UNDERNEWS

Undernews is the online report of the Progressive Review, edited by Sam Smith, who covered Washington during all or part of one quarter of America's presidencies and edited alternative journals since 1964. The Review has been on the web since 1995. See main page for full contents

July 2, 2009

HOW TO KILL ECONOMIC OPPORTUNITY

Sam Smith - Washington, DC, which has spent billions on economic development but still has fewer residents employed than in the mid 1980s is demonstrating once again how not to do it. Since the early 19th century, when hack drivers did the best of any free black group in the city, Washington has enjoyed an unusual door to upward mobility: driving a cab. What made it special was that the city put no cap on number of drivers and used zones instead of meters, which meant that large corporations couldn't take over the business since they wouldn't be able to tell how much income a driver made.

As a result, the city had more cabs per capita than any place else in America and new immigrants - whether blacks from the south in the 1950s or Ethiopians and Indians today - had an unusual opportunity to make it in a tough system.

But those in power, including the white liberal elite, have hated the system and in recent years started to change it, first by moving to a meter system. As the Review predicted, however, this was only the first step in moving towards a corporate controlled system, as the story below indicates.

Michael Neibauer, DC Examiner - The District's open, all-are-invited taxicab industry is so saturated with drivers that the entire enterprise is threatened, according to a D.C. Council member who has filed a bill to cap the number of cabs allowed on city streets.

Ward 1 Councilman Jim Graham introduced legislation to limit the number of taxicabs in D.C. through either a medallion system, like ones used in New York City and Chicago, or a certification system.

The soaring number of taxicab operators in D.C. - roughly 8,000, most of whom own their own cars - is a "pressing and urgent problem," Graham said. [Note: this is untrue. There were 8,000 drivers a decade earlier- TPR] There are more licensed drivers in D.C. per capita than any place in the world, he said, and new applicants continue to take the required class, giving them access to the driver's exam administered by the D.C. Taxicab Commission. A glut of drivers could jeopardize the chances of any cabbies making an adequate living, Graham has said.

"Whatever system we use, we need to limit the number of operators or this boat is going to sink by its own weight in terms of the number of taxicab operators that we have," Graham said. "We're going to determine which of these two approaches we should take, but we're going to have one or the other.". . .


New York City's medallion system, established in 1937 during the Great Depression in response to a ballooning number of unregulated taxis, artificially capped the number of cabs on the road, to what is now about 13,000.

The medallion program, however, made it very difficult for the average New Yorker to join the industry as an owner: The May 2009 price for an individual medallion, those held by owner-operators, was $568,000. The cost of a corporate medallion was $744,000.

D.C. Taxicab Commissioner A. Cornelius Baker said during a recent meeting that the city must move "toward a regulated taxi force" and create a system "that sustains our drivers and also creates wealth for them in the long term."

Gary Imhoff, DC Watch - It's an awful burden on council members to have to determine the optimum number of people who should be allowed to practice any profession. Wouldn't it be a relief for politicians if someone could invent an economic system under which the optimum number of workers could be determined automatically, say by the market? Under this magical system, people would enter and leave different job markets on their own accord, depending on their own judgments of how good a living they could make, and politicians wouldn't have to make decisions for everyone else about which occupations they would be allowed to pursue. Has anyone heard of an economic system like that?

Seriously, isn't this the second step in the city government's program to force independent taxicab drivers out of business, and to ensure that a few large cab companies control the market? The first step was to get rid of the zone system and force the installation of meters. Instituting a medallion system that will limit the number of cabs and vastly increase the cost of becoming an independent cabbie should ensure that large companies will dominate and independents disappear over time, as they have in New York.

THE BACK STORY

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