bad. Some are probably worth keeping. The handicapped-accessible issue is likely one of them. (I don't know much about the specifics of that regulation, but it certainly doesn't seem to apply to 100% of taxis since I see plenty of Crown Victoria or Prius taxis that are just like what you'd get from UberX.)

But some regulations are clearly obsoleted by the innovations of Uber/Lyft. And I am really opposed to a reactionary stance that says we have to protect the existing taxi industry against Uber/Lyft or the poor and sick will suffer (the implicit assumption being that taxis serve the poor and sick in a way that Uber/Lyft never can).

Uber could write itself a code of conduct that states that they maintain X accessible cars per Y inhabitants in any covered area. And that they will cover the entire region with certain price controls (which is a form of network neutrality), not just the meaty routes. And so on.

Those things likely cost extra, and that will shuffle money around a bit in a non-linear way - Uber will have to find a way to sort that out, one way or the other (unless they're shut down). It might be better for them if they find a solution on their own terms, before the regulators step in.

This is such a beautiful, earnest response I read it aloud to my wife. Thank you for eloquently describing your experience of a kind of helplessness in the crevasse between the lucky few and the needy many. I am touched by your writing.

Thanks

> but acknowledging the reasons for the existing regulations will greatly limit the 'unforeseen' side effects

There was a nice quote I found the other day, known as Chesterton's fence[0]:

"In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, “I don’t see the use of this; let us clear it away.” To which the more intelligent type of reformer will do well to answer: “If you don’t see the use of it, I certainly won’t let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."

http://www.chesterton.org/taking-a-fence-down/

I note that at least in theory, "guaranteeing availability of off-peak and low-density service" is indeed at least partly about providing transit to the "underprivileged" -- that is, to people who live in unpopular/poor parts of town or the elderly who want taxi transit during low-demand parts of the day.

That said, I've never seen a lot of signs that taxi regulation was effective in providing service in low density areas and off-peak times.

Indeed, it seems pretty clear to me that the main purpose of taxi regulation is either:

a. Sincere concerns about "oversupply" b. A revenue generation device with a fig leaf about a nonsensical "oversupply" problem. c. A corrupt institution to guarantee the profits of politically connected people with a fig leaf about a nonsensical "oversupply" problem. d. Or most likely, some mixture of the above.

Note that c. is probably not the principal answer here.

In any case, I think that there's a terribly high bar of evidence required to imagine that taxi regulations save us from the scourge of oversupply, and I've never seen the slightest whiff of such evidence. Why exactly is the taxi industry uniquely prone to oversupply?

> Medallions were created to ensure that cars were properly maintained, drivers could earn decent wages, and that there wouldn't be reoccurrences of the crime waves against taxis and customers that led to medallions in the first place.

Ha ha. In Sydney, at least, this is a joke.

I never met more scammier taxi drivers than in Sydney. Once you stated you destination they would always ask which way you wanted to go in order to check if you knew the way. If I didn't they would almost always take a longer route than necessary. From the airport on a quiet day I would say don't take the tunnel I don't want to pay toll. They would sometimes take it anyway despite my instructions and we would then have an argument because I refused to pay. You can be sure many people don't. Worst taxis ever.

Never been to Prague then?

While it got a lot better I remember my first ride in 2006 from the airport into town.

The cabbie was texting away while rushing down the autobahn with 160 (km/h). Scary.

At least he only overcharged me by about 50%, which wasn't too bad for Prague at that time.

Yeah they are infamous. Budapest isn't any better.

Funny story involving Prague mayor...

http://news.bbc.co.uk/2/hi/europe/4175143.stm

Amsterdam is very bad as well.

Echo that. I think a "regulated" taxi driver actually killed a tourist a few years ago.

It is a joke everywhere in the world.

At least everywhere the taxi market is large enough to make it worth it for taxi companies to influence government to make sure the taxi regulations favor them by increasing the barrier to entry for would-be competitors.

I think that how "big" the taxi business is is mostly a red herring, and that viewing it as a cynical ploy of taxi companies is an un-nuanced reading of the situation.

Rather, I think that the deal is that taxi regulators work with taxi companies and taxi drivers. Day in and day out, for, at this point, generations. Taxi companies and taxi drivers advocate for their interests and beliefs, as of course they do and should, both to the people in their local Taxi and Limousine Commission or local equivalent, and also to city councilors and such on the fairly rare occasions when those people take up taxi regulation.

The size of the market is to a large degree irrelevant. The taxi companies are going to advocate their interests -- mostly informally and without thinking of themselves as lobbying -- whether they're in a $5 million market or a $50 million market. It doesn't really matter how big objectively the taxi market is -- however big it is, it's their livelihood.

Taxi regulatory practices will be subjected to democratic scrutiny only rarely. Honestly, prior to Uber bringing all this into the spotlight, how much thought did you give to taxi regulations? Most people I've spoken do didn't even know what a medallion system entailed. It's a minor and bureaucratic subject that the ordinary people are typically uninterested in. Similarly, government officials who want to make a big showy example of rooting out corruption probably do not gravitate to TLC jobs -- it's just not that big a deal, and not that high profile.

In that environment, you'll often see a slow process of regulatory capture. And indeed, it's hard to argue that the taxi industry was not marked by regulatory capture.

But it's a mistake to imagine, because of that, a shadowy cabal of well-heeled businessmen with a gigantic presence behind them. Uber is the big business, not the taxi companies. The taxi companies have had a cushy deal, but that's through a slow accretion of generations of largely informal "lobbying," not a backroom power-brokering deal.

> The size of the market is to a large degree irrelevant. The taxi companies are going to advocate their interests -- mostly informally and without thinking of themselves as lobbying -- whether they're in a $5 million market or a $50 million market.

All I meant is that there is some fixed cost to lobbying local government for favorable regulations regardless of community size, and it's probably not worth it for local governments which are too small to have a sizable taxi market.

> Honestly, prior to Uber bringing all this into the spotlight, how much thought did you give to taxi regulations?

A fair amount, but that's because I read a lot of libertarian stuff, and taxi regulations have been a major topic of libertarian economics as a textbook example of regulatory capture (perhaps second only to tariffs) for much longer than Uber has existed. The Machinery of Freedom, a popular libertarian book proposing a legal system without government, discusses taxi regulations at length, and it was first published in the 1970s. Libertarianism aside, I think taxis have always had a reputation in pop culture for being bad experiences, but I agree that the economic and political debates we see now involving ridesharing were never common.

Australian taxi services are close to being a monopoly.

In my opinion, all it would take for Uber to be shut down is a sufficiently big enough fine for violating the law in one or a couple cities. If they got hit with a $5000 per passenger fine in a major metropolitan area with thousands of passengers, how long with the major investors keep pumping in money? There's little hope of a return on that kind of loss.

In my city I thought Uber would be massively successful. I was so excited when they launched. But there are hardly any drivers around, because the police calls up Uber rides and then tickets the driver for operating an illegal cab. No one wants to drive with that persecution going on.

That would shut them down in the cities that instituted the fine. But they'd probably keep going elsewhere and use their popular support to try to undo the change.

That's probably why they're employing such shady tactics. They need the fastest growth they can achieve, in order to become huge enough and making it difficult for the regulator to shut them down by means of law.

> the regulator

Which regulator?

That's probably why they're employing such shady tactics. They need the fastest growth they can achieve, because those new 911 turbos aren't going to buy themselves.

There ya go, fixed it.

nothing would change

Well, in my market (San Diego), anyways, I am certain the number of drunk drivers would go up, and the bar industry would see a hit in their clientele. I rarely even drink myself, but I don't think twice about calling a Lyft to go out or come back after drinking.

>number of drunk drivers would go up

>bar industry would see a hit in their clientele

Back to pre-Uber levels, presumably.

It'll mean less bars. More bars have opened than closed since Uber has been around.

I haven't heard of many bear attacks since Uber started offering their service either. Must be connected.

I guess I should say that the growth of bars seem to be exceeding the growth of parking lots. Does that mean more people are carpooling or taking cabs? Maybe. But it could also mean Uber has an effect.

Frankly, I'm not sure how the country survived before Uber.

More bars have been opened during the economic recovery after the GFC?

Aereo is fighting a much larger battle. It's the difference between fighting a house cat and a sabretooth tiger. The problem with Aereo is not that it is so good for consumers that some people aren't getting "their cut"...it all boils down to advertising. With Aereo, it's no longer truly possible to tell someone how many homes they are reaching with advertising dollars. How are network executives supposed to quantify how much they can charge to advertisers, now that they have even less of an idea of the effect of those advertisements? Also, since Aereo was being considered as on-par with the rest of the CATV providers, why weren't they required to pay retransmission fees? Although I really did believe in Aereo's promise of a better future, and I absolutely think that the future of television is streaming linear broadcasting, I always knew that it was going to be killed off by legislation because the cable industry is SO corrupt that there is literally no room for disruption.

On the other hand, Uber is not illegal. It never really was. Taxi cartels are attempting to twist the law to make it sound illegal. But really, Uber is just a dispatching service for limo companies that already exist. If you're talking about UberX, that may be a different story. UberX is not available in all 90 cities that regular Uber operates in, but there are enough cities with just regular Uber service that it won't be a problem if they have to shutter UberX for some reason down the line.

There are bastions of sanity in the world. My city government and Uber worked together to put Uber/Lyft under legal regulation while at the same time doing a small amount of deregulation of taxis to help competition. There was a _healthy_ amount of dissent which made reasonable points and the measure eventually passed.

It may be cold half the year in Minneapolis, but I think it makes people a little more reasonable.

http://blogs.citypages.com/blotter/2014/07/mpls_city_council...

I disagree, I think business size matters a lot. Uber may not be there yet, but the nature of legal violations changes for big companies. It's like they say: if you owe the bank a million dollars, you have a problem. If you owe the bank a billion dollars, the bank has a problem. Similarly, a sufficiently large business breaking the law is more a problem for the government than the business. Just look at how much trouble e.g. Bank of America got in for all their illegal shenanigans surrounding the mortgage crisis.

Uber also has the advantage that they're generally not dealing with national governments, but local ones, who are much more easily swayed by big businesses. One locality might declare them illegal, but they can just drop that market and move on. Or more likely, as happened here in Virginia a few weeks ago, they'll come to some sort of arrangement with the local government and be back in business in a few days.

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