"No experiment can be more interesting than that we are now trying, and which we trust will end in establishing the fact, that man may be governed by reason and truth. Our first object should therefore be, to leave open to him all the avenues to truth. The most effectual hitherto found, is the freedom of the press. It is, therefore, the first shut up by those who fear the investigation of their actions." --Thomas Jefferson to John Tyler, 1804.

Free market sustainability

Put the phrases “free market”, “less regulation” and “environmental sustainability” together in the same concept … well, it’s not that they can’t work together, but you don’t see it a lot. But here’s a case that can easily bridge the divide.

It comes from the Sightline Institute at Seattle, with the unlikely subject of taxis. Taxi cabs, it turns out, are a “sustainable” type of business, partly because they provide the means for people to use cars and other vehicles less. “Plentiful, affordable taxis facilitate greener urban travel. They help families shed second cars, ride transit more often, and walk to work on could-be-rainy days. They fill gaps in transit systems and provide a fallback in case of unexpected events,” Sightline said.


It turns out out too that Seattle and Portland are, relative among the nation’s larger metro areas (with large taxi fleets), over-regulating them – diminishing their numbers and use, increasing the cost of using them, and harming sustainability.

More specifically:

In the Northwest’s largest cities, however, local ordinances enforced by taxi boards suppress the entry of new cabs onto the streets. They impose arcane and ultimately farcical management principles reminiscent of Soviet planning. Imagine teams of pizza regulators pawing through discarded receipts and pizza boxes to determine whether demand for pizza delivery markets are “oversaturated,” and you won’t be far from the truth. Restricting taxicab licenses undermines passengers’ mobility, local economies, and—by encouraging driving—our natural heritage; uncapping cabs would allow market competition to bolster all three.

As shown in the figure above, at present, the Northwest’s largest cities have fewer cabs per capita, and higher fares, than many US cities. Seattle’s 1.4 cabs per 1,000 residents is twice Portland’s 0.7, and well above Vancouver’s 1 cab per 1,000. But all our cities lag. Washington, DC, has more than 12 cabs per 1,000 residents; Las Vegas has almost 6; and San Francisco has 2. Meanwhile, the cost of a typical, five-mile trip is $16.50 in Portland, $17.25 in Seattle, and $21.57 in Vancouver. Washington, DC’s typical fare is just $11.50.

Consider the efforts of Portland’s Transportation Board of Review, which has the power to issue new taxi licenses but is also charged by city law with monitoring “market saturation factors.” It is supposed to avoid market oversaturation, something every other market—from pizza delivery to home remodeling—manages to do just fine on its own, without benefit of a board. In Portland, the rules actually require applicants to prove that a new taxi license is needed. Imagine if Pizza Hut had to demonstrate to the Pizza Delivery Board that it needs another driver for the Super Bowl.

That’s not an argument that holds up on every regulated business, the markets-are-flawless crowd notwithstanding. But Sightline makes a good case for it in the case of taxis. And it’d be interesting to see counterpart studies elsewhere.

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