Taxi Regulation and "Dirty" Politics

A quick comment on politics and taxi regulation.  Catherine Rampell has a thoughtful column in the Washington Post about the politics of taxi regulation, pointing out that deregulation has not been successful in the past:

Alas, as legal scholars such as Paul Stephen Dempsey and others later documented, this Wild West approach proved disastrous. Taxi entry surged. But, unexpectedly, prices rose in every single deregulated market. This likely happened for several reasons: Government regulations, it turns out, had been capping prices below market value (especially in underserved neighborhoods); fares were relatively opaque and unpredictable; and consumers were reluctant to price-shop or interrogate drivers about their insurance and safety records. They just hopped into the first available cab.

Over time, traffic and pollution became bigger issues, incomes fell as individual drivers secured fewer rides, and service declined. By the early 1990s, nearly every city had re-regulated.

I think these conclusions will come as a surprise to people who think that Uber is by definition good because it increases competition and is innovative and blah blah blah.  I am not particularly surprised by the findings, particularly when it comes to price increases.  Uber's pricing is highly opaque and in general seems to be about double what you would pay for a taxi in New York.  It's a mystery to me why this is regarded as "consumer friendly," unless you are restricting your analysis to particularly well-heeled consumers.

But leave all that aside.  The point I want to make has to do with the politics of deregulation.  Rampell notes that "Nevada recently banned Uber — after the company reportedly failed to obey laws relating to licensing, vehicle inspections and insurance — in a move widely interpreted as being orchestrated by Big Taxi."

I think a lot of people are repulsed by the idea that public policy might be driven by interest groups such as taxi drivers or medallion owners.  The mere fact that taxi regulation benefits incumbents might seem like reason to oppose it (though of course almost every existing regulation, as opposed to new regulation, benefits incumbents, pretty much by definition).  But here is the key point:  there is a kind of physics of politics that essentially requires that interest groups will drive these sorts of discussions.

Occasionally politicians take the initiative and make good policy for the sake of good policy.  (I think William Gladstone was an exemplar of this brand of politics, though he wasn't above trying to buy off key constituencies).  But politicians aren't generally going to stand up to behemoths like Uber unless they have some concrete reason for doing so.  And even the best policy is not going to last long unless it enjoys broad popularity or has a strong constituency behind it.  Something like taxi regulation is far too nuanced and arcane for the general public to form strong opinions about, and so you are left looking for other sources of political support.

And here I think we have a way of thinking about what it means to be a good politician.  A good politician doesn't sacrifice his or her career in futile defense of, for instance, sensible taxi regulation.  But a good politician tries to find ways to mobilize a constituency in favor of good policy.  In other words, it doesn't have to be the case that if Uber spends 51x on lobbying, and the taxi industry spends 49x, that Uber will get what it wants.  51/49 is close enough for a politician to make the right decision.  But very few politicians can carry the banner of good policy if the ratio goes to something like 95/5.  If you believe that taxi regulation serves some public purpose, then you have to go out and find its natural allies and assemble them into a constituency that can sustain good policy.  (By the way, this doesn't have to be about money.  Quite often it's simply a matter of what opinions are voiced.  This is why it's so irritating that many people, particularly in the media, cast taxi regulation as a fight between innovative, high-tech Uber and the evil taxi cartel.)

And this goes into policy design at all stages.  If you want sustainable redistribution, you better find a way to build a lasting constituency that will support it (this is the logic behind the universality of Social Security and Medicare - see this old Sarang post).  If you want environmental regulation, you better make sure it is in someone's interest to keep the regulations strong.  In a lot of cases this is not a particularly difficult exercise, but it is an important aspect of the art of politics, and there is nothing whatsoever dirty about it.  Or at least, it is no dirtier than politics must be.