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A Good Corruption
Last week in New York, seven men were arrested for using common sense:
It might feel like forever, standing in line outside an airport terminal, luggage in tow, waiting for a taxi. But when cabdrivers obey the rules, it is likely that they have waited just as long, if not longer — idling in a lot, awaiting the go-ahead from a dispatcher. Some drivers have found a way around the wait: Hand some cash — usually $5 or $10 — to a dispatcher, and then drive straight to the terminal. It is hardly a new tactic. Over the years, dozens of dispatchers have been caught in sting operations meant to stop the payoffs.
This form of “corruption” is quite routine at La Guardia and other airports. Yet it’s not the dispatchers who are the corrupt villains of this story: it’s the Port Authority of New York and New Jersey. The actions of the dispatchers are the logical outcome of an egalitarian system put in place by the Port Authority itself.
Because picking up fares at airports is relatively lucrative, there is a large line-up at the terminals. This sometimes forces cabbies to wait hours in a nearby lot. Since time is money for self-employed people like cabbies, there is a powerful incentive to “cut in line.” The $5 or $10 slipped to a dispatcher can be easily made back with a decent fare and tip. The system is almost designed to breed this sort of petty “corruption.”
The Port Authority’s Inspector General, in reliably melodramatic style, declared that: “The defendants took unfair advantage of a dispatching process that was created to provide a level playing field for all cabdrivers.” Which isn’t so much a lie as nonsense on stilts. Making cabbies wait in line isn’t a “level playing field;” it’s discrimination.
The ‘equality’ at play here is that every cab should have to wait roughly the same amount of time and make roughly the same amount of money. But not every cabbie has the same utility preference or desire to make money. A more aggressive cabbie might prefer to pay more to wait less, enabling him to make more trips and more money in a given day. By contrast, a less aggressive driver might prefer to pay nothing and wait his turn. He’d make fewer trips and less money but his work day would be far less stressful.
The Port Authority’s policy has the unintended consequence of punishing younger cabbies. The older the driver, the greater the likelihood that he owns his own medallion, has paid off his mortgage, and his children are safely out of college. They work in order to cover daily expenses, save a little something for a rainy day, and wait for retirement. A younger driver likely has greater obligations and bigger debts. He needs to work harder to have any hope of reaching the same level of security enjoyed by his older competitors.
Like many schemes that seek to create fairness, or a “level playing field,” the practical result is the protection of incumbents and the marginalization of newcomers. But governments have always had a funny sense of fair.
Published in Domestic Policy, Economics
Yes! The problem with bad rules is that they encourage rule-breaking.
This is what drives me nuts about so many of the kinds of regulation we impose on work and business: they prohibit certain kinds of arrangements that might allow for more choice and efficiency.
Perhaps some cabbies might be willing to pay more to get more, as you say. Perhaps some people might be willing to trade some increased risk for a lower price in medicine. But those choices aren’t allowed.
It’s infuriating.
I had a little Asian Hitler dispatcher yell at me to get out of a cab that another dispatcher told me to get into.
He threatened to take away the cabbies right to pick up people there.
Countries descended from Spanish mercantilism and that suffer from a Napoleonic code where everything is illegal unless made legal, can only function through corruption. Without it there would be total sludge and stagnation. We’re getting there as we turn law into regulations and the administrative state reaches into everything. The flood of immigrants will feel comfortable, but some day will wonder why they came. It would be good if we could remind them why they left and what their preferred party is doing. Not that it would change anything, but it’s a better narrative than trying to outdo Democrats or attacking them for being who they are.
Exactly, when will these “regulators” understand the laws of economics and the power of incentives.
There is a video on Youtube of one of Milton Friedman’s Q+A sessons and he talks about how in the 18th century Britian had a reputation of corruption. ?That they were a bunch of law breakers and smugglers, then in the 19th century they had a reputation of being the most law abiding people in Europe. He said they only change is that they repealed many of the laws that people were breaking. People will abide by laws that they believe are fair and just, some of these regulations are just ridiculous nothing would get done if people didn’t go around these kinds of laws.
Allow me to state the obvious. Heavily importing a culture accustomed to bribery will have effects on a society already tempted that way. If nothing else, the influx will quicken the deterioration of legal order.
Many New York cab drivers are foreign-born, yes? Look for other industries attractive to immigrants and you might find similar disregard for regulations. Construction, perhaps?
Hyper-regulation is the main problem. If Republicans were truly interested in Constitutional government, they would spend more time repealing laws and programs than proposing new ones. But foolish immigration standards are exacerbating the issue.
Why there is any need to regulate cabs is beyond me. The more “uber” type services that pop up in these cities, the better off everyone will be. Then it just takes a sensible government to notice that things work better without its interference and simply back off. … ok, that comment turned from hopeful to fantasy right there.
New York City is a pretty corrupt place, especially in construction. This stuff if par for the course in NYC, perhaps the influence of past cultures that dominated the city but the recent immigrants didn’t bring it to the city it was well established before they got there.