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Eli Lehrer


Mayor Gray: Leave D.C.'s Taxicab System Alone

Posted: 12/29/11 03:55 PM ET

Mayor Vincent Gray and the D.C. taxicab commission's proposals to "modernize" the District's taxicab system by means of burdensome new regulations are a terrible idea that the Council should reject.

Nice and pro-consumer as they sound, the proposals to require that cabs all be painted the same color, be less than five years old, start taking credit cards, and have better-trained drivers threaten to undermine what's arguably the best taxicab system in America.

Some background first. Unique among major American center cities, Washington, D.C. imposes no meaningful restriction on the number of taxis that roam the streets. Getting the "hack license" one needs to drive a cab requires taking a single 60-hour course and paying a $375 fee. As a result, the barriers to entry are very low. Right now, anyone who wants to can buy a full-sized car, take the course, and start picking up passengers for an initial investment of only a few thousand dollars. D.C., with a hair under 600,000 residents, has about as many cabs as does Chicago with 2.7 million.

And Chicago isn't the worst. In New York, which hasn't issued new taxi medallions since the 1930s, the right to run a single cab can cost $1 million. And D.C. is a near-utopia for taxi riders as a result. Even during rush hour, it's easy to get a ride. Because competition for street pickups is so fierce, however, nobody gets rich driving or owning cabs, smaller enterprises predominate, and ambitious individuals can still enter the market. The only control on the number of licenses is a periodic suspension of the exam.

Gray's proposals all threaten this system. Better training for drivers, nice as it sounds, is superfluous. The D.C. street grid is simple enough that anybody with a little experience and an IQ above room temperature can easily locate just about any address. And even if an individual can't, of course, $100 GPS systems (already hidden in just about every taxi's glove compartment) can do it for them.

Beyond requiring English proficiency and a reasonably clean driving record, there's little reason to certify cab drivers at all. A quick background check should suffice. Likewise, mandatory credit card acceptance in taxi cabs would shave their profit margins enormously and, for shorter trips, would erase their financial gains from the fare hike the Commission has proposed.

And when D.C. requires the fancy computer terminals now found in the backseat of most New York City cabs, the cost of entering the taxi business could double. Forcing all cabs to get new paint jobs and be less than five years old, likewise, is nothing more than a rather pointless $1,000 head tax on every cab driver in the city. Has the lack of a uniform color scheme made it difficult for anyone, anywhere, to recognize that a car with a distinctive "taxi" sign on top is, indeed, a cab?

Furthermore, with inflation near zero, gas surcharges already added to every taxi meter, and the number of cabs essentially stable, there's no easily apparent grounds for a fare hike. Taxis -- privately owned cars that roam the streets and can be flagged down for set-rate trips anywhere within a given city -- are, by definition, price-controlled. The ability to flag down a ride and know that it will cost a certain amount is a key product feature. Keeping anything like the current taxi system in place suggests fares should be reset periodically by a formula that includes gas prices, local wage growth, inflation, and other factors rather than raised arbitrarily by political dictate.

All of Mayor Gray's proposals to change the District's taxi system, in short, are ill-advised. The Council and Mayor should reconsider them.