Friday, August 10, 2018

Picking Winners and Losers in NYC

The once-great, or maybe never-really-great City of New York is at it again.  Yes, I hate the place and all it stands for, so maybe writing this is a guilty pleasure, but when the city steps all over itself, I do experience Schadenfreude of the highest level.

Most of us at one time or another have taken an Uber or Lyft ride, some of us a whole stinking lot of times (I've done it exactly only once, but then again I have a car).  I can't speak to whether or not it is a good experience, certainly not on one episode I've long since forgotten, but it is a popular service.

And a disruptive one.

Apparently, the taxi industry in New York City is noticing.  Cabs there have been a necessary evil forever, since the overpopulation and lack of garage space -- and compressed space lessening the need for them -- keeps down the car count.

The taxi folks have managed to build a tidy little business there -- a few years ago, a medallion, or transferable license to operate a single cab, was selling for well over a million dollars.  That tells you all you need to know.  The people there need cabs, and the industry has conspired with the city to constrain the number of them to drive up prices.

Then came Uber and Lyft, which I will refer to collectively as "Uber", because it's my column.  With an alternative to cabs (and I won't even get into the relative cleanliness or English fluency of the drivers, since I never go near New York and can't really speak to it, but the stereotype is good enough), people started using cabs less and less.

Medallions are now selling for about 90% less than they were only a few short years ago, because the competition is making them less valuable.  It's called "serving the marketplace", and if cabs were serving the marketplace instead of, apparently, screwing it, Uber wouldn't have a place.

Well, the good City and its communist mayor and bumbling council have apparently listened.  Not, of course, to the people of the city, who can now get from point A to point B cheaper than before and with a custom-summoned vehicle.  No, they are listening to the taxicab cartel that was apparently screwing the citizens before Uber came along.

New York City is now limiting the number of Uber cars that can be on the streets at any one time.  I haven't gotten into the details of the law, because the fact that the law exists at all means that the city government and its communist mayor have selected one business over another, rather than allowing the market to make that decision.

They have the right to do that, and they have the right to be voted out of office, if the people of the city hadn't already exposed their stupidity by voting for them in the first place.  That doesn't mean that it made sense.

These anti-capitalists, led by their communist mayor, passed that law not because they were doing a good deed for the people they serve, but because the taxicab cartel complained that their revenues were going down, and they could no longer gouge each other for medallion fees, or gouge the public.

Now, if the City were to have passed a law allowing the taxis to charge whatever they wanted and not be forced to obey mandatory rates set by a commission, perhaps they could compete -- as is done in a free market.  The cabs could then battle with Uber by charging lower fares, for example.  All that would be good for the people of the city.

Ah, the people.  The ones whom the City Council and the communist mayor apparently paid no attention to in the crafting of the bill.  The people who, as of the passage of the law, had less access to transportation than they had the day before, but with exactly no benefit to them.  The taxi cartel now has less competition, and the Uber types are limited in what they can do.  But the people who actually needed the service of being drive from point A to point B, well, apparently their needs are less important than the cartel.

The cab companies are the winners, and Uber and the people of New York are the losers, as chosen by the City of New York.   Ahhhh, they're Yankee fans, I shouldn't care.

And come these next Novembers, those people who lost will go to the polls and vote for the same council members and communist mayor they have been voting for in recent years.  They got screwed, and then they vote for the same thing.

You can't fix stupid.

Copyright 2018 by Robert Sutton
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  1. At some point one has to admit that most voting for candidates like de Blasio, and many other corrupt and economically ignorant politicians, are themselves woefully ignorant of economics and of the events around them. Not only that, but I have no doubt that someone (some people) got paid in order for this change to take place.

    The only way behavior like this gets rewarded is through ignorance.

    1. Sounds like New York, or most big old cities. Capsules of corruption. I feel for Rudy Giuliani, who clearly loves the place for some reason.