City Journal Winter 2016

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Winter 2016
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By Myron Magnet

The Founders at Home: The Building of America, 1735-1817

Edited with an Introduction by Myron Magnet

Modern Sex: Liberation and Its Discontents.

Eye on the News

Myron Magnet
Taxi Busters
The Bloomberg administration has begun a misguided war on livery cabs.
May 14, 2003

I walked out my door on the Upper-Upper West Side this morning into a posse of undercover cops. What crime were they busting? Terrorism? Drug trafficking? Nope: illegal pickups of passengers by livery car drivers, whom the law forbids to respond to street hails south of 125th Street in Manhattan. Well, you might think, perhaps this is the kind of low-level, quality-of-life enforcement that worked so well for the Giuliani-era NYPD. Trouble is, this particular use of police will lower New York’s quality of life, not raise it. And the Bloomberg administration’s motives for using scarce police resources this way are intensely suspect.

In a gradual, ad-hoc way, as City Journal has shown (“New York’s Unsung Taxi Triumph,” Autumn 1999), Gotham has developed a very efficient three-tier taxi system similar to that devised by wise policy in cities like Hong Kong. Since taxis tend to congregate in central business districts and at airports, the problem for regulators is to prevent excessive congestion in the center city, while ensuring adequate service in the outlying parts of town, where passengers are thinner on the ground. Hong Kong’s solution is to issue three classes of taxi licenses, the most expensive allowing drivers to operate in the highest-volume areas, the cheapest permitting cruising in the periphery.

New York’s three-tier system turns over midtown and the airports to its 12,000-plus yellow cabs, who pay up to $250,000 for the medallion that licenses them to respond to street hails in those areas. This fleet is no bigger than the number of cabs on the street when the medallion system went into effect in 1937, and it is too small to provide Gotham with adequate service. But because medallion owners have resisted any efforts by the city to dilute their regulated monopoly by selling significantly more medallions, two additional kinds of service have grown up, called into existence by market demand. A fleet of about 8,000 “black cars”—luxury sedans summoned by telephone and serving the corporate market—has effectively increased service to the business district. Much less opulently, some 30,000 “livery cabs,” or local car services, ply the outer boroughs and the northern reaches of Manhattan.

Though the city licenses these vehicles to respond to street hails only north of 125th Street or outside of Manhattan (they can, however, answer telephone summonses anywhere in the city), the livery cabs for at least a decade have in fact been picking up passengers on the streets of the Upper West and Upper East Sides, without interference from the police. As demand has inexorably increased beyond the capacity of the supply of yellow cabs to fill it, residents of those neighborhoods, thanks to livery cars, have had enough cabs to get to work or take kids to school. At the same time, a class of micro-entrepreneurs has flourished among the hardworking owner-drivers, mostly middle-aged, Hispanic, family men.

This is the system, which benefits so many, that the new enforcement regime will destabilize. If the mayor weren’t an independent billionaire, you might think that the politically powerful taxi fleet owners had exerted pressure on him—as they have on so many city politicians—to limit supply and so to increase the value of their monopoly. The real cause is probably no more savory, however. The war on livery drivers is of a piece with the administration’s use of the cops to help fill the city’s empty fisc by issuing a blizzard of tickets that will produce income from fines. Worse, since part of city hall’s cockeyed plan for raising revenue is to sell an additional 900 yellow-cab medallions (in itself, not at all a bad idea), one can’t help wonder if the anti-livery enforcement is aimed at raising the price of those medallions prior to the sale. In that case, the city would be not the tool of the special interests but just one more special interest itself.

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