The app rides should save the taxis

The de Blasio administration indicated recently that it is set to offer a bailout of the troubled taxi industry, using taxpayers’ money. You know, the taxi industry that the city destroyed by letting in Uber and similar app ride services, virtually free of charge, which bankrupted the taxi industry and — directly or indirectly — appear to have been a factor in at least nine suicides.

This bailout, although perhaps well intentioned, makes no sense. Instead of using taxpayers’ money, the city should charge the Ubers out there, the same way it charges the taxis. By doing so, the city would enhance rather than deplete public finances, and in doing so, revive and “bail out” the taxi industry.

Let me set the record straight by reviewing the history. For 80 years, New York had the best, most regulated taxi industry in the country, perhaps in the world. As everyone knows, the service was far from perfect, but it worked. In many ways it was the driving force behind New York’s economy, by providing business people, social revelers and travelers a safe and easy way to get around town. The Taxi and Limousine Commission, a city agency, was set up to foster and protect the industry, and to provide the public with the most professional surface transportation service.

The primary way the industry was regulated was first through the sale of medallions, and second by regular inspections every four months. In the early aughts, the city balanced its budget by selling about a billion dollars’ worth of medallions. There were single medallions that went for up to one million each. Drivers, in particular many immigrants, were encouraged to purchase medallions. The city’s sale documents said that medallions were a good investment, generally increasing in value. Many bought the medallions by taking out large loans with the hope of paying off those loans over time, and then having a retirement nest egg. In addition to paying for a medallion, taxis pay the city and state about $15,000 per year in fees.

The city was able to sell the medallions at auction for as much as a million dollars because the demand for spontaneous rides was clearly on the increase. To meet that demand, the city sold medallions after a survey was completed and the industry created thousands of new jobs. After taking people’s money, the TLC did several foolish things. First, TLC forced the industry to use a car that was obviously designed by people who wanted to make riding a taxi as unpleasant an experience as possible. They called it the Taxi of the Future. It was more like the Taxi from Hell.

Then the TLC did the unthinkable. They let Uber et al. add close to 100,000 regular, comfortable vehicles to our streets without charging them much more than a token amount, instead of charging them for a medallion or even the $15,000 annual fees, which would have raised about a half a billion dollars per year. These 100,000 vehicles clogged the streets (where were all the anti-car advocates?), and stole the rightfully earned business from the taxis. They drew many bus riders away from bus routes, hurting the MTA’s financial ability to provide, in particular, low-income New Yorkers with a relatively convenient and inexpensive way to get to work.

Total spontaneous trips continued to go up, but the share provided by yellow taxis dropped by 50%. Bus ridership, particularly outside Manhattan dropped precipitously. Ubers were cheaper because they didn’t have to pay for a medallion, or the annual fees the taxis paid. Plus they were not profitable, but Wall Street and other sources subsidized the new ride-hailing companies to break the back of the taxi industry.

The city now admits that it screwed the yellow cab industry. But the remedy is not to waste more taxpayer money. That money won’t save the industry. It can’t compete with Wall Street-subsidized Ubers that don’t have to pay what the taxis pay.

The solution is not to make another mistake by wasting taxpayer money. The solution is to limit the number of Ubers and charge them all the all the fees and taxes that the taxis pay. Raise money for the MTA to build more subways and improve service. Let the yellows use real cars. Let the two types compete fairly.

If done the right way, the yellows will prosper on their own via competition on a level playing field. The public will be better served, and the taxpayer money could be put to better use. And if they don’t do that, the city should buy back the medallions at the price the city sold them for. That would be a legitimate “bailout.”

Something has to be done to help these people. It’s just that the proposal is not the right thing.