The deck is stacked against Uber, Lyft and Sidecar. You have to realize that the taxi industry is a government-cab collaboration, with the customer getting fleeced. It is not as simple as "government grants license to cab operator, cab operator runs his cab and makes money". No. The government takes a cut from the daily action too. Use a credit card in the cab? The government takes a cut. Want to rent your medallion to someone else? The government takes a cut.
Right now, the financial impact of these outfits is minimal. But when they seriously start impacting government revenues, expect the lawmakers to come out swinging. They'll tag-team with the taxi union(s) and make life hell for the Sidecars, Ubers and Lyfts of the world.
The problem with this argument is that anti-competitive regulations that restrict the size of the taxi market probably do not maximize government revenues. The government would probably receive greater revenues if it deregulated the market since more people would take cabs, albeit at somewhat lower fares.
The more significant dynamic behind regulatory capture is the simple fact that the groups who are most interested in taxi regulations and the membership of CPUC, and who are most incentivized to lobby for advantageous laws and to try and get friendly people on the Commission, are the very taxi firms being regulated.
I was following this story for about a week now. SF was extremely conflicted because they want to be tech friendly, but at the same time taxis are a huge moneymaker. There are also unanswered questions about safety and liability in case of car accidents. If the city did want more taxi cabs though, they would allow more. There are many cab companies waiting for the chance to expand. Also, the article doesn't say it (I only skimmed it though so I may of missed it), but the tech companies were issues warnings to cease their actions. I can't find a source to back it up though. Only heard it on NPR while driving.
So cities, counties, and states are supposed to build and maintain roads, keep them safe, and allow businesses like Uber that use these roads and services to do so without paying for them? How is that sustainable?
Uber's drivers pay tax on the fuel they use and there's sales tax on the transaction itself. They are, in fact paying for the use of the roads. Why should there be a special additional tax on that particular type of business?
Because everyone else in the business is still paying a special additional tax? If you disagree with that, you have to fight to change it for everyone. You don't just start competing without paying the same taxes as everyone else.
Do UPS, FedEx, etc. pay separately for the privilege to use these roads? No. The money to pay for these facilities comes from gas taxes (mostly), sales taxes, income taxes, etc., all of which are paid by the Uber/Lyft/Sidecar people too. Their cars don't run on air, you know. In fact, Uber's limos use much more gas than the Priuses that the cabs drive, so in fact at least Uber people are paying more for the use of these roads.
Businesses like Uber pay a lot for them. Corporate taxes, payroll taxes, sales taxes, gasoline taxes, business licenses, registration fees, etc. etc. Trying to justify every runaway regulation and fee with "oh, but we have to build the roads!" is only going to convince somebody who is too lazy to think about how many taxes business like Uber has to pay in any case.
And if by the "services" you mean blocking competition and being the enforcement arm of the unions - then I could do without these "services", thank you very much.
I've always thought AirBnB has as big a deck stacked against it (or bigger). There are a lot of cities whose main industry is tourism and collect 10%+ bed taxes. I can't imagine they'll give those up easily.
I don't think so. The VRBO market has existed for years (decades even) AirBnB just made it marketable and easy to enter. The controversy with them is some of the property owners are really taking the piss and treating their residential property as hotels and not paying the hotel taxes (BTW, Florida is 20%).
All the reports I've read have been spot on (though the AirBnB founders disagree). The hotels are paying this tax. Some of your members properties look awfully like a hotel. You collect the money, you collect the tax.
Unlike the taxi companies who actually have a monopoly, the hoteliers just want the same deal to apply to everyone.
It might be reasonable in this case to ask why the hotels have to pay a special tax. Why shouldn't they just collect sales tax like every other business?
Because visitors don't pay taxes or elect politicians. So when the cities need to balance their budget and vote on a new revenue stream guess where it's coming from? Property and sales tax increases are widely unpopular so politicians look for revenue that won't impact their career: cigarettes, liquor, gambling, and hotels.
Because renting out a hotel room is not a sale. Ergo, a sales tax does not apply. An occupancy tax is the tax levied on short-term leases (i.e.,, hotels).
It's mainly because (a) sales taxes are much less than these occupancy taxes, and (b) socking it to the visitor has no political repercussions; they're not going to vote in the elections anyways.
Couldn't those cities move to tax the vacation rental industry, though? In developed markets like Paris, a majority vacation rentals are done through agencies (who manage cleanings, checkins checkouts, quality control, etc.). It would be fairly straightforward for the cities to pass laws to force agencies to get licenses and pay a tourism tax, much like hotels do.
Most vacation rental agencies I've dealt with wish they were taxed as opposed to being de jure illegal but de facto tolerated. That uncertainty has made acquiring new properties and investing capital in the business quite risky.
That's not to say that the deck isn't somewhat stacked against vacation rentals. There is a hotel lobbie that's dead-set to kill the industry. Unlike the agencies, the hotel people are quite organized (although that's changing in my experience).
And there's an even greater threat from the fact that most vacation-rental properties are owned by foreigners who are seen as driving the price up of longer-term rentals because of the new emphasis on the short-term market. I do think that rising rental prices in many urban centers is the biggest short-term danger -- PR and real.
At the same time, vacation rentals are becoming more and more necessary to tourism in big cities. E.g., Paris has more than 75+k apartments rented by the week, with occupation rates above 50%. If you made it illegal, there wouldn't be nearly enough hotels to cover those millions of travelers. And enforcing a ban on a per-property basis would be extremely expensive in terms of man-power.
My prognosis is that the market matures, the cities find a way to benefit through taxation, vacation rentals become a bit less price-competitive versus hotels because of that taxation, and it grows from an $80b a year market to a $200b a year market [see http://software.homeaway.com/Media/Files/pdf/RezFest2012-Bre...].
I know next to nothing about Uber and that business, and I am sure the taxi lobby will do its best to kill it, but in the end one should never underestimate gov't ability to be clever when it comes to finding new revenue through taxation, especially during these times.
[I have invested in a couple of companies in Europe in the vacation rental market]
I wonder if Uber, Lyft and Sidecar aren't competing against each other right now, seeing as they have a common enemy. It would be wise to have all the people on your side as possible even if they won't be in the future.
It just reeks of special interests protecting their turf. Of course when you are operating in highly regulated environment and have a well-oiled connections with local politicians it is annoying when somebody new comes around and tries to take part of your customer share. However for me as a consumer it is annoying that government yet again tries to take away my choice under the guise of protecting me from imaginary threats - and instead ends up protecting me from better service and lower prices. I don't need this kind of protection.
You're avoiding the issue by framing the question in specific terms.
Please specify how, in this case, what is beneficial about the illegal operation of a taxi company for consumers (and taxi drivers) concerned about safety?
See what I did there?
I'm, not going to dig through the history of taxi regulation in the SF bay area to defend a point that is already made in law. Rape on women by unlicensed taxi operators has led to calls for mandatory police checks in the UK. Attacks on drivers in NZ led to the introduction of cameras in all taxis. So, forgive me thinking that ignoring the law as a basis for undercutting the competition is a shitty way to run a business.
There are already laws against violations of safety of passengers. If you really wanted to ensure passenger safety allow for concealed carry laws in the city, you'd have no issue with drivers harming passengers, or vice versa.
Not saying I necessary agree with the arguments. That said:
1. Never felt unsafe. Only time I've ever felt unsafe in a cab was mainland China which has less (enforced?) regulation.
3. Never happened to me in SF. Happened in Las Vegas (common thing where cab drivers take I-215 from airport to the Strip rather than surface streets); it's very easy to request a complete refund.
4. Public transit, bike, etc. Ensures that those who are really willing to pay for a cab get there quicker due to lower traffic congestion (theoretically - this probably only applies to areas dominated by cabs like Manhattan).
I wonder if it would lead to lower prices. Here in Sweden where basically anybody can start a taxi company the end result is that most companies a grouped within a couple of bucks of the two big taxi firms on the low end of scale plus a few companies charging two or even three times as much, and operating on the assumption that enough people (especially tourists who don't understand the taxi system) will simply jump into the first taxi they see without looking at the price. I've yet to see anyone trying to break into the market by significantly undercutting the big players.
Acting as though arguments for the common benefits of a competitive market should be dismissed unless the proponents are selflessly altruistic is an even bigger load of bollocks.
Nobody said anything about being noble or exempt from the law. The fact is the local laws are written by politicians that are in the pocket of the unions. And one doesn't have to be a noble knight to be opposed to this injustice and to realize it's just a legal extortion scheme.
The lawsuit against Uber seems to me like nothing more than taxi drivers upset that their monopoly is being threatened. As the article said, all the Uber drivers are already licensed, and there's no explanation as to why Uber is "unfair".
Uber claims their drivers already meet the requirements, but if Uber doesn't register with CPUC how can they know if it's true? Are they supposed to take Uber's word for it?
I don't know anything about CPUC so I can't really answer that question, but the lawsuit isn't about the licensing. The lawsuit is about Uber being "unfair", with no explanation for what that means. The only hint is that taxi drivers are seeing lower incomes, and the implication is that the lower incomes must somehow mean that Uber is being "unfair" rather than simply being a consequence of competition.
Unqualified statements of "X is unfair" are quite popular with unions in the northeast, to protest the hiring of any non-union labor. I guess one can't accuse them of libel or slander for accusations of "unfairness."
To clarify: trade unions hoist signs and distribute leaflets that literally say "[so-and-so] IS UNFAIR." It's the phrase "is unfair" to which I'm reacting--it's not a summary or simplification of anything else.
Except that's not how public safety works. Part of why this regulation exists is because having unregulated taxi drivers (at least to the judgement of lawmakers) poses a danger to everyone else on roads etc.
It surprises me that intelligent people are so ready to take bureaucrats and politicians at their word when they claim that "your safety is our priority".
Yes! God forbid someone isn't as cynical about the government! I mean obviously regulators that are regulating the cabs are interested in making the government a profit to ensure that the gov is the most profitable organiza....wait a second. Oh yah, the governments role is to provide for the common welfare of this nation. Silly me.
That's its role in theory, but in practice, governments are made out of people, and people don't always have the motives they're supposed to. A government official might be more motivated by a desire to protect the profits of his friend's taxi company than by what's in the interests of society as a whole.
It doesn't always work out this way, but I think in the case of companies like Uber, the interests of the company, the customer and society as a whole all align. To be able to make a profit, Uber needs to be perceived as safe. The most effective way to do that is to actually be safe.
I'm a customer not a lawyer, but Uber certainly feels like a "provider" to me. It's not like they are just a referral service. They dispatch a driver of their choice, they process the payment, and they pay the driver.
And while I think Uber is an awesome service, it's not totally unreasonable for the state to insist that if you are acting as a taxi, you need to have proof of insurance beyond what's required for a normal driver.
If the drivers already have the required paperwork and insurance then why doesn't Uber just register as a taxi provider and submit it as CPUC requested? Is that really so onerous (honest question)?
I'm guessing that taxis are a protected industry, as a result from lobbying, and that you can't just register as a taxi provider. I'm guessing that, like most cities, they have found taxi licensing to be a nice little earner for the city, and intentionally limit supply in order to keep the prices high.
What does the licensing accomplish? Are drivers double drug tested? Are they double insured? They're using all licensed drivers, which means any arguments of "unfairness" are baseless. They aren't benefiting from lower labor costs because they're using unregulated drivers who might be able to compete at lower costs.
I don't think it's a degree of how onerous the requirement is. It's more a matter of what does it accomplish? There's not a precedent for double covering in the industry, and Uber certainly isn't gaining a competitive advantage because of it. It seems strange that they're lumped in with the other two services who clearly use unlicensed drivers.
I made some remarks elsewhere in this thread about the term "unfair," and AFAIK it usually refers to anyone doing work outside the reach of the protestor's collective bargaining agreement.
"We have rigged the market to our satisfaction, and it would be unfair of you to alter that comfortable dynamic."
The licensing proves to the agency that the drivers are drug tested and insured instead of simply taking Uber's word for it. I think it is unreasonable to expect that regulatory paperwork doesn't apply to you just because you're probably in compliance anyway.
This doesn't seem to be an issue of regulatory paperwork though. What does double licensing accomplish and what does it actually mean? I'm all for fines if they're found using unlicensed drivers. I guess I don't know that it's necessary to double drug test the drivers though. I don't think the issue here is filling out a permit, I think it's a matter of "what does that mean". If asked, they should probably be required to show that all their drivers are properly licensed. If their drivers are all properly licensed, I don't see what requiring Uber to be licensed accomplishes.
It's not a question of "probably in compliance". If Uber is using unlicensed drivers (which I haven't heard any evidence of), they should be fined. If they are using 100% properly licensed drivers, I think this is a non-story.
San Francisco is currently limited to 1494 taxi medallions. That means, legally, there can be a maximum of 1494 cars making street hails at any given moment.
Car services are licensed by the state instead of the city, and are not subject to medallion restrictions. However, they cannot legally make street hails.
If the people of SF want more medallions, they can always create a proposition and vote at the ballot box. Proposition A in 2007 is the reason the MTA regulates taxis in the first place, and previous propositions ("Transit First") have shaped the number of medallions that are issued.
If Uber is operating as a taxi, they should have to get medallions just like every other taxi company. If they, or anyone else doesn't like the taxi system in SF, it's possible to change it, assuming you can convince enough voters... It's not all that hard to get a proposition on the ballot in SF. There were 7 propositions in our last election, and that's on the low end for SF.
Why should there be medallions at all? How do they benefit society as a whole or serve any legitimate government function, as opposed to shall-issue licencing for anyone who meets the safety/training/testing/insurance requirements?
Medallions increase the cost to taxi operators of violations by threatening a difficult-to-recover license. Talk to Uber drivers, like friends of mine have, and you quickly learn that many Uber drivers like the service principally because no other licensed operator would allow them to drive; it's too risky for a cab or black car operator to hire on a driver with a suspension.
I can imagine a simple solution to this problem that doesn't require a complex regulatory framework or artificial restrictions on supply: require a large amount of insurance coverage. The insurance companies would do the rest.
So, instead of a medallion system, we'd have a corporatocracy run by major insurers and the large companies that could afford long-term relationships with them, and instead of voting to decide how we'd regulate cabs, we'd be stuck with whatever rules the insurers came up with. This does not seem like a public policy improvement.
I believe a significant insurance requirement already exists for taxis. What I'm proposing is that, if it isn't already, it be worded such that it applies to anyone who regularly drives people for money.
Fundamentally, what I want is for simple rules to exist that don't interfere with new business models and serve to align the interests of businesses with society as a whole. To mitigate the impact of corporate deals, each driver could be required to apply for insurance individually with the insurer of their choice and that the employer pay it (or not hire the driver if it's too much). This would allow competition to do its job.
SF taxi insurance requirements are low: $1MM, on the order of what a typical sr. software engineer should already be buying for their own insurance.
My point is, by delegating regulation of cabs to the insurance markets, you don't make the market any more transparent or efficient; instead, you cede it to private businesses who can make arbitrary decisions with no oversight at all.
I don't care about oversight. I care that the taxi I get in to doesn't crash.
I don't have a lot of faith that regulators will do a good job reducing the probability of that outcome. I think they're likely to be corrupt, incompetent, apathetic or some combination of the three.
I do have a lot of faith that insurance companies will do a good job maximizing their own profits. Those that fail to do so will cease to exist. If we can tie insurance company profits to my taxi not crashing, I think they'll do a near-optimal job of reducing the probability of that outcome.
I agree that $1M seems low for a taxi. That doesn't even cover one wrongful death.
I understand, but oversight is the thing that allows you to say, for instance, that a cab driver can't drive for more than 30 hours straight without losing their license.
Most of the good people of San Francisco have no idea and couldn't care less until they need a taxi. Then they get ripped off, but then they forget about it in the next half an hour.
I couldn't find the origin of the permitting system in a couple minutes of googling, but I did find that there was a medallion system at least as early as 1950. It therefore seems unlikely that many of the people who currently live in San Francisco voted to impose one. It does not appear that there has been any serious effort to eliminate the system.
I believe that's a question for Uber, I'm just paraphrasing from the article which states as I've said.
Speculating though, perhaps there are limitations and red tape issues that would prevent them from doing so. Most likely, they don't want / need to operate the fleet of cars, just the technology that connects them to the customers.
I really like Lyft. I use it when I need a taxi and it works very well.
Although I do agree that a world where these types of "collaborative consumption" services (like AirBNB) are essentially unregulated (or at least more open to competition) is much better, it is true that a number of industries are regulated, and incumbents that have been "playing by the rules" were promised a protected business environment. And it's not like they didn't have to give anything up in that trade - a taxi medallion in NYC is worth a lot of money - they have been exchanged for over a million dollars.
So the question is: how do we transition to the better world without being unfair to the "stranded capital"?
Protecting a business environment always comes at a cost to the consumers, whether it is through tariffs, regulations, licences, restrictions or whatever.
I don't feel sorry for the existing businesses, because they constructed a legal framework to protect themselves instead of trying to keep up with the competition. At any point the natural will of people to come up with something better will route around the regulatory framework they hid themselves behind.
Incumbents have been playing by the rules all right - rules that they have successfully lobbied for, that protect them at a cost to everyone else.
The stranded capital has to remain stranded, and sucks to be them. Otherwise you open a can of worms, and extreme economic stagnation will follow, because doing business becomes a case of who can construct the best regulatory fences, not who can deliver the best products and services.
It's not called risk capital for nothing. You risk losing it.
TLDR; cry me a river, taxi companies, and next time innovate instead of regulate.
We managed to transition from horsepower to cars without economy breaking down and I'm sure some people investing in horses lost some money on that. If some people investing in taxi business being shielded from competition will lose some money - sucks for them, but definite benefit for everybody else. And also would teach people not to invest in schemes that rely on government coercion and anti-competitiveness. It'd be no more "unfair" to them than their rent-extraction based on excluding competition is unfair to consumers.
I'm not sure I was clear. In the cases I'm discussing, society has made an explicit deal with a group of providers within an industry. Essentially that deal is: purchase a license, run your business this way, charge these prices, etc., and we'll protect your market.
NB this does not apply in equal degrees across all industries, and your horses -> cars example doesn't qualify.
In addition, note that I was agreeing with you that the transition, on the whole, is definitely desirable. I'm only arguing that there may be moral consequences in not upholding society's end of the trade I describe above.
>society has made an explicit deal with a group of providers within an industry.
>not upholding society's end of the trade I describe above.
The deal - as it was, has been, or whatever, was simply some type of legislative barrier passed using the threat of imprisonment and/or fines as the stick. While you could argue that 'society' passed and agreed to these rules through the democratic legislative process, in reality it's far more arcane than that (don't watch sausages or laws getting made).
In reality, no law in a democracy can be promised to exist past the next election period. Sure, mostly it doesn't happen that way, but laws passed some time ago in a different technological state of progress are not inviolate, never-to-be-repealed things cast in stone.
There are no moral consequences at all. People win and lose every day, in every industry, for millions of reasons. It would be immoral to try and stop this creative destruction process and try to freeze life at a certain point. Because that would deny the future winners from winning, and permanently cast the losers in the 'loser' role.
The underlying beauty and strength of democracy is that it can change and destroy old concepts, old rules and old leaders peacefully. This is the killer feature that makes up for it's otherwise many flaws.
society has made an explicit deal with a group of providers within an industry
Government is often a poor proxy for society. I suspect most people in any given US city would not like to artificially limit the supply of taxi drivers and were not consulted about the decision to do so.
Well, that's representative democracy for ya. I'm not sure what to say except that I agree with you on the facts, but probably not on their ramifications.
So? Let's say a corrupt mayor makes a deal with a building contractor - you pay me a million dollars and I'll give you all the building contracts. Then it was discovered and the corrupt mayor went to jail. Is there any reason the society has to keep the building contracts part of the deal? I see none.
The only difference in this case is that the corrupt officials that betrayed the public interest in exchange for votes and support of a group of special interests are not in jail yet.
Give up on the idea of an apolitical, independent bureaucracy and move to the patronage ("spoils") system. The government becomes incapable of credibly promising rents beyond the horizon of the next election and the value of monopoly rights gets priced more appropriately as a wasting asset.
You could give existing civil servants tenure both to be fair to them and ensure a gradual transition.
Interesting how Uber is lumped in with Lyft and SideCar. Uber drivers at least have (towncar) licenses. I haven't figured out yet how Lyft/SideCar are anything more than illegal taxi services that rename "fare" "donation".
In Chicago I've seen taxi drivers using Uber X, but that may be a city-specific pilot. This TC interview with Uber indicates that Uber X drivers have TCP licenses, but may not necessarily drive limos or town cars:
The few uber drivers I've talked to love the service. One driver told me that, with uber, he can often find a nearby fare in minutes. He said that the combination of flags, the dispatcher, and über means the meter is always running.
It's pretty clear to me that the folks that are suffering from über are the taxi dispatch companies. These companies lease out the cars for a daily fee, like 150 bucks per day. The driver can do whatever he wants as long as he pays that daily fee. The cab company pays insurance because they own the cabs. Cab drivers are essentially independent contractors. They start making money after they've covered the cab cost for the day.
So why should the cab companies care if a driver is using über? From what I've heard, when a dispatcher has a good order, like for a trip across town on a slow day, they'll ask for a cut. In other words the cab companies are supplementing their taxi rental service with a cut of the fares they dispatch. And as a cab driver, if you want to get good orders you have to stay on the dispatchers good side.
Über changes the balance of power. As more people use über, the drivers have to rely on the dispatchers less, and the tit-for-tat system is deflated. I think this class action suit is an attempt to retain the status quo by cab companies. Über shouldn't be responsible for insurance until they start owning their own cabs. If the cab companies have their way, both the drivers and passengers will suffer.
In practice these behave exactly like a taxi service. I don't think it matters much who owns the cars. No one would argue that a cab company from, say, LA, should be able to just bring a portion of its fleet to SF and start picking up passengers without complying with the laws that govern taxis here. If these start-ups affect the market in essentially the same way, we and they all know they are trying to enter a market with rules in a way that does not abide by them
I'll take the bait: Yes an external cab company should be able to come into SF and compete with the local firms. The SF regulations have expressly been rigged to support a local cartel and are morally illegitimate.
You may think that an external cab company (or Lyft) should be able to come into SF and complete with local firms but you also apparently agree it is illegal. I personally consider it equally morally illegitimate for individual actors in a society governed by the rule of law to decide which laws and regulations "work" for them and which ones don't, then to disregard those they don't like. And in practical terms I think it is irresponsible for a group of people with one goal -to make money- to set up a company which they know is breaking the law, and to convince a lot of people to join them in breaking the law (their drivers) and creating ridiculous contortions that allow them to pretend not to be governed by the rules ("the donation thing" e.g.) when everyone knows they are a taxi service, plain and simple.
If I were them, they should just get users to use real names and addresses to send e-mail, faxes, and paper mail to the offices of the public utilities commission and to other officials who will pressure them.
Fundamentally, these guys just need to increase social capital with regulators and invest in legal infrastructure. The government is just like another giant company with dependencies and old architecture. Trust me, it's just like investing in weird ERP integration to get access to all of those clients. It's not something that is necessary to the evolution of your product, but it's something you just have to do because the market is just shaped that way.
Also, any press is good press, and once these three get large enough, it'll be widely unpopular to not support them.
This is outrageous that the taxi companies are just lobbying for laws that protect their business at the expense of other businesses!
Ok, now please pass a law saying internet providers can't limit how much data I can send each month nor prioritize one type of traffic over another. After all, that is hurting internet businesses!
Traffic prioritization is an important issue that does hurt businesses and users to the benefit of telecoms and ISPs. It is better known as the "net neutrality" issue. https://www.eff.org/issues/net-neutrality
To your larger point, the disgusting part is the behavior of the regulators, who should not succumb to the lobbyists and campaign donations of the livery industry. However, it's also absolutely wrong to attempt to influence government for personal gain. We all have a moral duty to do what's good for everyone including ourselves. Taxi unions need to recognize that protecting incompetent systems to enrich their members at the expense of everyone else, by using government as a weapon, harms every user of public transportation and several businesses and in the long run sets the drivers up for an unnecessary catastrophic collapse of the taxi system when it becomes completely unbearable by the public.
Right now, the financial impact of these outfits is minimal. But when they seriously start impacting government revenues, expect the lawmakers to come out swinging. They'll tag-team with the taxi union(s) and make life hell for the Sidecars, Ubers and Lyfts of the world.