Uber’s Racial Politics Are Convenient, but not Coincidence

It has long been a harsh reality in the Big Apple that black denizens have a substantially tougher time hailing a taxi than their fairer neighbors. Even as the caucasoid cabbie becomes the unicorn of transportation, black New Yorkers struggle to find a driver willing to drive them to or fro. Uber highlighted this fact earlier this year in its fight against Mayor de Blasio and City Hall’s attempts to slow the ridesharing company’s rise.

In July, Latoya Peterson at Fusion expressed her cautious satisfaction with the accessibility of rides Uber has provided to blacks. “It’s true, by most accounts, that Uber has made it easier for people of color to hail a ride home…” she wrote, “But the marketing of social justice for Uber is just a convenient means to an end: boosting Uber’s appeal and influence”—and ultimately their revenue. Peterson’s concern is that concern for racial equality is only an ephemeral marketing strategy and that Uber could easily adopt an implicit policy of discrimination as the taxicabs did long ago. Is this a valid concern? Why did the time-honored cab companies forsake would-be black customers if feigned concern for racial equality is so profitable?

In his book The State Against Blacks, Walter Williams describes the situation in Gotham as it was circa the early 1980s:

High risks of robberies and other violence is the reason given by the medallioned taxi industry for not providing services in these communities. In addition, medallioned operators perceive these areas as being economically unprofitable compared to the central business district and other areas of the city […] As such, there is considerable inducement for many medallioned taxi drivers not to operate in these neighborhoods.1

For those of us who are still neophyte to sidewalks and unacquainted with civilized life, the medallions Williams mentions are badges every cab must buy and display to operate legally. The medallions in New York were introduced in 1937 and were issued to all existing cabs. Since then, the city issued no additional medallions despite the enormous increase in population. (The number of has medallions actually decreased!) Thus the only way to acquire a medallion is to buy one from an existing owner. The medallion for a single taxi in 1979 was $60,000 and has climbed to over $1 million today. Williams lays out the “inevitable result” of such a scheme:

[W]hen there is an increase in public demand for taxi services, as there has been in New York since 1937, there is no response in the form of more legal taxis. The response to the higher demand is mostly in the form of higher taxi fares and poorer-quality taxi service. This is the natural result of monopolized markets.2

With the city government shielding them from competition, medallioned cab drivers can now pick and choose whom to serve. Under competition, if one cab driver chose to coast past a black man attempting to hail a ride, one of his riskier or more progressive competitors would come to a stop and make a few bucks. Under the medallion scheme, that competitor does not exist and does not show up. The absence of free competition deceases the cost to the individual of making decisions based on noneconomic criteria. That is, such regulation decreases the cost of being racist.

Uber is not the first instance of the New York taxi industry being challenged by legally ambiguous competitors attempting to reach an untapped market. The underserved New York communities such as Harlem, Brownsville, and the South Bronx developed illegal “gypsy” taxicabs—often just private cars with lights and meters installed—to serve blacks and Puerto Ricans who could not catch a ride from legitimate cabs. Not only did these businesses provide a way home for racial minorities, they also provided employment opportunities for lower-income communities. The authorities turned a blind eye to these gypsy cabs so long as they confined themselves to the ghettos, but skirmishes were fought and automobiles immolated on both sides once the gypsy cabs began encroaching on what the medallioned cabs considered their territory.3

Entrepreneurs in certain New York neighborhoods have attempted to meet the transportation needs of neglected populations with large passenger vans. Hector Ricketts for decades fought tooth-and-nail against the city and taxicab special interests to secure licit status for the vans his company ran through Queens. So long as competition is legal—and sometimes even when it is not—entrepreneurs will be looking for ways to serve blacks who need to get around. Their money is just as good as anyone else’s.

Peterson is spot-on in identifying Uber’s ostensible concern for the transportation needs of New York’s black community as an ulterior concern for their bottom line. But she and others who share her fears of this newcomer eventually adopting the taxicabs’ discriminatory practices should take comfort in the power of self-interest and competition. So long as government allows it, individuals, with their “propensity to truck, barter, and exchange,” will tend to be “led by an invisible hand” to provide the customarily underserved black population with the rides they need, and if Uber decides to  adopt the unfortunate and unsavory implicit policy of neglecting would-be black customers, another actor will see a profit opportunity in social justice.

Footnotes

  1. Williams, Walter E. The State Against Blacks. New York: McGraw-Hill, 1982. 77–78.
  2. Ibid., 76–77.
  3. Ibid., 78–80.
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One comment

  1. […] one of the latest posts on this blog, I took at look at the economics of why Uber, a cornerstone of the sharing economy, […]

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