In Our View: Regulating Taxis Passé

The insurgence of Uber and Lyft into Vancouver apparently has been a smooth ride — so to speak. But with city council members recently receiving a progress report on the ride-sharing services and their arrival in the market, it brings to mind another question: Why do cities insist upon regulating taxi services?

This is not a new question by any means. Taxi regulations arose during the 1930s, when many residents in cities throughout the country, desperate for work during The Great Depression, took it upon themselves to provide taxi services. This created problems such as increased congestion, unpredictable fares and inexperienced drivers. Problems, indeed, and that led governments to do what governments tend to do — regulate the industry. In Vancouver, the taxi code was adopted in 1939.

By the 1970s and 1980s, according to whosdrivingyou.org, many municipalities — including Portland and Seattle — thought it would be a good idea to deregulate the industry. You know, let the market decide and all that. Great idea, except that it didn’t work very well. The problems of the previous generation re-emerged, and cities again tightened the reins on taxi services.

Proponents of taxi regulations point to those failed experiments as proof of the need for a well-governed industry. They say it is necessary for cities to control the number of taxi drivers, and set guidelines for fares, and establish standards for vehicle quality and driver qualifications. Of course, from the cities’ point of view, it doesn’t hurt that they can make money in the process. In Vancouver, a taxicab license costs $200; in New York City, where taxis are an essential part of the culture, the average cost of a taxi medallion last October was $872,000, according to the New York Times.

But what often gets lost in this discussion of taxi regulation and deregulation is the fact that Uber and Lyft have completely altered the nature of the industry. By using smartphone apps to connect consumers with drivers who are hired by the ride-sharing companies but use their personal cars to provide transportation, Uber and Lyft have moved the taxi industry closer to the state of perfect information that is the foundation of a free-market system. When an aggressive public relations campaign by Uber scuttled a New York City proposal to limit the number of the company’s drivers in the city, Mitchell Moss of the Rudin Center for Transportation at New York University said: “This lets other cities know that Uber is not going to be intimidated by municipal governments, that the days of taxi industry cartels are over, and that meddling with how people get from place to place is not easily done in an age of Internet-based mobility.”

In March, Vancouver updated its taxi code to make room for the ride-sharing companies, acknowledging the inevitably changing landscape. Last month, the city council was told that the city has received no complaints from consumers about the operations of Uber and Lyft in the city, which is a compliment to the diligence of city officials in formulating the plan. “We wanted to have a smooth transition, and it appears to have worked out that way,” said Lloyd Tyler, the city’s chief financial officer.

That, however, is merely the first step in an evolution of the taxi industry. While background checks for drivers and the need for widespread service at all hours should be discussed, the next step for Vancouver and other municipalities should be to question why they are in business of regulating taxi cabs in the first place.