The taxi/ livery plan the legislature passed in Albany is sure to fail because it ignores economic reality. Giving 30,000 liveries the right to accept street hails will disappoint supporters, disrupt beneficial relationships, and likely ruin cab service for everyone.

The law’s purpose is to provide street hail service in areas presently without street hail service. But street hail service is only viable in dense areas where cabbies know that riders regularly appear. Taxis nowhere in the world provide regular street hail service in neighborhoods that lack the requisite density of demand. Instead taxi service is provided on-call. New York liveries provide good on-call service. True, there are areas throughout the City like Fordham Road which could support street hail service or cab stands to serve as street hail locations. The Bloomberg Administration wrongly rejected both options.

Instead, the Bloomberg Administration has opted for a plan that has the potential to destroy the taxi industry. Many successful on-call taxi businesses will likely fail without the control of drivers that calling in provides. This means worse on-call taxi service for much of the city since street hail cabbies cruise where the business is, not where an occasional passenger wants a ride.

Yellow cab service will also get worse. Black car livery vehicles regularly poach on the yellow cabs, but they lack meters. Put meters in the black cars, and the passenger’s disincentive to get in a black car disappears. Liveries with meters will inevitably flood Manhattan. Policing against poaching cannot succeed where the passengers are willing to step in the poacher’s car. What works against poaching are incentives for riders to choose yellow cabs: a sufficient number of yellow cabs, accurate meters, stiff regulations and identifiable drivers. The yellow cab industry can live with limited poaching by unmetered black cars, but not up to 30,000 newly metered liveries with street hail rights. The new law will likely destroy the value of medallions, cause the collapse of the economic structure supporting the yellow cab industry, and provide poorer cab service everywhere.

It would be hard to have produced a more disruptive taxi plan. Governor Cuomo should veto the bill, and let the Bloomberg Administration and the taxi/ livery industry work out a plan based on sound economics.