The Tyranny of Taxis

I have written before (multiple times, in fact) on the ridiculous nature of Ottawa’s taxi market. It’s a cartel system. Existing providers have a protected market in which possible competitors are blocked from entry. Taxi plates, purchased from the city for purported purpose of driving a taxi, are bought, sold and rented on a grey market. Prices for plates on this market are incredibly expensive, allowing plate holders to get rich off of, essentially, a public entitlement. It’s rent-seeking at its most egregious…and the city has not shown sufficient nerve to deal with it.

Today, it wasn’t the customers or would-be competitors who were decrying this pseudo-monopoly; the plate holders are now upset:

The president of the local taxi union says gas prices and insurance fees are “out of control” and Ottawa cabbies are looking to increase their fares by seven per cent.

Ontario Taxi Union Local 1688 president Amrik Singh says that Ottawa cab drivers pay about $8,000 per year for insurance – and ‘one little fender bender’ will cost them an additional $300 per month. And he can’t bear to watch gas prices go up any more than they already have.

“You don’t even want to look at the gas station when you pass by,” Singh told Metro Tuesday.

It is easy to see how rising costs but price caps will put the squeeze on drivers. One driver noted that with gas, insurance and “company fees”, his costs are approximately $12,000 per year. That is quite a burden, and I certainly have a lot of sympathy for an individual trying to make a living during trying times.

But I don’t have a lot of sympathy for the industry as a whole. Drivers may be getting squeezed by companies and gas prices. There is a measure of unfairness in the government freezing prices for a (non-essential) service, but the industry regularly fights to ensure they retain their industry’s protection from the government. It’s not really the place of industry participants to claim to be the wronged party in this scenario.

If you lobby the government to meddle in your business, it’s partially your fault when the government meddles in your business.

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Taxis, Supply Management and Speculation

In response to my recent post, Taxis and Picket Lines, commenter Peter notes:

The same thing can be said for any government quota system. Ottawa Taxis and Ontario milk come to mind. While not really defending the quota system, it does afford some reliability in supply. It also gives workers a chance to find jobs with some chance of a retirement plan at the end. There have been many suggestions about how to change the system, particularly in Ottawa, there is some jurisprudence in this regard dating back to the 1980s, I believe. I am not really offering much here. The taking away of long established government rights seems to be always met with arguments of financial hardship should those rights be revoked. Buying back the licenses or quota from every taxi driver or milk farmer maybe one way to do it but how much are we willing to pay as a city or province to do this.

Peter is correct that the taxi quota system is similar to other supply management programs, and he is correct that the intent of Ottawa’s taxi service is to provide some reliability in supply. The current system reliably limits the supply of taxis. Were it not for the plate system, we would see more cabs on the roads, and customers would have less difficulty hailing a cab. The plate system is a giant give-away to the entrenched interests of the taxi industry, and the extract rents from customers and new entrants to the market. It is a rather sick operation that a relative few people can hold the market hostage until their ransom is paid. Continue reading

Taxis and Picket Lines

Carleton University staff are on strike. Classes continue, but picket lines are set up. Unfortunately, by the first day, there had been an incident. A couple of picketers were hit by cars. The picketers are okay, thankfully, and I won’t judge whether it was malice or negligence (or a mixture of the two).

Of note to people heading to Carleton, OC Transpo buses are not going on to campus. The O-train and Para-Transpo will, but regular buses will not. I wondered what the reason was behind this decision, as the website gave no explanation. So I tweeted OC Transpo. Quickly, I received this response:

This is a reasonable explanation. It could be convenient cover so that OC Transpo can escape controversy. News reports also stated that some taxis would not cross the picket line, as some drivers are unionized.

Which is also reasonable…almost. Continue reading

Same old news for Ottawa’s taxi market

The Ottawa Sun‘s Susan Sherring notes that a new proposal regarding Ottawa’s taxi system has appeared at City Hall. If adopted, every time a taxi plate was sold, the new owner would have to provide an accessible cab. The proposal is hung up, as Councillor Mark Taylor, who chairs the city’s community and protective services committee, wants it to be given more study.

Annoyed by the typical (and typically annoying) political hang ups, Ms. Sherring is a big fan of the new proposal, arguing that it is a good fit with the evolving demographics of the city. I am less inclined to believe this is such a happy development. Continue reading