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Blatantly using government to protect an entrenched special interest

Wednesday, Mar 26, 2014

* “Taxis want these guys out of business,” one of the sponsors of the ride-sharing regulatory bill told me yesterday.

The play here is obvious. Taxi companies in Chicago, like pretty much everywhere else in the world, want to put Uber and other companies like it out of business. Period. That’s all that this is about. The companies have tough lobbyists and a pile of cash and they want the government to protect them from a new-age competitor.

* It’s not too hard to read between the lines here

Rep. Michael Zalewski, D-Riverside, chief sponsor of the legislation in Springfield, said putting in safety mandates on the new companies that can be summoned with a few keystrokes on a smartphone is an “urgent matter.”

“It’s our opinion, and the opinion of those who focus on consumer protection, that in fact regulatory vacuums are not healthy for Illinois citizens,” Zalewski said. “We don’t condone unlicensed, unregulated activity, and in fact it’s our duty to protect the public safety of our constituents.”

If only they’d tackled the budget with the same vigor.

Some of the safety mandates do make sense. For instance, making sure that the vehicles are subjected to safety inspections is a good idea.

* But, I mean, what the heck

No commercial ridesharing arrangement shall pick up or discharge a passenger at any airport that serves as a base for commercial flights open to the general public, to any convention center

This is all about stifling competition. Pure and simple.

- Posted by Rich Miller        


45 Comments
  1. - OneMan - Wednesday, Mar 26, 14 @ 10:18 am:

    Yep,

    and I suspect the taxi companies have been giving more and longer than the uber folks and their ilk…

    Also the taxi medallion thing makes all sorts of entities good money, don’t want to hurt those folks either.


  2. - wordslinger - Wednesday, Mar 26, 14 @ 10:20 am:

    –No commercial ridesharing arrangement shall pick up or discharge a passenger at any airport that serves as a base for commercial flights open to the general public, to any convention center–

    Obviously, that’s O’Hare, Midway, and McCormick Place, which are the golden rides for taxis.

    Another factor to consider, though, is that there’s a surcharge on taxi and limo rides to the airports that are used to service Mac Place bonds.

    I don’t know if the Uber drivers are charging that. If they want a level playing field, they should.


  3. - Empty Chair - Wednesday, Mar 26, 14 @ 10:22 am:

    It’s amazing how much the Sun-Times has given up on things like editing and quality. From the last paragraph in one of the linked articles:

    “The lobbying firm, once one of the most clout-heavy law firms in the city and still a formidable presence, has Michael Daley as one of its principles.”

    Principals. This is basic stuff.

    http://politics.suntimes.com/article/springfield/taxi-industry-ride-sharing-services-lock-horns-capitol/wed-03262014-123am


  4. - Rich Miller - Wednesday, Mar 26, 14 @ 10:23 am:

    ===If they want a level playing field, they should. ===

    Yep. They should, instead of trying to ban them from doing the trips in the first place.


  5. - Senator Clay Davis - Wednesday, Mar 26, 14 @ 10:31 am:

    Uber, Lyft and Sidecar (like AirBnB, RelayRides, Craigslist, or your neighborhood yard sale) are about peer-to-peer transactions. There is no regulation, and that’s the point. You save money, but you accept some risk.

    Want additional safety? Take a cab.


  6. - VanillaMan - Wednesday, Mar 26, 14 @ 10:31 am:

    At what point will political interests interfere with my ability to taxi my kids to soccer, claiming that my vehicle, my driving ability, or that the route I take to get them there could be dangerous? There are folks who need to earn a living taxiing my kids to soccer!


  7. - Upon Further Review - Wednesday, Mar 26, 14 @ 10:32 am:

    For a change, I come down on the side of the government, if the “ride share” vehicle operators are not “licensed” to drive passengers in the same manner as the taxi drivers.

    In a different setting, it makes me wonder if the food vendors operating from pushcarts are licensed as well.

    Licensing laws serve two purposes, raising government revenue and allowing government regulation for safety reasons. If the ride share operators are skirting the laws applied to the taxis, I am with Zalewski.


  8. - Been There - Wednesday, Mar 26, 14 @ 10:34 am:

    ===This is all about stifling competition===
    The city only allows for a limited number of taxi licenses. The value of these “medallions” run in the hundreds of thousand of dollars each. Since the city has allowed the limited licenses to be sold at market prices their value was there was a fixed number. With the ride share companies taking a bigger share of the market the value of these medallions will drop significantly. Not sure why the city ever allowed the “owners” of a license to resell it. Seems to me that should fall to whoever issues a license.


  9. - Tom - Wednesday, Mar 26, 14 @ 10:35 am:

    I have no qualms making them do background checks on drivers and making sure they have the proper insurance but everything else is overkill. Uber is a great service. Leave them alone. Have you ever heard anyone defend the taxi industry? Not me because they have an inferior product.


  10. - Senator Clay Davis - Wednesday, Mar 26, 14 @ 10:36 am:

    With that said, I’ve used Uber and Lyft many times and I feel very safe using their services. Their drivers are tracked and have to pass background checks, and I wouldn’t use them otherwise.


  11. - Steve - Wednesday, Mar 26, 14 @ 10:37 am:

    This is the best modern day example of the rent-seeking society. The taxi cartel wants to limit competition to gain monopoly style profits. Ever wonder why taxi cab medallions in NYC are so expensive??? Just look who doesn’t want a free market in transportation. Why have anti-trust laws if they don’t apply to situations like this????


  12. - Upon Further Review - Wednesday, Mar 26, 14 @ 10:49 am:

    If a restaurant has a “BYOB” policy, the owners do not have to have a liquor license. I am hard pressed to see how taxi companies would not be angry at competitors providing a comparable service while not being subject to the same laws.

    We can all cite horror stories about the major taxi companies, but there are still independent taxi operators and smaller companies too.

    Follow the laws.


  13. - Wumpus - Wednesday, Mar 26, 14 @ 10:51 am:

    i undersrand why the taxis are doing this. They are probably like, “We paid how many hundreds of thousands for this lousy medallion when all we needed to buy was an Iphone (or droid phone)?”


  14. - Zoom - Wednesday, Mar 26, 14 @ 10:53 am:

    I saw that- seems to me that having competition in the marketplace is a good thing. If the taxi companies don’t like it, it should be their problem and not mine.


  15. - Amuzing Myself - Wednesday, Mar 26, 14 @ 11:04 am:

    So they pick them up at the airports and drop them off across the street, instead of the front door.


  16. - North Shore Joe - Wednesday, Mar 26, 14 @ 11:10 am:

    This will all be a moot subject when cars are driving themselves in under 5 years.


  17. - Just Me - Wednesday, Mar 26, 14 @ 11:14 am:

    The biggest reason most of my friends like the apps is because it is so easy to pay with their phones. Maybe the taxi industry should look into why they are losing business.


  18. - RonOglesby - Wednesday, Mar 26, 14 @ 11:16 am:

    Uber, the next food truck… Must protect the existing cartels no matter the benefit to the consumer.

    They couch this as safety then ban all rides from the airports. Please. Ignoring that one line is like having a bill that says “everyone can vote, Well except this one group of people” and calling it the “voter protection act”


  19. - liandro - Wednesday, Mar 26, 14 @ 11:22 am:

    What frustrates me about watching all this unfold is just how passive, and even approving, IL is to the idea of regulation–even when there is little to no evidence that it is needed. Too often government sells us the idea of “safety” and “security” and then charges us a ransom for it. In this case, the ransom is an entire new market concept.

    While I agree with North Shore Joe that eventually new techs might make this particular case moot, what happens when we regulate that new tech? Entrenched interests and paradigms will still be here. How many barriers to entry must we place on the market before people realize that it is we, the regular people, that lose out? Scare tactics without evidence is just fear-mongering. At least with things like texting-while-driving there was research involved.


  20. - Upon Further Review - Wednesday, Mar 26, 14 @ 11:23 am:

    @RonOglesby:

    Uhmm… government regulation and consumer safety laws were considered “Progressive” reforms to check the abuses of unfettered capitalism.

    The “cartels” are complying with actual laws and ordinances which are not exactly new. Taxi cab medallions date back to the era of horse drawn carriages.

    Bottom line: Chicago needs the taxi revenue.


  21. - Plutocrat03 - Wednesday, Mar 26, 14 @ 11:24 am:

    Let’s accept the new ride sharing services, but make them provide minimum levels of protection to the consumer.

    Make sure that insurance, safety inspections and driver checks are up to snuff.


  22. - Shemp - Wednesday, Mar 26, 14 @ 11:25 am:

    Wait, vast members of the GA can have their opinions bought? Glad the GA can look out for my safety by restraining competition and progress in the marketplace, whew!


  23. - North Shore Joe - Wednesday, Mar 26, 14 @ 11:30 am:

    Uber is just technologically disguised gypsy cabs–I agree they need to be regulated. So whatever logic banned gypsy cabs and hitch hiking an be the same logic applied here.

    Yuppies in the city use the ‘independents’ shall we call them with no qualms. Its made hailing a taxi is pretty ole fashioned these days.

    Once this bill passes, I agree with Just Me.

    Yellow Cab and the other big companies should just make an app that takes no cut, and these taxi-brokers will be put right out of business.


  24. - Jimmy 87 - Wednesday, Mar 26, 14 @ 11:33 am:

    Aside from basic safety regulations, both the General Assembly and City really ought to stay out of this fight. This is a matter that should be decided by the marketplace. Let consumers decide. I sometimes use Uber, it’s a great service. But if you’re downtown or river north it’s just as easy and often times cheaper to grab a taxi - especially during “surge pricing” times. To be fair, at least with Uber, they’re always very upfront and make you confirm twice that you’ve accepted the “surge price.”

    I remember three or four years ago we had the whole “blunt wrap” debacle. Same thing, one company trying to gain a competitive advantage over another via legislation. I believe that legislation ultimately met its demise in the House - I hope this bill does too.


  25. - Just Me - Wednesday, Mar 26, 14 @ 11:39 am:

    Jimmy: I suppose you think the market place should decide what drugs are sold. Do you favor elimination of the FDA?

    Sooner or later one of the drivers is going to get into an accident without insurance, or is going to rape one of their customers, and then everyone will wonder why they weren’t regulated.


  26. - OneMan - Wednesday, Mar 26, 14 @ 11:45 am:

    Bottom line: Chicago needs the taxi revenue.

    Wait, I thought it was all about safety. I thought it was about protecting me, little ole Oneman from people who might do me harm..

    It’s about tax revenue for Chicago? Well glad we cleared that up…

    Also just because a system has been around for a while and people know how to work it is no reason for a system to stick around.

    Because, whatever superior being you may or may not believe in help us if someone figures out a way to do something that reduces government revenues. Can’t have that happening now, can we…


  27. - BobbyC - Wednesday, Mar 26, 14 @ 11:46 am:

    I hope someone touches on how difficult it is to get a cab in many Chicago neighborhoods, including those in Zaleweski’s district. Cabs won’t pick you up unless you’re going downtown to to the airport. If Uber does this, we should be all for it.


  28. - Chicago Publius - Wednesday, Mar 26, 14 @ 11:50 am:

    I agree with the general conclusion that the legislation is about members of an industry trying to stifle competition, but the issue is a bit more complicated when you consider that many, many cabbies have paid a lot of money — more than $200K — for their medallions. So, put yourself in their shoes. They borrow money to buy the medallions, on the assumption that the industry (at least in Chicago) wouldn’t change. Well, now the industry is changing. If legislators want to keep abreast of the times and be equitable as well, they need to figure out a way to help the current cabbies recoup their investment, while slowly doing away with the antiquated and monopolistic medallion approach. It’s ludicrous that Chicago would regulate the actual number of cabs, but to be fair — the small-time guys and gals who bought a medallion need a chance to pay off that debt.


  29. - Been There - Wednesday, Mar 26, 14 @ 11:55 am:

    ===Yellow Cab and the other big companies should just make an app that takes no cut===
    Actually, Yellow probably should just buy out one of these ride share companies.


  30. - Jim'e' - Wednesday, Mar 26, 14 @ 11:57 am:

    hmmm, what the heck does having a marked vehicle have to do with safety? I agree with the safety aspect, but lets be real. Wait, I can think of a ‘right to work’ scenario coming from this, albeit taxies are to unions.


  31. - RonOglesby - Wednesday, Mar 26, 14 @ 12:00 pm:

    @upon further review
    “Uhmm… government regulation and consumer safety laws were considered “Progressive” reforms to check the abuses of unfettered capitalism. ”

    ahhh so banning them from the airport is a reform to protect the consumers from unfettered capitalism… Make that logical some how and show me how its NOT protecting cabs cab companies VS protecting the consumer.


  32. - ChrisB - Wednesday, Mar 26, 14 @ 12:01 pm:

    @Just Me

    –Sooner or later one of the drivers is going to get into an accident without insurance, or is going to rape one of their customers, and then everyone will wonder why they weren’t regulated. –

    Oh yeah, because that never happened with a regulated taxi driver…

    http://articles.chicagotribune.com/2013-02-26/news/chi-cops-cab-driver-caught-sexually-assaulting-passenger-20130225_1_schaumburg-police-department-cabbie-sexual-assault


  33. - Keyser Soze - Wednesday, Mar 26, 14 @ 12:04 pm:

    It’s about public safety. Huh? Safety is not a term that I would use in describing some of the cab rides I’ve experienced.


  34. - wordslinger - Wednesday, Mar 26, 14 @ 12:05 pm:

    –you consider that many, many cabbies have paid a lot of money — more than $200K — for their medallions. So, put yourself in their shoes.–

    There are very few operators who have their own medallions. Most lease. There are a handful of bigfoots who own most of the medallions.


  35. - Jimmy 87 - Wednesday, Mar 26, 14 @ 12:08 pm:

    Just Me: Perhaps you overlooked the first few words of my initial comment, “aside from basic safety regulations.” I would be in favor of a minimum insurance requirement, vehicle inspections, making the drivers have chauffeurs licenses or even mandatory background checks for the drivers. Those are all reasonable safety related regulations.

    What I don’t support is the government dictating where a car service can and can’t take me. Like the airport, convention centers etc.


  36. - North Shore Joe - Wednesday, Mar 26, 14 @ 12:11 pm:

    Been There,

    Given the IPO market, Uber could probably go public for 500 million dollars right now. Their value will only go up when drivers are taken out of the consideration.

    Even so, there is no point to buying it even if they could afford to–there is nothing proprietary about it. They are paying for the brand, (which is quickly becoming more valuable than they are).

    They need an app of their own operated at zero cost to the consumer. This is the only free market solution to stopping Uber.


  37. - A guy... - Wednesday, Mar 26, 14 @ 12:16 pm:

    Gotta go way back to the time before El Trains were stopped at Escalators at the airport (obvious snark, forgive me) but the livery industry fought public transport to airports then. They don’t wanna compete. Any industry will be the size it’s supposed to be and offer the amenities is supposed to when options are available. These guys need to quit being the “friends and family” legislators are start paying attention to a very discomforted electorate.


  38. - Responsa - Wednesday, Mar 26, 14 @ 12:43 pm:

    I understand that this issue is complex. But younger urban people, especially, use these new format ride share dealios. Many of them may not be highly political but they do notice and recognize political interference, clout, and game playing when it affects them personally. They and many others increasingly don’t care if the official medallions cost some cabby $200,000. It’s their own money they care about and who can blame them? This ain’t your father’s city anymore where nobody even notices the backroom deals– but to their discredit many of the pols haven’t quite figured that out yet.


  39. - Plutocrat03 - Wednesday, Mar 26, 14 @ 12:50 pm:

    Let’s kept in mind the rivers of payola that limit the numbers of medallions , thus inflating lease coats etc. having the city out of the business of regulating rates would be a good thing


  40. - chuddery - Wednesday, Mar 26, 14 @ 1:00 pm:

    =They borrow money to buy the medallions, on the assumption that the industry (at least in Chicago) wouldn’t change.=

    Anyone who does anything in a relatively free market and expects nothing to change is, plain and simple, an idiot.


  41. - liandro - Wednesday, Mar 26, 14 @ 2:17 pm:

    - Chicago Publius - Wednesday, Mar 26, 14 @ 11:50 am:

    “So, put yourself in their shoes. They borrow money to buy the medallions, on the assumption that the industry (at least in Chicago) wouldn’t change. Well, now the industry is changing. If legislators want to keep abreast of the times and be equitable as well, they need to figure out a way to help the current cabbies recoup their investment, while slowly doing away with the antiquated and monopolistic medallion approach. It’s ludicrous that Chicago would regulate the actual number of cabs, but to be fair — the small-time guys and gals who bought a medallion need a chance to pay off that debt.”

    Basically, you want another industry bailed out by the government? Question-as long as the taxpayers are paying for it, why don’t we bail out every bad business decision? Netflix helped kill Blockbuster…should we have regulated download content to death and/or bailed out all the local movie rental stores? How many industries do we bail out or shield from change?

    And how often is it that the kingpins get most of the bailout money? In this case, as Wordslinger noted, medallions seem centralized in the hands of a few powerful forces. It is often that way when government defends and bails out business moves, no? The little guys get used to stir up emotions, but it’s the kingpins that get saved by protectionist regulations or taxpayer bail outs.


  42. - Upon Further Review - Wednesday, Mar 26, 14 @ 2:20 pm:

    @One Man:

    Licensing laws are to promote regulation and raise revenue. I thought that so many of the posters here were all about paying seeing that everyone pays their “fair share.”

    While the major cab companies have many of the medallions, there are still quite a few in the possession of individuals who can lease the medallions if they do not drive.


  43. - PW Worker - Wednesday, Mar 26, 14 @ 3:04 pm:

    As someone who uses Uber on a regular basis I can confidently say I feel much safer with the average joe behind the wheel then half of the cab drivers in the City. Many cabs i’ve been smell awful and have unfriendly drivers, thanks but no thanks. These ride sharing services wouldn’t be so popular if there weren’t issues with taxis. Again as many have already stated this is about money pure and simple. Just curious if any of these anti-ride sharing polticians have ever used the service or are just doing what the people who fill their political coffers tell them to do.


  44. - Commonsense in Illinois - Wednesday, Mar 26, 14 @ 4:35 pm:

    Didn’t see this in comments, so forgive me if I’m repeating someone’s earlier observation. My guess is the bill violates the Commerce Clause as well as being an overt ploy to eliminate competition.


  45. - @nonsense - Wednesday, Mar 26, 14 @ 5:10 pm:

    To the person that says joe behind the wheel is better than half the cab drivers in the city is because uber driver are not regulated they have surge charges when they can make more than the cab driver. Also noting the Cab drivers haven’t gotten a fair increase in chicago over 10 years, Than a startup company comes along and charges whatever they think is fair. Obviously something is wrong there. Of course that would make a cab driver angry.


Sorry, comments for this post are now closed.


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          * Environmental group's $1M attack ad target......

          * Today’s the day for associations to meet NAR core standards
          * CIPS course offered July 22
          * REEF announces 26 college scholarship winners
          * REALTORS® notice deadline for SB 1380 extended to July 31
          * IAR office closed Friday for Independence Day
          * REALTORS® must spread word about $60K for housing assistance for June tornado victims
          * Morning Minute: Chicago makes the grade when it comes to college towns where it pays to invest in rentals
          * Yes, it is summer; but 18th District voters have an election
          * Morning Minute: U.S. pending home sales at highest level in nine years, NAR says
          * Story can help you and your buyers avoid financial roadblocks


          * State, Teamsters Reach Tentative Agreement - Workers at IDOT, DHS, IDES, and CMS in Cook County to Vote on New Contract
          * Governor Rauner Extends Tax Filing and Payment Deadlines for Businesses and Individuals Impacted by Recent Tornado - Deadlines Pushed to December 31, 2015
          * Illinois EPA Releases Annual Report on Landfill Capacity
          * IDNR Urges Public to Leave Fireworks Displays to Those Who Are Licensed and Trained - Fireworks Show Sponsors Reminded to Check Credentials of Fireworks Vendors
          * Governor Receives Initial Criminal Justice Commission Report




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