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July 07, 2011

They’re Flying in Their Taxis, Taking Tips, and Getting Hosed…

If you had to name the number one concern facing the residents of the District of Columbia, home to our nation’s Capital, what would it be?

A)   Drugs
B)   Crime
C)   Schools.
D)   Way too much taxicab competition.

If you chose “D,” you just might have a future as a DC City Council Member.

Known as the “Professional Taxicab Standards And Medallion Establishment Act of 2011” (because calling it the “Fewer Cabs At Higher Prices Act” didn’t test well with focus groups), the proposed law seeks to put an end to people thinking they can just compete for business in an open market.

Like that’s ever worked.

Rather than the relatively open system dominated by owner-operators and the ability for new entrants to enter the market, the proposed law would require the possession of a “medallion” before taxi services could legally offer their services, and those medallions would be rationed eliminating at least a third of all taxis available today and increasing prices by 25% or more.

What is being overlooked are the many advantages a medallion system offers.  According to a report (pdf) by DC’s Chief Financial Officer, Natwar, M. Gandhi:

“Introduction of a medallion system institutes entry barriers to the taxicab market by restricting the supply of taxicabs. There is broad consensus among economists that such restrictions allow a small group of private citizens—those who are among the first round of recipients of medallions—to earn windfall profits at the expense of consumers and drivers without medallions.”

Okay, sure, maybe taking a cab in the District will cost a little more. But according to Mr. Gandhi, you have to look at the whole picture:

“Evidence from other jurisdictions suggests that limiting entry into a taxicab market leads to a decline in overall service: consumers pay higher fares, wait longer for an available taxicab, face more service refusals, and receive less service than they would otherwise. Service to the outlying areas of the city becomes poorer, and in order to meet the demand, an alternative off-the-books market may develop with poor safety, security, and insurance standards.”

Maybe Mr. Gandhi isn’t the best cheerleader for the new Medallion system. Instead, let’s go straight to the source:

John Ray, the lobbyist who wrote the bill on behalf of a large incumbent taxicab operator who would have one of the first shots at the medallions:

In the District, a “come one, come all” system results in a disproportionate cab-per-resident ratio of one cab for every 93 residents. In New York and Boston, the cab per resident ratios are 1-to-625 and 1-to-338, respectively.”

How much longer must DC residents suffer from this burden of convenience?

But it goes deeper than that. The people Mr. Ray is really concerned about are the drivers themselves:

“Recently, Mayor Vincent C. Gray (D) lifted the $19 maximum-fare cap and imposed a $1 gas surcharge to help drivers increase their earnings. Could it be that there are too many drivers chasing too few fares?”

Too bad nobody told the drivers (language warning for those of you who are at work and/or are Mormons):

And then there’s the corruption inherent in a system in which small special favors are doled out by the government as opposed to great big huge ones:

“But the District’s “open-entry” system is, in part, why this unregulated industry fell victim to an “audacious and long-running [from 2007 to 2009] scheme” to obtain licenses to operate cab companies in the city.”

Much better that the industry be further regulated by the DC Taxicab Commission that has had hardly any corruption at all. In fact, all these issues are being aired out in the open in public meetings where everyone has the right to monitor and report on the proceedings, and by “monitor and report on the proceedings,” we mean, “get arrested for monitoring and reporting on the proceedings:”

DC: Land of the free, and the home of the incarcerated.

No word on whether they were able to flag a cab home after being released.

J.

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July 7, 2011 at 05:01 PM in Current Affairs | Permalink

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Comments

And these bozos think they deserve statehood?
Good grief!

Posted by: Mark | Jul 8, 2011 2:55:44 PM

Is this post's title a reference to something?

Posted by: Mªrty | Jul 11, 2011 11:50:08 PM

Marty: Harry Chapin, http://www.youtube.com/watch?v=IfqjKDRQvWI

I've got something inside me
to drive the princess blind
there's a madman wizard he's hiding in me
illuminating my mind

(That's not the reference, just the only explanation I have for my gf sticking with me).

Posted by: Michael | Jul 12, 2011 12:14:47 AM

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