Reader's letter from a recent FT:
… Taxi service forms part of the transportation industry, long a regulated industry for the very purpose of providing the traveling public protection in areas such as insurance, safety, quality of transport and consistency of fares.
Raw, free-market unregulated competition in a field of transport was shown to be flawed when in the 1970s and 1980s US President Ronald Reagan deregulated the airlines. I believe one consequence was a reduction of traffic and of service to and from less-frequented cities (meaning cities of lower volume and higher cost to serve by the airlines).
In protecting city transport travellers, while at the same time not ignoring technological innovations, a rule of reason and fairness is required. Established cab drivers often have invested a considerable sum in the purchase of a license or medallion, and are bound by strict terms of contract to the taxi-owning enterprises. Their interests require some thoughtful form of protection by the local authorities.
Boynton M Rawlings, Paris, France.
I get the point about safety, but the rest is drivel.
What if airlines had never been regulated? They would never have flown to "less-frequented cities" in the first place, so the fact that they stopped doing so is irrelevant. He might as well compare the relatively unregulated market with a hypothetical regulated market where airlines fly regularly to every last little village, no matter how few passengers wish to take the flight.
The same goes for buying a taxi license. That is state-created property; there is only "value" because there is an artificially restricted number of them, pushing up the profits which the lucky license holders can earn. So the value of the licences do not represent net wealth, best case they are a zero sum game but in this case they actually measure negative wealth, an overall loss to society - the higher fares which consumers have to pay and all the services which are not provided by those shut out of taxi driving.
There are plenty of jobs on which the state places no numerical restrictions, and so you don't have to pay a retiree for permission to do them - following his logic, every job could or should be so restricted, generating a one-off windfall gain for present incumbents, a position which can then never be reversed because of the one-off windfall loss to future license holders.
Seeing as he has not come up with any reason why the number of permits has to be restricted, his argument is surely null and void. If the state wishes to place qualitative restrictions on taxi divers such as clean licence, safe vehicle, no criminal record for assault etc, well that's fine, but that is quite different to having quantitative restrictions.
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