Category: Transportation

Uber v. Taxis

I decline to choose a winner. The people of New Orleans should be allowed to choose who wins by either using Uber or not  using Uber. Unfortunately, this is not the typical city approach to new companies disrupting the status quo. This is especially true when the threatened party is the deeply connected New Orleans taxi industry.

The Transportation Committee of the New Orleans City Council is set to debate rules changes to some city ordinances on Tuesday, June 24, 2014. Since I will not be able to attend that meeting, my thoughts (non-exhaustive) on the situation continue below.

Assuming that opposition to Uber stems from a concern for public safety, there are some common misconceptions out there that simply aren’t true. These include lack of insurance coverage, unsafe vehicles, random people as drivers, and the affordability of rides. First, Uber now provides significant insurance coverage for all Uber drivers that should certainly be adequate in the event of an accident. Second, the average age of an Uber vehicle is 6 years, and none are older than 10 years. Third, Uber conducts extensive background checks on its drivers before allowing them to hit the streets.

Further, before getting into an Uber car the customer sees a picture of the driver, the driver’s license plate number, and the driver’s name, and then after the ride is over, the customer can rate the experience they had with the driver. This process allows other customers to know who they are getting and the quality of the driver. Uber also is able to keep tabs on its drivers through this system.

Finally, while Uber does have a minimum fare structure to account for insurance and the background checks it runs on drivers (certainly worthwhile fees for a rider to pay for), the customer at least gets an estimate on the cost of the trip before getting into the vehicle. That way, if the cost is too high, they know to seek other options.

Now, comparing Uber with New Orleans’ recent updates to taxi regulations, at least on these four points there aren’t appreciable differences that weigh against Uber. Going beyond these points, Uber is far superior. First, introducing a new player into the market will provide additional transportation options for New Orleans riders. Anyone who’s continually heard a busy tone while trying to call a cab or seen a constant parade of full cabs heading uptown late at night knows that additional drivers are needed. Second, having the ability to rate your driver, and for your driver to rate you, sets up an incentive for drivers to not only be trustworthy and efficient (i.e. not take the long way), but for both driver and rider to just be nice to each other. This is a welcome addition.

Third, Uber technology requires drivers to use GPS. What does this mean? No more having to tell the lost driver that you are PAYING how to get to where you’re going! Fourth, it is far preferable (to me) to be able to pull up a ride on a phone app instead of standing out on a curb waving like a maniac or constantly calling dispatch and waiting for a car to pull up and honk. Further, the app allows you to see the progress of your driver on his way to pick you up.

Fifth, no more cash! Not only do you just hop out of the vehicle at the end of your trip without having to complete a transaction, but the app takes care of tipping for you. This process is preferable for rider and driver for 4 main reasons: 1) not having to give your card to the driver prevents drivers from engaging in swapping out your card with someone elses and then running up charges before the theft is discovered (I dealt with this multiple times in a previous life as a banker at Chase); 2) riders not having cash is also faster and safer (for obvious reasons); 3) no more having to make sure a driver’s credit card machine is working or that they aren’t flouting the city regulations requiring them to accept them; 4) it’s safer for drivers, too, since they don’t have to carry cash on them.

Of course it is true that not everyone has smart phones. This is why Uber will not destroy the taxi industry. There is still room for taxis. Regardless of whether you simply don’t own a smartphone (or haven’t updated your phone’s software to allow you to use it at the moment), or choose not to pay for the service at times of peak-pricing, or just happen to see a cab and hop in instead of pulling out your phone, there are still many customers and situations that will support taxis. Also, there is no reason that existing cab companies can’t adopt similar technology as Uber uses unless they have no incentive to. Unfortunately, due to the current lack of real competition on this front, taxi companies don’t really have an incentive to adopt better technology (not to mention it may not even be affordable at the moment due to the added expenses resulting from recent ordinance changes).

The point is that competition is good. Keeping a competing company out of a market for arbitrary reasons is not good. After reading the above and considering other possible public safety rationales for limiting Uber, I can’t help but think that keeping Uber out must be based on other motivations. Just because taxi companies have been granted a monopoly by the city doesn’t mean they are entitled to enjoy it forever. Plus, as soon as it is honestly acknowledged that what is really going on is simple economic protectionism, at least New Orleanians will know that it isn’t public safety that is being secured. Instead, it is profits of the well connected taxi industry paid for by the public. If the city of New Orleans truly cares about protecting the public and making sure there are safe, dependable, and plentiful rides for people choosing or needing to not drive themselves, then it will amend current regulations to allow for robust competition in the New Orleans taxi market.

Not Stopping For Directions

Were it not for GPS I would probably get lost driving around New Orleans quite frequently. The network of street signs in this city is deplorable! However, instead of just complaining about it, I did some research into how it could be better.

The Traffic Division of the Office Of Public Works is responsible for maintaining city traffic signs and lights. This entire division has 11 employees. They have an annual budget of around $1,800,000. That amount is only 10% of the total public works budget and only 0.36% of the total General Fund of the city of New Orleans. Based on 2010 Census figures, that works out to $5.25/year that is paid per resident of New Orleans to finance this aspect of the city. How many other things in life do you pay just $5.25 a year for that affect most people daily?

I bring up all these numbers for one reason. The city of New Orleans should issue a request for proposals to interested companies to take over maintenance and installation of traffic signs and lights from the city.

Other U.S. cities have already done this, notably, New York City, so it’s not like this is a revolutionary idea. The two biggest arguments in favor of this are cost and accountability.

The private company managing this will undoubtedly have lower labor costs mostly due to using private health insurance for their employees (if they choose to provide it) and 401k retirement accounts instead of high cost public employee pensions. Second, this aspect of daily life will finally have accountability on its side. The city can write into the contract a clause that allows the contract to not be renewed if the company isn’t performing to the public’s satisfaction.

So, what we have here is a win-win. Taxpayers pay less for better service and new jobs would most likely be created (I am not aware of an existing company that could absorb the increase of work here without adding staff). To prevent job losses by privatizing this function of Public Works, existing city employees can be shifted to other vacancies or apply to join the new company.

Ideally, not only will this lead to all streets being clearly and properly marked but this also opens up New Orleans street signage and lighting to innovation. Can you imagine a world where major thoroughfares have all traffic lights synchronized? How many of you would benefit from that? Here’s hoping to a future of New Orleans drivers not spent slowing at an unfamiliar intersection searching frantically for a street sign.

Parking Hassles Got You Down?

If you’re like me, and your girlfriend has to constantly calm you down while looking for parking in our fair city of New Orleans, then have I got the announcement for you.

Tomorrow, Tuesday, March 13, 2012 from 6-8pm in the Louisiana Pavilion at the WW2 Museum (945 Magazine) UCLA urban planning professor and economist Donald Shoup will be giving a symposium titled “Parking: Can We Do Better for Our Communities and Our Businesses?” The event is sponsored by the Urban Land Institute.

If you are unfamiliar with Mr Shoup’s work, he is the author of “The High Cost of Free Parking” and is profiled in the reason.tv spot below. The focus of his message is that “in addition to making it harder to find a spot when you need one, “free” parking exacerbates other problems, from pollution to traffic congestion. Using the power of market pricing, Shoup explains how to fix the parking mess in three steps.”

An example of how his ideas are being implemented in San Francisco can be found here.

Registration for the event takes place between 5:30-6pm at the museum. The cost is $15 for ULI members and $30 for non-members.

I Survived the Office of Motor Vehicles

Yesterday, I had the pleasure of making a trip to the Louisiana Office of Motor Vehicles. Fortunately, all I had to do was renew my driver’s license and change the address on my vehicle registration so I was able to go to the little office on the westbank under the expressway. Based on stories of most people’s experiences I expected a long wait, but being middle of the day on a Thursday, I was in and out in an hour.

Even though an hour isn’t too bad, especially when you are sufficiently prepared with reading material, there must be a better way. How is it possible that in the New Orleans metro area there are a grand total of 2 offices to serve this size of a population? Not to mention that there are none in Orleans Parish. This is crazy.

I grew up in Oklahoma, where instead of centralized, state-run offices they have “tag agencies.” Tag agencies are businesses contracted with the state to provide all the services of the Office of Motor Vehicles. The beauty of this system is that they function like franchise businesses, so they have offices all over and compete with each other for customers. In the city of Tulsa, there are 15 offices alone! Some are even open on Saturday. Can you imagine a world where you can walk in and out with a new license in 5 minutes and have the option of paying with a debit/credit card? That is what the people of Oklahoma are able to enjoy.

As we approach a new state legislative session I’m hoping to get a bill introduced to pave the way for Louisiana to implement a tag agency system like Oklahoma. I’ll be sure to post on my progress to eliminate an avoidable headache for Louisianans.