Taxi Drivers Are Persecuted by Regulation, Not Innovation

The temper tantrums thrown by taxi drivers around the world, when it comes to ride-sharing services such as Uber or Lyft, is indicative of a dying monopoly. If your taxi driver wasn't angry at the gig economy, then something would be wrong.

Victims of Their Own Monopoly

In Frédéric Bastiat's The Law, the French economist elaborates on the conditions that lead to a monopoly. He writes:

There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are “just” because the law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it. Slavery, restrictions, and monopoly find defenders not only among those who profit from them but also among those who suffer from them.

This is well reflected in a recent article in the New York Post, on the financial difficulties of New York taxi drivers. The piece tells the personal stories of the drivers who see themselves burdened by the licensing system, yet conclude that it must be Uber and Lyft who are to blame for their hardships. The complaints of one driver are explained as follows:

When it’s slow, he drives by Penn Station on Thursday rush hour to join a conga line of 15 cabs. "That never would have happened five years ago. Before, the customer would wait 15 minutes. Now, we do."

From a mere consumer perspective, it is difficult to see how this could possibly be a bad thing. Waiting 15 minutes for a taxi in a city with important business obligations is certainly not adapted to the needs of our time. For the consumer, the decision isn’t only based off of lower prices, but also improved service, friendlier drivers, and better cars.

Actor Matthew Cherry responded to the article, and even took it further:

It is true that licensing costs put on drivers are high and that switching to another system isn't necessarily convenient for everyone. However, let's not pretend that it came without its perks either. For years, taxi drivers profited off the system of licensing and the outdated medallion, because it limited the numbers of taxis legally allowed to be on the roadFor years, taxi drivers profited off the system of licensing and the outdated medallion (a certificate issued by public authorities that allows one to operate a taxi), because it limited the number of taxis legally allowed to be on the road. It turns out that fares can be much higher when you're lucky to get a taxi within 15 minutes. Compare this to a system where a driver is provided to you, arrives quickly, and nobody can jump in before you last minute.

The drivers see themselves as victims of innovation when actually the complete opposite is the case: regulation is holding them back.

Taxi strikes are happening... so what?

Over in Europe, the debate on ride-sharing apps has been held with what we shall call “less courteous manners.”

In Brussels, taximen attacked multiple Uber drivers and vandalized their cars. In response, the chairman of the taxi federation said that he could “understand their frustration.”

In the French city of Lyon, a 26-year-old man was beaten up by a taxi driver, who had refused to give him a ride after he told him that he "will use an Uber instead then.” In Paris, an Uber driver described the attack of taxi drivers on his vehicle with this chilling account: "When my windshield started cracking, I became really afraid." Drivers had built a literal checkpoint outside of the Roissy airport in Paris in order to intercept Ubers. In the same violent attack, passengers were injured by broken glass and spat on. In the Belgian capital of Brussels, taximen attacked multiple Uber drivers and vandalized their cars. In response, the chairman of the taxi federation said that he could “understand their frustration.”

Last month, Brussels' taxi drivers blocked major roads leading to the city center in an effort to gain the attention of the city council. This has been one of the many "taxi strikes" in which angry taxi drivers vividly defend their operational monopoly. The countless instances of violent attacks against Uber drivers are demonstrative of an ugly shadow being cast by the taxi industry.

That being said, the only reason the taxi industry is angry is because ride-sharing apps are generating tremendous success, which is cause for consumer celebration. The mere fact that taximen are steaming at the thought of Uber and Lyft indicates that yes, your fares are getting cheaper and yes, your service is improving.

Embrace Technology

Did Nokia factory workers rise up against the impending takeover of smartphones through Apple? Did CD designers light fires in city squares to bemoan the arrival of mp3-players? Did carriage drivers block the construction of the railway network?

There needs to be a point where we recognize that technology benefits us all. Yes, it is true that some old industries persevere, sometimes through aggressive marketing, clever tricks, or nostalgic feelings of the past. However, most old industries die because they simply don't meet the needs of the current consumer generation. We have seen the death of phone booths, MySpace, and fax machines. Eventually, taxis will be one of those dead things too.