Yes on Prop 8: More taxis will hurt, not help

Proposition 8 on the municipal election ballot asks voters whether or not they support the Assembly's decision to radically increase the number of taxi permits in Anchorage. Currently, there are 188 taxi permits in town, taxis driving people around when they need to get from A to B. The Assembly's decision proposes increasing this number to 304.

Most people naturally assume that increasing the number of cabs will result in more competition and lower prices, but in fact the opposite is true. Increasing the number of cabs will likely make fares increase and make quality get worse. But when you tell people this, they don't believe it … it runs counter to a well-entrenched belief that many of us have that "more is better."

So I am going to prove it to you, OK? Are you ready, because here it is:

[Anchorage taxi permit owners warily await city elections]

If having 300 cabs available on the streets to take us from A to B whenever we wanted them actually didn't cost us any more money than having 188, then why stop there? Can we have 1,000? 10,000?  Hey, can we have, like, a cab each? Parked outside our houses, with a private driver wearing a chauffeur's hat? He can take us wherever we need to go for the same rates … in fact, it should cost us less, because competition, right?

This is patently absurd. So if it is so easy to understand why having 100,000 cabs in town would be so enormously expensive and result in rates that were orders of magnitude higher than they are now, why is it so difficult to understand that the same applies with 300 cabs? The bottom line is, we only need a number of cabs out there that is sufficient to adequately serve the population, and no more. Because more, you know, costs money.

Here's the detail of what will happen if this increase goes through: When you increase the number of cabs from 188 to 304, taxi demand is static … it won't increase. No one will wake up the next day saying: "I know! There's loads of cabs out there; let's go for a ride!" So revenues stay much the same, just divided up among more cabs, which will now make approximately 40 percent less money.

Now, excuse me, I might not be an economics expert, but how will this make cab service improve?

Additionally, this will place pressure on the transportation inspector to raise cab fares to maintain the balance between the needs of the driver and the needs of the customer. So fares will go up, in exactly the same way they would go up as you increase the number of cabs up to 100,000.

[Q&A: The Anchorage Assembly overhauled taxicab rules. What now?]

Taxis exist to provide a transportation service to the community. It is a regulated business because we don't want our streets clogged up by way more taxis than we need, and we want to make sure that rates are fixed and affordable. It isn't a competitive business. You don't choose your cab. So it isn't subject to the same rules.

If you think about it a little, it really becomes very obvious and logical: The more cabs we have access to out there, and the more convenience they provide to us, the more we have to pay for it.

So, Anchorage, as you think about Prop 8, remember — it is in our interest as a community, obviously, to have a number of cab permits sufficient to adequately serve the public's needs. But it is also in our interest to not be wasteful and inefficient by flooding the city with way more cabs than demand dictates.

So it's clear, the Assembly thought they knew best. They have overstepped their bounds in this instance and have made a bad decision, which will result in cab fares becoming less affordable for all of us and service becoming worse. Right now, Anchorage enjoys relatively low cab rates, ranking in the bottom half of cities across the U.S. based on price. Go to Honolulu and a ride will cost you half as much again. Let's not spoil that.

On April 4, repeal this wrong-headed decision. Allow our cabs to continue providing the economical, on-demand, 24/7 transportation service they provide to our community without political interference.

It really will cost us less.

Suzie Smith has been an Anchorage taxi permit owner/operator for more than 20 years.

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