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There is an assumption within your comment that these different market segments ought to be served by a single transportation company. If Uber wants to come alo

by Pyxl101 12y ago

There is an assumption within your comment that these different market segments ought to be served by a single transportation company. If Uber wants to come along and take the "cream", let them. If that means traditional taxi companies go out of business, or have to change their business model and cater to a different segment, then so be it. That's competition, and competition is a good, healthy thing. It keeps us strong. A market that doesn't allow this is dysfunctional. If some of these segments are unprofitable and cannot be served by regular businesses, then that's good for us to realize! That encourages us to have the discussion we ought to be having, which is: should we provide these services in pursuit of a social goal? And what are the services worth? I would be much more in favor of cities contracting with private companies to provide a service than passing regulation to require it. Requiring a service by regulation hides the true cost of the service and causes it to be borne in random places and in random ways through price increases. It's like a hidden tax. There should be a clear dollar cost for these services in the budget, and voters should be able to inspect the costs and decide what's reasonable. Requiring private companies to provide the service through regulation does not promote a transparent democracy, since voters cannot easily determine the cost, and indeed the actual cost may be hard to determine. For example, if the city wishes there to be a certain number of vehicles available for the disabled, then a reasonable and fair approach is to ask private transportation companies to bid on a contract to provide that service. The city should be satisfied paying the lowest bid for that service. If the lowest price is viewed as too high, then this is a signal that either some political debate is needed regarding the budget for such things, or that the resources should be spent on another social goal which provides value more effectively. Far too many different issues are bundled together in the discussions of taxis. We ought to unbundle them. [Edit: Sorry for reposting my comment. There seems to be some kind of issue that's preventing me from editing my comments in minor ways like I usually can.]

sokoloff 12y ago
Should the electricity distribution company be allowed to cream off tptacek's and others who are less price sensitive business? The natural gas/water/sewer company? The fire department? What if the end result is that rich people get stable electricity, gas, water/sewer, basic internet, and fire protection services, while the poor can just fend for themselves or hope that the low bidder utility has power tomorrow? There are companies granted/licensed some form of monopoly in exchange for minimum mandated services, maximum mandated rates, and other limits to capitalism in its purest form because government believes that their service is essential in some way. Many cities operate taxi licensing in this light. That you view this as prime facia evidence that the taxi market is dysfunctional and that Uber should be able to selectively siphon off a portion of the demand without abiding the rest of the government-regulated taxi requirements is consistent internally, but I believe misses some of the underlying public good that the current taxi system provides.
- Pyxl101 12y ago
  Yes, you make a good point that utilities are not always profitable, and as a social policy it's reasonable for cities to ensure that everyone gets access. I agree with you that there is a sort of public good provided by taxis, but I disagree that it's a natural monopoly of the kind that you mentioned. There are varying strategies for solving the problem of social goods like utilities. In some cities, utilities like these are publicly owned, such as Seattle City Light. I'm not convinced that individual transportation services are sufficiently similar to utilities that they fall into this category. What utilities have in common is that they fundamentally share physical infrastructure: pipes, wires, etc. It does not make economic sense to run duplicate wires everywhere, and so we grant a monopoly to one utility company. By comparison, each private vehicle traveling along the road is physically distinct from all others. (There will certainly be economies to scale for a single organization to operate a larger fleet of vehicles, but that's always true in every business.) Buses make sense to offer as a public good since they represent collective transportation; whereas private for-hire vehicles inherently offer individualized transportation. So it may be a public good, but it's not quite collective nor a natural monopoly. I don't think it's inherently unreasonable for cities to want to ensure access to this type of individual transportation [1], but I question whether the current taxi model is the right one. What is the best way to meet these public needs? I don't know for sure, but some attractive alternative approaches include: (1) offering a subsidy for private transportation companies to meet certain criteria (e.g., area coverage) (2) soliciting bids for private contracts with companies to provide the service under contract (3) directly providing the service (metro). Forcing companies to provide the service in order to get licensed to provide other services is heavy-handed and unjustified based on what I've learned so far. I have not heard a convincing argument for why a company that wishes to provide some transportation services should also be forced to provide other transportation services at certain prices. The utility company should be forced to support everyone because we don't want to dig up our roads over and over again, and because water and electricity are necessary for life, and sewer for sanitation reasons. The fire department should support everyone so that your house catching fire doesn't cause mine to burn down. There are good public benefit arguments behind most of these utilities. Are private cars that drive you around really in the same category? And if they are, what stops cities from solving these problems with a much less heavy-handed approach that enables innovation? Isn't Uber serving taxi-like needs through UberX anyway? It's not as if the poor would be without transport even if only Uber was available. Let's allow private companies to provide what transportation they can. The existence of these companies does not stop the city from offering alternative solutions for various market segments, or offering a subsidy to entice companies to meet those needs. I would like to make one last argument against the current model. The current regulation model imposes a lot of costs on transportation companies that are effectively a hidden tax - when in any aspect of their operations they're forced to do something unnatural. These costs surface through higher prices. However, these prices are opaque. A voter in the district can't necessarily determine how much higher taxi prices are because of the city's decision to force them to do <X>. This does not support an informed, rational democracy. Consider the alternative models I've proposed above. They all essentially include a contract where the city is providing a service directly, or paying a third party to do so. You can imagine computing a very clear line-item cost in the budget for each of the services that the city wishes to be provided. Consequently, voters in the district can learn about these costs transparently, and reason about whether the cost/benefit tradeoff makes sense to them. It is possible for voters to say, "This service is too expensive - we should cease funding it". How could we determine whether certain requirements mandated under taxi regulation are too expensive? Does deciding to stop providing a service mean that the city needs to amend its law? (Inflexible and, again, heavy-handed.) The costs are known only to private companies, and even they might require actuarial analysis to understand the costs. Whereas if you pay a private transportation service to offer subsidized taxi-like transportation in certain areas, in certain hours, then we know exactly what it costs, and we can make an informed decision about whether to continue to provide the service or not. Regulation requiring private companies to provide the service as part of other activities just obfuscates the cost and prevents us from reasoning about it intelligently, like in debates like this. [1] In fact, I hope the city of the future will move away from buses, and move to automated fleets of something like robotic Uber, scheduled in real-time based on live transportation needs

by Pyxl101 12y ago

sokoloff 12y ago

Should the electricity distribution company be allowed to cream off tptacek's and others who are less price sensitive business? The natural gas/water/sewer company? The fire department? What if the end result is that rich people get stable electricity, gas, water/sewer, basic internet, and fire protection services, while the poor can just fend for themselves or hope that the low bidder utility has power tomorrow? There are companies granted/licensed some form of monopoly in exchange for minimum mandated services, maximum mandated rates, and other limits to capitalism in its purest form because government believes that their service is essential in some way. Many cities operate taxi licensing in this light. That you view this as prime facia evidence that the taxi market is dysfunctional and that Uber should be able to selectively siphon off a portion of the demand without abiding the rest of the government-regulated taxi requirements is consistent internally, but I believe misses some of the underlying public good that the current taxi system provides.

Pyxl101 12y ago
Yes, you make a good point that utilities are not always profitable, and as a social policy it's reasonable for cities to ensure that everyone gets access. I agree with you that there is a sort of public good provided by taxis, but I disagree that it's a natural monopoly of the kind that you mentioned. There are varying strategies for solving the problem of social goods like utilities. In some cities, utilities like these are publicly owned, such as Seattle City Light. I'm not convinced that individual transportation services are sufficiently similar to utilities that they fall into this category. What utilities have in common is that they fundamentally share physical infrastructure: pipes, wires, etc. It does not make economic sense to run duplicate wires everywhere, and so we grant a monopoly to one utility company. By comparison, each private vehicle traveling along the road is physically distinct from all others. (There will certainly be economies to scale for a single organization to operate a larger fleet of vehicles, but that's always true in every business.) Buses make sense to offer as a public good since they represent collective transportation; whereas private for-hire vehicles inherently offer individualized transportation. So it may be a public good, but it's not quite collective nor a natural monopoly. I don't think it's inherently unreasonable for cities to want to ensure access to this type of individual transportation [1], but I question whether the current taxi model is the right one. What is the best way to meet these public needs? I don't know for sure, but some attractive alternative approaches include: (1) offering a subsidy for private transportation companies to meet certain criteria (e.g., area coverage) (2) soliciting bids for private contracts with companies to provide the service under contract (3) directly providing the service (metro). Forcing companies to provide the service in order to get licensed to provide other services is heavy-handed and unjustified based on what I've learned so far. I have not heard a convincing argument for why a company that wishes to provide some transportation services should also be forced to provide other transportation services at certain prices. The utility company should be forced to support everyone because we don't want to dig up our roads over and over again, and because water and electricity are necessary for life, and sewer for sanitation reasons. The fire department should support everyone so that your house catching fire doesn't cause mine to burn down. There are good public benefit arguments behind most of these utilities. Are private cars that drive you around really in the same category? And if they are, what stops cities from solving these problems with a much less heavy-handed approach that enables innovation? Isn't Uber serving taxi-like needs through UberX anyway? It's not as if the poor would be without transport even if only Uber was available. Let's allow private companies to provide what transportation they can. The existence of these companies does not stop the city from offering alternative solutions for various market segments, or offering a subsidy to entice companies to meet those needs. I would like to make one last argument against the current model. The current regulation model imposes a lot of costs on transportation companies that are effectively a hidden tax - when in any aspect of their operations they're forced to do something unnatural. These costs surface through higher prices. However, these prices are opaque. A voter in the district can't necessarily determine how much higher taxi prices are because of the city's decision to force them to do <X>. This does not support an informed, rational democracy. Consider the alternative models I've proposed above. They all essentially include a contract where the city is providing a service directly, or paying a third party to do so. You can imagine computing a very clear line-item cost in the budget for each of the services that the city wishes to be provided. Consequently, voters in the district can learn about these costs transparently, and reason about whether the cost/benefit tradeoff makes sense to them. It is possible for voters to say, "This service is too expensive - we should cease funding it". How could we determine whether certain requirements mandated under taxi regulation are too expensive? Does deciding to stop providing a service mean that the city needs to amend its law? (Inflexible and, again, heavy-handed.) The costs are known only to private companies, and even they might require actuarial analysis to understand the costs. Whereas if you pay a private transportation service to offer subsidized taxi-like transportation in certain areas, in certain hours, then we know exactly what it costs, and we can make an informed decision about whether to continue to provide the service or not. Regulation requiring private companies to provide the service as part of other activities just obfuscates the cost and prevents us from reasoning about it intelligently, like in debates like this. [1] In fact, I hope the city of the future will move away from buses, and move to automated fleets of something like robotic Uber, scheduled in real-time based on live transportation needs