So apparently NYC issuing new taxi medallions will shut down black market (read free market) taxi market in outer boroughs

December 24th, 2011

I previously blogged about NYC issuing 2,000 medallions. I thought, good! More supply. Eh, not so much.

From NY Mag Daily Intel:

 Since the outer reaches of New York have long been yellow taxi deserts, unlicensed entrepreneurs have already established a robust network of black market transportation, including livery cabs that take illegal street hails, dollar vans, and privately owned cars that wait for passengers outside of Target, Ikea, or the Utica Avenue subway stop.

There are more than 150,000 illegal street hails every day, according to the Taxi & Limousine Commission, but the TLC only issued 2,584 infractions for all of last year. There was a more pronounced crackdown in 2011 — along with a city crackdown on cabs that illegally refused to take passengers out of Manhattan — but the TLC is a small regulatory body that lacks the resources to enforce its own regulations or make a meaningful dent in the gypsy taxi business.

Now the city is trying to make the underground car economy legit, but without budgeting any new funds for enforcement. The recently signed taxi bill will create tens of thousands of new medallions that are backed by toothless regulations that are already largely ignored.

Gypsy cabs will never be eliminated entirely, but a properly funded system of regulation is possible, one that would increase sting operations for illegal street hails and create taxi stands at busy locations, similar to the ones found at airports and the Staten Island Ferry, with curbside agents who usher riders into licensed cabs.

I think the author of this article is largely missing the point. The outer boroughs have a fully-functioning free market system taxi system. Now, that supply will be crowded out by medallion-owning taxis. Supply will be even less.

Comments like this make me sick:

The prevalance of what Eric calls “gypsy” cabs has been due to the fact that there has been no legal alternative. Most people would prefer to do things the right way — I expect the vast bulk of the illegal-taxi drivers will come in and get the permits once they are available — and yes, we will need enforcement to make sure the rest get the message. That’s why we at the TLC have already doubled our enforcement staff (in anticipation of the bill being signed) and why we secured funding for further increases next year. The beefing-up is already showing results — we issued more than 2,000 summonses for illegal street hails last month alone. David Yassky

Public choice strikes again.

H/T Militza

Update: The commenter I mentioned, David Yassky, is apparently the Taxi and Limousine Commissioner. From the horse’s mouth.