No city is perfect. Even the best city in the world has its flaws. Issues arise when we ignore simple economics and the free market system. Governmental control of the market often leads to failed systems or systems that are currently in the process of failing.[1] One could argue that a free market system is more beneficial than a government-controlled system.
If governmental control of economic systems consistently leads to failure [2], then why do we continue to allow the government to control these systems?
Transportation in New York City is an issue that almost every New Yorker must deal with. The options to travel in New York City are effectively a taxi or the Metropolitan Transportation Authority (MTA) system.
The yellow cab is a symbol of New York City; however, it is highly regulated to the point that driving a cab is a life investment and not a part-time job.[3] Only 13,587 taxi medallions exist because the number is fixed by New York City’s Taxi and Limousine Commission .[4]
The MTA system is 100 years old,[5] delays are frequent[6] , and the quality of the ride and the stations are decrepit, at best. Fare increases are constant, and the MTA system still loses $6 billion every year.[7] If this was a functioning business, it would be bankrupt, and the free market would have to replace it.
Indeed, that is what happened; the MTA was failing, and drivers were not sufficient for New Yorkers[8]. The free market did what it does better than any other system– it solved our problems.[9] Uber prospered in New York City because Uber drivers could make over $75,000 dollars a year.[10] Yellow Cab drivers suffered as they failed to adapt to the new model,[11] and the MTA continued to deteriorate.
The New York City government enacted regulation for increased governmental control over Uber.[12] New York City gave two primary reasons for its regulation: (1) workers were not being paid enough; and, (2) the City streets were too crowded.[13]
Who maintains the City streets? The government. Instead of letting the free market fix congestion issues,[14] the government added congestion taxes, designed to decrease driving in New York City and give even more money to the overfunded and inefficient MTA.[15]
The argument that workers were not being paid enough is filled with flaws. Not every worker can become a millionaire; that is called inflation, and it would destroy the economy.[16] If an Uber driver had a better opportunity, then, logically, the Uber driver would go seek out that better opportunity.[17] However, many times there aren’t better opportunities available.
Uber gives drivers a solution to their problem. Maybe they need extra money, they need flexibility, or they just came to this country and are trying to start out. We do not know all the motivations of Uber drivers. What we do know is they chose to do so.
If the rate they are being paid is not enough, they can band together and collectively demand higher wages; or, as they have done in the past,[18] they can collectively stop driving for Uber. The drivers have a choice to drive or not. If a better opportunity comes along, they are able to pursue that.
New York City government could not leave the free market alone to set the wages and solve problems for New Yorkers. What the New York City government did was impose minimum wage standards that drove up prices and crushed riders. [19] Riders knew it was not affordable and there were cheaper ways to travel around, albeit not as good; and in the end, this government regulation hurt drivers as well. [20]
After these regulations went into effect, rides dropped 8% in the first month,[21] Uber announced it would be restricting drivers on the application to comply with the regulations.[22] In addition, a competitor, Lyft, stopped accepting new drivers and fired old ones.[23] It appears it will only get worse as congestion pricing and other regulations take effect.
New York City has a dangerous habit of overregulation and taking away our liberties to make choices for ourselves.[24] Luckily our judiciary has stepped in and stopped some of the most outrageous of these overreaches, including the soda ban. [25]
The New York City government took away the choice’s consumers have in the free market. It took away the right to work for many New Yorkers. It took away from consumer the right to choose how they were going to spend their money. Regulation, as seen here, does not and did not improve the quality of life for many New Yorkers; it unjustly took away our right to choose.
I suggest New York City voters and the government strive to understand that free market with fair rules can and does solve our issues. Excessive government is not the best option, and we can do better. We can choose for ourselves, and we should not allow our government to take away our liberties and make choices for us.
Endnotes:
[1] Ilya Somin, Lessons from a century of communism, The Volokh Conspiracy, (accessed Oct. 8, 2019), https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/11/07/lessons-from-a-century-of-communism
[2] Id.
[3] Gary Sernovitz, Are New York Taxis Such a Bad Investment?, The New Yorker, (accessed Oct. 8, 2019) https://www.newyorker.com/business/currency/are-new-york-taxis-such-a-bad-investment
[4] Id.
[5] Jonathan English, Why New York City Stopped Building Subways, City Lab, (accessed Oct. 8, 2019) https://www.citylab.com/transportation/2018/04/why-new-york-city-stopped-building-subways/557567/
[6] Emma G. Fitzsimmons, Ford Fessenden and K.K. Rebecca Lai, Every New York City Subway Line Is Getting Worse. Here’s Why, The New York Times, (accessed Oct. 8, 2019) https://www.nytimes.com/interactive/2017/06/28/nyregion/subway-delays-overcrowding.html
[7]Johnny Knocke, The MTA loses six billion dollars a year and nobody cares, Medium, (accessed Oct. 8, 2019), https://medium.com/@johnnyknocke/the-mta-loses-six-billion-dollars-a-year-and-nobody-cares-d0d23093b2d8
[8] Roger Dooley, How Did Uber Beat the Taxi Industry? Friction., Linkedin, (accessed Oct. 8, 2019) https://www.linkedin.com/pulse/how-did-uber-beat-taxi-industry-friction-roger-dooley/
[9] https://mises.org/library/market-doesnt-solve-problems-people-do
[10] Kathleen Elkins, I spent a day with a full-time Uber, Lyft and Juno driver in NYC—here’s how much he earned in 9 hours, (accessed Oct. 8, 2019), https://www.cnbc.com/2019/02/04/how-much-money-nyc-uber-lyft-and-juno-drivers-can-earn-in-a-day.html
[11] Post Editorial Board, Don’t punish New Yorkers to try to save yellow cabs, New York Post, (accessed Oct. 8, 2019) https://nypost.com/2017/09/27/dont-punish-new-yorkers-to-try-to-save-yellow-cabs/
[12] Anna Sanders and Clayton Guse, NYC to impose some of the world’s toughest regulations on Uber and Lyft, Daily News, (accessed Oct. 8, 2019) https://www.nydailynews.com/new-york/ny-uber-lyft-cap-fhv-regulations-tlc-20190612-pspo2afygje63mxm4lr55s57jq-story.html
[13] Id.
[14] Lauren Cook, Congestion pricing in NYC: What to know about the Manhattan toll plan, AM New York, (accessed Oct. 8, 2019) https://www.amny.com/transit/congestion-pricing-nyc-1.29251703
[15] Winnie Hu, Your Taxi or Uber Ride in Manhattan Will Soon Cost More, The New York Times, (accessed Oct. 8, 2019), https://www.nytimes.com/2019/01/31/nyregion/uber-taxi-lyft-fee.html
[16] James Chen, Inflation, investopedia, (accessed Nov. 4, 2019), https://www.investopedia.com/terms/i/inflation.asp
[17] Dana Wilkie, Better Pay Is Top Reason Workers Are Quitting Jobs, SHRM, (accessed Nov. 4, 2019), https://www.shrm.org/resourcesandtools/hr-topics/employee-relations/pages/pay-is-reason-workers-quit-jobs.aspx
[18] Shirin Ghaffary, The Uber strike shows how drivers remain one of the company’s biggest liabilities, Vox, (accessed Oct. 8, 2019), https://www.vox.com/recode/2019/5/7/18528512/uber-driver-strike-gig-economy-labor-dilemma
[19] Alexia Fernández Campbell, New York City passes nation’s first minimum pay rate for Uber and Lyft drivers, Vox, , (accessed Oct. 8, 2019), https://www.vox.com/2018/12/5/18127208/new-york-uber-lyft-minimum-wage
[20] Id.
[21] Graham Rapier, Uber and Lyft rides are down in New York City thanks to a minimum-wage rule that drove up prices. Analysts say it could have been even worse., Business Insider, (accessed Oct. 8, 2019), https://www.businessinsider.com/uber-lyft-rides-decline-after-new-york-minimum-wage-2019-7
[22] Mariella Moon, Uber will restrict NYC drivers’ access to app due to new regulations, Engadget, (accessed Oct. 8, 2019), https://www.engadget.com/2019/09/17/uber-to-lock-out-nyc-drivers/
[23] Id.
[24]Sara Haviva Mark, Gillian E. Metzger, and Richard Briffault, The Soda Ban Decision: What It Really Means, HuffPost, (accessed Oct. 8, 2019), https://www.huffpost.com/entry/the-soda-ban-court-decision_b_5537010.
[25] Michael M. Grynbaum, New York’s Ban on Big Sodas Is Rejected by Final Court, The New York Times, (accessed Oct. 8, 2019).
