Should government choose which cab you can take?

 

Should government determine how many taxicabs can operate in a city? Should it charge cabdrivers thousands of dollars for the “privilege” of offering cab service?

That’s exactly what Salt Lake City is doing, and Yellow Cab has decided to sue. Watch the following video report to learn more:

httpv://www.youtube.com/watch?v=85AZXdo4fhs

Salt Lake City Council Chairwoman Jill Remington-Love has said that the city has been looking for ways to improve cab service for years. We have a suggestion for the city: Try the free market by letting cabdrivers and riders determine when, where and for how much money they do business.

What do you think?

Here’s the script for the video:

VOICE-OVER: More than two months ago the Salt Lake City Airport opened a bidding process and chose two cab companies, Ace Taxi Service and Total Transit, that would be able to operate at SLC Airport and banned the other three taxi companies. Here’s the catch: The airport will receive $501,000 annually from the two chosen cab companies in order for them to operate. Don Winder, who is the attorney for Yellow Cab, is suing the Salt Lake airport.

DON WINDER: “This is not airport only; this is for all of the citizens of Salt Lake City. Where does the airport get the authority to charge $501,000 annually to the taxicab companies for the privilege of providing taxicab service in this city? It’s unprecedented; it’s never happened in this city, in this county, in this state, or in this country except for a couple small communities in California that have special legislation.”

VOICE-OVER: Not only are the cab companies expected to pay an annual fee to operate, but the lease rate per week for the cabdrivers will rise significantly.

MR. WINDER: “Right now, Yellow Cabs’ lease rate to the drivers is $276 per week, so that’s what it costs to put to able to put a cab on fleet. Total Transit’s cost to the drivers for the new Priuses is $785 a week, and Ace’s charge to the drivers is $550 a week. Well, how are the drivers going to pay for this?”

VOICE-OVER: But the real reason for the lawsuit is that the government, through the airport, is excluding taxi companies from servicing customers. Soren Simonsen, a council member for the Salt Lake City Council, voted against the current regulations for ground transportation in Salt Lake City.

SOREN SIMSONSEN: “The city is very heavily regulating an industry and has provided in my opinion no reasonable way for this industry to help guide this legislation. I don’t know of many legislative actions that have had as little contribution or input from an industry as this particular one, and I don’t know why that’s the case.”

VOICE-OVER: So should government even be involved in regulating the free market?

MR. SIMONSEN: “Conceptually I don’t think I would be opposed to looking at a much lower level of regulation, and I think there is still some ways to keep some checks and balances without specifically requiring contracts with taxi providers and a heavy set of regulations and fees.”

VOICE-OVER: Councilman Simonsen’s comments raise the question of whether a lawsuit would have occurred at all if cab companies were not so heavily regulated. Sutherland Institute’s Policy Analyst Matt Piccolo offered his thoughts.

MATT PICCOLO: “It’s inevitable that someone is going to file a lawsuit in a situation like this, because the government is regulating what a taxicab driver can do to try to earn a living, and that affects a lot of people. Not only does it affect taxicab drivers, it also affects the consumer because when you regulate the market, when you have barriers to entry, it almost always raises the cost of whatever product or services are being offered. It decreases the quality of service because there’s not enough competition or as much competition as there would be in a free market. I believe that in almost every case the free market works better than regulation, because of course the free market is not perfect, but overregulation causes much more harm than underregulation and allowing people to earn a living to buy the products and services they want, at the price they want, is a much better approach than regulation.”

VOICE-OVER: Sutherland tried to contact and interview a council member who supports the city’s cab regulations, but they declined to be interviewed. For Sutherland Institute, I’m Alexis Young, reminding you that public policy changes lives.

This entry was posted in Regulation and tagged , , , . Bookmark the permalink.
  • Rachel M.

    A taxi driver in Kuala Lumpur told my husband and I that he is only allowed to drop off at the airport because the government regulates which companies can pick-up from the airport. We immediately thought it was a sign of corruption, and it gave us a bad impression of the Malaysian government. I certainly wouldn’t have imagined that the same thing would happen at the SLC airport.