Marco Schuster


Cabs vanishing due to Uber, Lyft & co? Bad idea.

As news break that in Chicago the taxicab industry is on the brink of collapse, because Uber, Lyft and other ride-sharing companies outcompete them, I wonder if this has a net benefit to society.

Not just because the lives of real people and not investors are in danger due to the value of the taxi medallions in freefall (which cab drivers tend to own for retirement — and which often enough are paid by loans that cannot be adjusted for the drop in value, thus driving real people into bankruptcy).

What many people have skipped so far in the entire taxicab debate (we have had it in Germany, too, but Uber lost in court 2016 and cannot offer ridesharing any more) is that taxicabs offer tangible benefits over Uber, Lyft and friends — which means, when taxicabs vanish, a lot of problems arise:

  1. People who do not own smartphones (esp. young kids, the elderly) or no credit cards, for whatever reason, lose the only form of individual point-to-point transport other than a car (which may be not another option due to lack of a license or being drunk) as there’s no way to hail a ride-share without a smartphone or a credit card to pay.
  2. People with disabilities (e.g. wheelchair-dependent people) lose a form of transport which is usually guaranteed by law (anti-discrimination rules). Uber and Lyft drivers tend to be driving in small, uncomfortable limos which cannot accomodate special needs, in contrast to cabs — in Germany, I can explicitly order a van cab if I need one.
  3. With a licensed taxi cab, the guest can usually be sure that the taxi driver knows his/her way through the city. With ride-share the situation can be a hit and miss, although the rating system seems to prevent “detour” scams pretty much.
  4. With a licensed taxi cab, the guest can usually rely on the taxi being both properly insured (as authorities won’t hand out medallions/taxi plates without proof of proper insurance) and in proper fitness to be on the road. Ride-shares, again, not so much. and especially not the “old school” forms of ride sharing… it’s not really funny if the driver comes up with a rusting-away VW Polo. Taxi cabs have a yearly check-up in Germany (in contrast to general automobiles, which have a mandatory check-up every two years).
  5. There don’t seem to be any restrictions on “road time” for ride-sharing services. It’s dangerous to drive too long, and even more dangerous to do so without breaks — I speak with personal experience. Employed taxi cab drivers, however, are subjected to labor laws limiting workdays to 8 hours.
  6. Uber and Lyft, for now, offer unsustainable fares, subsidized by massive amounts of venture capital. Once the taxi cabs have vanished and VC dries up, ride-share companies can jack up fares without any limit — in contrast to licensed taxi cabs, where the government sets mandatory tariffs. And as could be seen in the legal fights, especially Uber does not give a f..k about local laws and regulations anyway, so cities are looking at multiple-year-long lawsuits when they try to rein in the big ones.
  7. Public transport (buses, trains) is no full featured alternative to taxi cabs, in my opinion: in rural areas, buses often enough run twice a day and that’s it. The public transport networks usually entail a large amount of walking, which can be either physically impossible (for elderly people) or dangerous (kids). A taxi cab, however, can be hailed from anywhere to anywhere, and regulators in Germany tend to manage taxi cab licenses in a way that ensures that even at nighttime in a run-down part of a city (or in the midst of nowhere in the country) there will be a cab at your location in a reasonable time frame.
  8. Uber and Lyft, as well as the rest of the “gig economy” scam, are only successful because they evade laws and squeeze profits without end out of their “employees” or society as a whole. Drivers for Uber, for example, often earn below minimum wage. Airbnb, the second-in-command when it comes to ignoring or breaking laws, makes its profits on the back of society: Valuable living space is abused for short-term rentals, which jacks up rents and outprices “ordinary” people (in Berlin, for example, there are estimated 13k apartments on Airbnb), and noisy tourists are a bane to neighbors.

In my opinion, the answer to the problems which Uber, Lyft and other “gig economy” companies claim to solve (e.g. “high costs” or unflexible payment solutions — everyone can tell stories of not working CC readers in taxi cabs, for example) should better be solved through more and especially more efficient regulation, but not by letting VC-backed companies destroy parts of our society for private gain.

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