New York City Mayor Bill de Blasio backed away from his controversial plan to restrict the growth of ridesharing companies in the Big Apple.
The mayor blamed innovative new companies like Uber and Via for worsening traffic congestion in the heart of Manhattan.
He proposed a one percent cap on growth for companies with more than 500 cars, and insisted that doing so was in the public’s best interests.
In reality, the de Blasio plan was little more than another attempt in a long line of recent efforts by city officials to protect the beleaguered taxi industry.
Under pressure from rideshares, taxi revenues have dropped and the value of taxi medallions – once considered to be ironclad investments with multi-million dollar values – has declined.
Yellow cabs are down, but not out. As New York’s comptroller put it, the taxi companies have been busily investing, but not in technology – in politicians. And it just so happens that the industry was the second largest contributor to de Blasio’s mayoral campaign.
New Yorkers saw through the ruse, and under pressure the mayor abruptly shelved his plans – at least for now.
New Yorkers were wise not to fall for it.
Rideshares have generated jobs for tens of thousands of city residents, and made affordable and convenient transportation available to millions more.
Thanks to rideshares, those living in areas traditionally underserved by taxis, like New York’s outer boroughs, finally have reliable access to transportation services.
The fact that they have given taxi companies their first taste of genuine competition in 80 years should be celebrated, not attacked.
The impulse to protect New York’s taxi industry runs deep. Taxis have been heavily regulated since the 1930s, when the city government responded to a depression-era glut in taxis by instituting a medallion system.
Under pressure from striking taxi drivers, the government capped the number of taxis permitted to operate within city limits at 16,900. Unbelievably, the number of allowed taxis has decreased to only 13,400 while the city’s population and economy have grown.
An artificially-restricted taxi supply meant higher fares than free markets would allow. And since the government used its regulatory and police powers to keep outside competitors at bay, the taxi industry was freed from the burdens of competition.
It was a bulletproof arrangement that persisted for decades – until innovative start-ups like Uber and Lyft threatened the status quo.
Consumers have embraced these new for-hire car services. Some New York City regulators and lawmakers, though, have done their best to shut those services down, trying alternately to ban, suspend, and heavily regulate the tech start-ups.
Congestion-related caps are just the latest salvo from a government that clearly favors an entrenched industry over all competitors.
This latest attack on rideshares was transparent to the point of absurdity. Rideshare’s supposed responsibility for historically slow traffic speeds in Manhattan was based on little more than anecdote and supposition.
In fact, the mayor’s one-year growth cap was to be in put in place until the city could conduct a study to determine just what the industry’s traffic impact actually is.
De Blasio’s plan would have penalized successful employers without any actual evidence that they are to blame for Manhattan’s vehicular woes. Mayor de Blasio may call that sound public policy; most others would call that arbitrary and capricious favoritism.
Lending support to the notion that the proposed congestion caps were really just a handout to yellow cabs, consider this: the plan to cap rideshares was first proposed three months ago by the taxi industry itself.
The industry calculated that ridesharing caps would lead to longer wait times for cars and as demand outpaced supply, more frequent use of unpopular “surge pricing.”
Now, the city plans to conduct a four-month study into rideshare’s impact on traffic before it revisits the issue.
While New York should investigate the causes of its traffic problems, it should not limit its study to one politically-disfavored group. A whole host of other potential causes should be examined.
The effects of population and economic growth cannot be discounted, nor can the city’s own policies that steal precious pavement for bike- and pedestrian-only lanes. A lack of adequate and properly-priced parking may also be a factor.
If city officials are sincere in their goal of reducing congestion, they should also consider reforming or abandoning the New Deal-era medallion system.
Its inflexibility means that the supply of cabs is relatively constant, even when demand is low.
That means that thousands of taxis may be on the road when they don’t need to be.
The numbers bear this out; where Uber has over 20,000 cars registered in the city, only 2,000 to 3,000 are on the road at any given time, with the change in supply driven by real-time data on demand.
Meanwhile, of 13,400 taxis, between 9,000 and 11,400 are cruising, whether they are picking up passengers or not.
It is time for New York City to abandon its antiquated, paternalistic sentiments and let markets work.
Many other cities, from Seattle to Washington, D.C., have overcome their own initial opposition (and the vitriolic attacks of once-protected taxi companies) and drafted laws recognizing rideshare’s right to compete. America’s largest city should do the same.
Disclosure: An executive of Heritage Action for America, a sister organization of The Heritage Foundation, is married to an executive of Uber.
