Wednesday, January 25, 2017

Uber Taxi Regulation Exemption: Chickens Already Coming Home to Roost.

Uber drivers are now learning a simple truth long understood by their more experienced counterparts in the non-exempt taxi sector:

The more drivers on the road, the less each driver makes.

In a robust economy with a healthy demand for labour, higher wages in other kinds of work limit the number of cab drivers. When alternate employment opportunities become scarce, people pour into the taxi business. That's one reason the industry has come to be dominated by immigrants over the last thirty years.

Because the taxi biz is usually not covered under minimum wage laws, there is no bottom to the wages available to cab drivers.

A majority of starry-eyed libertarians, especially the newbies, drunk on their free market economic theories, make the mistake of concluding that deregulating micro sectors of an otherwise sclerotic welfare state economy will lead to miracles.

Well, here's a wake-up call for you. It doesn't.

What we are starting to see now in Canada is a repetition of the same circumstances that lead to the taxi medallion system in New York City. (See here, and here.) And the regulation of the hackney business in London in 1654. (see here.)

"Forasmuch as many Inconveniences do daily arise by reason of the late increase and great irregularity of Hackney Coaches and Hackney Coachmen in London, Westminster and the places thereabouts: For remedy thereof, Be it Ordained by his Highness the Lord Protector, with the consent of His Council, that from the four and twentieth day of June, One thousand six hundred fifty and four ensuing, the number of persons keeping Hackney-coaches and Hackney horses for Coaches, within the City of London, Westminster and six miles about the late lines of communication, do not exceed at one time two hundred; nor the Hackney-coaches to be used by them, three hundred; nor their Hackney Horses for Coaches do not exceed the number of six hundred.

As a driver in the non-exempt taxi sector, I knew this from the start which was why, despite the plethora of idiotic taxi regulations harassing my business, I never considered Uber as a viable option.

As I write, I expect Hamilton City Council has already voted on its new bylaw exempting Uber from most taxi regulations, and opening the door to an unlimited number of taxicabs on Hamilton streets.

I expect the experiment will have the same results as it has always had in the past. I know from familiarity and experience that Hamilton's politicians know nothing about taxi history and even less about economics.

Uber drivers are also rediscovering the realities of taxi economics.

The whine fests on uberpeople.net are becoming more frequent (see Uber is Dead,) and the lawsuits are starting to roll. (see here.)

Also worth watching:

It's amusing to see how the Trump phenomenon even divides the taxi community. (see here.)The thing is, I have always advocated an open taxi market since I first started ridesharing in 1977. Seven or eight years ago, while a member of the taxi advisory committee, and seeing how destructive a sudden, overnight deregulation (or worse, Uber exemption) would be upon people who invested their lives in this business, I recommended a phased withdrawal of the closed entry system, over say fifty years (freedom in fifty) in favour of a market oriented entry model.

Not one other person on the committee was willing to give the proposal any consideration, and I am confident that, had my recommendation been put before city council, it would have been soundly rejected.

What disgusts me to no end is the ease with which Uber was able to prompt the politicians to do an abrupt about-face and take an absolute wrecking ball to the system that was so sacred to these governments in the past, regardless of the strife it has caused. It has revealed the true nature of most of these politicians for those who have eyes to see.