Not on the Frontier…

We answer a critical letter in the National Post.
Published on June 2, 2011

Last month we published the paper “The End of Taxi Regulation.” and two related op-eds, one which was printed in several places including the Calgary Herald and another which was special to the National Post. The paper also spawned several. Radio. Interviews.

The thrust of the paper and the op-eds is that as smart phones become ubiquitous (currently around half of all mobile phones are “smart”), taxi regulations on the number of cabs and the prices they can charge will become unnecessary and perhaps unenforceable because GPS enabled smart phones will replace taxi dispatch services in such an efficient way that proponents of regulation will no longer be able to claim that there are market failures in the industry.

This would of course be the end of taxi plates as the nice-little-earner that they are for those who currently own them.  For example in Calgary a plate trades for $150,000 or $200/week in rental.  There’s no point in owning a plate unless the government makes them too scarce to meet market demand for driving positions and so opening up the market would make plates worthless.

And so it is hardly a surprise to see the establishment bristling at our suggestions as in this National Post Letter to the Editor:

Re: No Need To Regulate High-Tech Taxis, David Seymour, May 25.

According to David Seymour, senior policy analyst at the Frontier Centre, technology and deregulation are the answers to Toronto’s taxi troubles.

It is evident that he knows very little about the history of this industry or what the end results would be if his recommendations were adopted. Although new technologies could assist the industry, there would need to be certain guidelines put in place in order for it to be effective.

Deregulation has been tried in many countries and it has consistently failed. Ireland received so many consumer complaints that the industry is moving back toward a regulated environment.

The taxi industry has many outstanding issues, but the resolution must come from the industry itself. Too many politicians, bureaucrats and so-called experts have tried to fix it in the past and have always failed.

Gerry Manley, taxi owner/operator, Toronto.

For the record, the OECD stated in 2007:

Increasing numbers of OECD countries have removed or loosened supply restrictions on taxis.  The results of these reforms have been strongly positive, with reduced waiting times, increased consumer satisfaction and, in many cases, falling prices being observed.

A literature review of papers by professional economists on the subject finds that such studies favour deregulation by more than a 3:1 ratio.

Irish taxi deregulation was very positive in its initial years and the status quo remains better than the old days of regulation according to two articles (2007 and 2010) by Sean Barrett of Trinity College in Dublin.  The Irish economy has experienced a crash and unemployment of monumental proportions in recent years, nobody is particularly happy in any sector so it is not surprising that taxis have felt the pressure too.

We could also mention research by Phillip Morrison at New Zealand’s Victoria University which concluded:

…deregulation (the removal of quantity and price controls) with appropriate (re)introduction of quality standards can bring about a restructuring of the industry in a way that benefi ts both consumers and suppliers alike. Far from being an industry apart, ungovernable without stringent regulation, the removal of entry and fare restrictions has released forces which have led to a new and considerably more vibrant local taxi industry.

The Australian Productivity Commission is gearing up to push for deregulation with some heavyweight economic analysis that points towards deregulation.  in fact we could go one and on, but you get the picture…

Altogether, there are no serious arguments left against taxi regulation, just a group of people who have too much tied up in their taxi plates to lose this debate honestly.

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