[jfager]

So, just so I follow, your proposal is to impoverish cabbies and drive the skill level of the average driver down as low as it can go while increasing the number of vehicles on the streets in a city where it already takes an hour to go a mile?

May that you never be in charge of taxi service.

[yummyfajitas]

Yes, my proposal is to reduce the wages of current cabbies, increase the wages of future cabbies (the people currently making $25k/year, or perhaps who are unemployed, who would take jobs as cabbies at $35k/year) and lower the cost of taxis to consumers.

As for the number of vehicles, that's an issue not primarily caused by cabbies. A congestion charge (levied on cabbies and drivers alike) and eliminating free parking seems like a solution to that - it works pretty well in London.

[jfager]

Yes, my proposal is to reduce the wages of current cabbies, increase the wages of future cabbies (the people currently making $25k/year, or perhaps who are unemployed, who would take jobs as cabbies at $35k/year) and lower the cost of taxis to consumers.

Which in NYC, with its existing low cost subway and bus alternatives, basically translates to "helping rich people by eliminating the lower-middle-class jobs their fares currently support". You would expand the pool of people who choose cabs over the subway down from the top a little bit while pushing the actual service workers further out from the city.

As for the number of vehicles, that's an issue not primarily caused by cabbies.

Perhaps because the current medallion system restricts the number of operating cabs?

A congestion charge (levied on cabbies and drivers alike) and eliminating free parking seems like a solution to that

I'm all for a congestion charge (though my version actually wouldn't apply to medallioned cabs) and eliminating free parking. But you said the point was to lower costs for consumers by increasing competition. We're getting to the point where we actually have to do the math to see where everything falls, but if you don't tweak the parameters right, you could easily find yourself in a situation where consumers are right back to paying today's fares (because there aren't actually more cabs on the road) but instead of the money going to the cabbies, it's going to the city in fees.

it works pretty well in London.

London, where cab drivers are probably the best paid, most skilled, and most stringently regulated in the world?

[yummyfajitas]

You previously criticized me for wanting to "increas[e...] the number of vehicles". Now you are criticizing me for wanting to "eliminat[e...] lower-middle-class jobs". How can a proposed policy simultaneously increase the number of taxis and decrease the number of jobs? Will the new taxis drive themselves?

As for doing the math, scroll up. I gave you numbers, and showed that even making fairly generous assumptions, there is a LOT of rent being extracted from the current system.

Perhaps because the current medallion system restricts the number of operating cabs?...London, where cab drivers are probably the best paid, most skilled, and most stringently regulated in the world?

Fun fact: there are about 250 million cars in the US, and about 250 thousand taxis. But I'm sure all congestion problems are caused by the taxis - thank god for limited numbers of medallions.

http://en.wikipedia.org/wiki/Passenger_vehicles_in_the_Unite... http://www.schallerconsult.com/taxi/taxidriverreport.htm

[jfager]

I specifically said "lower-middle-class jobs", and you're pretending I just said "jobs". Of course I meant that you were replacing fewer higher paying jobs with more lower paying ones.

I see nothing in your previous numbers showing how you do or don't keep the benefit to the consumer after throwing in a congestion tax, which is what I said we needed to do the math for.

Fun fact: there are about 250 million cars in the US, and about 250 thousand taxis. But I'm sure all congestion problems are caused by the taxis - thank god for limited numbers of medallions.

How many of those 250m cars are in NYC, and how many of those 250k taxis are? And at what point did I suggest that all congestion problems were caused by taxis? I even explicitly said I would support a congestion tax for other kinds of traffic as an orthogonal solution.

[yummyfajitas]

There are about 13,000 yellow cabs in all of NYC. The GWB and Lincoln tunnels have traffic of 320,000 and 120,000 vehicles (respectively). I'm too lazy to look up the number of people driving from non-NJ locales.

Also, I didn't realize that the 37'th percentile of income (36'th percentile in NY [1]) did not count as lower middle class (or just plain middle class). My mistake.

If the congestion tax costs less than $24,000/year/cab, consumers still pay less for a taxi.

[1] http://www.city-data.com/income/income-New-York-New-York.htm...

[jfager]

There are about 13,000 yellow cabs in all of NYC.

Which is the number set by the medallion system. My original point in this line of argument was that one of the main reasons cabs don't contribute to congestion in the city is because the number of cabs allowed in is capped. You're the one who wants to make that number bigger.

Also, I didn't realize that the 37'th percentile of income (36'th percentile in NY [1]) did not count as lower middle class

The labels are flexible depending on who's drawing the boundaries, I'm sure. The point is that I wasn't contradicting myself when I said your plan would both cut a certain class of jobs and increase traffic, I was simply saying that you're replacing fewer higher-paying jobs with more lower-paying ones. Where we disagree is that I think in this case that's equivalent to giving rich people a break and forcing more of the city's service workers to live further away, and I assume you don't.

If the congestion tax costs less than $24,000/year/cab, consumers still pay less for a taxi.

You're taking the savings from the medallion and labor costs that you posited above and assuming they'd be passed directly to the consumer, but that's overly simplistic. More competition means marketing costs go up, which drives the fares back up a bit. The congestion tax is presumably convincing fewer people to drive to work, which increases the demand for cabs, which drives the fares back up a bit more.

The point was not "you are wrong about consumer prices going down", it was "you have to start modeling the problem more carefully to have a meaningful conversation about it". You're probably right, consumers would save money, but again, given who the consumers are (oversimplifying: rich people), I don't necessarily see that as a good thing when it comes at the cost of cabbie pay.

[maukdaddy]

Um, sorry, but I want my taxi driving making a living wage. Why? Because [s]he has more to lose by fucking me over. If he is on the edge of poverty, making only 35k/year, he is MUCH more likely to screw me over with shady tactics because he needs to feed his family.

[yummyfajitas]

Even after cutting the medallion fee in half, NYC would have $9000/cab to devote to policing taxis. Assuming the 4x yearly safety inspection costs $1000/inspection (at a rate of, say, $333/hour for the mechanic), that leaves $5000/year/taxi for police work.

So for every 15 cabs, the city could spend $75,000 on a dedicated undercover taxi inspector. Lets say this undercover inspector works 250 days/year, and rides 3x/day. Thus, every taxi is subjected to an undercover inspection every single day (on average, assuing 250 working days/year). Assuming an average fare of $12 and taking revenues of $90,000/year (see my previous link), a taxi driver has 30 fares/day, one of which is an undercover inspector.

Each time he uses shady tactics, his odds of being caught are 1/30. 50% of cheating cabbies will be caught before they manage to cheat even 20 customers.

Also, if you don't feel that $35k/year (higher household earnings than 37% of the US) is a living wage, then what is?

[maukdaddy]

$35k in Iowa City is equal to $58k in Queens.

So I'm thinking 50k.

http://www.bankrate.com/calculators/savings/moving-cost-of-l...

[jfager]

Also, if you don't feel that $35k/year (higher household earnings than 37% of the US) is a living wage, then what is?

Come on, 35k in NYC is barely a living wage and you know it.

[tptacek]

Having read 'yummyfajitas closely for awhile now, can I take the liberty of predicting that he will acknowledge the NYC congestion problem, but suggest that we should be addressing it with a market-based solution that targets it directly, instead of as a side effect of regulations?

I agree with you not him, because I don't trust the process that will generate the market-based solution, and I think the medallion system actually pretty much works in Chicago and NYC. But that doesn't make the argument much more productive.

[jfager]

I suppose I don't understand how reducing congestion can be seen as a "side-effect" of the medallion system. That's one of the explicit reasons it exists: to cap the supply of cabs on the streets.

[tptacek]

The problem isn't the number of cabs on the street; it's the number of cars on the street. So charge a congestion tax. Even if there are 10,000,000 cabs, if the congestion tax is set appropriately, they won't all be clogging the streets, since they won't be able to make a buck doing it.

[jfager]

You don't have to solve a problem in one fell swoop with one technique. Medallions aren't the only way to reduce congestion, and they aren't a complete solution, but they certainly do at least partly address the issue as an explicit goal, not a side-effect.

I would welcome a separate congestion tax levied on certain other kinds of traffic to complete the solution. You want cabs in the city, and you want them running all the time - they're doing the useful work of moving people around, and should certainly be preferred to traffic that congests the city during rush hour just to cram into a parking lot for eight hours.

Even if there are 10,000,000 cabs, if the congestion tax is set appropriately, they won't all be clogging the streets, since they won't be able to make a buck doing it.

I'm deeply suspicious of this kind of reasoning when it's unaccompanied by an explanation of how the tragedy of the commons would be avoided. You're a cab driver with rent and your kid's tuition to pay, are you the one staying home today?

[yummyfajitas]

You're a cab driver with rent and your kid's tuition to pay, are you the one staying home today?

If congestion charge + other expenses > expected revenues, yes. Actually, things should equilibrate roughly at expected revenues - congestion charge - other expenses = average low skill wage.

The real trick is to set the congestion charge somewhat higher for taxis than for regular vehicles, since taxis spend more time on the road. The proper ratio would be (taxi charge/regular charge) = (taxi time on road / regular time on road), presumably this could be estimated using sat photos.

[jfager]

People don't always make optimal, rational economic decisions. If driving a cab is what you've always done and is all you know, it's not as simple as plugging the numbers into the equation each morning before deciding to go to work. You know there are fares out there, and that if you don't take them, someone else will. What motivates any individual cabbie to acknowledge that they should be the one to give that fare up rather than someone else? And what job do they take in its place? You're certainly correct that the decision would get made one way or the other, but there's a human cost that cold, superficial economic reasoning has a hard time accounting for.

The real trick is to set the congestion charge somewhat higher for taxis than for regular vehicles, since taxis spend more time on the road.

Commuter vehicles deliver less value to the city, though. They spike congestion in the morning and the evening, waste time looking for parking, and take up valuable real estate just sitting around during the day. That's the traffic you want to discourage, not cabs, delivery trucks, and other actual economic contributors.