back to article Hurrah! Uber does work (in the broadest sense of the word) after all

There's a certain, perhaps too cynical strain in economics, best exemplified by Mancur Olson, who was prone to pointing out that all governments are just bandits living off the population they oppress. It's better to be ruled by stationary bandits rather than nomadic ones, to be sure, for they will at least farm you rather …

  1. dogged

    Again?

    Another interesting and non-controversial article?

    You're mellowing, Tim. Careful now.

    1. John H Woods Silver badge

      Re: Again?

      Principally as a result of Tim Worstall's articles, I have actually found myself reading Adam Smith's "The Wealth of Nations" It's hard to recommend this too highly -- it's a very rewarding, if not entirely straightforward read. It is especially interesting how he railed against allowing special interests too much control, or even just influence, over governments. In particular, he talks of "corporations" which, as I understand it, then referred to businesses who use government law to restrict competition in order to gain financial advantage --- that would seem to describe the medallion issue in the article perfectly.

      1. Mark Price

        Re: Again?

        The taking down of one corporation - the medallion owner - is welcome, but let us not fool ourselves that Uber is a night in shining armour. They simply replace the previous incumbant with their own version of rent and barriers to entry, Furthermore, due to their size they are even less likely to play by the rules of corporate citizenship.

        We are all being returned to a pre-industrial status, where people are merely factors of production, and the (very) few capital owners are not encumbered by government 'interference'

        1. Yet Another Anonymous coward Silver badge

          Re: Again?

          Like Kayak, expedia, flightbookers, etc did to travel agents.

          If only the travel agents had donated $50k to the mayor's election fund these services would be illegal.

          In fact given the airline's clout with the government i'm surprised that they aren't

          1. Anonymous Coward
            Anonymous Coward

            Re: Again?

            The airlines want the seats filled. Similarly, the cruise lines want all of the cabins booked.

          2. jonathanb Silver badge

            Re: Again?

            Not really. Expedia is registered with the Civil Aviation Authority in the UK as a travel agent and complies with the same rules as all other travel agents.

        2. Doctor Syntax Silver badge

          Re: Again?

          "We are all being returned to a pre-industrial status, where people are merely factors of production, and the (very) few capital owners are not encumbered by government 'interference'"

          By pre-industrial I suppose you mean before the introduction of the factory system. What do you mean by "factors of production". In pre-industrial society craftsmen generally enjoyed a much higher status than they did under the factory system. It was the loss of that status that provoked the Luddite riots.

          1. DanceMan

            Re: Again?

            "We are all being returned to a pre-industrial status,"

            Recently heard a boffin on CBC Radio saying that mankind were happier as hunter-gatherers than as farmers, that agriculture led to serfs and an elite. The patterns keep repeating.

      2. Tim Worstal

        Re: Again?

        Serious advice about reading WoT (BTW, Theory of Moral Sentiments has some great stuff too). Skip the stuff about silver coinage. there's people out there who've never quite recovered from that.

    2. Anonymous Coward
      Anonymous Coward

      Re: Again?

      "Medallion owners in several cities, including New York, have reported increased difficulty finding drivers interested in leasing their cabs, as both drivers and passengers have switched to Uber."

      I, for one, do love the smell of market forces at play in the morning. Great article, monsieur.

  2. Captain Underpants

    The interesting question for me is what, if anything, Uber (in the generalised "smartphone booking system for resource provided by others" sense) really does differently at a business level that means it should be exempt from existing taxi regulation. Because to me it looks like their argument is "but you do it on a computer" - and if it's generally accepted that this argument shouldn't be enough to get you a patent for an idea, then it shouldn't be enough to exempt you from existing regulatory and legislative requirements either.

    It's going to be interesting to see how the case against Uber-the-company in France plays out.

    1. J.G.Harston Silver badge

      "The interesting question for me is what, if anything, Uber ... really does differently at a business level that means it should be exempt from existing taxi regulation"

      Absolutely nothing. Zilch. Nada. Zero. Maru. Nill. They are a taxi dispatch service, just like any other taxi dispatch service. The fact they are using online electronic means to do so, just like my city's taxi firms were doing more than seven years ago, is irrelevent.

    2. Anonymous Coward
      Anonymous Coward

      Yeah, Uber changes the game a bit by "doing it on a computer", but the fact is they are facing an opposition that has become complacent and indifferent to its customers.

      I've been in a few New York yellow cabs and it is a generally miserable experience. The driver doesn't have any real knowledge of the city, so you have to know where you are going. The cabs are small, uncomfortable, usually dog-eared, often dirty and always expensive. The driving style can vary from indifferent to reckless.

      Obviously a lot of this is because the driver's resources are focussed on paying back his artificially high costs, but as a customer you don't really care about that. So it's hardly surprising that Uber and the like can come in and do well, because entry barriers are so low.

    3. I ain't Spartacus Gold badge

      Captain Underpants,

      That's the whole point of the article really. The regulation generally doesn't work. Taxi licensing makes sense, in order to avoid robberies and rapes and promote use of safe and accessible vehicles.

      But a small group of people have managed in many places to get hold of a bunch of licenses, and then pursuade the regulators not to issue any more. Suddenly their licenses become artificially scarce, and so they can charge stupid amounts of money. So in places like New York or Rome, that licence is worth insane amounts like a million - and you don't actually need to drive your cab - and then suddenly it's just an economically inefficient rip-off, and no one's even bothering to enforce the standards the licensing system was supposed to be there for in the first place.

      But the entrenched group of drivers will all scream, go on strike, and tell the papers you're in favour of women getting raped. So as a politician, it's too much trouble to do anything about it. Then Uber come along with their astonishingly dishonest claims about not being a taxi firm. But everyone looks at the current system and goes, well Uber may be horrible, but this system is a pile of shit. Let's do something. So Uber may end up being a socially useful catalyst.

      Of course, in France, doing something means to prosecute Uber and protect the special interests...

      1. Captain Underpants

        @I Ain't Spartacus

        To be honest, though, I do think that prosecuting Uber is the right thing to do - the state prosecutor clearly feels that they're breaching applicable laws and ignoring instructions to comply with them, and I'm not convinced the approach taken elsewhere will actually result in what citizens want (which is a regulated taxi system whose regulation isn't being exploited for private financial gain, with reasonable fares and a dependable level of service).

        Of course, given the built-in resistance from existing interested parties, it may be that feeble/non-existent efforts at enforcement is the pragmatic way of supporting Uber (or at least using them as leverage to implement reform) by politicians wary of wading in directly for fear of getting splashed with the brown stuff...

        1. I ain't Spartacus Gold badge

          Captain Underpants,

          I do agree with you that Uber are breaking the law. If it waddles like a taxi service, and quacks like a taxi service, then it's clearly... A duck.

          So if they've come in and ignored the regulators, they deserve everything they get.

          It's one of those difficult areas. London black cabs are generally well regulated, but you can't get one after about 11 o'clock at night. So they tell you how wonderful they are, but won't give a service at a time when security checked drivers are vitally needed. One of the scariest drives I've ever done was in a minicab at 4am. I didn't know it was possible to do 100mph down the Westway until that point - and it's a good job I had plenty of alcohol to cushion my system...

          I've been reading lots about European business, since the Eurocrisis. And there's plenty of examples of rent seeking, where the taxi drivers in Rome can sell their licences for several hundred thousand Euro when they retire, due to artificial scarcity. Hence you get silly prices, and I'm sure lots of them never actually drive their cabs, just rent their licence.

          Or rules that Greek supermarkets can't sell bread, to artificially protect local bakers. A rule the Troika are making them change. But on the other hand, Greek pharmacies are similar, only small and local ones and limited numbers of licences. But on the other hand, they're local, give medical advice to those who can't afford to pay the extra bribes/blackmail fees that the doctors charge - and they apparently give credit and even free drugs to those they know who're struggling. That social good may well be worth the restrictive practises.

      2. Anonymous Coward
        Anonymous Coward

        @ I ain't Spartacus

        "Of course, in France, doing something means to prosecute Uber and protect the special interests..."

        But the "something" (along with pick-axe wielding taxi drivers), will bring the whole argument to a head and produce some action. This is why these things are called disruptive technologies.

        Uber and AirBnb are the latest in a long list:

        Skype == breakdown of Telco monopolists

        Amazon == transformation of mail-order sales into a new online economic model

        Youtube, torrents, etc == massive threat to content monopolists

        Bitcoin could == the future of the online payment industry.

        the list goes on....

        I say bring on more Ubers, squash more monopolists and bankrupt more rent-seekers. It will happen anyway, no matter how much kicking and screaming takes place.

    4. thames

      @Captain Underpants - "The interesting question for me is what, if anything, Uber (in the generalised "smartphone booking system for resource provided by others" sense) really does differently at a business level that means it should be exempt from existing taxi regulation."

      What is different? Nothing except they have the willingness to ignore the law. They're a taxi dispatch service. They're rocked up in my city, and the response of the largest taxi company here is that if Uber is allowed to operate, then the taxi company is simply going to say that they're not a taxi company either, they're a "technology company". They've got their own phone app as well, after all.

      Some of the things that regulated taxi companies do is they ensure that the vehicles are inspected, that there are a minimum number (set by the city) number of cabs available at all hours of the day (e.g. to take you to the hospital in the middle of the night instead of calling an ambulance), that they have vehicles for people with physical disabilities, and that there is someone who can be held accountable in the event of accidents involving their vehicles.

      The structure of the existing taxi industry is designed to ease the regulatory cost burden on the city and its taxpayers by putting it directly on the taxi business ("user pay", they like to call it). The city has only a handful of inspectors to enforce the bylaws, and the cost of things like service for people with disabilities is built into the cost of the fares. Without that, these costs will get loaded onto everyone's property taxes in the form of hiring more city employees to enforce safety and to subsidise the additional services that aren't profitable on their own.

      So, the city is stuck between a rock and a hard place. People want cheaper (Uber is about 10% cheaper according to an investigative report by the local paper) taxi fares, but they don't want to pay higher property taxes to compensate.

      Taxi licenses here cost a small fraction of the example that the author used. The taxi companies here are willing to write off all those licenses and claim they are just like Uber instead of paying the extra compliance costs of being a regulated taxi business. Other small business owners have said that if Uber doesn't have to pay for a taxi licence, they why should local restaurants have to pay for a business license to cover the costs of things like health inspections?

      I get the impression that once all is said and done, the taxpayers are going to be the ones getting royally screwed over this.

      1. Anonymous Coward
        Anonymous Coward

        You're right that it's situational. Uber screw up the status quo.

        In some situations the status quo has been captured by a small group to the detriment of everyone else. New York cabs are a very good example. London cabs another one (and in the latter case it's kind of a double-whammy, because gps really makes the premium on black cabs that was somewhat justified at one point redundant).

        The London underground is another good example of an outdated status quo being disrupted by technology. The insane wages that drivers earn are accelerating an anyway inevitable move to automate trains.

        Where the status quo is better managed for the general good, that disruption is less positive.

    5. Anonymous Coward
      Anonymous Coward

      @Captain Underpants

      It is already generally accepted that if you do anything on a smartphone, you can patent it any way you want and almost anywhere. Ask Apple.......

      Any support of existing Taxi law is just another way to say you are for subsidizing an anti-competitive monopoly!

      Carrying passengers is not illegal or we would never have station wagons or larger vehicles. HOV lanes incentivize this behavior and set a precedent for legalizing it because HOV's demand multiple occupants or you get ticketed. There is not enough difference between personally asking for passengers and having UBER get them for you.

      Unlike Europe, you can't just change the definition of a "crime" to fit your personal or political viewpoint here in the States.

      1. Naughtyhorse

        change the definition of a "crime" to fit your personal or political viewpoint...

        Ah! anonymous coward, let me introduce Wall Street....

      2. Gordon 10

        Re: @Captain Underpants

        On the contrary AC in the US it appears what is defined as a crime or not is directly related to the size of your wallet (hello uber) or the colour of your skin.

        The systems in Europe may be (badly) flawed but not nearly so much as a the land of the "free" - remind me how the electoral college system works again?. Given the choice I'd rather live in any European country (including Greece and France) than the US, never has there been such a contrast between the governed (who are generally lovely) and the government (which seems to be the bastard offspring of George Orwell and Ayn Rand regardless of whether they are red or blue).

      3. John Brown (no body) Silver badge

        Re: @Captain Underpants

        "There is not enough difference between personally asking for passengers and having UBER get them for you."

        Yes, there is a significant difference. Two or more friends/colleague/acquaintances sharing a lift because they need to start and end their journeys at more or less the same start and end points is VERY different from someone going out of their way to a pick up and then dropping off, again off their "normal" route, to give a stranger a "lift" while charging them only a little less than taxi market rates for said "lift".

        The "sharing" economy is about people doing "favours" on an individual basis. Once it becomes organised with middle-men needing to earn a living, then it's a business with employees or contractors and that mean laws and regulations must apply. AirBnB has been mentioned. It's one thing to have a friend or acquaintance stay over at your house, it's quite something else to rent out rooms to complete strangers who need to be covered by fire regulations and hygiene regulations, let alone the potential insurance risks. Who pays out if a paying guest causes a fire,slips in the bath or falls down the stairs? Most home insurance companies won't cover you for paying guests. London has relaxed their by-laws to allow home owners to "rent" for up to 90 days per year. Not sure how they'll regulate or tax that.

  3. Jason Bloomberg Silver badge

    "The reason that economists don't like these sorts of rents is that of course Freidman wasn't doing anything economically valuable to collect that cash."

    Surely the purpose of medallions, or having to be approved by the AMA or any body, is to ensure those being granted the right to practice their craft are the sort of people society wants practising those crafts. We don't want taxi drivers who will murder or rape us or surgeons who are slap-dash with the knife or prone to leaving their watch behind.

    It may not be working that way, and it may not generate anything directly economically valuable, but it does (or should) serve an important and valuable purpose.

    Of course; if one discounts everything else and only look at the bottom line...

    1. DropBear

      No, it isn't. If it were, there would be unlimited number of medallions to be granted, if only you fulfil the relevant criteria - but there aren't; the number is strictly limited. They are first and foremost a means to induce artificial scarcity on a market that otherwise would not have it.

      1. Captain Underpants

        @Dropbear

        The initial implementation of medallions was intended at least partially to raise the standard of service provided by drivers. (See this WP story, for example). So Jason's right in that regard.

        It's almost certainly not how it's working in practice now, but that doesn't mean the idea is unsound, just that its current implementation is unsound. And I'm not convinced that opting for the libertarian "Anyone can be a driver, and never mind checking things like whether they're insured, the market will correct" type approach is necessarily better either in theory or as currently implemented.

        And, of course, it's always possible that both Uber and existing taxi regulators are being collosal bellends in their approach...

        1. I ain't Spartacus Gold badge
          Terminator

          Re: @Dropbear

          And, of course, it's always possible that both Uber and existing taxi regulators are being collosal bellends in their approach...

          Yup. That's about the size of it.

          You probably do need a bit of scarcity. You can't reasonably enforce standards if everyone can run a taxi for a £5 charge, or nobody will make enough money to pay for the nicer cabs, less criminal drivers and regularly servicing of the brakes that we all want to see.

          I guess the economic phrase is "regulatory capture". Since the licensing authoritites spend all their time talking to the owners of the medallions, they start caring about keeping them happy, and sod the customers.

          Government by robots anyone?

          1. auburnman

            @Spartacus

            "You probably do need a bit of scarcity.You can't reasonably enforce standards if everyone can run a taxi for a £5 charge"

            I'm not following your logic there; if you enforce standards then people can't run a taxi for a £5 charge (unless somehow complying with standards were cheap enough that you could still profit) so I can't see it making an argument for deliberate scarcity. Unless you mean you can't enforce standards in regulated taxis if Uber are wilfully sidestepping them going "LA LA LA NOT A TAXI" ?

            1. Captain Underpants

              Re: @Spartacus

              @auburnman

              If anyone can run a taxi for a nominal fee, then there's no upper limit on the number of taxis at any given time. This means the costs of meaningful enforcement become untenable, and so what enforcement you get won't manage to either capture enough of the offenders nor serve as a deterrent to new taxi operators, so as a result there's no reasonable expectation at the user end that getting into a licensed taxi is any safer than getting into any other random car.

              By defining an upper limit on the number of taxis that can be licensed, you can define a budget for enforcement that has a reasonable chance of success and devise a method for funding this budget. But what we don't yet have is a way of avoiding people selling/renting on their license/medallion at a profit, which is where a lot of the problems have emerged.

              1. I ain't Spartacus Gold badge

                Re: @Spartacus

                Captain Underpants,

                Thanks for saving me some typing. I agree with Nick. Oh sorry, wrong meeting...

              2. auburnman

                Re: @Spartacus

                But if the method of enforcing standards includes training and testing upfront as in the London system, and those costs are passed onto prospective drivers, then the taxi fee can't be nominal, and the enforcement budget can scale in relation to the amount of taxi hopefuls. The scarcity argument assumes enforcement has failed from the get-go.

                1. JC_

                  Re: @Spartacus

                  The problem with enforcement is that there is none. LTDA boasts about how successful it is at getting drivers off on the few occasions that they are ticketed. Despite being a tiny part of the transport network they have outsize representation on the TfL board. 30,000 drivers are represented; half a million cyclists aren't.

                  Traffic enforcement ought to be enforced by a body separate from the police and council, so that effective enforcement doesn't affect how motorists view these groups; basically, it needs to be done by a technocratic group that don't care if (bad) drivers think that they're bastards.

                  Secondly, enforcement needs to actually happen. For that there needs to be an objective measure of how bad the driving is; if, for example, a sample of red-light cameras show violations above a threshold, then up goes the enforcement strictness so that it's brought down.

                  Finally, give the enforcement agents some real encouragement: 10% of the fines as a commission!

      2. jonathanb Silver badge

        In London, their equivalent of a medallion is available to anyone who passes the very difficult test, and it can't be transferred or sold to anyone else.

      3. John Brown (no body) Silver badge

        "They are first and foremost a means to induce artificial scarcity "

        That may be the long term result but the intention was to not flood a city with so many taxis that no one could get enough fares to make a living.

    2. scrubber

      The purpose of licensing...

      "is to ensure those being granted the right to practice their craft are the sort of people society wants practising those crafts"

      Which is why the people who own medallions don't drive cabs? Which is why the driver behind the wheel actually leases the cab? Which is why the fares:rape ration is currently worse for regulated cabs than Uber?

      Okay, here's a thought experiment that you can try in real life: Imagine going to a taxi rank and not getting in the first one but getting in another one further back because his cab looked cleaner/safer. what would the reaction of the cabbies be? Yet that is precisely what the online rating system gives you. Alongside service, whether the banter is racist etc.

      1. Kubla Cant

        Re: The purpose of licensing...

        It's interesting that this discussion homes in on New York cabs. My impression is that the regime under which London's black cabs are regulated, though imperfect, pretty much achieves what these medallions are supposed to be doing.

        Such scarcity as exists is caused by the application of stringent conditions, rather than artificial limitation. The result is a fleet of clean, well-maintained cabs driven by people who know what they're doing (and where they're going).

        Regimes under which the price of cab licenses is high, but standards are not, are simply using the law as a source of income. It's similar to the way councils raise money from traffic cameras and parking meters.

  4. James 100

    Actually works

    Those NYC medallion prices do seem insane - and of course ultimately hurt the customers paying the inflated fares to cover them.

    I found myself needing a taxi in Glasgow a few weeks ago, and booked with what claimed to be a large cab firm with their own iOS app ... booking accepted, for the time I chose ... but never actually turned up. (I phoned, and was told they didn't actually have a car nearby after all, so I was SOL. Very helpful.) A far cry from the experience friends have described using Uber in other cities!

    All I really needed, though, was a realtime map of taxis: if some app could have told me "there's an empty cab two streets away now, phone number xxxxxx", that would have been enough. Supposing I built that app, and covered costs by getting 50p per fare from the drivers: would that mean I need a taxi license for that city, even though I'm not driving or even necessarily setting foot in it? I don't think so; OK, Uber do a bit more, handling the actual payment for the journey as well, but I still wouldn't call them a taxi company.

    1. J.G.Harston Silver badge

      Re: Actually works

      "would that mean I need a taxi license for that city?"

      Yes, because you're operating as a taxi dispatcher. You're matching up customers with drivers. That's "taxi dispatcher". I think that probably the only change in the licensing regs that would be useful to update really is the requirement for a taxi dispatcher's physical address to be in the licensing area. That could be more flexible to address modern realities.

      1. Yet Another Anonymous coward Silver badge

        Re: Actually works

        "would that mean I need a taxi license for that city?"

        Yes but more importantly you would need a license from the BCS, and be a member, and pay annual dues to be allowed to write a computer program.

        We can't have just anyone writing programs - don't you care about hackers etc?

        If only the BCS had the same lobbying cash as the lawyers, accountants, opticians etc

      2. Finder Keeper

        Re: Actually works

        If the regulations pertaining to what's a taxi dispatch service and what's not goes too far, the market will evolve a completely decentralized peer-to-peer matching service similar to OpenBazaar.

        Alternatively, uber will be replaced by a craigslist-like listing service with free-speech safe harbor protections, and a paypal-like payment processing system, both with APIs that allow an umbrella app that can make the end result look exactly like the uber app frrom the users' perspective.

      3. I ain't Spartacus Gold badge

        Re: Actually works

        Excuse my ignorance, but is taxi despatching what has the licence? Or is it the individual drivers?

        Surely we don't care who the despatchers are. They can be rapists, murders or whatever, just so long as the drivers aren't and the cars are maintained - that doesn't actually matter to the passengers.

    2. Colin Bull 1

      Re: Actually works

      ....would that mean I need a taxi license for that city, even though I'm not driving or even necessarily setting foot in it? I don't think so; OK, Uber do a bit more, handling the actual payment for the journey as well, but I still wouldn't call them a taxi company.

      The UK has suffered from similar lobbying as NYC. The taxi and Private Hire regs has been 'localised' so that Taxi drivers can lobby their local authority - in whose area they can tout for business.

      Private hire licences are governed so that your physical address where you take bookings is the licensing authority. BUT you can work any where in the UK. A Bristol PH company can work exclusively in Manchester if they want as long as their vehicles and drivers have licences from same authority.

      If a PH driver works for one company licensed in Birmingham and one in Coventry he needs a separate PH driver license from each - madness

      This is the unintended consequence of lobbyists over riding common sense.

  5. J.G.Harston Silver badge

    Hold on, you're saying that in New York you buy the right to operate a taxi from a private individual? Here in the UK you ""buy"" that right from the local authority taxi licensing board, by paying about £150 and the driver and the vehicle passing the required tests.

    1. DropBear

      Same there

      ...except you can't, see, they're "all gone". So you buy one from someone who already has one and is willing to sell / lease, for the mentioned $1M. Neat, innit?

      1. Yet Another Anonymous coward Silver badge

        Re: Same there

        And the person with a $1M is an idiot. $1M and the return is $40,000/year. ie 4% return on capital.

        This is a billionaire that needs to read some business books.

        1. Richard 12 Silver badge

          Near-zero risk though

          Until recently, it appeared to be zero risk.

          There aren't many ways to invest $1 million with a guaranteed 4% return.

    2. a cynic writes...

      In London it's a bit different with two types of taxi - black cabs that are heavily regulated* and minicabs (aka private hire vehicles) which are lightly regulated. Uber ignores both.

      Don't under any circumstances ask a black cab driver (like my brother in law) about Uber. He will tell you...

      Anyway there are two logical answers - either enforce the existing regulations or relax them. What's the betting neither happens until the first horror story hits the front page?

      *Heavily regulated as in you need to pass an exam as to routes (takes 1-2 years), use one of the 3 vehicles which conform to spec (about £40k) and your fare rates are set by government. By contrast minicabs just need to be roadworthy, be pre-booked and with a pre-agreed fare.

      1. ChrisB 2

        "Uber ignores both"

        I'm not a great defender of Uber preferring the traditional Lahndahn cabbie (they can use bus lanes!), but in London at least their drivers have to be licensed and insured as private hire drivers - i.e. exactly the same as book-on-the-phone minicab drivers.

        http://driveuberuki.com/london

        1. auburnman

          I think that's the slightly schizophrenic thing about Uber - in one country they may be unpopular but they are working with licenced drivers under minicab regulations, but in the next country over they appear to be shitting on everyone and doing as they please. This could be what is polarizing the debate into leave 'em be vs. Lock 'em up.

    3. BlokeOnMotorway

      Slightly different over there. The medallion owner has the right to operate a firm, and thus create a taxi fleet by leasing cars to drivers, who I think are also individually licenced, but only as drivers. There isn't an equivalent firm/medallion licence in the UK, as each licence (driver, operator) has to be held by an individual, not a corporate entity.

      If I remember correctly, medallions change hands via auction, and NYC (back in the nineties) certainly took a percentage of the price.

      Also, IIRC, each metropolitan/city area has/can have a different licencing scheme, so back in 2001, in the Garden City area, there were taxis that could only pick up and drop within the city limits, those that could only run between the city area and the airports & hotels, and other variations and terms. In London, there are two licences for black cabs, one for the centre of London and one for the suburbs. A driver can hold both.

    4. Chris Miller

      @JG Harston

      No, that's not correct. If you want a taxi licence (as opposed to private hire), you have to buy one from an existing 'owner'. In my part of Buckinghamshire, they go for about £30-40k.

  6. auburnman

    Potential topic for Worstal...

    Was there ever a serious rationale for the limitation on taxi licences/medallions or whatever, or has it always been a naked attempt to force scarcity and enable rent-seeking?

    1. Neil Barnes Silver badge

      Re: Potential topic for Worstal...

      It's a logical extension of the medieval guild system, wherein one had to be a member of the guild to perform the actions covered by that guild.

      If you're a medieval robber-baron guild master, that is...

      But at least in the case of the guilds, they *did* try and maintain a standard, such that one knew that a guild member (a) was a guild member and (b) would work to the standards/ethics of the guild - on pain of, well, pain if one represented oneself otherwise.

      These days, that membership is generally replaced by either a trade body - e.g. the BMA, the BCA, or the IEEE or similar - or by a standards test administered by a local council, e.g. most taxi licensing in the UK.

      To be honest, I couldn't care two hoots whether a taxi function is carried out by a Uber-employed driver, a licensed minicab, or a Hackney Carriage - provided that in *any* case when I use a taxi, said taxi and driver are guaranteed by *someone* to be mechanically safe, insured, competent, and without a relevant criminal conviction.

      1. tony2heads

        @Neil Barnes

        I have used Uber a few times and spoke with the drivers. All were happy with Uber, and used GPS (typically on a smartphone) to find their way around. One was an ex-taxi firm guy and said that he preferred Uber to his old boss. They said that the convenience of the app got them more business without having to sit at a taxi rank.

        They better than the local taxi service (but to be honest that is a low standard).

        Uber does NOT employ them.

      2. Tim Worstal

        Re: Potential topic for Worstal...

        That's what makes the comment above about reading Smith so interesting. Large parts of WoT are really an explanation of what's wrong with that guild system.

    2. Jason Bloomberg Silver badge

      Re: Potential topic for Worstal...

      And what about getting the opinions of other experts who may have a contradictory view to Worstall?

      I don't mind Worstall having his platform but I am not comfortable with El Reg becoming a Worstall vehicle, giving his perspective on such issues exclusively.

      1. Tim Worstal

        Re: Potential topic for Worstal...

        I don't quite know how many people El Reg has writing for it but I'm sure it's just more than me.....

    3. Irony Deficient

      Re: Potential topic for Worstall …

      auburnman, in the case of New York, you could research the “Haas Act” (really a city ordinance) from 1937. This 1996 article from the New York Times provides a brief overview of the situation that led to its adoption. The number of medallions were frozen at that time; the post-WWII economic boom led to the increase of value of the medallions, and additional medallions were first issued only in 1996, but not in numbers that significantly affected the (artificial) value of the originals.

    4. Captain Underpants

      Re: Potential topic for Worstal...

      Yes - see here. Basically in the 1920s the level of service was bloody awful, and the decision was taken to limit the number of cabs that could operate legally and require standards of service of those who were licensed to operate. This scarcity meant that operators with higher costs (carrying out proper maintenance on cars, properly trained drivers, clean cabs etc) could afford to maintain their standard service and still make a profit, and had the desired result of turning the cab service into something useful.

      The problem is that medallion holders are able to lease out their medallions at ludicrous rates, essentially re-establishing the old problem of promoting undesirable behaviour from taxi drivers because nobody can afford to run a service with higher standards.

      Edit: beaten to the punch by Irony Deficient

      1. Neil Barnes Silver badge

        Re: Potential topic for Worstal...

        The problem is that medallion holders are able to lease out their medallions...

        And that's it, exactly. If you can't resell your medallion, it has *no* value except to certify *you*. It should be inexpensive to obtain (over and above any necessary training). It should be carried by the driver, not a parent company, and should provide only approval of the driver, not the company for which he may work. A similar but perhaps simpler system may be required for the vehicle itself, to cope with vehicle sharing - but there is absolutely no reason for, and no benefit to the taxi user from, the million dollar medallion.

  7. J.G.Harston Silver badge

    "but is taxi despatching what has the licence? Or is it the individual drivers?"

    All three. My experience is outside London, but London is gradually converging with non-London taxi law.

    In UK law:

    a taxi dispatcher needs a taxi dispatcher's license, issued from the taxi licensing authority for the taxi licensing area they wish to dispatch taxis from. They need a physical address in the taxi licensing area they wish to operate in.

    a taxi vehicle needs a taxi vehicle license. The vehicle has to pass an enhanced MOT test and has to comply with any additional rules the licensing authority sets. For example, we required all vehicles need to be no more than three years old on first licensing, and no more than 15 years old on renewal, certain size of driver ID plates, certain minimum number of seats. If the vehicle falls outside these you had the opportunity to go to the board and explain why a deviation was appropriate. For example, we had some sui generis stuff like fire engines and vintage buses. Once a vehicle is licensied it can be used in the area it is licensed in.

    a driver needs a taxi driver's license. The driver needs to pass a medical and knowledge test and we advised applicants to complete the local college's taxi driver's course. We added to those requirements by specifying a driver had to be 21+ years old and have 3+ years driving experience. Again, if the applicant falls outside these requirements they have the opportunity to go to the board and explain in person why policy should be deviated from. For example, we had a 20-year-old applicant with five years' driving experience come to board. A driver is licensed either as a private hire driver, and can only take pre-booked fares, or a hackney driver, and can ply for hire and take pre-booked fares. Once licensed, a driver can use a vehicle licensed in the licensing area to trade in the licensing area. A driver is allowed to pick up in the licensed area, but drop off anywhere.

    the driver does not have to be the vehicle owner. There is no problem with a single vehicle being used by multiple drivers, as long as the vehicle is licensed, and the drivers are licensed.

    the licensing board has the ability to set a ceiling on fares. Any taxi is completely free to charge absolutely anything up to, but no more than, that fare ceiling. If the fare ceiling is £1.50 a mile, there is absolutely nothing stopping the driver chargeing £1 a mile. Fares are regulated on hackney (ply for hire) taxis, but in my city the private hire used the same rates. A journey that crosses a boundary is not regulated and is subject to negotiation before the journey starts or is booked.

    The smallest licensing area is a single district council. Licensing areas are free to amalgamate their licensed areas so a license is usable in a larger area, and the SecOfState has the power to forcable amalgamate areas. Greater London is an amalgamated area. In my opinion, Greater Manchester should also be an amalgamated area.

    the law requires vehicles to be licensed, and the law requires vehicles used for business purposes to be insured for business purposes, so a vehicle used as a taxi is required to be insured for use as a taxi. Operating a taxi without a taxi license or vehicle license invalidates your insurance, so we would always bring a "driving without insurance" prosecution as well as a "taxi without a license" prosecution.

    1. Doctor Syntax Silver badge

      @ J.G.Harston

      Thanks for a knowledgeable comment. But although the requirements for driver & vehicle licensing are well spelled out & sensible it's difficult to see why the requirement exists for a dispatcher to be licensed. This appears to be an area where technology could improve - for instance the suggestion of an app displaying current locations of taxis to ensure service. The dispatcher licensing appears to be an impediment to such improvement.

      1. J.G.Harston Silver badge

        Re: @ J.G.Harston

        Good point. Off the top of my head I don't know why dispatchers are regulated. Vehicles and drivers are regulated to protect the public. I'm not sure what public safety threat dispatchers have that isn't covered by normal law, eg discrimination law preventing the dispatcher refusing to employ certain categories of person whereit is not relevant to their job.

        (We had to repeatedly advise one start-up who wanted to do women-only taxis that they would be breaking the law if they refused to employ a man who applied for a job with them, or pick up a passenger, because he was a man. We advised them their route was to target their advertising, not make breaking the sex discrimination laws the core of their business).

  8. Charles Manning

    Bandits

    "It's better to be ruled by stationary bandits rather than nomadic ones, to be sure, for they will at least farm you rather than just steal everything."

    Wrong, the nomadic ones are better.

    The stationary bandits do farm you, but they manage to convince the populace that it is for their own good, so people welcome them and accept their lives of tax servitude.

    The mobile rape and pillage sort are obviously bandits and the people see them for what they are, so people defend themselves and get rid of them.

    1. Doctor Syntax Silver badge
      Coat

      Re: Bandits

      It's the stationery bandits you have to worry about. They smother you with paperwork.

      Mine's the one with the triplicate invoice book in the pocket.

  9. BobRocket

    Why have a dog

    Talking of economic rents, the UK Government currently pays over £1Beellion per week in interest on its borrowing.

    This is interesting because the UK Government owns a bank, the Bank of England.

    The Government does actually borrow from its own bank (QE) and it pays interest on the loan but the interest forms part of the profit that the bank makes which is paid back to the owners (UK Gov).

    The question has to be,

    'Why are we (the taxpaying public) paying private financial entities £1B/wk when there is no need ?'

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