On “price-gouging.”

Today, New York City’s bus and subway workers went on strike. What a mess. I wonder whether it matters to them that the strike is illegal. State law forbids public employees from striking, so the Transport Workers Union is being fined one million bucks per day. That’s roughly $30 per TWU employee, plus losing two days’ pay for each day on strike, plus the possibility of going to jail. I hope it’s worth it for them, because they’re going to have to answer to a lot of angry New Yorkers.

Anyhow, I watched portions of Mayor Bloomberg’s press conference regarding the strike. He reiterated that the strike was illegal and estimated the cost of the strike to be as much as $400 million per day. The last thing he said before I turned off the TV in disgust was that there was a phone number to report “price-gouging” by taxi drivers.

Never mind the larger point about the potential troubles and inefficiencies of too much government involvement in an economy. Why is it that when every mode of transportation in NYC–other than the subways and buses—is under far greater strain and faces greater demand than usual, Bloomberg sees fit to put an upper limit on what taxi drivers can charge?

“Well, people need [stretch “need” into as many syllables as possible] rides, and it’s not right to take advantage of them in such a situation.”

So instead, people should be allowed to take advantage of taxi drivers? Imagine this scenario—which is probably happening, in some form or other, today:

A ride from Point A to Point B, both in NYC, normally costs $25 for a full cab, say, four riders. Group 1 and Group 2, four people each, need to get from Point A to Point B as soon as possible. The groups hail the cab at the same time. The cabbie pulls over, and tries to figure out which group he should take. Group 1 offers $50. Group 2 offers $100.

Mayor Bloomberg suddenly announces that taxi fares can not rise more than 100 percent today. Fifty dollars is the cabbie’s limit for the day. One way or another, he has to refuse fifty moredollars that somebody was willing to pay.

See the problem the cabbie faces? If not, maybe this’ll help: to legally drive a cab in New York, you need a “medallion.” These medallions are auctioned off by New York City, which controls the supply. According to the NYC Taxi and Limousine Commission’s most recent auction results, the lowest winning bid for a medallion for a regular, individually-owned car was $332,027.62. Remember, that’s just to be allowed to drive the cab– it doesn’t include gas, insurance, maintenance, or the cab itself. Medallions were cheaper for hybrid cars and handicapped-accessible cars, but still over $220,000. They were more than $775,000 for corporate-owned cars. The cabbies have some pretty big costs to cover if they ever want to see profits.

People who complain about price-gouging seem to forget that when buyers are facing emergencies, so are sellers–because buyers are making greater demands of the sellers’ time, effort, and resources. Who is Mayor Bloomberg to single-handedly determine the value of a cabbie’s work, especially on a day like today? The cabbies and the potential riders have a much better grasp of how much the ride is worth to them. Let them work it out.

This entry was posted on Tuesday, December 20th, 2005 at 8:34 PM.

One Response to “On “price-gouging.””

  1. donnimikk Says:
    December 25th, 2005 at 11:49 AM

Merry Christmas, Mr. V.