Sunday, February 2, 2020

Taxicab Wars - Then and Now

Everything old is new again....

I mentioned in a recent posting that the gyrations we are going through today with Uber and Lyft are nothing new - all of this was experienced before, 100 years ago, and settled by enacting regulations for the taxi industry - regulations that Uber and Lyft are flouting by claiming to be "ride-hailing apps" and not de facto cab companies.

I ran into the video above, by the "history guy" who is very earnest but has a slightly annoying voice.  But the video nicely illustrates what I have been saying - we've been down this road before.   Back then, the taxi business was largely unregulated, and there were too many cabs and not enough fares.  Fights broke out between cab drivers and people were actually killed.  And then organized crime muscled in.   Today, we don't have organized crime, but disorganized crime in the form of these Tech-that-are-not-tech companies, like Uber, Lyft, Lime, Bird, and of course, Wework.   Rather than gun down their opponents or put the squeeze on people, this new breed of robber baron gets people to willingly hand over millions in cash through private equity "funding" and of course the IPO.

Sadly, no one warned anyone in the taxi business, but then again, the way the taxi business was being run, no one really mourned the fate of the taxi companies and taxi drivers.  The medallion system, which put an end to the taxi wars, created problems of its own.   Medallions became very valuable, and pretty soon there were people who ran taxi "companies" that did little more than own the medallions and rent run-down cabs to immigrants, who worked for pennies.   At their height, medallions were worth millions, and then collapsed in value when Uber and Lyft appeared on the scene.

None other than Michael Cohen, Trump's jailed former attorney, was caught up in this medallion business, supposedly with links to the Russian mob - or so he claims, anyway.  With the collapse of medallion values (which may have been a classic bubble anyway, without Uber and Lyft) many people have gone bankrupt.  Some have committed suicide.   There are plans afoot to "bail out" medallion owners, by loaning them more money to pay off their loans.   Borrowing money to pay off debts - sounds like a plan to me!   Better off to declare bankruptcy, get rid of the medallion, and then become an Uber driver, I think.

But then again, maybe not.   Like in days of yore, many Uber and Lyft drivers are finding that the returns on investment are getting skinnier and skinnier.  As more and more people become Lyft and Uber drivers, the number of fares per driver decline.   Pretty soon, you are effectively making less than minimum wage, and the companies don't care, so long as the number of fares increases and they get 20-25% of each fare.   But of course, these companies are also losing money, so it remains to be seen how long this game goes on, before something breaks.

We tried Lyft in Anchorage, Alaska, as we didn't want the "hassle" of parking downtown.   As it turned out, it wasn't that much hassle to get around, but the service was efficient and quick - far quicker than a taxi service.   That is the problem with these services  - and public transportation.   In many cases, despite all the hoopla about traffic and congestion, it is still easier to just drive your own car.  In Vancouver, we tried using their aerial subway a couple of times, but were accosted by crazy homeless people (and nary a transit cop in sight - be careful what you wish for, New York!).   Taxi cabs were not much better.  Turns out that since we weren't commuting, it was easier to just drive our truck into town and park on the street, at least in the evenings.

Even in New York City, traffic can be manageable.  Once you realize that all the lights are timed on Fifth Avenue and Central Park West, if you want to go North or South, take one or the other of those streets, and you can fly.   Cross-town traffic, on the other hand, it a bitch - it can take an half-hour just to go a few blocks, during the peak of rush-hour.  Hence the name of the Jimmy Hendrix song

Even my hippy-dippy brother, when he lived in Manhattan getting one college degree after another, kept a car in the city, as politically incorrect as that was.  And yes, like on "Seinfeld" they had a system of moving the car twice a day to allow the street sweepers through - with people double-parking half the day (which was illegal, but no one cared).    Block the street sweeper, you get towed, block your fellow citizen, there are no consequences.   It always struck me as odd that someone who was a leftist and decried our car culture kept a car on the street in the nation's most crowded city.   I mean, wouldn't you think......?   Well, then again, it doesn't surprise me that much - most "public transit advocates" believe that everyone should use public transit, but of course they need to drive their Subaru - to the public transit planning meeting!

But I digress.  But not by much.

The question is, who controls our culture, our society, and our laws?   And it is a question that is never answered, in its entirety.   100 years ago, the automobile was a "disruptor" to the existing social structure.  Regardless of the nostalgia people today feel about trolleys, people back then (such as my Dad) couldn't wait to get their hands on a Model T Ford, and drive themselves where they wanted to go, when they wanted to go, instead of relying on unreliable public transportation, which was always on the brink of bankruptcy - if not in fact insolvent.  With the car, came the taxicab.

Today, the Internet is a "distruptor" but disrupting things in an awfully similar way to the past.  Hailing cabs by cell phone "app" isn't much different than the past model of calling a cab company and having a cab sent.  It is doubtful that we will resort to shooting wars, as we did in the past when there were too many cabs and not enough fares.   But then again, for officials to wring their hands and claim there is "nothing they can do" is also a bit disingenuous.

We can regulate these new industries, if indeed they are new at all, and not in fact just illegal operators.   In the 1980's medallion taxi drivers refused to drive to places like the South Bronx, and illegal cab services called "black cars" started to proliferate.  A new technology called the "cellular telephone" allowed people to call these psudeo-cabs from the street. There was a hue and cry from the medallion drivers, but officials realized these new cabs were serving areas that the traditional cabs eschewed.   Before long, "black cars" were legitimized, but with particular rules (you could not hail one, but had to call one by phone).

Maybe a similar thing will happen to Uber and Lyft.   And perhaps the companies themselves will do this - to avoid regulation, often the best thing a business can do is regulate itself.   That, and in left-leaning California, Uber and Lyft drivers are being classified as "employees" and may have to be paid a minimum wage.   Uber and Lyft will lose even more money if they have to pay drivers to just sit in their cars - if there are too many drivers and not enough fares.

I am not sure what the point of all this is, other than we tend to think of "today's problems" as unique and new, when in fact, they are the same old tired things we have dealt with or were dealing with before.   Just calling something "tech" doesn't make it technology - or new.