A modest proposal on taxi pricing (first draft)

In light of the current NYC transit strike, and my many years of experience with various forms of public transit here in San Francisco, I’d like to put forward the following idea for making taxis a more vital part of the public transit ecosystem.

How may times have you had trouble finding a cab? How many times have you waited 30 minutes for a cab to not show up? How can a service industry get away with this?

Because, in many cases, it is not worthwhile for the driver to do the work. They do not get paid more for providing better service. They do not get rewarded for driving 15 unpaid minutes to the Outer Richmond (an SF neighborhood). And I don’t blame them.

Have you ever wondered exactly what sort of organisms are sitting with you on that back seat? And what is that smell exactly?

As above, taxi drivers and companies do not get paid more for keeping a nicer environment in the cab.

And what happens when the price of gas varies? Did your taxi get more expensive? No -- it just became less profitable for the poor cabbie. The result is that fewer drivers believe it is worth their time to drive a shift, and rightly so.

Now, I deal with many very considerate, courteous taxi drivers...this is not about making a generalization about people based on their occupation. It is, however, about the incentives that drive every other type of service business to do better.

We need to give taxi drivers more freedom to charge different rates, to provide a better incentive, and more variety of service. They should be able to charge more when the demand is high, or when gas goes up. They should be rewarded for going the extra mile, so to speak. And they should be able to reduce their prices to increase ridership...

With the ability to charge differing prices, taxi companies have an incentive to differentiate themselves. Maybe Yellow Cab will decide to go premium. They improve the ride, they improve the customer experience, and they get rewarded for it. Banana Republic.

Maybe City Cab decides that it will charge less, keeping the fun but reducing the frills along with the prices. Old Navy and JetBlue have done this quite profitably.

And maybe Desoto decides that it will provide solid service to the broad middle market. The Gap.

Nobody thinks of cabs like this. But we expect exactly this range of options in restaurants, hotels, and retail shops. The result of such variety is that the customer is better served and the industry grows. And imagine the innovations -- loyalty programs, anyone?

OK smart guy, how do we phase this in? I propose that San Francisco embark on a three-tiered pricing system, call it A, B and C. Cabs can charge any of these predetermined rates as they wish, whenever they wish, so long as the big lighted sign on the roof advertises it clearly.

Further, we remove any limits on the number of medallions that the city makes available. Instead, the city (or a private clearinghouse) enforces a test of skill and competency to all drivers. Safety standards, yes, quotas, no.

From a perspective of economics, this would make automobile utilization much higher -- which is to say, a smaller number of cars spending more time on the road. Much more efficient than individuals maintaining and parking cars that they use only occasionally, assuming that taxi service becomes the better option.

What do you think?

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