Friday, October 2, 2015

Do taxi drivers DESERVE to work?

An October 1, 2015 editorial in the Ottawa East News titled “Taxi drivers deserve to work” gave me pause stop and think about the fundamental ideas behind the writer’s words, and I was not impressed. Whereas the writer does identify government as a problem, the article is replete with common economic fallacies and falsehoods.  In fact, every single problem that currently besets taxi drivers is caused by the intervention of government force in the economy - force that removes freedoms, causes stagnation of business development, raises prices, makes services less accessible and harms social harmony.

The taxi business is a monopoly - a business that is banned by force except for all but the few who are allowed to buy a forcibly limited number of taxi license plates.  Those who attempt to run an honest taxi service outside the monopoly are subject to potential threats, fines, seizure, arrest, imprisonment and condemnation.  Such a situation is intolerable to advocates of a truly free society but eagerly encouraged by our current political and intellectual leaders.

When a business is under monopoly powers, meaning power backed by the government’s ability to initiate force, the result can only be stagnation and lack of innovation. Monopoly power removes the possibility of competition, removes the requirement for steady innovation and improvement of quality of service that true competition requires. In truth, innovation and experimentation are banned by law in such a situation and this too is intolerable in a free society.  Who benefits? The few are granted economic power at the expense of the many.

Under monopoly powers the result must be higher prices than in a free market.  It is a basic economic fact that when you limit supply, the price must rise. In many cases, the initial forced limiting of supply causes harm and then there are calls for enforcing price controls, such as is the case in the taxi business.  In a free market all prices are subject to competition and eventually the profit margin approaches the average of all other free sectors.  If the profit is higher than average, new competition enters and brings profits back down, and vice versa. Under monopoly rule all consumers are deprived of access to a competitive market. Who is harmed the most? Those among us who are poorest.  In the case of the current taxi business, the drivers are squeezed between the monopoly on license plates and the price controls.  They are victims of government interference also.

Enter Uber - the current free market innovation in the personal transportation business.  Uber is simply a creation of free thinking people, provided by free thinking entrepreneurial drivers and used by free-thinking customers, who for the first time in their lives have the choice of using the monopoly service or a free-market alternative, and customers are voting for the free-market service in droves.  Too bad few of them fully recognize the principles involved and vote for politicians who advocate for freedom.

Drivers in the monopoly system do not deserve to work - that is an invalid concept because it implies the work must be provided for them.  What they deserve is freedom to work, freedom from people, organizations and most especially governments that would stop them from working, so long as they are not violating the rights of others.  In fact, government is the agency peaceful people create to protect their rights, not violate them through the imposition of monopolies.

The fact drivers are not rich is of no consequence. The vast majority of people are not rich, so what?  In a free market every individual is able to make his own choices, build a business if he is able, and become rich if that business creates phenomenal value for many customers.  This appears to be impossible for an individual driving a taxi, but possible if the driver has a good mind for customer value creation and builds a superior taxi business, employing many and servicing a great many at an attractive price for value ratio.

The editorial writer insults human reasoning, ingenuity, perseverance and value creation when the term “Wal-mart-ization” is used as a term of slander.  Not a single Wal-Mart employee is forced to work there or forced to accept less money than they earn. Every employee is free to rise as far as his ability and work ethic allows, or is free to leave and find an employer who agrees he is worth more than Wal-Mart is paying him.  In a free market, justice prevails and each person receives precisely what he deserves, as determined by his free trade with other like-minded souls.  If the taxi business was a free as Wal-Mart, the business would be a thriving, innovative concern, offering an abundant variety of price points and services to everyone.

The correct and moral response by a free citizen to the current taxi imbroglio not to support the striking drivers but is a cry to end the license plate monopoly in the taxi business and all other government intervention in the taxi business. Only thus will justice be served: drivers freed to compete in a free market and customers freed to choose from among the variety of business models a free market offers. A free market is a harmonious society.

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