My car has a hot pink mustache—and it just might disrupt the taxi business

Smartphone apps + "ride-sharing" = travel revolution? Two startups say yes.

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[jdale]

If you have to work a certain number of hours ("With Lyft, I had to agree to work certain hours.") and you go wherever the passenger wants ("With Lyft, I don’t know where I’m driving until a passenger steps into the car.") then I don't see how this can be considered anything but a taxi service. Ridesharing implies you would be going anyway, and the passenger is sharing the trip. If the trip is all about the passenger and you are going only to get a "donation", that's a taxi in my book.

There may be a debate to be had about whether regulations for taxi services are all reasonable, but one of the goals is to make sure that people get safely to their destination and charged the correct amount. The insurance requirement is also there to protect the passenger. This has a fun, easy-going feel, but I'm not sure that should really trump safety and fraud prevention. Not to mention preventing various forms of discrimination (whether not picking up certain people, or not providing services to certain areas e.g. black neighborhoods).

The counterargument is that regulation also serves to maintain rates at a certain level, and that may not be good for consumers. But I don't think this is the best solution, especially given that part of why they are undercutting the competition is by cutting corners on licensing, vehicle maintenance, and employee pay and benefits (since basically they are getting a large number of part-timers to do the work).

Last point, undercut taxi services this way, who is going to provide taxi services in the middle of the night? Is Lyft going to get volunteers for those shifts too?

 

[jdale]

There may be a debate to be had about whether regulations for taxi services are all reasonable, but one of the goals is to make sure that people get safely to their destination and charged the correct amount. The insurance requirement is also there to protect the passenger. This has a fun, easy-going feel, but I'm not sure that should really trump safety and fraud prevention.

Government simply has no compelling justification to use force (the threat of fines and/or imprisonment) to prevent an adult from contracting with another adult to do something which would otherwise be legal were money not involved. There are always well-intentioned excuses for such government intrusion on basic rights, such as fraud prevention--but fraud is already illegal, such laws already serve as a reasonable enough deterrent to prevent most of it, and the voluntary rating and reputation systems which "ride-sharing" communities use are excellent and less-intrusive ways to be proactive with the same issues professional licensing has traditionally tackled.

There can even be professional organizations which offer voluntary licensing, inspections, etc., to which companies or individuals could choose to submit for the purpose of gaining a recognized accreditation. Government need not mandate it; the market would provide for such a thing because some customers would find it an added value.

So by that logic, government should also get out of regulation of, say, medical care (why can't I hire a cheaper doctor who doesn't have that piece of paper?) and wages. Maybe you support this stance? I don't.

Not to mention preventing various forms of discrimination (whether not picking up certain people, or not providing services to certain areas e.g. black neighborhoods).

The idea that no one would ever serve minority communities if not for government mandates requiring it is a strangely common fixation, and a very mistaken one. Many of the reasons why this is the case are tackled in this nice little article:

http://www.econlib.org/library/Enc/Discrimination.html

and there's some great discussion about it here:

http://econlog.econlib.org/archives/201 ... an_11.html

Even in then worst of times, when minority communities were pervasively discriminated against and systematically underserved, free markets allowed them to develop ways to serve themselves--e.g., Motown records, and the many Jewish institutions which developed and were at the cutting edge of economics, politics, and technology for centuries because of discrimination against them. When government decides to get involved, however, it's more often to do harm rather than good--for example "separate but equal" Jim Crow laws which worsened and codified what had been informal discrimination into formal law.

Those links talk about the principles. But in practice there are many real examples where taxis would not serve certain areas. I don't think a taxi driver is likely to think "I'm not picking that guy up because he's black", which is where that logic comes in. I think they are more likely to think something like "that black guy looks like a thug and I don't feel safe with him in my car." When you think about things that way, the fact that you are missing out on a little income can very well feel acceptable. Or "black guys never tip" so you would be losing income anyway. In both cases you consider the math and decide to leave money on the table. But if you are applying these blanket judgments on a racial basis, then blacks can't hire taxis, or have to wait much longer for one because the first several don't show up.

The counterargument is that regulation also serves to maintain rates at a certain level, and that may not be good for consumers. But I don't think this is the best solution, especially given that part of why they are undercutting the competition is by cutting corners on licensing, vehicle maintenance, and employee pay and benefits (since basically they are getting a large number of part-timers to do the work).

It's not a legitimate role of government to create artificial scarcities and barriers to entry, even if the goal is artificially increasing wages and benefits--because government can only do so by violating one party's basic rights in order to enrich another party. That's bad enough, but then government licensing mandates for things as basic as sharing transportation or the like always lag behind the times when disruptive technologies develop and prop up old, inefficient industries at a great cost to their forced-to-keep-using-them customers.

I think arguing that government should not limit the number of taxi licenses is not an unreasonable argument. What I'm saying is that new competition should not compete by removing safeguards.

In my opinion, this is not ridesharing. Not even close. So it's not appropriate to say this is about licensing sharing transportation. This is a taxi service. There are ideas here like internet dispatch, which are good ideas, but they could be used by a regular taxi service. Volunteer workforce in private cars is not a good solution.

 

[jdale]

I don't know how it is everywhere, but in Australia the license to run a taxi costs a lot of money, and you need to actually RUN a taxi, you can't decide not to have your car on the road. There needs to be enough vehicles out there to support the population, and you can't pick and choose the cushy jobs and ignore the low profit ones.

That's silly. Sure there should be enough taxis, but the decision shouldn't be up to a bunch of bureaucrats. Just like there shouldn't be a Food Mart Board deciding how many food marts there should be per square mile.

The bureaucrats never set a minimum number of taxis, they can't. Sometimes they set a maximum number, just like zoning might also limit the number of food marts but not require additional food marts to be built.

Nope, this is a fallacy. These half-assed services only can exist by relying on the regulated services to cover the rest of the market.

If there's a market, there would be a service. Now, some routes and times might get cheaper and others might get more expensive to account for the true cost of providing the service, and some routes and times may get heavier service and others lighter service to account for the true demand. That's exactly what should happen.

What you propose would lead to the circumstance where there is a taxi available at 3 in the morning, but they can change outrageous fares because they have a virtual monopoly. I don't want to pay $500 to get home because the guy behind the wheel knows I have no choice. Or have to call a dozen different services to find the only one that actually is running at this hour in this area.

Let me ask people arguing for regulated taxis (not that I'm opposed to some regulation of taxis; just the kind here) a question. In my earlier post I related an anecdote about a carpooling service to camp. Should that have been illegal, so that for safety's sake, I wouldn't have been able to socialize and make friends, learn to swim, do sports (which as a skinny kid I really needed), do arts and crafts, etc.? If so, how is that your, and not my parents', call to make? Should the service in the article be illegal and if so, why should people knowingly opting out of regulated taxis not be allowed to do so? Who are you to make these decisions on their behalf? On the other hand, if the services in the article should be legal, why should it be legal to get around regulations via loopholes/legal subtleties and not directly?

There's a real difference between a taxi service, in which you can get picked up anywhere and dropped off anywhere, and a shuttle service to a particular destination.

I think people here trust regulations far too much. Many taxi regulations are not to help people. They're to benefit existing taxi companies. They fix prices to legally entrench collusion. They fix number of medallions to prevent competition. They legislate business model to prevent companies like the one in the article from coming on the scene and providing a better service, thus taking away business. They're anticompetitive; people supporting them are rationalizing them after the fact.

Some of the regulations benefit existing taxi companies, by limiting the number of taxis and by raising the cost of entry into the market. I agree that far. But they also serve to protect consumers and ensure coverage of all areas for everyone. I think you want to throw out the baby with the bathwater.

 

[jdale]

What you propose would lead to the circumstance where there is a taxi available at 3 in the morning, but they can change outrageous fares because they have a virtual monopoly. I don't want to pay $500 to get home because the guy behind the wheel knows I have no choice. Or have to call a dozen different services to find the only one that actually is running at this hour in this area.

Outrageous prices would not exist because other players would compete and drive down prices. Note that currently you do pay those "outrageous prices", except spread over daytime rides that subsidize the nighttime rides. If supply were able to fluctuate, the majority of people would pay lower prices and the average cost would go down. Fixing the price subsidizes the few at the cost of the many, and increases average price as well.

I would argue that spreading the costs out (requiring equal prices day and night, weekday and holiday) exposes those costs to full competition, and keeps average prices down.

Remove the subsidy and there is less competition for the less desirable times, and less competition means average prices go up.

There's a real difference between a taxi service, in which you can get picked up anywhere and dropped off anywhere, and a shuttle service to a particular destination.

Then we're just arguing semantics.

We're arguing policy, and to be implementable, policies have to be specific. Anyway, the definition of "taxi" is pretty central to the article at hand. I argue that the service offered here is a taxi service (which is debated), but that actual ridesharing (taking on passengers who are going more or less where you are going anyway) and shuttle services are not.

Some of the regulations benefit existing taxi companies, by limiting the number of taxis and by raising the cost of entry into the market. I agree that far. But they also serve to protect consumers and ensure coverage of all areas for everyone. I think you want to throw out the baby with the bathwater.

But coverage shouldn't necessarily be ensured. There isn't some fundamental right to taxis. Nor are safety requirements necessary beyond the competence of your average driver. For one thing, you are still at the mercy of other drivers, who could crash into the cab. For another, cab drivers are not known for being safe so I doubt those regulations are doing much of anything except restricting the supply of cabs. And you shouldn't force the quantity of safety you desire on everyone else - there may be more important factors, such as in the anecdote I provided earlier.

It's not about a "right to taxi service." It's about maintaining quality of life, it's about providing people with an alternative to owning cars (which is good for everyone), it's about making your city accessible to visitors (who spend money in your city). I think these are reasonable goals for a municipal government to use as a basis for setting policies.

 

[jdale]

So still no explanation why anyone would want to drive for these companies?

They get paid - at least potentially, since nominally it is a "donation". And there is no long-term commitment. Essentially it's a job you can take on the side or while you are waiting for something better to show up.

Of course, once you reduce it to that, it follows that it is a taxi service...