There is no limit to the good that government can do. I recently blogged on the efforts of the Montgomery County Council in Maryland to protect us from inexpensive groceries. Now they have solved an even more pressing social problem—poor taxi service. From today’s Washington Post:
The Montgomery County Council plans to vote today on
regulations aimed at upgrading taxi service in the county, long a
target of customer complaints about late pickups, rude drivers and
excessive fares.
If approved, the legislation would require cab
companies to pick up customers within 20 minutes of receiving a call
for service. Customers who prearrange service could be picked up no
more than 10 minutes later than the time they requested. Fines could be
issued if a certain percentage of customers was not picked up on time.
I always like legislation that requires something. Why stop at late cabs? Why not legislate niceness? Or clean hair? Or eternal life? Why not outlaw death? The problem with such legislation is always compliance. It’s all well and good to require that cabs be on time. But how do you get there from here?
How do you make sure that cab companies comply with the requirement to be timely? According to the article, fines could be issued. But how would you legislate that? A fine for every late cab? A fine that’s a function of how late the overall fleet is in a particular month? And how could you possibly measure timeliness? Would it be on the honor system? Or would there be a government employee in the front seat of every cab with a stop watch?
Alas, it’s worse than that. I went to the Montgomery Council’s web site and pulled up the actual legislation. There’s nothing about fines. Here’s the actual requirement and the consequences:
Each fleet and association is responsible for providing timely, safe, reliable quality taxicab service. To that end, each fleet and association must submit to the Director a customer service plan as required by Section 53-110 and applicable regulations.
At a minimum, each fleet and association’s initial customer service plan must:
(1) specify the fleet or association’s anticipated percentage of trips that will achieve the applicable response time standards set under Section 53-100(b)(8) for prearranged service requests and calls…
(2) include timelines to achieve the proposed standards if they will not be met in the next year
(3) describe any operational changes the fleet or association intends to implement that would result in improved service
There are (14) requirements in all, but here’s the bottom line. You don’t have to improve service, you just have to plan on improving it. The real bottom line is that the regulation raises the costs of running a taxicab business. The lovely result is less competition. How strange, you think, until you read more of the article in the Post and learn about the relationship between the main cab company in the county and Douglas Duncan, the county executive:
A major component of the legislation is designed to
loosen the grip of Barwood Inc. on the county’s taxi market. The
company is owned by Lee Barnes, a Duncan campaign contributor and a
member of the county board that regulates the industry. He holds —
directly or through affiliates — 434 of the 580 taxi licenses in
Montgomery. During the past decade, the county has received hundreds of
complaints about service.
The way I read it, the legislation strengthens the grip of Barnes and Barwood while pretending it is otherwise. It reduces competition by making compliance with County regulations more onerous. That makes it harder for a new, small cab company to enter.
And what’s the cost of failure to comply with all the new planning and paperwork requirements? What if you fail to achieve your planned goal of better service? Here’s the language from the memo outlining the legislation.
Potential sanctions for failing to meet the minimum requirements include the loss of current licenses and denial of new licenses.
Potential sanctions. That’s the big threat. Potential sanctions. If your plan to improve service comes up short, you could lose some licenses. I wonder what the odds of that will be in practice. So in reality, this consumer protection legislation is all bark and no bite. Big hat, no cattle.
It’s actually worse than that. Rather than improving customer service the easy way—by issuing more licenses to new competitors, this legislation actually makes it harder to compete because it raises costs on potential competitors, particularly small ones.
