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May 05, 2012 2:40 PM Libertarians, Answer My Important Taxi Question!

By Jesse Singal

Okay, yeah, so I get fixated on libertarianism sometimes. Mea culpa. But what’s the libertarian answer to the late-night cab crisis at DC’s Union Station (you should really read the story)? I guess in the wee-hour absence of regulation, “the market” (in a libertarian wonderland where anyone can start a cab company without the approval or licensing of the District) would eventually produce a company or two willing to take people to far-flung, unprofitable neighborhoods, maybe? But obviously these people will be charged more. And obviously people from really poor, distant neighborhoods are probably screwed and might not be able to get home at all.

Real-life libertarians who might be reading, I’m not trying to be a snarky caricature artist. What am I missing here?

Jesse Singal is a former opinion writer for The Boston Globe and former web editor of the Washington Monthly. He is currently a master's student at Princeton's Woodrow Wilson School of Public and International Policy. Follow him on Twitter at @jessesingal.

Comments

  • greennotGreen on May 05, 2012 3:05 PM:

    I will use your post as a point from which to segue into another way the Market fails us: the inability of the Market to remove blight. The thorn that is the case that brought this to mind is the drive on I-24 east into Chattanooga, TN in the foothills of the Smokies, onto the bridge across Nickajack Lake. It's just gorgeous...unless you look back. In your rear view mirror you see a huge, and I mean huge, sign in red lights that says "Fireworks." It's like putting a McDonald's next to the Lincoln Memorial. But as long as the owners make enough money to keep the (many) lights on, and as long as there is neither the political will nor the state funds to buy the owners out, this atrocious sore on the landscape will persist. How does the Market deal with this?

  • Peter C on May 05, 2012 3:22 PM:

    Libertarians don't have solutions to actual problems; they have utopian theories where everyone gets what they deserve. When bad things happen to actual people, they deserved it.

    If an unwary passenger dies in a crash in a faultily equipped cab, they deserved to die because of their unwariness. When enough passengers die in that company's cabs, that company will get a bad enough reputation that too few people choose them and they go out of business and they will have deserved to go out of business.

    For Libertarians, all of this is preferrable to the intolerable loss of liberty of not being able to save a buck on a cab ride.

  • "snarky caricature artist" on May 05, 2012 3:26 PM:

    What you are missing is that there are no poor people. Everyone is rich and everyone has a magic unicorn. What part of 'wonderland' do you not get?

  • Herb on May 05, 2012 3:30 PM:

    Just trying to game out what a staunch libertarian might say...

    They might say that the problem is created by uneven enforcement. Regulating the cabs so heavily keeps the supply low, but at night --when no one's around-- the demand is too great for the artificially low regulated supply and rules are broken. Eliminate the rules, open up the supply, and enterprising people with minivans will be more than willing to fulfill the demand.

    I'm not a Libertarian, though, so I'm not sure if that's the angle they would go with...but that's my guess.

  • LibertarianPointOfView on May 05, 2012 3:59 PM:

    I read Samuelson's article and I don't see what problem you are talking about! That is the free market at work. This seems to be a definite example of how capitalism should work! Those with the capital (taxis) get to set the rules.

    Everyone knows that you will deservingly get taken care of if you just offer more money. If you want to go to Timbuktu Maryland, make an offer that the taxi drivers will jump to take. If it is big enough, the drivers will at least be deferential, if not polite. Yes, this is snark.

  • Paul Dirks on May 05, 2012 4:00 PM:

    Real-life libertarians who might be reading,[...] What am I missing here?

    The fact that the Government was allowed to build an airport in the first place!!!

  • martin on May 05, 2012 4:06 PM:

    I believe the correct Libertarian (that's capital L) is the market, left to its own devices, will eventually educate those without the means to get a cab after hours to plan their trips to arrive when cabs are cheap and available. It the meantime, tough. Deregulate the cabs and market forces will distribute them as needed.

    The needs of the market determine the lives of the people.

  • BM on May 05, 2012 4:20 PM:

    I'm not a libertarian, but here's my guess:

    "We've got two overlapping non-market systems here. One, there's meter-rate regulation. Two, regulation of passenger selection and passenger-sharing. In this late-night pickup market, the drivers are willing to flout the obscure passenger-choice regulation, but they don't dare flout the well-known, paper-trail-generating (and thus passenger-enforceable) fare rules---and that's the imbalanced situation that causes the problem described. If you removed both sets of rules, short-haul passengers would negotiate on price in order to find a ride. There are clearly no downsides to this, thanks to the gold standard, Rearden metal, and/or unicorns."

  • pbasch on May 05, 2012 4:29 PM:

    I think Peter C has it right. I think Libertarians would say it doesn't matter who can and who can't get a ride. There's no "right" to a ride. As long as we have removed the so-called "tyranny" of gov't from the system, whatever happens is what should happen. Widespread misery? Tough, that's the world.

  • exlibra on May 05, 2012 4:51 PM:

    My answer would be essentially the same as martin's (@406 PM):if you weren't smart enough to make/have enough money to live in a more profitable, nearby neighbourhood, then you'll just have to plan your trips better (and anyway...where do you get the money for the train trips?). Take a train that arrives at Union Station before midnight, when the buses and the Metro are still operating. Taxi is a luxury, not a right.

  • Rick B on May 05, 2012 5:43 PM:

    @Paul Dirks

    Of course if the government had not funded the basic research in aviation (for military purposes), trained the pilots and copilots (again military purposes), and built the airports there would be no aviation industry. The aviation industry then would not be the infrastructure for so much else in the economy.

    That's a little part of what the libertarians overlook.

    @Martin

    Yes, the market distributes the available resources, but that means that the maximum number of possible flights is reduced by the number of hours at night that cabs aren't available. Assuming that there even was an aviation industry which (see above) is highly unlikely.

    Unicorns, of course, offer more options.

  • T-Rex on May 05, 2012 6:07 PM:

    So, fellow snarkers, we've now agreed that in a world of true freedom, the intelligent would plan their trips so as to arrive early in the evening and the stupid would deserve to get the shaft. Now, a snarky question to go with the snarky solutions: how does libertarianism deal with delayed flights? How will the free market prevent thunderstorms, etc.? That's one you can't even get out of by having a private jet. Unless, of course, libertarianism extends to abolishing onerous government regulations against flying in dangerous weather, in which case the natural attrition of deaths from plane crashes would decrease the demand. Or something.

  • internet tough guy on May 05, 2012 6:11 PM:

    Are we going to ignore that any market involving people is going to be inherently irrational again?

  • axt113 on May 05, 2012 6:38 PM:

    Also the problem with deregulating the cabs, is what's to prevent collusion?

    The cabbies could then get together and agree to set prices at a certain level far above the natural level of supply and demand.

    This is the problem with the libertarian ideal, it'll eventually result in cartels and monopolies everywhere

  • Mitt's Magic Underwear on May 05, 2012 6:46 PM:

    >This is the problem with the libertarian ideal, it'll eventually result in cartels and monopolies everywhere

    That's a feature, not a bug. Libertarianism is all about the rich wanting to get richer. Period. They's never read our Constitution's Preamble.

  • Free Market Socialist on May 05, 2012 8:10 PM:

    I too am not a libertarian, but your choice of market failure is a telling one. You don't have to be a libertarian to recognize the fundamental problem here is a supply problem: if there was enough competition amongst cabbies, they wouldn't be able to flout regulations so easily, as they would either take whatever passenger showed up or they would be driving no one at all.

    So why are there so few cabbies at Union Station, far less than demand warrants? Almost certainly because taxi cab licenses are highly regulated in DC, as the cabbies have formed an effective cartel that limits the entry of competitors. So the answer would be to deregulate the taxi cab industry, vitiating the need for more rigorous enforcement. But this is actually a conclusion anyone familiar with basic microeconomics should come to; its hardly reserved to "libertarians." Matt Yglesias used to blog about this stuff quite a bit, for example.

  • anon on May 06, 2012 12:24 AM:

    What am I missing?

    You have a system where the Gov't restricts the number of service providers(to defend the power of current operators) and assigns itself the sole power to arbitrarily regulate the prices and business practices of market participants- yet, when that same gov't fails to actually enforce the regulations it has enacted in the "wee hours"-- (haven't you noticed that Gov't workers tend to be 9-5 types?), it somehow becomes a "l"ibertarian problem.

    You almost get it... You seem to be aware that some trips to "far-flung neighborhoods" are "unprofitable". Did you ever ask yourself "WHY" these trips are unprofitable?

    Why should a cabbie be "obligated" to take an "unprofitable" trip?

    I remember working third shift back in the 90's when I didn't have a car for a year. On Sundays, the last bus headed south from my home was at 5:45 PM which got me downtown at 6:30. I then walked the other two miles to work for my shift that didn't start until 11PM.

    #public transportation FAIL


  • Tom Johnson on May 06, 2012 7:45 AM:

    I normally really enjoy the comment threads here because I think the readers of this blog are smart and well informed. This thread brings me to near despair. Seriously: this group, even as an intellectual exercise,can't formulate a cogent argument for a policy it disagrees with?

    Try this: first of all, this discussion takes place in an environment of huge deficits at all levels of government, and there's no question we need to both increase revenue and decrease pending. We can decrease spending across the board -- hurting both essential in frivolous programs -- or we can focus our cutting on programs that bring little benefit.

    Which brings us to taxi regulation. In this case, a large bureaucracy that stifles innovation. The net benefit of this is provision of individual transportation needs to comparatively few people at significant cost to other who are not exactly wealthy: cab drivers.

    It is reasonable to assume that cutting regulations on cabs would make possible other solutions to the original problem. That argument is bolstered by the simple fact that in other, less regulated economies, people do not go without transportation. There are jitney services and rickshaws and other less elegant services that pop up -- services that, perhaps ironically, are celebrated by diversity-oriented liberals who visit exotic lands and return with tale of hanging off the side of a color jitney in the Philippines or hiring an ancient Buick driven by a 14-year old in Mexico.

    The current system cost government money it does not have, inhibits innovation, shifts costs to people who have little money to begin with, and -- as is clear from this discussion -- does a poor job of providing for real-world transportation needs. A glib-sounding but ultimately serious response to this is: what do we have to lose? Let's try something different and see if it works. The evidence from around the world suggests it will, empowering the poor and shifting power from government to individuals in the process.

    Is that such a hard argument to understand? Is it worthy only of ad hominem snark and condescension?

  • waddanut on May 06, 2012 9:42 AM:

    If a Muslim cab driver refuses to pick you up because you have a six-pack of beer and a rack of BBQ'D pork ribs in your bag in a "True" Libertarian world you would say "OK I'll just get the next one". On the other hand, a "Real-Life" Libertarian will say to the driver "You have to pick me up, or you're taking away my first amendment rights" and complain to all the government agencies he can find because "that's unfair".

  • superdestroyer on May 06, 2012 10:07 AM:

    Martin,

    In the real world, sometimes the supply curve and the demand curve do not cross. That is what is happening with DC Cabs where the government refuses to increase the number. thus, the money makers are the people who own the cabs and the price of driving a cab is so high that it encourages people to disobey the rules.

    Increasing the number of rules just makes the margin between regulated costs and regulated price too narrow for honest drivers.

  • Ryan on May 06, 2012 3:48 PM:

    When there are price fixes, as there is on cab fares, it will always cause a shortage on supply which is causing this problem. Now you will say that if there was no regulation on prices drivers would "price gouge" based on need and for that I refer you to this link: ow.ly/aBZnE

  • axt113 on May 06, 2012 4:50 PM:

    Actually Tom Johnson, in many of those less regulated countries corruption and graft run rampant and help lead to many of the problems that those countries are facing.

    So I guess your libertarian dream is to have corruption levels like in India?

    Funny because my cousins in India are telling me about how people are fighting for more regulations and crackdowns on the corruption in government.

  • superdestroyer on May 06, 2012 7:20 PM:

    Axt113,

    There is now way that you can describe India as being a country with few regulations. Having a bureaucracy that is slow and complicated can lead to more corruption.

  • toowearyforoutrage on May 07, 2012 11:44 AM:

    Holy cow.
    He asks for responses from Libertarians and the Polyanna liberals come out of the woodwork at battalion levels!

    While bashing the speculative view of what a Libertarian world would look like, it goes unmentioned that the regulated, compassionate world of "big government" has produced the very situation (can't get a cab to economically challenged neighborhoods) that caused this inquiry into market forces solutions. Would the liberals please surrender the mic for a few minutes?

    Conservatives aren't ALWAYS wrong. Just most of the time. This knee jerk reaction against all conservatism gets our side in trouble. Not as much as Faux News viewers trip over the assumption that liberals are always wrong, but aren't we interested in perfecting our views?

    I may not be Libertarian, but I'm closer to it than all but two of the commenters thus far, so I'll chime in. Lucky you.

    Let's review the complaints:
    1) Poor people would pay much more for a cab. (real life example: 50% more using Uber)
    2) Providers would collude and charge even more than that 50% premium.
    3) Poor people / minorities / Muslims / mimes wouldn't get picked up by anyone for ANY price.
    4) Deregulation causes government corruption


    1) Well, yes, at first. If there is a fat profit margin above and beyond a standard taxi fare, folks inclined to be unafraid of these areas can paint their car's door and open up shop until any premium properly reflects the lower tips and safety risks. If the price doesn't go below Uber's 50% premium, then trying to push it below that cost will require additional incentives such as government subsidies, like other forms of transit. Taxis, unlike buses, must be profitable.
    2) Collusion would cause uniform pricing. We have that NOW. Only difference is the price appears to be too low to justify trips to every portion of a given city. You may find that raising the regulated price doesn't change the problem much because if the price is the same regardless of destination, the safety and tipping risks to the cabbie deflate the value of the underserved destination. Why go? Again, targeted subsidization is the answer in a regulated market, but political will for partial payment of cab rides will be a tough sell. You might also wish to invest in making the scary parts of town safer, but often the will for THAT is low too. Tax-averse voters cause headaches for economically challenged people too, not just companies or the wealthy. Then again, taxi subsidies would be a sort of market force, so isn't this cheating?
    3) Pay in advance with a locked cash box where the driver doesn't have the key, and I'd ask you to prove it.
    4) The medallion system is regulation put in place BY government corruption. There is a clear public need for more cabs but political contributions from existing cab companies will be deployed against any councilman that suggests fixing the problem. Tax loopholes are created out of a regulated economy through corrupt elected officials that put them in our tax code after a timely bribe / political donation. Wal Mart, you may have heard, had to pay huge bribes to get PERMITS, a tool of corrupt government regulation. How has anyone come under the impression that regulation helps prevent corruption? Perhaps deregulation wouldn't help either, but the evidence that a regulated economy deters corruption is entirely absent from what I see. Regulation is perfectly compatible with corrupt governments.

    Libertarianism is no panacea, but it isn't hemlock either and liberals would do well to respect laws of economics like they do with science. Ignoring the mechanics of incentives is REALLY hard work and the energy is likely better spent in less direcly confrontational fashion.