It has now come to pass that one company is capable of dominating a whole industry. You know the name of the company. But let u go back to the Haas Act of 1937 which instituted the “medallion system” to regulate the number of taxi operators. The yellow taxi system became a government backed monopoly that for decades reaped millions and millions of dollars upon the City of New York and the medallion holders in general. The Taxi industry successfully lobbied to limit the number of medallions for their own benefit. The taxi companies used their influence to sway politicians in favor of their monopoly. For so many years, an investment in the medallion was a better investment that almost anything in the world. Ironically, this monopoly left the taxi companies with no incentive to innovate or improve their services, rendering them vulnerable to something they never saw coming……..market forces. Coddled by this lack of competition, taxi operators have made insufficient effort to be more responsive to customers, who were often frustrated by the difficulty of getting a taxicab, among other issues. So while the taxi medallion owners counted their money and laughed at those on the outside who could not get in, the City of New York became complicit in the demise of the industry. They did nothing to innovate either. No incentive to innovate or think outside the box. This caused an effect that no one could imagine. A monopoly is essentially concentrated economic power in the hands of a few. Any concentrated power in the hands of a few is antithetical to a free market and democratic society.
The community based car services were born out of the rule mandating that the radios be taken out of the taxis and the general rule that taxis are prohibited from accepting pre-arranged transportation. So for decades, the taxis accepted street hails and the car services (and black car radio groups) provided transportation by pre arrangement. The lines were very clear and all had prospered. Then came the insurgents (the “disruptors”). All of a sudden, the lines between street hail and pre-arrangement became blurred. The Mayor of New York City is quite tech savvy and he was all in favor of the disruptors and their new “toy”. Allowing them to operate outside of the law was a governmental abuse of power and abdication of its responsibility to its citizens. All of a sudden, the disruptors were allowed to accept street hails and prearrangement, which took a significant chunk of business away from both the taxis and the car services. While the taxis and car services played by the rules and were smacked by the regulators when they violated the rules, the disruptors were permitted to operate unlawfully and with impunity.
The City of New York used the taxi monopoly for its own benefit for decades and now has essentially abandoned the transitional for hire vehicle industry. When the “disruptors” came to town, some were not daunted and did not see the need to innovate. Also, they did not see nor could they comprehend that an evil empire had come to town. This was a huge mistake. The black car industry enabled the disruptors and the TLC allowed them to operate outside of the law for so long that by the time everyone woke up, it was too late.
We are now at the point where most in the for hire vehicle industry have begun to lose faith that anyone or anything can help them. By its very nature, monopolies tend to arrest progress. In the beginning, when the taxis reigned supreme, the City of New York standardized the prices and the products, but in the process, in order to retain that standard, the City arrested efficiency and progress…and that itself stagnated the industry and prevented it from growing and innovating.
Very often, a business grows in efficiency as it grows from a small business to a large business; but there is a unit of greatest efficiency in every business that may be too large to be efficient. The profits of a monopoly are not due in the main to efficiency, but are due to the control of the market. The ratio of profit ordinarily is in direct relation to the ratio of control. Where a company has a high degree of control, the profits are great; where they had a small degree of control, the profits are small.
When is the City of New York going to learn the fact that the effect of a monopoly is the arresting of progress and the arresting of advance in industry. It should have learned this with the taxi industry, but now it is doing the same thing with the “disruptors”. The City of New York is perpetuating another monopoly. The City and its regulatory regime is on the wrong path right now and unless they change course, a great for hire transportation infrastructure for the future is unattainable.
A practice is unreasonable if it tends to destroy competition. And we know now what the main practices are which have been pursued by the “disruptors” to secure the monopoly-control of our industry. They are cut-throat competition, espionage, doing business as fake independents, the making of exclusive contracts, as well as many other methods and practices of unfair trade which have been pursued not for the purpose of conducting a business in competition with others, but for the purpose of killing competitors. Again, we have found grave defects in our regulatory machinery.
Personally, I would like to restore competition and do away with the conditions that make for monopoly. But the regulators of the City’s taxi and limousine industry are blinded. The “disruptors” have a lack of respect not only for the law, our City and our institutions, but also our citizens themselves. And yet, with this great demand for on demand transportation staring us in the face, we need to be calling upon everyone we can to do everything we can to bring the “disruptors” back to a respect for law and to convince the regulators to deregulate the industry. This is to prevent another monopoly and for the benefit of all. We are seeing that if we follow the current path, a few rich and powerful people can defy the law; that their power is so great that there will be private monopoly and we cannot prevent it; and that, therefore, if such is the case, we must content ourselves with seeking to mitigate the evil. Respect for the law must be supreme, but the great question involves question more fundamental. For generations immigrants came to this City seeking and obtaining the job of a taxi driver. This used to act as a gateway to the American Dream and the ownership of a medallion was the gateway to riches. Now, it’s the gateway to hell and destruction.
If this opportunity is no longer available and this is no longer the land of opportunity, then what does America stands for. Our whole regulatory system of the industry is for naught. What does democracy involve? Not merely political and religious liberty, but industrial liberty also. Is not business today one of the greatest part of life? What America needs is not the combination of power in the hands of a few, but to keep open the path of opportunity to enable the industry to do for themselves. The current regulatory regime is not merely a capitalistic control of the industry. It is the worst form of capitalistic control. It is absentee capitalistic control. The responsibility and sensibility of regulation is lacking. If there had been responsibility of regulation in the industry, then we would all not be witnessing destruction of the minority based community car services in all 5 boroughs of NYC.