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Professional Licensing: A First-Person Perspective

Posted by on May 21, 2009

[This post was originally written for my employer’s blog, Show-Me Daily.]

In addition to my involvement with the Show-Me Institute, I have also worked part-time as a licensed taxicab driver for Chesterfield Car Service, for a little more than three years. Apart from licensing drivers, the cabs themselves also require a license, which must similarly be renewed annually. Earlier today, I reported to the company parking lot where an inspector was going through the routine on some of our company’s cars. As I understand it, the inspector is an employee of the Metropolitan Taxicab Commission who performs inspections year-round on taxis in St. Louis. Between 8:00 a.m. and noon, today and tomorrow, all 30 or so taxis in our company will be inspected.

The inspection largely consists of giving the exterior a once-over glance and checking a few necessary things, such as brake lights and blinkers. Some cabs get a more thorough inspection than others, but it seems that the inspector is mostly looking for glaring defects or safety hazards. The inspector also verifies that the car’s meter has been recently inspected by a third-party meter inspecting agent, and that the car has proper insurance. The meter inspection is another required annual appointment, usually completed a week or two prior to the vehicle inspection. 

If the inspector finds a defect, it must be repaired before the car can continue to operate as a taxi in the Metropolitan Taxicab Commission (MTC) district (both St. Louis County and city — other areas have their own taxi certification agencies and processes). I’m pretty sure this is why the inspection is typically scheduled over two days, so that defects spotted on day one can be repaired and ready for day two.

Show-Me Institute scholars have spoken out a few times about the subject of professional licensing. This is certainly another example of an area where market forces, rather than government bureaucracy, would most efficiently produce the quantity and quality of services that people want. The MTC limits both the number and quality of taxis in its district, as well as the prices these taxis can charge. Limiting number or quality leads to increased prices, as basic economics would indicate. Price ceilings lead to shortages, made worse by the other limitations on quantity and quality. If you’ve ever been to Mardi Gras in St. Louis, participated in New Year’s Eve festivities, or even attended a Blues or Cardinals game, and tried to get a taxi, it is likely that you had to wait a long time — especially during those once-a-year holidays. Granted, I and other taxi drivers working at those times make a terrific hourly rate — especially for an occupation requiring practically no special training, education, or experience — but I care more about fostering a market in which customers get the taxi services they want than I do about making good money a few days per year.

Like most other businesses and services, you can get a pretty good idea about what kind of taxi you’re stepping into with just a superficial examination. Also like other businesses, it is difficult for taxicab companies to persist in the market if they don’t engender repeat business by offering good quality and reasonable prices. Market forces push toward price equilibrium, and entrepreneurs predictably exploit arbitrage opportunities, bringing people what they want more often in more efficient ways. The market would be a better steward of taxi services in St. Louis than the MTC is today.

8 Responses to Professional Licensing: A First-Person Perspective

  1. David Stokes

    Great post, Josh. I hope it doesn’t get you into any trouble.

    I want to note that taxi cabs are one of the occupations that Milton Friedman actually cited as being a worthy candidate for licensing, although he put it into the level of “registration”, which is far less cumbersome than the full-blown “licensure” he cited for other examples and which taxis in St. Louis (and most other cities) are subject to now.

    Friedman cited safety, and I think you could add greatly increased conveneience, as a reason why taxis should be required to register with the local government and have some type of easily identifiable number on them. Specifically, that people waving for taxis would make attractive robbery targets, and having easily noticable taxis with visiable numbers could address that. Along those lines, I don’t have a problem with enforcing insurance and mechanical inspection requirements. The many other things the MTC regulates, like driver dress codes, price regulation, limitations on who can work the airport, and more, are unnecessary and harmful.

    Final note, with all it many drawbacks, the MTC is still better than the system it replaced where both the city and county separately licensed all the cabs. At least now cabs can readily work both St. Louis city and county.

  2. Eric D. Dixon

    Milton Friedman’s son David would probably point out that although it’s beneficial for taxicabs to be registered with a trustworthy organization, there’s no reason to presume that this organization should be the government rather than a private organization with a solid reputation for its impartial judgments of quality levels.

  3. David Stokes

    In the same writings where he stated it was logical for taxi cabs to have to register with the local government, Friedman cited numerous other examples where things such as the “Good Housekeeping Seal of Approval” could play exactly the role of the government. So he obviously agreed with that for things; but specifically cited the government for taxi cabs.

    The police power of the state to deal with public safety is something that one should be very hesitant to contract out. The foremost responsibility for your own safety lies with yourself, but after that when you are in trouble do you want the cops or a private security guard to arrive? Over and above the fact that that when you are in trouble you are probably happy if anyone arrives…

  4. Mike S.

    I think ensuring that the meters are calibrated correctly is important. It would be basically impossible for a passenger to know if a meter was shaving a percent or two off every mile.

    As for cab company preference – I’m an Arlington (VA) Blue Top man.

  5. Joseph Gnatek

    I love how all of you paid employees of the ‘Show-me Institute’ comment on each others postings. Awfully lonely in your paid opinions, eh crew?

  6. Eric D. Dixon

    Joseph, we comment when we have something to add to the discussion. We’re paid to work here, but we’re not paid to hold any opinions but our own. We each pursued employment with the Show-Me Institute because its mission is compatible with our own intellectual interests.

  7. David Stokes

    Also the book club burritos – we can’t leave them out. We wanted to work here for the book club burritos…

  8. Eric D. Dixon

    Hey, if you actually attended the book club, you’d get burritos more often.

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