Boston cab drivers spent May 22nd protesting, rather than making their service better. I’ve taken a lot of cabs here in my time, and the story is the same every time: Rude drivers. Crazy drivers. Unsafe drivers. Drivers with gross, unclean cars. Drivers whose credit-card machines mysteriously stop working right when you need them to work. Drivers who won’t take you from Boston to Cambridge, or vice versa, out of the legitimate fear that they’ll have to deadhead (i.e., that when they take someone from Boston to Cambridge, they can’t then pick someone up in Cambridge and return them to Boston, because Boston cab laws are stupid).
I’m no expert, but this system doesn’t seem to benefit the cabbies. Medallions, 20% of which are in the hands of a single company (Boston Cab) cost $625,000. It’s a giant scam benefiting only a few people.
Uber, on the other hand, has been almost unfailingly great. I’ve taken both the black cars and the cheaper UberX; under the latter scheme, Joe Schmoe can pick you up in his ordinary car, provided it passes certain tests: it has to be reasonably new, and apparently Uber gets on the drivers about keeping their cars in shape or getting new ones. And apparently the company has very low tolerance for poor drivers. Tonight I had my first unsatisfactory experience with an UberX or black-car driver; within a few minutes of submitting the review, I’d received a personal, apologetic email from Uber, assuring me that they’d contact the driver and tell him to clean up his act. Otherwise the batting average has been 1.000.
Markets don’t always work. But in this case we have every reason to believe that they will: there’s a nimble entrant up against an underperforming monopolist. Let Uber continue to be Uber, and maybe cab companies will get it together. Or maybe they won’t, in which case the Boston cab industry should go away.
Steve Reads 
I’m not sure why this needs to be an either/or kind of thing. The high-priced medallion-based system is problematic but I don’t think the solution here is unregulated market capitalism.
Uber’s good now because they are competing against cabs. Let’s say the medallion cab system is swept away tomorrow. Ok, now what? My guess is Uber then gets to play the game of “how bad can I make things before people have to switch to whatever competitor crops up”. Basically, they will milk the market and their service quality will go down so that their profits can go up. Now, another service might spring up, but there will be competition on cost, etc. So you might end up with services not much better than cabs that are cheap enough and good enough that Uber will look expensive, and we’ll be back in smelly cabs before long or Uber will have to charge enough to be a “premium service”. Worse, there won’t be any regulation on these things.. So are we going to be looking at web-enabled “gypsy cabs”? Isn’t that basically what Lyft is going to become if the race to the bottom ensues?
Basically, I think regulations are important here. Maybe the current medallion system is dumb. Like why not make medallions plentiful and cheap but still require a certain set of minimum standards and that milage is calculated properly so that Uber and Lyft, etc. are charging correct rates in the states they operate in, and that the drivers are getting fairly compensated? Basically, I think Uber is highlighting some problems but I think they have problems of their own, and those problems don’t go away if the current cab system is swept away.
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Not sure I agree with that reasoning. Aren’t you essentially arguing that we shouldn’t allow the existing monopolistic cab industry to be destroyed, because then Uber would just replace it with another monopolistic industry? That’s awfully premature optimization for a problem that we don’t expect we’ll have.
What problem, exactly, do we believe that a system of regulated cabs would solve? It’s supposed to solve the problems of unsafe, dangerous drivers, I’d assume (you can envision psychopaths going around posing as cab drivers, then kidnapping their passengers), and the problem of cab drivers playing funny buggers with the meter so that they overcharge their passengers, right? The latter one seems not to be a cause for concern: regulated cabs typically make that problem worse. How often have you driven in a cab and had them deliberately take the long way, thereby juicing the meter by other means? How often has a cab driver asked you, “Which route would you like to take?” so that they can judge whether you’re from the area and can scam if you’re not? As for the former: Uber does pretty thorough background checks, so this doesn’t concern me.
To be clear, it’s not just about Uber. I’d be glad to see cabs replaced with Lyft (institutionalized hitchhiking, basically) or RelayRides, or any number of other alternatives. The market for these alternatives is booming right now. If we take the cab companies at their word, they’ve lost 30% of their business because of Uber and friends; granted, they’re going to overstate their losses, but doubtless people are clamoring for better alternatives to cabs. That’s because cabs are terrible. In a well-functioning market, the cabs would do whatever they could to improve, or they’d go out of business. As it is, they’re lobbying the government to fix the market for them. That’s offensive.
I’m just saying that competition should do what competition does best, namely replace poor performers with better performers.
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My intent is not to say “Save the cabs!” or, more specifically, “Save the current medallion system!”. My point is that I think there may be some value in minimum regulation on what one can expect out of a livery system so that services like Uber and Lyft meet certain standards and that their sub-contracting cabs meet certain standards. That the vehicles are safe, that the rides are billed correctly, and that it’s possible to trace a ride back to a particular car + driver if there is a problem. If Uber does those things, then good for them. They would already meet the criteria but if they should slip, then something can be done without having to resort to a glibertarian solution of “Well, build your own cab service!” because after a while, it’s conceivable that one or two companies are basically going to own a metro market and if they become scummy, the barriers to entry may be more difficult to overcome by then and you’ll be stuck with whatever the scummy existing carriers feel like serving to you…and you’ll put up with it and wax over the wonderful days when you would get a flashy black car.
That said, what I’m not recommending is that the government protect the current monopoly system of cab companies, just that it’s probably not wise to rely entirely on the current good will of Uber to provide a reasonable livery service.
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