September 27, 2010
Taxi Industry Reports Tired and One Sided
Ignores past seventeen years of evidence.
This summer Saskatchewan’s two largest cities received and digested report by transportation consultant Dr Ray Mundy of the Tennessee Transportation and Logistics Foundation. He’s been busy in Saskatchewan this year, filing 170 page reports on the taxi industries of Regina and Saskatoon, at a cost of $45,000 and $50,000 respectively. City residents should consider what’s not in the reports before deciding whether they got value for money.
Behind any debate on taxi regulations looms the question of whether municipalities should stipulate the number of cabs allowed to operate and the prices they charge. The alternative is for municipalities to focus on safety and basic driver competence, and then leave the questions of price and numbers up to the marketplace. This very question was debated by panels of experts at the International Association of Taxi Regulators’ annual conference in Chicago this past weekend.
In Dr. Mundy’s reports, there is no such debate. Like a child who incriminates himself by denying a misdeed even before being accused, the first sections of each report reveal where the inquiry won’t be going. They’re entitled “Why regulate Taxis?” and go on to answer their own questions. Competition serves consumers well in every other private industry, it seems, but taxis are somehow different. It explains how several U.S. cities disastrously removed controls on prices charged and who could enter the industry in the 1980’s. On this he is largely correct, and offers several quotes from studies of that period.
Incredibly, the newest study quoted dates to 1993, and the entire reports fail to even mention the quite different experiences and research that have come to light in the past seventeen years.
They might, for example have included a 2008 Organisation for Economic Cooperation and Development (OECD) study of seventeen countries which found “Increasing numbers of OECD countries have removed or loosened supply restrictions on taxis. The results of these reforms have been strongly positive, with reduced waiting times, increased consumer satisfaction and, in many cases, falling prices being observed.”
They might have looked to a 2006 “study of studies” by two American economists who found that nineteen out of twenty-eight recent papers by professional economists on the subject favoured deregulation.
They might have considered the positive deregulation experiences of countries like Sweden, Ireland, and New Zealand documented by the Norwegian Institute of Transport Economics. It found that deregulation has different results in different places, but certainly can work very well. There is more, dear reader, but I know you too can use Google.
Alas, for some strange reason, the 170 page reports didn’t find room to mention such evidence.
Could somebody who makes a living as a consultant on an issue as specialised as the taxi industry really be twenty years behind in his reading on the subject? Perhaps he is aware of the evidence I have quoted above but believes that Saskatchewan people don’t need to know about the findings of the OECD, the Institute of Transport Economics, the majority of professional economists publishing in the area, or the experiences of other industrialised countries that don’t happen to be on this continent?
Or could it be that a report on regulating taxis could only ever recommend more regulations? A deregulated market would not require $50,000 reports to decide what taxi drivers should wear and how old their cars should be (among other Mundy recommendations). In a deregulated market such questions would be decided by supply and demand.
The cities of Regina and Saskatoon effectively wrote their taxi industry reports’ conclusions simply by asking a transport consultant for them. Any other conclusion would have been like asking an accountant to recommend less accounting, a lawyer to recommend less legal advice, or an engineer to recommend fewer design reports.
We can only assume Dr Mundy worked to the best of his ability with the best of intentions. That doesn’t mean that the people of Regina and Saskatoon should be happy with his report. They would be far better served by starting afresh with all available evidence on the table.
I bet they would want a taxi industry with limited quality and safety regulations, and which left people who met those regulations free to compete in an open market. The remaining question is whether civic leaders have the courage of their convictions to actually lead on this issue.
direct the Centre’s Saskatchewan office from 2007 to 2011. He holds degrees in Electrical Engineering and Philosophy from the University of Auckland, where he also tutored Economics. In four years working for the Frontier Centre, David carried out extensive media work, presenting policy analysis through local and national television, newspapers, and radio. His policy columns have been published in newspapers in every province as well as the Globe and Mail and the National Post. David has produced policy research papers on telecommunications privatization, education, environmental policy, fiscal policy, poverty, and taxi deregulation. However, his major project with the Frontier Centre is the annual Local Government Performance Index (LGPI). The inaugural LGPI was released in November 2007 and comes at a time when municipal accounting standards in Canada must improve if the municipal government sector is to reach its potential as an economic growth engine for Canada. David is now a policy advisor in Wellington, New Zealand.