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Friday, October 21, 2016

London’s Mayor Tries to Stop History: The Case of Uber

He is trying to regulate ridesharing out of existence

Like New York City’s yellow cabs, London’s black cabs were once the only choice for individuals’ public above-ground transportation. People took the Tube, a bus, or a cab. But competition from ride-sharing services such as Uber has eaten into the taxi business.

London mayor Sadiq Khan promised to reverse this progress back in March when he said, “I will be a mayor that begins the renaissance of the black taxis. They’re iconic—we saw the closing ceremony at the Olympics, what a role they had. I don’t want the black taxi to go the way of the red telephone box.”

Khan followed through on this promise by releasing his 27-point “Taxi and Private Hire Action Plan.” In it he lays out measures that could limit many of the benefits that have come from ride-sharing while providing major subsidies to the city’s taxi industry.

Stopping Progress

Instead of government giveaways, ride-sharing drivers can expect significant hurdles.Since Uber arrived in London four years ago, its relationship with the taxi industry has been turbulent, to say the least. Uber and other ride-sharing platforms have expanded the number of for-hire trips and poached some of the cabs’ riders. Taxi drivers have responded with slowdown protests and ineffective lawsuits. The 27 measures described in Mayor Khan’s new plan, though, provide just the answers they were seeking. (Compare the release to the 28 points in the taxi drivers’ April manifesto and you will find considerable overlap.)

The plan is to roll out government-sponsored preferences for taxi companies. While cabs may see a 20 percent increase in their ranks by 2020, they will also receive expanded access to bus lanes and expensive subsidies to promote a greener taxi industry. Transport for London, the local transportation regulator, will put aside $51 million to incentivize drivers of older taxis to end their licenses. Further, $32 million will be used to subsidize the first 9,000 zero-emissions-capable taxis, and the industry is lobbying London’s government for even more funding.

New Burdens for Ridesharing

Instead of government giveaways, ride-sharing drivers can expect significant hurdles. The plan describes special insurance requirements, English-language requirements, advanced driving tests, and topographical tests. All of these will result in higher fares and longer waits for passengers.

It is no wonder that black cabs cost more than Uber. Taxi drivers regularly spend over $1,200 and three to five years on the licensing process, and they then must secure a $55,000 vehicle. Once they begin driving their cabs, drivers must charge high fares that are prohibitive for low-income individuals and those who live on the outskirts of the city, where black cabs are difficult to find. London has likely seen the same effects as New York City: Ride-sharing’s growth mostly benefited residents of low-income, non-Manhattan neighborhoods, where yellow taxis are scarce.

In an e-mail to its customers, Uber challenged Khan’s action plan by writing: 

“We understand that black-cab drivers are feeling the pressure from services like Uber. But the answer is to level the playing field by reducing today’s burdensome black-cab regulations — not to impose new costs on private-hire drivers at the behest of the Licensed Taxi Drivers Association (LTDA) and the London Cab Driver’s Club.”

This is a simple, commonsense solution that policymakers often overlook.

Ride-sharing services significantly decrease traffic congestion after entering an urban area.For example, the process of studying for “the Knowledge” — London’s infamously difficult licensing test for cabdrivers — takes “on average between 3 and 5 years.” Why should any drivers have to memorize London’s streets when GPS is widely available? Instead of applying parts of the Knowledge exam to ride-sharing drivers, authorities should free taxi drivers from its antiquated requirements.

Mayor Khan’s action plan assumes several unproven claims about Uber that are heard from taxi drivers globally. It orders a full review of ride-sharing companies to address “the congestion caused by the rise in the number of PHVs [private-hire vehicles].” No citation is provided for this causal claim, which was once made and refuted in New York City. Also, a recent study from Arizona State University finds that ride-sharing services significantly decrease traffic congestion after entering an urban area. 

Several measures in the Action Plan use soft terminology such as “investigate the feasibility of . . . ” or “explore the potential for . . . ” Each is a harbinger for future restrictions such as the introduction of three-year background checks for drivers. This is unnecessary because all signs point to ride-sharing’s being safer than cabs for both riders and drivers. The main reasons for this conclusion are that ride-sharing gets rid of anonymity and cash — two aspects that make cabs magnets for crime. This is why in the United States the homicide rate for taxi drivers is twice that for police officers.

Not about Residents

By increasing the availability and reliability of rides, ride-sharing has lowered DUI incidents and alcohol-related car accidents. If Uber’s background checks, peer-to-peer rating systems, and live-tracking features are able to achieve even the same level of safety as taxis’ burdensome regulations, then ride-sharing’s consumer-driven approach to regulation is the preferable route to follow.

Sifting through the arguments, it becomes more difficult to believe that Mayor Khan’s plan is about helping London residents. The London black cab has no clear advantage over ride-sharing in terms of contribution to traffic congestion, passenger and driver safety, or equitable service.

That leaves only the argument that the aesthetic value of the black cabs — icons of 20th-century London — outweighs the costs of foregone innovation. Sorry, Mayor Kahn, but policymakers should realize that while some might enjoy riding London black cabs, others might prefer the convenience of lower-cost Ubers. This choice of transportation should be left to consumers.

This piece ran on E21

  • Jared Meyer is a fellow at the Manhattan Institute for Policy Research. His research has been published in The Wall Street Journal and National Review.