Socialism is alive and well in Madison’s taxis.
The laws of supply and demand that govern capitalism stop at the curb when you step inside a Madison taxi. Inside the cab, you’ll pay monopoly prices to companies that owe their profitable existence solely to the heavy hand of city government.
Specifically, the city of Madison requires all cab companies provide service 24-hours a day, seven-days a week. While the law purports to ensure Madisonians can always hail a cab, in practices it freezes out independent entrepreneurs hoping to start small and grow big.
Make no mistake: Madison’s taxicab laws ignore the interests of students looking for a safe way to get home from libraries and bars. As it stands, riding cabs around downtown Madison is prohibitively expensive — Madisonians pay some of the highest fares in the United States.
City officials who deny licenses to independent cab drivers unable to guarantee round-the-clock service are living in a cocoon. Starting with John F. Kennedy’s 1962 call to increase “reliance on the forces of competition and less reliance on the restraints of regulation,” federal and local governments alike have moved to deregulate industries in recent decades. On the federal level, deregulating telecommunications and air travel — once regulated under the same pretense of guaranteeing service — has resulted in unimaginable improvements in safety and services at lower costs. Thanks to cutthroat competition, commercial airlines are safer and cheaper than 20 years ago. On the local levels, many cities have moved to deregulate their cab industries, all to the benefit consumers and cab drivers alike.
But not in Madison. City leaders naturally suspicious of “free markets,” “entrepreneurship” and — God forbid — “capitalism” have moved at a painfully slow pace to free Madison’s taxis. While the city does not directly dictate prices, it intentionally creates an environment so devoid of competition that collusion is inevitable. It is no coincidence that Madison’s three cab companies — Union Cab, Badger Cab and Madison Taxi — all charge virtually the same inflated rate.
There is no question that if Madison dropped the 24/7 requirements, cab service would improve overnight. Individual cab drivers who currently have no choice but to fork over their earnings to Badger Cab and Madison Taxi could instead go independent and keep every dollar they earn. Rather than collude with each other, individual cab drivers would compete for fares — when you order a cab on a Friday night, the Yellow Pages would blare cheap fares and prompt service.
Socialists, er, defenders of taxi regulations argue that without requiring Madison Taxi and Badger Cab to operate in the wee mornings, they would promptly halt service when nobody needs a ride. Which begs the question: If nobody needs a ride, why is it so crucial for every cab company to provide service? Even if there is a lone person to ride, independent taxi drivers would be the most likely to undertake the long shifts for the chance of an extra fare.
Of course, the city should not stop regulating taxis entirely. Just as the government licenses doctors and pilots, the city should continue to ensure that cabbies are good drivers, can speak English and can find their way around the Isthmus. But city regulations should not deny the laws of supply and demand.
In the coming weeks, Madison’s City Council will consider a father-son team’s application to begin its own cab company. In evaluating the application, the city should drop its requirements that the duo provide round-the-clock service. Rather, they — and others to come — should be evaluated on their ability to provide a needed service for less.
