Medallion Monopoly Drives Taxicab Racism

February 1, 2000

February 2000

Medallion Monopoly Drives Taxicab Racism

By Marcus Cole

In the preface to his book, Race Matters, Harvard Professor Cornel West describes a scene all too familiar to African-Americans: he stood at the corner of 60th Street and Park Avenue in Manhattan and watched 10 unoccupied taxicabs pass him by. Recently, actor Danny Glover has brought national attention to this commonly experienced aspect of black life in America. When Glover was frustrated in his attempt to catch any one of several taxicabs as he stood on 116th Street, he filed a lawsuit against the New York Taxi and Limousine Commission. His suit calls for mandatory sensitivity training for New York taxi drivers.

In response to the outrage generated by Glover’s experience, New York Mayor Rudolph Giuliani has vowed to combat the practice of yellow taxi cab drivers refusing to stop for black fares. Giuliani’s plan calls for the deployment of a hundred African-American plain-clothes police officers to attempt to hail cabs on the streets of New York. When these officers are refused transport, they will issue citations, carrying heavy fines and the possibility of the loss of the driver’s taxi license.

While both Glover’s suit and Giuliani’s policing efforts may have some effect on the problem, the impact of these approaches is likely to be little more than superficial. It is not for want of caring. Few celebrities have the civil rights credentials of Glover. Few politicians have the political incentives of Giuliani. The reason why these efforts will ultimately fall short is because they are not rooted in the experiences of the people who are most frequently victimized by the current structure of taxicab transportation: working-class African-Americans living in predominantly black communities.

Unlike Cornel West or Danny Glover, African-American communities are deprived of even the opportunity to wave arms in futility. When well-to-do African-Americans cannot get a cab, it is reasonable to assume that it is because they are black. All the success, money, and fame in the world will not permit the Wests or the Glovers of the world to escape this part of the black experience in America. But when other, less familiar or less well-heeled African-Americans are in need of transportation, we know it is pointless to go out to the curb. Taxicabs simply do not serve our communities. We need more than sensitivity training for cab drivers; we need cab drivers.

In response, we are reduced to having to break the law by employing “gypsy” or “jitney” cab services. Gypsy cabs are like other cabs except they are unmarked, unregulated, frequently unsafe, but are in our neighborhoods. They are, in essence, “black market” taxicabs. Gypsy cab drivers frequently require passengers to ride in the front passenger seat, so as to avoid detection by police. And black passengers will comply, because the alternatives do not include regular taxi service by yellow cabs. Yellow cabs refuse to enter our neighborhoods, just as they refuse to pick up even our most distinguished actors and academics.

The motor that drives yellow taxicabs past arm-waving, would-be passengers is not under the hood; it is on the hood. Like many other large cities, New York City confers upon a select number of companies an artificial monopoly in the right to pick up passengers on the street. This right flows from the ownership of a taxicab medallion, which is required in order for a taxi to carry passengers other than those that are assigned by a radio dispatcher. Currently, the City of New York allows just over 11,000 of these precious medallions to be held by cab companies. Ownership of the medallion, which is visibly attached to the hood of the vehicle by way of a large rivet, also entitles the taxicab to be painted yellow, thereby communicating to all the world that this cab is one of the select few to have curbside pick-up rights.

This artificial monopoly exists, purportedly, to allow New York City to regulate taxicabs. There is, however, no logical nexus between the need to regulate taxicabs and the imposition of an artificial quota on the number of cabs. Even the oft-cited concern about street congestion cannot justify this arbitrary barrier to entry. Taxicabs can be regulated like any other business, without the creation of arbitrary limits on their numbers. New York regulates restaurants, too, but does not fix the number which may exist in the city at any one time. The market does this. If there is insufficient demand to support additional restaurants, additional restaurants will not be opened. This is true for any supply, including the supply of taxicabs.

As the Institute for Justice has pointed out in its work to open long-closed taxi markets across the nation, the imposition of this artificial monopoly does more than merely create an artificial shortage of taxicabs. It also empowers taxicab drivers to behave like monopolists. Rather than pick up customers because of the desire for additional business, or enter underserved neighborhoods to circumvent competition, these monopolists are empowered to pick and choose their customers. Cab drivers who harbor racist attitudes are suddenly protected from the competitive forces that would, under normal circumstances, punish them monetarily for acting upon those attitudes. The medallion monopoly provides the hood by which these racist attitudes are shielded from the light of the marketplace.

Cornel West is right; race does matter. It is obvious to any African-American who has attempted to flag down a taxi that race matters to many cab drivers. But it is precisely because cab drivers may be racists that we should not empower them to act in racist ways. The conferring of monopoly status on taxis, however, does just this. If Mayor Giuliani truly cares about making a significant impact on the transportation experiences of African-Americans, he will end the artificial taxicab medallion monopoly.

This, however, will be easier said than done. Current medallion owners hold rights that are traded for hundreds of thousands of dollars. Any attempt to break the monopoly will dramatically deflate the value of the medallions already in circulation, and will be met, accordingly, with fierce opposition. It will not be unlike taking slaves from slave-holders. But there is little justification of continuing to hold entire communities in shackles in order to generate monopoly profits and “black-free” working conditions for medallion holders. It is time that New Yorkers took the wheel to break this monopoly, and the pain and economic toll it inflicts on black and non-black citizens alike. Eliminate the medallion monopoly. When the yellow cab medallion monopolists start to wave their arms in protest, take a cue from them: just pretend not to notice them.

Marcus Cole is a law professor at Stanford Law School, where he teaches bankruptcy, contracts and the effects of commercial regulation on minorities.

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