Economics of Taxi Medalions (Re: taxi! taxi!

Patrick Bond pbond at wn.apc.org
Fri May 15 16:14:03 PDT 1998


Ok, a mine's bigger than yours story.

South African taxis were the hit of the deregulatory 1980s. "Free Enterprise is Working!," the billboards would scream, with an earnest black taxi (in our case, minibus) driver working long into the night. It was, indeed, the only route to personal capital accumulation available to most ordinary folk, especially those who could convert their pension fund into a once-off grant and invest in a minibus.

Then overaccumulation hit, and there were suddenly twice the number of taxis that the market could bear. Several large fleets formed, and debt loads rose dramatically as interest rates went from 18% to 32% by the early 1990s. The result was driver speed-up (SA tops the world in accidents, the bulk caused by taxis) and a shifting of intercapitalist competition into extraeconomic forms, particularly murder of opponent fleets' passengers. We have lost something like 5 000 taxi passengers and drivers -- 20 in the last two weeks in Johannesburg -- via shoot-outs in the ranks. All black, working-class people.

A David Harvey student at Oxford, Meshack Khosa, did his DPhil on this, and really identified the capitalist process within the taxi ride as a commodity, etc, etc.

I once asked a spokesperson from the Free Market Foundation about their poster child sector, the taxi industry, and they conceded the need, finally, far too late in the day, for regulation. But the state finds itself not militarily powerful enough to take on the taxi gangs at this stage. Provincial government announced last week that they had "given up." What with apartheid urban planning, taxis are the only avenue for people to get anywhere, and over long distances at high prices at that. So people have to suffer the danger and cost, and still often wait 2 hours in queues in the AM and PM during rush hour to get their taxis, while drivers curse during the rest of the day as their vehicles sit unused.

Another reason to hate South African capitalism. The transport minister, a former communist, has privatised a good deal of his department, and all his taxi peace initiatives have failed. He had the mandate in the ANC campaign platform to establish a massive public transport system. Neoliberalism took hold instead.

Just across the Limpopo River to the north, the Zimbabwean state recognised the danger of the minibus taxis and now regulates them very heavily, hence none of the extraeconomic battles to the death there.

So, Doug, be glad you're running those red lights in NYC, if that's the main reflection of speedup and other laws of capitalist motion you suffer as a taxi customer...


> Date: Fri, 15 May 1998 13:48:17 -0400
> To: lbo-talk at lists.panix.com
> From: Doug Henwood <dhenwood at panix.com>
> Subject: Re: Economics of Taxi Medalions (Re: taxi! taxi!
> Reply-to: lbo-talk at lists.panix.com


> Nathan Newman wrote:
>
> >We are not talking about big capital like airlines; we are talking about the
> >possibility of owner-entrepreneurs taxi drivers. You don't have to love the
> >petit-bougeoisie to be skeptical of a system that uses a $250,000 per car
> >capital threshhold to enter a marketplace that should require at most a
> >$15,000
> >per car capital threshhold.
> >
> >Using capital ownership on that scale as the means to restrict entry is not
> >progressive. Owners of those medallions can replace the workers, so the
> >medallion system doesn't even necessarily benefit the workers directly, only
> >indirectly.
> >
> >Without question, more competition would lower fares and cab revenues. But
> >would it lower wages? If revenues dropped less than the premium owners of the
> >medallions demand from workers to use the cabs, the taxi drivers would
> >come out
> >ahead.
> >
> >A progressive system of taxi regulation might use training and licensing
> >rules
> >(ideally backed by union contract) to restrict entry to the marketplace, but I
> >am unconvinced that the medallion system is in any sense a progressive
> >substitute.
>
> Who said it was? Medallian prices are capitalized monopoly rent streams,
> fuck 'em, it's muliply parasitical, but the kind of dereg'd market Rudy &
> the Manhattan Institute want would cut wages. I'd bet you.
>
> Doug
>
>
>
>



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