As of last month, the MTC demanded drug tests, specific background checks, and stringent insurance requirements before any ridesharing company could set up in Saint Louis City or County. Since that time, the MTC has backed down on drug testing and has stated that it believes it can resolve issues surrounding insurance. Background checks, including fingerprinting, is the most intransigent remaining problem. In past meetings, the MTC held that Uber’s checks were inadequate. Now the MTC says the main problem is state law:

Fingerprint-Based Criminal Background Checks—Uber is adamant that its own proprietary, Internet-based criminal background checks are more thorough, detailed and reliable than those conducted by law enforcement and based on fingerprint scans of driver applicants. We [MTC] can argue back and forth as to which position is correct. But it matters little what MTC thinks, or what Uber desires. Fingerprint-based criminal background checks conducted by the Missouri Highway Patrol and the Federal Bureau of Investigation are the law of the land. And Missouri statutes governing the MTC mandate such checks.

Uber has stated that its own background checks are thorough, and the MTC’s checks may prevent UberX from entering the Saint Louis market.

This post cannot comment on whether the MTC’s interpretation of the law is correct. However, if state law governing the MTC does need to change to allow more flexible background checks, state policymakers should consider such a reform. There is no reason Saint Louis residents cannot decide for themselves whether Uber’s background checks meet their needs.

Should the state legislature decide to reform laws governing the MTC, there is no reason to stop at background check requirements. They should consider eliminating provisions that require four of nine MTC commissioners to be taxi industry representatives. They could also curtail the regulatory powers of the commission to consumer protection provisions, which is all the MTC says it wants anyway. However, given the past performance of the MTC and its recent dysfunction, perhaps the best reform state legislators could make would be to disband the body altogether. 

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MTC representatives, along with other opponents of ridesharing, criticize Uber and Lyft as being unsafe, unprofessional, and discriminatory. They argue that these companies need to be regulated so these problems can be addressed. But is the MTC really effective at protecting the consumer? Let’s ask some questions:

1. The MTC, unlike Uber or Lyft, specially requires cabs to pick up any customer and take them wherever they want to go. So taxis never refuse fares or avoid going to certain neighborhoods?   
2. The MTC has rules on insurance that they claim are more comprehensive than Uber and Lyft’s policies. So cabs never operate without proper insurance?
3. The MTC has a myriad of rules to ensure cab drivers dress and act professionally. So all cab drivers provide good service?

The answer to all these is an emphatic no. Cabs have ways to refuse fares and avoid certain neighborhoods. Drivers sometimes act unprofessionally and, as an editorial in the Post-Dispatch claims, even operate without proper insurance.

The presumption that creating a regulatory commission and writing regulations will result in intended outcomes, and only intended outcomes, is an example of the “Unicorn Governance” fallacy; it’s magical thinking. In reality, even when regulators are competent, impartial, and have the public interest in mind, regulation can fail to be effective or even make matters worse. But with a regulatory body like the MTC, which has taxi company representatives as commissioners, impartiality is an unreasonable assumption. And after recent outbursts from the MTC’s chairman, competence is in question as well. Given the incentives at play, it should not come as a surprise the MTC is more effective at blocking competition than protecting consumer safety.

Market competition and open information, not regulation, are the best ways to ensure customers get a safe, comfortable ride when they want. Unfortunately, the MTC still wants to prevent that competition from coming to Saint Louis, to the continued embarrassment of the city. Saint Louisans should consider whether the MTC now does more harm than good. 

The post The Metropolitan Taxicab Commission and the Myth of Effective Regulation appeared first on Show-Me Institute.

The Metropolitan Taxicab Commission (MTC), that’s who.

The MTC regulates all for-hire vehicle services in the city of Saint Louis, including ridesharing. Problematically, half of its members represent the existing taxi industry, with vested interests in keeping out new competitors and new business models. As we’ve written before, their onerous and outdated taxi regulations are the reason Saint Louis has fallen behind the rest of the nation in getting ridesharing companies to set up in the city. In response to Uber’s petition to allow free rides in Saint Louis on the Fourth, the MTC said they would only allow it if all Uber drivers had gone through the MTC’s background checks (including finger printing) and drug tests. That stipulation effectively scuttles the promotion.

There is some question as to whether the MTC has any legal authority to ban free Uber rides, as the company is not technically offering a paid service. But the commission believes it does have the authority, and it has decided to use it to the detriment of Saint Louis. Moreover, the commission’s decision is in direct opposition to the position of Mayor Slay, who tweeted out on the promotion:

Uber has offered a free trial of its X service for the long holiday weekend. It is a positive gesture that we welcome.

With the MTC now swimming against both the tide of public opinion and the Mayor’s Office (which has hinted that they would not pressure police to enforce the MTC’s decision), it may be time to ask whom exactly this regulatory commission works for, Saint Louis residents or itself? 

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However, despite the public enthusiasm, the commissioners themselves were more critical and directed their criticism mainly at Uber’s business model. They doubted whether Uber’s background checks were up to their standards, they discussed at length the need for initial drug testing, and they questioned Uber’s insurance requirements. As is usual, they claimed that their concerns were only about customer safety.

In their nitpicking about which background check was most thorough, the MTC continued to ignore the fact that most of its for-hire vehicle regulations have nothing to do with safety. How does limiting the number of licensed cabs protect safety? How do pricing regulations determine whether a cab is road worthy? What consumer breathes a sigh of relief knowing that the MTC controls what drivers may wear?

Unfortunately, rather than take an open attitude toward innovation, a regulatory reflex reigns at the MTC. When the commission was asked to reconsider the necessity of its regulations, one commissioner asked, and I’m paraphrasing, “Would you get your hair cut at an unlicensed barber?” (Barbers require licenses in Saint Louis.) He was incredulous to the idea that, yes, many residents would feel perfectly comfortable choosing a barber that did not have the city’s seal of approval, if that barber did a good job. That same commissioner ended the meeting by saying that ridesharing companies were a want, but customer safety was a need. Customer safety as defined by the MTC, not customers themselves.

The MTC would best serve Saint Louis if it takes the demands of its residents seriously and gives up on its instinct to delay and control ridesharing companies. More than anything, Saint Louis needs a welcoming business environment; no one wants the MTC to hold the region back.

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We’ve gone over many times how a local regulatory body, the Metropolitan Taxicab Commission (MTC), blocks companies like Uber and Lyft from freely operating in Saint Louis. To simplify a complicated regulatory story, the MTC only allows ridesharing companies to operate using licensed premium sedans, which the MTC has made scarce. This means that only expensive types of ridesharing, like Uber Black, can operate in Saint Louis, and even then not effectively.

So while many cities across the United States, including Kansas City, have altered their regulations to allow cheap forms of ridesharing (like UberX) to operate, Saint Louis remains a closed market. In many of those cities, ridesharing has provided drastically improved mobility for urban dwellers (a ridesharing vehicle will purportedly show up faster than an ambulance in New York City). In midsized metropolitan areas like Saint Louis, ridesharing companies have created hundreds, if not thousands, of new jobs.

The MTC’s reaction to all this, along with Lozano’s latest critique, has been to claim there is no problem. According to one MTC member, Lozano’s claim that he lost a hire is “a lot of hoo-hah.” Instead of opening up the for-hire vehicle market to competition and letting residents vote over what kind and how many taxis they want with their wallets, the MTC is reviving their on-again, off-again efforts to study the supply and demand for taxis. Unfortunately for Saint Louisans, the commission (which has taxi company owners as commissioners) does not have the expertise or incentives to divine the number and kind of taxis Saint Louis needs.

It should come as no surprise that talented and mobile workers would want to live and work in a city where a cheap ride is available on demand. But more than that, what does it say about how a city is run, when, at the same time local officials want to spend hundreds of millions of public dollars on stadiums and light rail and bar districts to attract residents, they are willing to allow a regulatory body to block an innovative business model that makes urban life better at no public cost whatsoever. Saint Louis should be embarrassed that its leadership simultaneously adopts failed policies out of the 1990s and stamps out fresh ideas.

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If you are in Kansas City, probably not. According to the city’s for-hire vehicle code, jitneys (fixed-route buses not otherwise regulated by the government) are illegal. City ordinances do not describe a method for getting the government to approve a private bus route.

In Saint Louis, the Metropolitan Taxicab Commission’s (MTC) For-Hire Vehicle Code expressly allows for private shuttles, which can travel from one fixed point to another (although likely not more complex routes). Unfortunately, the regulatory hurdles toward getting a commercial service shuttle are formidable. It requires applying for certificate of need and necessity (which the MTC can refuse to grant at will), along with a plethora of other regulatory requirements. Getting permits to operate just one shuttle will cost you more than $3,000.

These regulatory roadblocks, along with competition from the heavily subsidized bus services (subsidies pay for more than 80 percent of costs in Saint Louis and Kansas City), likely have much to do with the absence of private bus routes in Missouri’s cities. But it was not always this way. In the early 20th century, jitneys took most American cities, including Kansas City and Saint Louis, by storm. They were faster, cheaper, and more flexible than incumbent streetcar competition. Hostility from streetcar owners and the nascent taxi industry pushed most cities to make jitneys illegal; but in Saint Louis they morphed into “Service Cars,” which served parts of North Saint Louis until the 1960s. At that time, Bi-State (Metro) moved to buy out the existing competition that was “skimming the cream” off its customer base.

Today, transit in Missouri’s cities is the exclusive domain of public monopolies, with limited competition from heavily regulated taxi markets. The resulting waste, inefficiency, and poor service are the predictable result. However, there is opportunity for improvement. In the United States, and especially internationally, private bus routes still exist. Reducing government control to only essential transit services, and allowing the private sector to provide the rest, could create space for competition and innovation in the transit market. Of course, a necessary first step toward that opportunity is to actually make private bus routes a legal possibility; that’s a change Kansas City and Saint Louis can and should make right away.

The post Private Buses: The Once (and Future?) Transit Option appeared first on Show-Me Institute.

This past week, when my flight into Saint Louis was over an hour and a half delayed, I realized I would have to catch a cab home. I usually can persuade my friends to pick me up by offering them Starbucks, but since my flight landed at 1:00 a.m. no one was able to pick me up. With MetroLink stopping service at 12:57 p.m., I was left with no other choice than to get a cab ride back to my apartment in Midtown. After collecting my bags, I went to the taxi stand to find only one company offering cab services. After a 15-mile ride to my apartment, I was stuck with a $44.14 cab fare.

Ridesharing companies like Uber and Lyft operate out of cities like San Francisco and Chicago at much more competitive rates. San Francisco even offers UberPool, which matches you with other riders heading in the same direction with the fare split among several riders.

However, since I live in Saint Louis, a city that is inhospitable to innovative and competitive ridesharing companies, I was unable to seek an affordable option.

The Metropolitan Taxicab Commission (MTC) is a regulatory body meant to protect the consumer. Instead, they protect the cab companies who profit from anti-competitive regulations, while consumers are left without options that are prevalent in a competitive market.

Looking through the ridiculous regulations of the MTC’s code, cab companies picking up customers from the airport must obtain a permit and give one dollar for every fare to the MTC. At this time, the MTC has only granted permits to seven cab companies. With limits on the number of permits made available, cab companies are shielded from meaningful competition and can set prices that would be too high in a market with free entry.

I hope the next time I fly into Saint Louis, UberX or Lyft will be an option because I cannot afford many more $45 cab rides.

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Ridesharing companies like Uber and Lyft are rapidly growing across the country. Their popularity comes from the ability to provide quick, convenient, and inexpensive rides, especially compared with traditional cabs. A study in San Francisco found that more than 90 percent of customers who requested Uber or Lyft had a driver arrive in less than 10 minutes, a huge improvement over traditional cab service. In New York City, the average Uber response time is faster than that of ambulances. Payment is electronic and customers rate drivers, allowing for quality control.

In addition to making it easier to get a lift home, ridesharing may also increase public safety. Ridesharing companies often use peak pricing to ensure the supply of drivers matches demand, no matter the time. The ready availability of drivers makes the safe choice the easy choice for the late-night crowd. Uber claims that incidences of drunk driving have fallen considerably where they operate freely, such as Austin and California.

Normally, Saint Louis officials would be eager to support a new service that increases mobility within the region while potentially creating hundreds of new jobs. In the case of ridesharing, there is no real cost to extending such support other than the political cost of refusing to kowtow to taxicab lobbying. Ridesharing is provided by locals, using resources they already own: personal vehicles. More than 90 percent of metro area households have one vehicle; around 60 percent have two or more. Ridesharing allows Saint Louisans to make better use of these resources by giving rides to other residents and visitors.

For local officials and regulators, ridesharing is a danger to the customer and unfair competition. It’s not safe, they say, despite the fact that large ridesharing companies perform extensive background checks. There’s an insurance problem, they say, despite the fact that Uber and Lyft have extensive insurance policies. Ridesharing companies price gouge, they say, demonstrating their failure to understand how peak pricing ensures that there are always cars available.

In reality, the taxicab industry in Saint Louis has been tightly regulated for decades, often in ways that actively harm, not protect, the customer. The Metropolitan Taxicab Commission, with taxi company owners as members, controls the supply, price, and even dress code of taxi companies in Saint Louis City and County. These regulations effectively block anything but limited, expensive ridesharing options.

Ridesharing companies have the potential to deliver huge benefits to the Saint Louis region, by leveraging the resources residents already own. At the state level, and in other Missouri cities, efforts are under way to remove regulatory barriers to ridesharing. Saint Louisans should encourage these efforts, and support local policy change. They should not let the naysayers, who fear loss of control or heightened competition, deny the region of those benefits.

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In the case, North Carolina Board of Dental Examiners v. Federal Trade Commission, the FTC claimed the North Carolina dental board violated federal antitrust laws in its attempt to eliminate market competitors, even though the board was empowered by the state to regulate dentistry.

Prior to this case, it was assumed that state-created professional boards and regulatory bodies were immune from antitrust law. But in their decision, the Supreme Court held that this is not always the case. The majority opinion stated that active state supervision is required for bodies that act as regulatory agents of the state but are controlled by market participants. In the case of the North Carolina dental board, the supervision was found lacking.

This brings us to the MTC. While the commission was created by the state, many of its members represent taxicab companies. There is no meaningful state oversight of what the MTC actions. It is possible that, if a court holds that the commission is effectively controlled by taxi market participants, the MTC would not be immune from antitrust legislation.

This would be a serious legal problem for the MTC, which fixes pricing, limits the number of taxi permits, and blocks the entry of ridesharing companies like Uber and Lyft. To preempt this type of legislation, the state could either make sure taxicab companies do not control the commission or more closely supervise the MTC’s actions. Given the anti-competitive behavior of the MTC as it exists today, either outcome would be an improvement for Saint Louis residents.

The post Is the Metropolitan Taxicab Commission Acting Illegally? appeared first on Show-Me Institute.

The bright spot for residents hoping to use ridesharing was Uber’s entry into the Saint Louis market. By negotiating with regional power brokers, such as Mayor Slay and the MTC, Uber was able to secure regulatory changes that would allow it to operate its expensive black car service, which launched last October.

Unfortunately, the relaxation in regulation was only very slight, and the MTC still firmly regulates taxi operations in the Saint Louis area. For example, the MTC only allows Uber to act as a dispatch service for MTC-licensed premium sedans, the number of which the commission has limited (initially the MTC added only 26 new vehicles to accommodate Uber). The MTC also passed restrictions to ensure that Uber Black uses only premium sedans and charges premium prices, lest they compete with normal cabs.

Notwithstanding the subsequent undersupply of Uber vehicles, Uber claims significant demand and wishes to expand its black car service and begin operating UberX, the company’s true low-price ridesharing service. But unlike cities across the country (including Kansas City and Chicago) the MTC has not shown the inclination to make the large-scale regulatory changes that would open the way for innovative ridesharing companies or create a more robust taxi market.

In a city where officials ceaselessly talk about attracting businesses and innovators downtown, it is shocking that they are unwilling to reduce regulations in order to make the city an easier place to work and play. If Saint Louis is going to experience sustained revitalization, it is going to come from being a leader in fostering new businesses, like ridesharing companies, that residents choose to patronize. It will not come from splashy, taxpayer-funded development schemes that regional leaders repeatedly propose.

The post Saint Louis Ridesharing Update: MTC Still Dragging Its Feet appeared first on Show-Me Institute.

Regulations that restrict market entry:

• Section 203: All For Hire Vehicle Owners require a Certificate of Convenience and Necessity (CCN) from the MTC. The MTC, staffed by taxi industry players, gets to decide if there is enough demand for more cabs. (The MTC has frozen CCN issuances for taxis until they finish a study on taxi demand, because apparently the job of the MTC should be to centrally plan taxi supply).
• 202: Transfer or sale of a CCN must be accompanied by a $2,500 application fee.
• 210: All CCNs must retain and maintain a non-residential office address with a business telephone number that is staffed 24 hours a day.
• 301: All for-hire vehicles require a permit (airport taxi, premium sedan, etc.). Vehicles can only receive one type of permit.
• 602: Taxis cannot be older than nine model years and premium sedans cannot be older than five model years. Taxis that are more than six model years cannot enter service and premium sedans more than two model years cannot enter service.
• 604: All new premium sedan CCNs require at least three sedans at the time of permit issuance.

Regulations that restrict competition:

• 501: Taxi meter rates are controlled.
• 301: For-hire vehicles can only receive one type of permit; hence, airport cabs cannot compete with normal taxis which cannot become premium sedans.
• 604: Premium sedans cannot be stationed within 2,500 feet of a hotel or business property.
• 604: Premium sedans must contract for passengers at least 60 minutes before pickup.

Regulations that are needless or simply ridiculous:

• 501: Taxis must have printed, in colors contrasting to that of the vehicle surface to which affixed, on the outside of one door, the name of the vehicle license holder in letters at least 2.5 inches high.
• 504: Drivers are required to wear a uniform of black slacks and a solid, button-up shirt.
• 701: All on-call taxicabs should arrive at a hotel with heat or air conditioning running, set between 65-75 degrees.
• 304: Vehicles cannot have spinning wheels or covers.
• 304: Bumper paint must match vehicle paint unless paint is not required, then it must be factory black.

You are free to believe these and many other MTC regulations have some tangential connection to keeping passengers safe. But the simplest explanation is that the purpose of these rules is the same as their result: to limit market entry and control competition. Equally simple is the method for improving taxi service in Saint Louis: shutting down the Metropolitan Taxicab Commission.

The post Useless Taxi Regulation In Saint Louis appeared first on Show-Me Institute.

MTC officials claim Lyft is not competing with cabs on a level playing field and that its unregulated drivers endanger public safety. However, Lyft drivers have to pass background checks, have vehicle inspections, and carry insurance (MTC requires cabs to have $200,000 of insurance while Lyft requires $1,000,000). If it is true that cabs are disadvantaged when competing with Lyft, it may have something to do with the competition stifling regulations that the MTC itself imposes. Just a few of these include:

• To receive a license, a person or company requires a Certificate of Convenience and Necessity (CCN). This means the MTC (where existing cab companies are represented) can decide whether the demands of the public require the additional cab service. They also can decide that more cabs will increase traffic congestion or parking demand too much to grant a CCN.
• A CCN holder must have and maintain a non-residential office address, telephone, and email. The phones must be answered at all times of the day. (Obviously, this essentially prohibits most individuals from obtaining a CCN.)
• If someone meets the first two hurdles, it does not matter because the MTC has issued a moratorium on applications for CCNs for airport taxis, on-call taxis, and premium sedans until a study on demand is completed.
• Drivers have to pass MTC-approved courses, in addition to obtaining a state chauffeur license.
• A for-hire car either can be an airport cab, an on-call cab, a handicap-accessible vehicle, a non-emergency medical transport vehicle, or premium sedan. A car cannot receive more than one type of registration or perform the activities allowed by more than one type.
• Cabs must use taxi meters with set fare maximums.
• Cabs can be no older than nine years and will not receive a permit if they are older than six model years.
• Drivers must wear a uniform (black baseball caps, no writing on it, bill forward).

If Lyft is allowed to operate in the Saint Louis area, traditional cab drivers may find it difficult to compete. But the answer to that problem is to eliminate the ability of the MTC to control entry, restrict how cabs operate, and set prices. That would put Lyft and traditional cab companies on a level playing field and provide more options to Saint Louis residents, if that is truly what the MTC wishes to accomplish. But we all know that the taxi commission, which is dominated by the larger taxi companies, is far more about limiting competition than actually protecting consumers.

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