The Great Taxi Upheaval 218
An anonymous reader writes: Uber, Lyft, and a variety of competitors are becoming ubiquitous. Their presence is jarring not because of how different they are from conventional taxis, but simply because they're different at all. Taxis really haven't changed much over the years. Watch a movie from the '90s and you can't help but chuckle at the giant, clunky mobile phones they use. But you can go all the way back to movies from '30s and scenes with taxis won't be unfamiliar. New York Magazine has a series of articles about the taxi revolution currently underway. "So far, Uber appears to be pinching traditional car services—Carmel, Dial 7, and the like—hardest. (They have apps, too, but Uber's is the one you've heard of.) The big question is about the prices for medallions, because so much of the yellow-cab business depends on their future value. ... [I]t's hard to see how those prices won't slip. Medallions, after all, are part of a top-down system formed to fight the abuses and dangers of the old crooked New York: rattletrap cars, overclocked meters, bribed inspectors. Its heavy regulation in turn empowered the taxi lobby and (somewhat) the drivers union. That system may be a pain to deal with, but in its defense, it provided predictability and security. The loosey-goosey libertarian alternative, conceived in the clean Northern California air, calls upon the market to provide checks and balances. A poorly served passenger can, instead of turning to a city agency for recourse, switch allegiances or sue."
The Free Market has the Technology Now (Score:2, Insightful)
Re:The Free Market has the Technology Now (Score:5, Insightful)
A look at how other online rating systems have been rigged suggests you're being hopelessly naive.
Re:Not this again.. (Score:4, Insightful)
Fear, uncertainty, doubt.
You're going to end up in a ditch! Only the government can save you! The government never lets anyone die or have bad things happen to them. Because democracy!
Re:The Free Market has the Technology Now (Score:4, Insightful)
You don't have to get all your information from one source.
Re:The Free Market has the Technology Now (Score:5, Insightful)
The "Free Market" is a myth. Suing to recover one's losses is a myth, at least as far as getting the defendant to actually respond to suits in small-claims is concerned. One can win by default judgement and then what? Good luck collecting.
There's a reason for taxi medallions, registrars of contractors, business licenses, landlord-tenant laws, and other regulation services, and it's to keep those that run those businesses honest and to protect the consumer. A bad-apple can operate for YEARS when new customers in a market don't know to avoid them, even if existing customers have reviewed them as bad. After all, when you're new to a market you don't necessarily even know how to find the reviews for that market, and a private service like Uber, while interested in providing reviews, won't go out of their way to disrespect their drivers as it in turn disrespects their very service. They have to tread a fine line as their service is dependent on their service providers, so they literally can't afford to be free-market in this sense.
I practice caveat emptor. Something that seems too good to be true often is. Something that starts out cheap and good probably won't be cheap and good for very long once its inertia sets in. Think about radio stations, when a station has a complete format change, the new station is often great, few ads, very short self-promotion clips, lots of music, DJs that don't talk that much. But that's when they're in the initial attract-listener phase. Once they've got a listener base they can sell ads. They need to bring the cost of the music down so they make longer self-promotion clips, and they have their DJs talk more since DJ airtime doesn't really cost anything, and soon they're no different that their competitors.
From a non-driver perspective (Score:4, Insightful)
I stopped driving 2 years ago, voluntarily. My SUV cost me around $800 a month in replacement costs. Another $200 in maintenance. I was burning through $12,000 a year in gas. I spent an average of 1000 hours a year in the car, for work, for groceries, for fun. 999 of those hours were spent focused on the road. I hate talking on the phone while driving.
Consider my annual total: about $25,000 + 1000 hours of my time. For the "privilege" to sit in Chicago traffic.
I'm a consultant. I now use UberX every day. I also use public transportation when I'm not in a rush or when someone isn't paying me to swing by.
I spent about $5000 a year on UberX. $100 a week. While I am being driven around, I can respond to emails, make phone calls. I bill for that time. When a customer wants me to visit them, I pass the UberX fee on to them plus 50%. No one scoffs at it. Some customers will realize the cost of me visiting them is more expensive than just consulting over the phone.
I figure I'm $20,000 ahead in vehicle costs, plus I've literally gained another 600-700 hours of phone and email consulting time a year. Call it $40,000 ahead.
I don't take cabs, because they don't like to come to where my HQ is (ghetto neighborhood). UberX comes 24/7, within minutes.
My little sister had an emergency surgery a few months ago. I immediately hired an UberX driver, who took me from the office, to the hospital. He waited. We then took my sister to her apartment to get her cats and clothes, then he took us to the pharmacy. After, he drove us to our dad's house to drop her off, in the suburbs of Chicago. Then he drove me back to work. 3 hours, $90. I can't get a cab to wait even 10 minutes while I drop off a package at UPS. Forget about them taking credit cards.
UberX charges my Paypal account and they're off. If they're busy, they charge a surcharge. I can pick it or take public transportation.
I know why the Chicago Taxi authorities want Uber gone. But a guy like me is their best customer. Next year I'll budget $10,000 a year for UberX, and it will make my life so much more enjoyable and profitable.
Driving yourself around is dead. It's inefficient. Ridesharing is "libertarian" because it is truly freeing.
Re:The Free Market has the Technology Now (Score:4, Insightful)
> What was previously missing from the free market was perfect information
Oh, thank you! I have to put that one up as my new "stupidest claim of the week" motto!
My dear boy, welcome to Heisenberg. The energy exerted to collect that "perfect information" would itself involve so much energy, money, effort, and overload of information that it would itself profoundly distort the situation. And let's be frank, people *lie*. They lie about ignoring fares they don't feel like picking up because the passenger is black or hispanic, they lie about insurance and training and what happened to the wallet left in the car, and they lie to the cabbies about how much cash they've got.
Your under-experienced college kid scoring a few bucks for pizza money and using mom's credit card to pay for insurance and gas bills is *not* usually going to be able to handle the cab pick up of the drunk at the party who wants to go to the last open bar, the confused diabetic, or the carsick toddler.
Well, I could, I worked ambulance when I was 20. But I'm weird.
Comment removed (Score:4, Insightful)
Re:The Free Market has the Technology Now (Score:5, Insightful)
I would presume perfect information means complete information. If that is the case then why would any business be compelled to release information that could be perceived as critical to their operations without regulation or the threat of regulation? As we have seen with the GM case keeping consumers in the dark about safety issues pads the bottom line and they would have gotten away with if it weren't for those pesky NHTSA regulators. I always find it amusing when the captains of industry get on television and berate government regulation and accountability their first line of defense for impropriety is always the mantra "it may be unethical but it is not illegal".
I do think that the goals regulation should be to enforce transparency, clarity, and legal accountability more than just simply restricting certain types of activities.
we're missing the METERS (Score:5, Insightful)
The meters on traditional cabs may sometimes be tinkered with, but that's illegal, and in the vast majority of cases they're accurate and legally binding. Whereas with the new wave of rideshare apps there's no indication of what charges you're reacking up until you arrive. You can get an estimate to start with on at least some of the apps but it's not binding, and especially when surge pricing is in effect you can end up with large and unexpected charges that are difficult to predict.
I use Uber and Lyft a lot, and I'm the first to admit that traditional taxis brought this on themselves, by often refusing to take credit cards and by never adopting a convenient method of hailing a cab for the increasing pool of people who use smartphones. But traditional rules around taxis were put in place for a reason, and meters in particular were created and regulated to protect consumers against arbitrary price-gouging.
Re:The Free Market has the Technology Now (Score:1, Insightful)
Re:Don't worry, Uber et all will end up regulated. (Score:5, Insightful)
I don't think there is anything wrong with the idea of regulation.
However, regulation can be turned into a false barrier to entry when the regulatory system becomes a system with its own constituency, such as the labor unions, medallion holders, and bureaucrats. In those cases, where regulation might simply be updated to take into account new technology or ideas, the regulation blocks consideration of new things, and the constituencies have no interest in making any changes because they like their safe and familiar modes of operation.
Not to mention scenarios where members end up investing in regulatory artifacts like medallions, which have value due only to artificial scarcity and then something comes along and makes those less valuable. They're going to want to protect those investments, even if the underlying system they represent is outdated and less efficient.
The real problem isn't regulation, it is the effect that regulation can have, if allowed to harden into a particular structure that does not respond to outside forces adequately.
Comment removed (Score:5, Insightful)
Re:From a non-driver perspective (Score:5, Insightful)
Are you sure you calculated your gas costs right? That's a helluva lot of money to be spending on gas, even for an SUV. At $4/gal, that's 3000 gallons/yr. At 14 MPG, that's 42,000 miles/yr.
The average vehicle is only driven 12,000 miles/yr, the average commute vehicle about 15,000 miles/yr. If your gas cost is accurate, your use case is just so far outside the norm that your anecdote is probably only applicable to about 0.01% of the population. (Your other vehicle costs seem absurdly high too, even if insurance is included in "replacement costs".)
Which translates into an average speed of 42 MPH, which is unusually high. You must've lived ~70 miles away from your workplace and spent most of your driving on the freeway to (1) rack up that many miles, and (2) have such a high average MPH.
UberX lists their Chicago rates [uber.com] as $2.40 + $0.24/min + $1/mile. There is absolutely no way you're replacing your 42,000 miles/yr commute with fewer than 5000 UberX miles. At 42,000 miles/yr @ 42 MPH and 500 commutes/yr (250 workdays, 2 commutes per day), completely replacing your SUV with UberX would cost you:
($2.40)*(500) + [ (1 mile / 42 MPH)*(60 min/hour)*($0.24/min) + $1/mile ] * (42000 miles) =
$1200 + [ ($0.343/mile) + ($1/mile) ] * (42000 miles) =
$1200 + $56,406 = $68,406/yr
I mean think about it. It's effectively a taxi service. There's no way it can be cheaper than driving your own car (unless it's an UberX carpool) because that would mean the UberX driver would be losing money. Any reduction in your commute costs now that you got rid of the SUV is because you're taking public transportation. Any solo rides you're taking on UberX are costing you more than it took you to drive your SUV.
The IRS places the standard deductible cost for mileage [irs.gov] at $0.56/mile. That's probably a good average to use for a commute vehicle's cost per mile nationwide. UberX costs nearly 3x that.
Medallions (Score:3, Insightful)
The reason for taxi medallions is to prevent competition, end of story. $1M in NYC, $800K in Chicago, yet DC has none and are DC cab known for being horrible?
Talking to a Chicago cab driver of 28 years, what happened was a Russian bought 80% of all cabs in the city. He talked to the mayor and a year later there was a medallion law in Chicago costing $800k to operate a new cab. Guess what? All existing cabs were grandfathered in and got their medallions free. So anyone who operated a cab on the day that went into effect got $800k for each one. They haven't sold any new ones since then, but now that Russian owns tens of millions in cab medallions, and I'd be willing to bet he donated heavily to help Rham get elected as mayor.
Its a corrupt system, pure and simple. People telling you different are part of the corruption or ignorant.
Re:The Free Market has the Technology Now (Score:5, Insightful)
So we see lots of innovations in unregulated industries like semiconductors and software, and little innovation in heavily regulated industries like plumbing.
Depends. There's a reason for regulation: the unregulated industry was ignoring public safety.
For example, when I bought my first car in 1960, I couldn't buy an American car with seat belts (and the American manufacturers dominated the American market). We had about 50,000 deaths a year from motor vehicle accidents, seat belts would have reduced them by about half, they were the most cost-efficient safety improvement, and yet the American automobile manufacturers refused to install them -- or to make any safety improvements. For documentation, read Ralph Nader's book, Unsafe at any Speed. Even some of the auto executives Nader interviewed couldn't figure out why. They continued to resist safety regulation until they lost a big product liability case, Larson vs. General Motors, which held them responsible for injuries due to unsafe products. Once they lost in the courts, they were willing to accept regulation. I used to deal with auto safety engineering a lot, and the U.S. regulators seemed to have done a good job. The free market didn't.
A contrary example would be the airline industry, one of the most innovative industries around. During WWII, the government subsidized aircraft design and production, and was its biggest customer. After the war, they wanted to develop a commercial aircraft industry. The problem was that flying wasn't that safe. Potential customers were worried that they would die in an aircraft accident, and everybody would say how reckless they were. The solution was industry-government cooperation, to develop safety standards. The Federal Aviation Administration established standards for licensing, for maintenance procedures, etc., and aircraft companies had both their own inspectors and government inspectors double-checking them. Sure enough, fatalities went down. They established a model system of safety management, which was adopted by other industries. Back then, government and industry cooperated.
In coal mining, some companies established rigorous safety procedures, while others didn't. The ones without safety procedures had more fatal accidents. Coal miners can't shop around for jobs. The free market failed. The government stepped in. There are many employers who were happy to let their workers die if they could save money. That's why we have OSHA.
Regulation is the sign of a failed free market.
Re:From a non-driver perspective (Score:4, Insightful)
Because working a second-job for that 2-hours every day, wouldn't ever hope to pay for the difference between a $100,000 house with a long commute, and a (smaller) $1mil house with only a short commute.