Ride-hailing apps undermine traditional taxis

The argument

A 2014 protest in London saw thousands of traditional taxi drivers blocking the roads for a one hour protest against ride-hailing app, Uber. Concerns were raised about the legality of Uber's practice and its threat to the taxi driver's livelihoods. In London, you have to pass the tricky ‘Knowledge of London’ test to become a taxi driver. This involves memorising the location and name of every road in central London and takes three to four years of studying. For New York citizens, drivers have to purchase a license called a Taxi Medallion, which is rare and expensive. In 2014, one license to operate cabs in New York City sold for more than a million dollars. The purpose of keeping a low limit of licenses means they have more value. And less competition. In 2017, A New York City taxi medallion sold for just $241,000. This was one-fifth less than what it would have been worth four years previous. The reason for this is the increase of ride-hailing apps competing for the same customers. In 2017, there were 13,587 yellow-taxi medallions in New York City up against more than 50,000 Uber and Lyft cars. Ride-hailing apps are a huge threat to taxi drivers. They tend to offer cheaper fares. Pretty much anyone over the age of 21 with a valid UK licence can sign up to become an Uber driver. And they don't have to buy a licence or take a complicated test. The same can be said for Lyft. It's not only London and New York who have protested over Uber. Taxi drivers have gridlocked cities in Berlin, Paris, Barcelona, Rome, and Madrid protesting Uber's lack of regulations and threats to their livelihood. Argentina has also protested against Uber.

Premises

Counter-arguments

Harm to an incumbent industry is not the same as harm to society, and the question asks about the second. Every displacement of an existing trade by a cheaper or more convenient alternative injures the incumbents; that is what competition does, and it is not by itself an objection unless the thing displaced was producing value the replacement does not. The argument documents the injury thoroughly and never makes that second case. Its own description of the medallion system is the problem. It states plainly that the purpose of capping licences is to keep their value high and competition low — which is a description of an artificial scarcity rent. A million-dollar entry fee excluded exactly the drivers least able to pay it, and a system whose defenders describe it as designed to limit competition is an odd thing to invoke on behalf of the public interest. The Knowledge is a genuine skill, but satellite navigation reduced the advantage it conferred, which is a technological change rather than a regulatory injustice. On the other side of the ledger sit the things the question asks about: lower fares, shorter waits, service in outer areas that cabs served poorly, traceable trips and cashless payment, and flexible earnings for drivers who could never have bought a medallion. There is a much stronger version of this argument that the body does not make. Many medallion owners borrowed heavily against inflated values, and the collapse left individual drivers with unpayable debts — a concrete, documented harm to real people. That case indicts the lending and the bubble as much as the apps. As written, the argument counts a fall in the resale price of a licence as damage to society, which conflates the interests of licence holders with the public's.

Rejecting the premises

[Rejecting P1] The premise describes the licensing regime accurately and in doing so undercuts itself: it states that the purpose of capping medallions is to preserve their value and limit competition, which describes an artificial scarcity rent that excluded the drivers least able to pay a million-dollar entry price. [Rejecting P2] Falling medallion values and driver protests evidence injury to incumbents rather than to society, and the ledger the question asks about also contains lower fares, shorter waits, service in areas cabs covered poorly, traceable cashless trips and flexible earnings for drivers who could not have bought a licence; the stronger harm — owners left with unpayable debts borrowed against inflated valuations — indicts the lending and the bubble alongside the apps. [Rejecting C] The conclusion moves from harm to an incumbent trade to harm to society, which does not follow unless the displaced arrangement produced value the replacement does not — a case the argument never attempts.