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No knowledge needed

16/02/2012

From the Economist on-line

“IF YOUR minicab’s not booked, it’s just a stranger’s car.” So reads a poster plastered across London’s tube stations and bus stops, part of campaign to encourage Londoners to avoid unlicensed taxis and minicabs. London’s taxis (“black cabs”) are among the most expensive in the world. Minicabs, which are not allowed to pick up customers off the street and must be booked in advance, are somewhat cheaper: they operate in a more competitive market and require less of the drivers. (They do not, for example, need to memorise London’s street map (called “the knowledge”)—and can instead rely on GPS.)

So why not allow minicabs to pick up customers? The main argument against it is safety. A particularly gruesome poster by Transport for London (TfL), the regulator for cabbies, shows a woman in tears in the back of a cab along with the words “Stop, no. Stop please, no, please. Please stop taking unbooked minicabs.” Licensed cab drivers must pass a background check, medical tests, a “topographical skills assessment test” and pay a fee of £262. This no doubt makes Londoners safer, or at very least gives them an opportunity to hold somebody to account if they are robbed, or worse. But it also gives pricey black cabs a monopoly on London’s streets.

But what would London look like without TfL’s regulations and licenses? A real world example of an all-but-free taxi market can be found in that renowned hub of capitalist free-marketeering, Tehran. In the Iranian capital, any car is a potential taxi and anybody who wants to pick up a passenger does.

There are 22,000 black cabs in London and another 49,000 vehicles licensed for private hire. Some 30,000 licensed taxis operate in Tehran. But so do an estimated 53,000 unlicensed taxis—though this number is extremely fluid. The result is not A Clockwork Orange-type world of widespread sexual attacks, armed robbery and societal breakdown as foretold by TfL. Instead, getting from place to place in Tehran is remarkably easy, safe and cheap.

Your friendly neighbourhood driver

In the absence of formal structures, a sophisticated eco-system of cab options has emerged. Commuters can call a taxi to the door or flag one down on the street to go dar baste (literally, “closed door”), hiring the whole cab for themselves. Or they can walk to the nearest main road and, at any point on the street, jump into one of the passing shared taxis that ply fixed routes up and down that particular street or between major city squares. These shared taxis form a city-wide hub-and-spoke network. Unlicensed cabs look like normal cars, but move slowly as they look for fares, flash their lights at waiting commuters and tend to have the window open just a crack so people can shout their destination at them.

Driving a fixed route obviates the need for drivers to know the roads or reading maps. Unlicensed drivers tend to prefer these routes (which is not to say they cannot be found for longer routes and more complicated journeys). This system complements the city’s public transport system, which includes a metro with three lines, scores of buses routes and the inevitable motorcycle taxis.

The result is that commuters rarely have to hang around. Taxis do not to disappear during rush hour, as they tend to do on London, but seem to multiply. Supply also expands to accommodate demand at night when people head home.

Taxis are also remarkably cheap. This is not only a result of Iran’s cheap petrol prices. Drivers get a fixed monthly quota of 60 litres of subsidised fuel per month. Anything over that must be bought at a significantly higher price on the open market. What is more, one of the benefits of owning a taxi license is a higher fuel quota. This keeps prices of  licensed taxis in check.

Taxi drivers the world over seem to dislike going short distances, making it difficult to get a ride for passengers who just want to go a few blocks. Tehran’s hop-on-hop-off shared taxi system effectively solves that problem. It also helps to reduce the number of cars on Tehran’s roads.

The system works for the unlicensed taxi drivers, too. Iran’s inflation for 2011 was 22.5% and unemployment hit 15%, according to the International Monetary Fund. Picking up a few passengers on your way home from work is an easy way to make a little pocket money—assuming you have a job at all. If you don’t, a car and a driver’s license is enough to be self-employed. Even if easing commuters’ woes is currently not on top of politicians’ mind in economically moribund Britain, a way for drivers to make a few extra quid would surely be welcomed.

This discussion hinges upon a number of paradoxes. The prime one being, that like the “prophet not honoured in his own country”, the London driver Taxi seems to provide a service which is the envy of the world, yet which is treated with some disdain by residents of London. The key criteria for qualifying as a London Cabbie are: 1 A clean criminal record 2 the ability to speak the native language clearly 3 an exhaustive topographical knowledge of a six mile radius of the City in question. At least two of the forgoing would disqualify any cab driver in any other City of the world. As a London Cabbie of 20 years’ service, my foreign passengers are daily amazed and often bemused that they enter a cab where the driver not only (in London’s case) speaks clear intelligible English, but that the driver in 95% of cases knows the precise location of a destination, simply by reference, not to a postal address, but to the name of the place ie The Carlton Club, Birkbeck College or John Bell & Croydon (a Drug store!).

To understand the whys and wherefores of the London Taxi system, one simply has to realise that the service is founded on a whole raft of legislation which is in place to protect you, the consumer. This legislation has been finely honed by Westminster Government over 400 years! Be it the requirement for a purpose built vehicle, the necessity of the painfully difficult topographical knowledge or the setting in place of a Fare Tariff which prevents arbitrarily over-charging. Add to this, the system of accountability which allows the passenger to make a complaint from their Blackberry whilst in transit via email (the address is clearly visible in the back of then cab); in toto, one has a public carriage system in place where the passenger is the priority.

As for GPS systems. As users of Private Hire cars in London have found to their daily distress, that being driven by a driver with limited language capability, third world driving habits and sole un-contextualised use of Sat Nav systems, arriving on time at the required destination is a hit and miss affair. A simple search on Twitter for #addisonlee will find a steady flow of complaints regarding the quality of Private Hire Drivers.

Comment from UNITE member Steve Plumb

This discussion hinges upon a number of paradoxes. The prime one being, that like the “prophet not honoured in his own country”, the London driver Taxi seems to provide a service which is the envy of the world, yet which is treated with some disdain by residents of London. The key criteria for qualifying as a London Cabbie are: 1 A clean criminal record 2 the ability to speak the native language clearly 3 an exhaustive topographical knowledge of a six mile radius of the City in question. At least two of the forgoing would disqualify any cab driver in any other City of the world. As a London Cabbie of 20 years’ service, my foreign passengers are daily amazed and often bemused that they enter a cab where the driver not only (in London’s case) speaks clear intelligible English, but that the driver in 95% of cases knows the precise location of a destination, simply by reference, not to a postal address, but to the name of the place ie The Carlton Club, Birkbeck College or John Bell & Croydon (a Drug store!).

To understand the whys and wherefores of the London Taxi system, one simply has to realise that the service is founded on a whole raft of legislation which is in place to protect you, the consumer. This legislation has been finely honed by Westminster Government over 400 years! Be it the requirement for a purpose built vehicle, the necessity of the painfully difficult topographical knowledge or the setting in place of a Fare Tariff which prevents arbitrarily over-charging. Add to this, the system of accountability which allows the passenger to make a complaint from their Blackberry whilst in transit via email (the address is clearly visible in the back of then cab); in toto, one has a public carriage system in place where the passenger is the priority.

As for GPS systems. As users of Private Hire cars in London have found to their daily distress, that being driven by a driver with limited language capability, third world driving habits and sole un-contextualised use of Sat Nav systems, arriving on time at the required destination is a hit and miss affair. A simple search on Twitter for #addisonlee will find a steady flow of complaints regarding the quality of Private Hire Drivers.

I can only reiterate the constant appreciation given to me and my colleagues by business people visiting London from overseas. As for the Warboys crime. He was one of 24,000 licence holders.

The M word reared its jealous and churlish head. Why is a licensing system, in place to protect the public, considered a “monopoly”? Let’s ask the Law Society, the Bar Council, the BMA, RIBA, RICS and the Royal College of Surgeons. Stephen Plumb @squaremiletaxi @tweetalondoncab

http://www.economist.com/blogs/schumpeter/2012/02/regulating-cabs-0

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