About this time last summer I wrote about the anti-free enterprise taxi situation in Vancouver. It is a situation I feel strongly about and have raised it at several public meetings without receiving any sensible replies. My interest has been piqued once again by this detailed article by Luke Brocki in Dependent Magazine.
Brocki explains how a $522 cab license from City Hall is immorally (though not illegally) boosted by the monopolists to $800,000 before the cab hits the streets. And these huge profits are made on the backs of cab drivers and passengers. Even Geoff Meggs who supports the current system agrees that this is simply wrong:
“Just put aside the question of worker exploitation, which is real, and just say okay, what is produced by this capital? It’s not a pulp mill. If you take the number of taxis out there and assume a half-shift is worth $400,000, you come out with a staggering number, like half a billion dollars worth of equity in the licences and we haven’t even gotten to the car yet,” he says with a laugh. “And it produces zero. It’s straight ascribed value. So to me, that is a dead weight on the back of the industry. If people were not struggling to pay for these licence purchase costs, they could then do lower fares, there could be any number of ways the revenue could be allocated.”
Brocki’s article highlights the success of open licensing in New Zealand and Ireland:
New Zealand abolished its taxi monopoly in 1989 via the seemingly despotic strategy of simply opening the industry to everyone, incumbent licence holders be damned … the reforming government of the day called the protected taxi market a privilege able to be stripped as easily as it was granted. There was anger, of course, but a more vibrant taxi market emerged within five years, with increased taxi numbers, reduced fares and a wider variety of taxi services, from budget rides to premium sedans with drivers in black ties. “The government still creates the institutions for a transparent marketplace and they still set minimum standards for safety and so on,” [said researcher David Seymour] “They just don’t try to control prices and volumes.”
The New Zealand story is not unique. Ireland abolished its taxi cartel in 2000 and saw taxi numbers triple shortly after deregulation. In 2007, the Paris-based Organisation for Economic Co-operation and Development found restrictions on entry to the taxi industry constituted an unjustified restriction on competition that led to “large transfers from consumers to producers, economic distortions and associated deadweight losses.”
You and I and everyone else who use taxis are paying for these huge and unnecessary gouging-like profits while receiving almost no service (just 9.4 cabs per 10,000 population, compared to 27 in Montreal for example, and 85 in Manhattan). Our monopolistic system is a disgrace and needs to be stopped.