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Newsflash: there’s no supply and demand in a centrally-planned market

January 11, 2011 By Stephen Smith

The NYT has an absolutely boneheaded article about the shortage of taxicabs in Manhattan during the evening rush-hour. They blame rising Manhattan rents and cabbies’ schedules, but the statists at the New York Times don’t see the obvious glaring issue: controlled prices and a taxicab cartel! They cite it as an “apparent violation of the laws of supply and demand,” without recognizing that for supply and demand to work, you need drivers to be able to charge their own prices and enter markets at will.

Aside from that supply and demand bit, I’d say the second stupidest quote comes from David Yassky, leader of the cabbies’ cartel:

Mr. Yassky said the city “should be circumspect about substituting its judgment for the judgment of business people.”

Hmm, that’s odd, because last I checked, Yassky was in charge of a state organ devoted to protecting incumbent taxi drivers from the judgment of business people.

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Filed Under: Uncategorized Tagged With: nyc, taxis

About Stephen Smith

I graduated Spring 2010 from Georgetown undergrad, with an entirely unrelated and highly regrettable major that might have made a little more sense if I actually wanted to become an international trade lawyer, but which alas seems good for little else.

I still do most of the tweeting for Market Urbanism

Stephen had previously written on urbanism at Forbes.com. Articles Profile; Reason Magazine, and Next City

Comments

  1. Terry Nicol says

    January 11, 2011 at 7:30 pm

    Unbelievable.

  2. MarketUrbanism says

    January 11, 2011 at 7:44 pm

    last I checked, Yassky was in charge of an organization that’s devoted to lobbying the state to protect its incumbent drivers from the judgment of business people.

    I was not aware that he was part of a lobbying organization, but now he IS the state….

    http://www.nyc.gov/html/tlc/html/home/home.shtml

  3. Stephen says

    January 11, 2011 at 8:01 pm

    Oops! You’re right. I’ll correct that.

  4. Dan says

    January 11, 2011 at 8:04 pm

    Steven, I’m struck by how well you couple true insight with meaningless insults that undermine your credibility to those who don’t share your point of view. I thought the question he answered (why does this happen, given the laws as they are) was an interesting one and his answer interesting as well. You choose a different level of analysis: “if the laws were different, how would this phenomenon differ?” and provide great insight at that level of analysis.

    So why the insult? Not everybody chooses to analyze at the particular level that you find more interesting. Personally, I think both the reporter’s explanation and yours are quite interesting.

    Finally, what has he written that makes him seem like a “statist”? He doesn’t show any preference for or against the existing taxicab laws; I’m not sure he’s even pondered the question. Yet you assume he opposes you. Why?

  5. John McDonnell says

    January 11, 2011 at 8:29 pm

    Yeah ignorance on this issue is unbelievable.

    Maybe you should post the level of distortion caused by the medallion system, I’d be interested to see the tally (I think the level of distortion is the summed market value of all the medallions in issue).

  6. John McDonnell says

    January 11, 2011 at 8:41 pm

    I think it is reasonable to presume that the author has not considered the true underlying cause of the taxi shortage (which is, of course, simply an artificial cap on supply, combined with price fixing). And I think the point Smith was getting at was that people just take these ridiculous systems for granted without questioning them. Calling the guy statist is pretty extreme (statists are often critical of government policies whatever their objectives) but it drives people like me and Smith crazy to read these articles because the only way voters can learn about these issues (and potentially make a difference with their votes) is by reading about them in the paper. For the writer to just look at the problem and scratch his head misses an obvious opportunity to inform everyone that the root cause of the situation is successful rent-seeking on a massive scale by a small number of individual medallion holders (I think the distortion is in the tens of billions of dollars), and could be rectified by the government at massive benefit to people who want to ride or drive cabs.

    Most people probably don’t realize this, and after reading this article about the taxi shortage, will continue to not realize it. I do think that’s a failure in reporting.

  7. Stephen says

    January 11, 2011 at 9:01 pm

    I’m struck by how well you couple true insight with meaningless insults that undermine your credibility to those who don’t share your point of view.

    If I ever write a book, that’s going on the dust jacket.

  8. MarketUrbanism says

    January 11, 2011 at 9:09 pm

    Finally, what has he written that makes him seem like a “statist”?

    Stephen stated it as follows,

    but the statists at the New York Times don’t see the obvious glaring issue

    It’s a generalization of the staff at that newspaper, which has a pretty good track record at defending government. They probably wouldn’t take being called a “statist” as an insult. The writer of the article may not know anything about economics, but there are plenty of editors at the NY Times who know enough about economics to know about price fixing and cartelization in the taxi industry. It’s pretty basic microeconomics…. So why didn’t any editors at the Times suggest some simple edits to correct for his economic ignorance?

  9. Dan says

    January 11, 2011 at 10:17 pm

    I would take “statist” as an insult, because I’ve only ever heard the term used pejoratively by market proponents. People in favor of more of a government role in the economy tend to call themselves “social democrats”, “socialists”, “market socialists”, or any number of other terms.

  10. Cap'n Transit says

    January 12, 2011 at 1:47 am

    There’s still supply and demand in a centrally planned market; it’s just that the market doesn’t respond to them.

    Of course, it’s so badly planned that it doesn’t respond to the people who are supposed to be running it, either…

  11. Cap'n Transit says

    January 12, 2011 at 1:47 am

    There’s still supply and demand in a centrally planned market; it’s just that the market doesn’t respond to them.

    Of course, it’s so badly planned that it doesn’t respond to the people who are supposed to be running it, either…

  12. Marcin Tustin says

    January 12, 2011 at 10:55 am

    There’s nothing social democratic about arbitrarily picking a number of cabs to have on the road, and auctioning the permits to drive them.

  13. Marcin Tustin says

    January 12, 2011 at 10:59 am

    The medallion system is really the worst of all worlds – state determines amount of cabs, and how they can be furnished, but do not require the drivers to have any substantive qualifications. At least in London, the barrier to entry is that cabbies must demonstrate their complete knowledge of the streets of London (and I do mean complete – they will recognise any road, as long as you use its correct name).

    My experience of gypsy cabs (in NYC) is that they are cleaner, cheaper, and of course more available. My only problem is that they are moderately difficult to identify and flag down.

Trackbacks

  1. Tweets that mention Newsflash: there’s no supply and demand in a centrally-planned market | Market Urbanism -- Topsy.com says:
    January 11, 2011 at 3:40 pm

    […] This post was mentioned on Twitter by Stephen Smith, Stephen Smith. Stephen Smith said: @timestransit RT @marketurbanism Newsflash: there’s no supply and demand in a centrally-planned market http://goo.gl/fb/RMche […]

  2. seo white label reseller says:
    February 24, 2014 at 6:24 am

    … [Trackback]

    […] There you will find 13186 more Infos: marketurbanism.com/2011/01/11/newsflash-theres-no-supply-and-demand-in-a-centrally-planned-market/ […]

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