UberX and similar non-taxi ride services

[The Nature Boy]

Is there a good reason for artificially limiting the amount of taxis? I can only imagine that it might be to limit traffic on the roadways but in a major urban area, that's a flimsy excuse.

The state DOES have to regulate taxis but restricting them is a bad idea.

Basic economics- if you lower supply but keep demand the same, prices go up, in this case to a living wage for cabbies. The nice thing about Uber and Lyft is that most of its drivers use it for extra cash, not as a means to make a living, which means prices can be lower. The downside is that the supply is flexible (if nobody feels like driving, there's no cars), but realistically that's how taxis are in a lot of areas anyway.

But if the medallions are prohibitively expensive then isn't much of the profit lost anyway? If that's the goal then the state could just make a licensing exam and make it so difficult that relatively few pass.

[mtantillo]

Is there a good reason for artificially limiting the amount of taxis? I can only imagine that it might be to limit traffic on the roadways but in a major urban area, that's a flimsy excuse.

The state DOES have to regulate taxis but restricting them is a bad idea.

Basic economics- if you lower supply but keep demand the same, prices go up, in this case to a living wage for cabbies. The nice thing about Uber and Lyft is that most of its drivers use it for extra cash, not as a means to make a living, which means prices can be lower. The downside is that the supply is flexible (if nobody feels like driving, there's no cars), but realistically that's how taxis are in a lot of areas anyway.

But if the medallions are prohibitively expensive then isn't much of the profit lost anyway? If that's the goal then the state could just make a licensing exam and make it so difficult that relatively few pass.

Yes. Investors buy them and lease them to drivers in NYC. So taxi drivers have to hand back a significant chunk of their cash intake everyday to pay to lease the medallion.

[The Nature Boy]

The medallion system in itself is hideously flawed and needs to be abolished. State could issue refunds to those who bought into the system or whatever. It just needs to go.

Here's how I would do it:

1. Create another class of driver's licensing and give a more rigorous exam for those who seek to obtain it. Test their ability to operate in various forms of high traffic, test their ability to do the daily tasks of a cab driver.

2. Require every cabbie to register their vehicle and get it inspected monthly.

3. Require periodic retaking of the driving test to ensure that driving skills remain sharp.

These 3 things should act as barriers to keep people out. They're all time consuming but not expensive.  Anyone found in violation will be issued a large fine.

[mtantillo]

Mike mentioned Airbnb (or however they capitalize it). There was a report in the news the other day about some idiot in California who used that service to let someone stay in his apartment for a length of time that, under state law, makes them month-to-month tenants and restricts his right to get his place back.

It's all well and good for the 20-somethings to talk about how these "sharing" services are "supposed" to work, but there are people out there who can and will game the system for their own advantage because they know what the laws say and those laws trump the "rules" the "sharing" services seek to impose. The proverbial bottom line is that you use services like Uber or Airbnb or the like at your own risk.

http://www.cnn.com/2014/07/23/travel/airbnb-squatters/index.html

Yup, this is why I don't use stuff like Airbnb. And I'd certainly never rent my apartment out (despite it being in a decent neighborhood and Metro accessible..desirable attributes for an AirBNB property), because there is no shared responsibility if damage to my apartment happens...the responsibility is mine and only mine. Not to mention, I could easily see my landlord saying something about giving my access card to someone who hasn't had their background check done...big no-no.

[The Nature Boy]

Mike mentioned Airbnb (or however they capitalize it). There was a report in the news the other day about some idiot in California who used that service to let someone stay in his apartment for a length of time that, under state law, makes them month-to-month tenants and restricts his right to get his place back.

It's all well and good for the 20-somethings to talk about how these "sharing" services are "supposed" to work, but there are people out there who can and will game the system for their own advantage because they know what the laws say and those laws trump the "rules" the "sharing" services seek to impose. The proverbial bottom line is that you use services like Uber or Airbnb or the like at your own risk.

http://www.cnn.com/2014/07/23/travel/airbnb-squatters/index.html

Yup, this is why I don't use stuff like Airbnb. And I'd certainly never rent my apartment out (despite it being in a decent neighborhood and Metro accessible..desirable attributes for an AirBNB property), because there is no shared responsibility if damage to my apartment happens...the responsibility is mine and only mine. Not to mention, I could easily see my landlord saying something about giving my access card to someone who hasn't had their background check done...big no-no.

To AirBNB's credit, I think they actually do reimburse property owners for damages. I noticed that when I was looking into renting a AirBNB room and wanted to check into its legitimacy.

[hbelkins]

I see two issues with Uber and Lyft.

One is the established monopoly (taxi companies) whining about losing their protected status. To this I say, too bad. If they can't handle the competition without special protection, they deserve to go out of business.

The other is the government being unable to resist its natural urge to regulate and tax.

If there is concern about the driving skills, require the drivers to hold CDLs. Problem solved.

It's been a matter of controversy in Kentucky as well.

[realjd]

I use Uber extensively when I'm traveling for work. It's great. For the same price as a cab, I can have a black car show up within minutes, and it automatically bills my corporate card and sends me a receipt. It's so much nicer than traditional taxis who tell me they take credit cards and then find out that "the card reader stopped working" when we get to the destination.

I've had hit or miss luck with UberX so I tend to pay the extra few bucks for regular Uber cars.

[Pete from Boston]

There's an easy way to fix the airbnb problem. Airbnb could simply make it impossible to book a stay longer than 30 days through their site. You only become a month to month tenant if you pay rent for over a month straight.

Airbnb would have to adapt to the laws of each state, as tenant law can vary.

[Pete from Boston]

Is there a good reason for artificially limiting the amount of taxis? I can only imagine that it might be to limit traffic on the roadways but in a major urban area, that's a flimsy excuse.

The state DOES have to regulate taxis but restricting them is a bad idea.

Basic economics- if you lower supply but keep demand the same, prices go up, in this case to a living wage for cabbies. The nice thing about Uber and Lyft is that most of its drivers use it for extra cash, not as a means to make a living, which means prices can be lower. The downside is that the supply is flexible (if nobody feels like driving, there's no cars), but realistically that's how taxis are in a lot of areas anyway.

But if the medallions are prohibitively expensive then isn't much of the profit lost anyway? If that's the goal then the state could just make a licensing exam and make it so difficult that relatively few pass.

Yes. Investors buy them and lease them to drivers in NYC. So taxi drivers have to hand back a significant chunk of their cash intake everyday to pay to lease the medallion.

Medallions are a form of Real Property.  If one abolishes that, it's like abolishing land ownership and telling land owners they knew the risk when they tried to own part of a planet. 

If medallions are abolished, then at the very least–and it will satisfy very few–the issuing bodies should be required to buy back medallions at whatever their base price (as opposed to market price) is. 

[hbelkins]

This story from Denver was big news recently:

http://www.geekwire.com/2014/hey-denver-police-harrass-riding-uber/

Here is some coverage from Kentucky:
http://www.kentucky.com/2014/06/16/3294844/new-ride-sharing-services-drove.html#storylink=misearch

These same kinds of issues are also in play regarding moving companies.
http://www.kentucky.com/2014/02/03/3067431/federal-judge-rules-in-favor-of.html#storylink=misearch

We have so many businesses who are protected against competition and the open market that it makes me sick. The same is true of hospitals and medical facilities. The state has to determine that there's a need for a new service instead of letting investors and business owners just go ahead and do it, and let the free market decide.

[1995hoo]

It's not like the idea of non-taxi car services is a new idea. The term people use varies around the country–my relatives in New York always say "car service," whereas here in the DC area I've normally heard "limo service" even when the car isn't what most people think of as a "limo." We've used services like Boston Coach (sedan service employing Lincoln Town Cars) to take us to the airport several times; I chose them mainly because my firm used them and I was able to bill it to myself through the firm using the "personal charge" code so I didn't have to pay the driver on the spot.

Uber strikes me as being similar to those types of car services but with a different way of reserving the vehicle on shorter notice. That's a fine idea, but if they're going to operate a car service/limo service/whatever name you use, they need to be subject to the same regulations all such other services are. I haven't even attempted to keep up with the avalanche of coverage of this issue from all over the country (and from the UK), but my impression is that they're certainly either skirting or flat-out ignoring at least some portion of those regulations. For example, Uber isn't even registered to do business in Virginia, which is a basic requirement in every state in the country (designed in part, though not entirely, to assist the state with collecting taxes; some types of business are also more heavily-regulated than others, such as insurance–if you buy car insurance from a company not licensed to issue insurance in your state, your policy probably isn't valid). If you don't register to do business, sooner or later the state is likely to come after you when somebody complains.

[hotdogPi]

What happens if regular taxis go out of business, and then someone who doesn't have a smartphone (and therefore can't use the app) needs one?

[The Nature Boy]

This story from Denver was big news recently:

http://www.geekwire.com/2014/hey-denver-police-harrass-riding-uber/

Here is some coverage from Kentucky:
http://www.kentucky.com/2014/06/16/3294844/new-ride-sharing-services-drove.html#storylink=misearch

These same kinds of issues are also in play regarding moving companies.
http://www.kentucky.com/2014/02/03/3067431/federal-judge-rules-in-favor-of.html#storylink=misearch

We have so many businesses who are protected against competition and the open market that it makes me sick. The same is true of hospitals and medical facilities. The state has to determine that there's a need for a new service instead of letting investors and business owners just go ahead and do it, and let the free market decide.

But the free market ISN'T the best way to deal with something like this. As someone else mentioned, Uber drivers are doing this for side change whereas cab drivers do it for a living. The free market will price those doing it for a living out of business. Someone with no hopes of making a living will charge A LOT less than someone who is.

[citrus]

At least in San Francisco, taxi drivers dug their own grave. Before Uber/Lyft, if you tried to hail a cab on the street, there would be a 50% chance the cab would refuse to take you where you wanted to go, and if you called dispatch for one, you could be waiting forever - I've waited 45+ minutes for cabs that never came on multiple occasions. Also refusing to take credit cards, claiming their credit card machine is broken, but it magically works when I inform them that I have no cash. More detail about this sort of stuff here: http://sfist.com/2013/01/02/sf_cabs_often_refuse_fares_endanger.php

I'd agree that there probably a few regulatory things that need to happen regarding insurance and liability. I'm perfectly happy seeing the medallion system go - from what I understand, cabbies often had to lease medallions at exorbitant cost from third-party owners, and in many cases they come out ahead without that system. (At least, I've talked to a few UberX drivers that used to be cabbies, and that's what they said - it's probably by no means universal.) And as the previous paragraph implies, you can have regulatory pressure, but you need to actually make things enforceable....

Basically, as long as UberX (or Lyft, although I haven't used them) keep the ability to reliably get a ride from A to B, not subject to the whims of somebody who (illegally) doesn't want to stop at A or B, then I'm happy. It's a bonus that it's usually slightly cheaper than a traditional cab. I'm in an UberX probably 3-6 times a month and have been mostly satisfied. Only downside for me so far is that there are a lot of newer drivers who don't know their way around as much - I end up giving directions a lot.

[hbelkins]

But the free market ISN'T the best way to deal with something like this. As someone else mentioned, Uber drivers are doing this for side change whereas cab drivers do it for a living. The free market will price those doing it for a living out of business.

So we let the government keep them propped up via regulation. Yep, that's the answer.

[mtantillo]

What happens if regular taxis go out of business, and then someone who doesn't have a smartphone (and therefore can't use the app) needs one?

They can call for one on their stupid-phone.

[mtantillo]

But the free market ISN'T the best way to deal with something like this. As someone else mentioned, Uber drivers are doing this for side change whereas cab drivers do it for a living. The free market will price those doing it for a living out of business.

So we let the government keep them propped up via regulation. Yep, that's the answer.

I'm with HB on this. Sometimes jobs that were once good enough to make a decent living off of are not anymore. That's just life, and the people that work those jobs are free to innovate and find new ways to earn more money, just like the industry innovated and found a way to provide the services in a cheaper way.

I had a relative who drove a city bus in the 1940's and 1950's in New York City, and was able to live a middle class life without his wife working, he owned a house, and had two kids. Times are different now. Society has decided that we no longer wish to pay bus drivers a high wage where the driver can afford to purchase a single family home in NYC, have two kids, and not have his/her spouse work. Society has decided this for a lot of jobs, in fact, because people would rather get crappier service if they can get it cheaper (Exhibit 1: Airfares).

Taxi drivers are no different. Society has demanded far better service than is currently being provided, without the artificial inflations in price due to unnecessary protectionist regulations. Obviously some legal changes have to take place in order for this to pass muster, and the battle has begun. We shall see who prevails.

[The Nature Boy]

But the free market ISN'T the best way to deal with something like this. As someone else mentioned, Uber drivers are doing this for side change whereas cab drivers do it for a living. The free market will price those doing it for a living out of business.

So we let the government keep them propped up via regulation. Yep, that's the answer.

There are tons of essential industries that the government has historically propped up though. Cabbies are essential in areas with poor public transit because they're often instrumental in keeping people from driving home drunk. Extreme scenario but what do you do when your part time drivers aren't willing to show up at 3 AM to take a drunk person home? That drunk person will probably notice the unreliability of these apps and take their own vehicle to the bar where.........you know.

There are also tons of industries where regulatory agencies set high barriers to entry. Ever talked to your doctor, lawyer or accountant? Without barriers to entry, you end up with incompetent people who can undercut people who are actually experienced and are dedicating their lives to what they do.

I'm against the idea of running a cabbie out of business in favor of some hotshot with a car and a few extra minutes. The free market is not infallible and if we had relied solely on the free market, much of rural America would be sitting in the dark without electricity or phone lines because it took government intervention for that to happen.

There has to be a compromise here. I'm all about going forward but I want protections for the guys who have sunken their lives into driving cabs.

[6a]

But the free market ISN'T the best way to deal with something like this. As someone else mentioned, Uber drivers are doing this for side change whereas cab drivers do it for a living. The free market will price those doing it for a living out of business. Someone with no hopes of making a living will charge A LOT less than someone who is.

If there were no artificial limit on medallions, would a taxi driver still be able to earn a living?

[The Nature Boy]

But the free market ISN'T the best way to deal with something like this. As someone else mentioned, Uber drivers are doing this for side change whereas cab drivers do it for a living. The free market will price those doing it for a living out of business. Someone with no hopes of making a living will charge A LOT less than someone who is.

If there were no artificial limit on medallions, would a taxi driver still be able to earn a living?

The whole medallion system should be scrapped, but there should be a way to restrict who CAN drive taxis. Just institute a monthly vehicle inspection requirement and create a yearly licensing removal. That's a low-cost barrier to entry that will keep the casuals out.

It also protects consumers because it ensures that the drivers and cars are safe.

[6a]

If you're in the mood for a wall of text, here (PDF) is the legislation approved by Columbus. It addresses many of the complaints brought up in this thread. The one missing is the fact Uber was operating before this was passed.  In that sense I guess we're back to square one. 

The point is, though, some cities are willing to work with this new technology and create rules to level the playing field, while others are not.  Pete from Boston and I came up with terrible examples of something similar earlier, and I think that's because there really isn't anything similar.  VHS & Beta vs. the TV & movie industries, maybe?  The RIAA vs. pirates?  I don't know, both of those had outcomes that ended up with the "old" industry adapting to survive.  As a consumer, I care about how much a medallion costs just as much as I care how much Target paid for the land their store sits on.  It's all about the experience inside and any value, perceived or real, I gain from using one over the other. If the taxi companies in other cities are truly being harmed, they should do more than circling city hall honking for hours (happened in Boston.)  even here, where it was approved, the city sued Uber while the legislation was pending.

[Brandon]

But the free market ISN'T the best way to deal with something like this. As someone else mentioned, Uber drivers are doing this for side change whereas cab drivers do it for a living. The free market will price those doing it for a living out of business. Someone with no hopes of making a living will charge A LOT less than someone who is.

If there were no artificial limit on medallions, would a taxi driver still be able to earn a living?

The whole medallion system should be scrapped, but there should be a way to restrict who CAN drive taxis. Just institute a monthly vehicle inspection requirement and create a yearly licensing removal. That's a low-cost barrier to entry that will keep the casuals out.

It also protects consumers because it ensures that the drivers and cars are safe.

A CDL-type license and separate license plates might be a start.  I know that Illinois has a separate license plate for taxis (as well as limos) with two different colors and a vertical "TX" on the plate.  Limos have "LIVERY" vertically on the plate.  There is no separate driver's license for a cabbie or limo driver.  Taxi companies are licensed by municipality.

[realjd]

What happens if regular taxis go out of business, and then someone who doesn't have a smartphone (and therefore can't use the app) needs one?

They can call an uber using text messages. If they don't have a cell phone, they can call a traditional car service.

[Duke87]

Innovation often runs afoul of regulation.

A lot of cities or states require you have a livery license to operate a taxi, with the original intent being a matter of consumer protection - if the driver is licensed for that business, you can reasonably expect they won't take advantage of or harm you. No such protection exists for unlicensed cabs, at least not by traditional means.

The key thing that enables services such as these to operate in a trustworthy fashion is that users can review providers and providers can review users. Shady characters are kept out by crowdsourcing data about people's respectability and honesty. In an era before smartphones this wasn't practical or even possible. So, the regulations banning such things are outdated, and unfortunately you have an often vocal and powerful interest group (medallion owners) which profits by keeping it that way and is going to fight change for selfish reasons.


I believe Uber and Lyft both operate in New York City but as best as I am aware neither does a large amount of business here. New York does have rules which say that if you don't have a medallion you can't accept street hails, but they aren't particularly enforced. Uber and Lyft don't have a huge untapped market to cash in on here since we already have a robust and decades old network of black-market taxi services, often colloquially known as "gypsy cabs", which will offer cheap hush-hush rides. Like all black market things, though, it does come with its risks. I have a friend who once had a gypsy cab driver lock the doors, pull a knife on her, and demand her wallet. Yellow cabs, meanwhile, have security cameras in them so you are protected against such things.

Airbnb has been running a lot of ads around the city as of late and is trying to make a name for themselves here. The case history here is interesting, though - in New York City you can have someone as a month to month tenant on almost whatever terms you feel like so long as either you own the property or your lease allows it. But you cannot operate a hotel without a license from the city to do so. So, it is completely legal here to use Airbnb - so long as you only book stays lasting at least 30 days. Less than that and you as a host can find yourself facing hefty fines for operating an unlicensed hotel. The city has not (thankfully) decided to make a point of enforcing this and Airbnb has thus far been able to operate here with little interference. There have, however, been cases of hosts getting hit with those fines after a disgruntled guest filed a complaint with the department of consumer protection.
So basically, you're fine unless you piss someone off and they snitch on you. And you only take this risk as a host, as a guest you can't face any penalties.

[hbelkins]

Cabbies are essential in areas with poor public transit because they're often instrumental in keeping people from driving home drunk. Extreme scenario but what do you do when your part time drivers aren't willing to show up at 3 AM to take a drunk person home?

Two observations. One is that this scenario you describe is exactly why traditional taxis will continue to operate, because there will always be a demand for that type of service.

Two is that this FEAR!!! rationale reminds me of that story I saw trying to explain why New Jersey still bans self-service gas pumps -- that untrained people fueling their cars might cause a disaster. I live in a rural area with no taxi service available and there are drunks on the road all the time, yet I don't incessantly worry about one of them running into me.