New York City Just Sent Its Transportation Industry Back to the 1930s
At 5 o’clock on Aug. 14, New York City turned its clocks back to the 1930s. The Taxi and Limousine Commission officially stopped issuing licenses to most for-hire vehicles, effectively declaring war on Uber and Lyft in an effort to protect taxis from competition.
This is the first of many steps that aim to constrain popular app-based ride-sharing platforms within the antiquated regulatory structure that city officials first imposed on taxis when Franklin D. Roosevelt was president.
The package of new laws signed recently by Mayor Bill de Blasio imposes a one-year moratorium on new for-hire vehicle licenses for any non-wheelchair accessible vehicles; requires the commission to set minimum pay; and mandates a 12-month study of traffic congestion and other issues. Once the study is completed, the commission will be able to artificially raise fares and restrict the number of ride-sharing vehicles.
The upshot for New Yorkers: Getting around town will get harder and more expensive—mainly because lawmakers have been co-opted by a powerful special interest.
The mayor has wanted to crack down on ride-sharing for years. He and others baselessly blame these services for everything from congestion to declining subway ridership. They even claim competition has encouraged taxi-driver suicides.
De Blasio touted his victory on Twitter: “New York City is about to put big corporations in the back seat and let the people take the wheel.”
What incredible hypocrisy. After all, he himself accepted more than $500,000 in campaign contributions from ride-sharing’s main competition—the taxi industry.
Meanwhile, “the people” have already spoken. Hundreds of thousands of New Yorkers who ride or drive for these services each day have expressed themselves through the market, embracing ride-sharing and implicitly rebuking the city’s costly, unreliable, and heavily regulated taxicab industry.
Unfortunately, aspiring central planners have little interest in allowing such free choices—especially when what “the people” want conflicts with their paternalistic preferences.
Still, these leaders are already having to answer for their decision. Council Speaker Corey Johnson, for example, assured New Yorkers that “we are not diminishing service” because “vehicles that are out there now will remain out there.”
These claims are disingenuous. They do not take into account driver turnover. Lyft estimates that one-quarter of its drivers leave the platform each year. Under the new law, these losses will not be replaced, meaning the new cap is really a policy of reduction by attrition.
The consequences are predictable: Service shortages and higher prices are inevitable when artificial caps prevent supply from growing to meet demand. Taxis experienced both problems, and now Uber and Lyft will, too.