| I've commented before on HN with this important cautionary tale from South Africa: In the late 1980's the apartheid government (which was taking very tentative steps towards reform) decided to cheaply "solve" the problem of public transport in poor, black areas, while encouraging small business. Thus was born the unregulated minibus taxi industry. It all started off well, but soon, instead of a Free Enterprise utopia of owner-operators looking after their vehicles, as was envisaged, owners bought fleets of taxis and "the miracle of the 80's became the nightmare of the 90's" as they engaged in brutal "taxi wars" over routes. As far as I know, drivers pay "rent" to the owners, and then keep the remainder of the takings for the day, incentivising extreme recklessness and lawlessness as they try to complete as many trips as possible (there are some South African libertarian types who claim minubus taxis are safe, but the road safety figures they cite are certainly incomplete and probably wrong). Attempts to re-regulate have to a large extent, failed, and when Bus-Rapid-Transit was started in Johannesburg, taxi owners got a cut (with the implicit threat that drivers/passengers would be killed if they didn't). Yes, there was a general breakdown in law and order during the transitional period in South Africa during the 1990's that wouldn't happen in other countries, but it is a reminder that this sort of business needs to be kept well regulated. EDIT: There was also an epidemic of violence on trains (an old and decrepit network serving the larger black townships) during the chaos of the early 1990's. As far as I know, the perpetrators were never found, even though elements of the apartheid regime were suspected at the time. The taxi industry had as strong a motive to carry out the attacks as any. |
And for a counter example, New York is very stingy with its medallions, which has created powerful special interest groups, and a system that serves drivers and passengers poorly in many respects.