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Chicago likes to think of itself as a “Silicon Prairie” hub of tech startups. And in a recent report on US “startup communities” and their readiness to capitalize on “next-wave startups,” the city ranked 14th. (Boston and the Bay Area were tops.)
So OK, but hardly impressive given both Chicago’s size and proximity to two elite universities, Northwestern University and the University of Chicago. Clearly city officials there, like their counterparts around the country, hope a winning bid for Amazon’s second headquarters might catapult them into the top tier.
Yet given all that, why on earth would Chicago Mayor Rahm Emanuel propose a tax on ride-hailing companies like Lyft and Uber? Seems sort of anti-tech. I mean, I get the basic reason: It’s a way of raising revenue for the city’s public transit system. But more broadly, the tax might be an effort to help bolster public transit in the face of a competitive threat from ride sharing companies. It’s becoming an evermore common story: Public transit problems boost Uber and Lyft, to the detriment of public transit.
And thus a vicious circle is established, which is good for Lyft and Uber, potentially bad for consumers. “The most important question surrounding Uber is whether it can only recoup its investors’ billions by building a monopoly (or at least duopoly with Lyft) on the ruins of public transportation,” a Guardian story argued earlier this year.
The answer to that question might be “no.” Some research suggests ridesharing companies and just regular taxis can complement public transit. As a 2012 CityLab piece noted:
Work from Columbia University scholar David King and others has supported the role of taxis as part of a multi-modal travel network that does not involve a private automobile. Their data of taxi movement in Manhattan neighborhoods found that a majority of these trips were late-night origins — meaning riders must have arrived there by some other mode earlier in the day, with this mode obviously not being a single-occupancy car. King and colleagues write: “In many cases taxi trips are part of journeys that began with transit trips, yet planning and expanding taxi service as an extension of transit networks is rarely undertaken in practice.”
Indeed, some cities are already finding value in cutting public transit and instead subsidizing ridesharing. I also think it’s worth noting Uber’s response to the Chicago ridesharing tax: “When safe and affordable rides are available across every neighborhood — whether it’s by train, bus, or rideshare — Chicagoans can get to their jobs or family obligations without having to own a car.”