It’s Free Market Day in Washington DC!

Sun, 12/20/2009 - 3:01pm | posted by Chris Moody

My flight was canceled due to the DC snowstorm and there were no government buses or trains to take me home from the airport. Stranded, I was left at the mercy of a taxi industry operating in a (brace yourself) free and open market system. On any other day, cabs are price controlled by the government through a meter system that makes drivers very little money. It is illegal for them to charge more or less for a ride, even if the services and quality of the ride are superior than others. But today, King Mayor Fenty graciously allowed taxi drivers to charge a higher market price to encourage cabbies to drive out in the snow.

(Let me take a paragraph here for obligatory grovelling: Oh, thank you, your Majesty. Your Graciousness, Your Holiness. Thank you for allowing your subjects to engage in voluntary exchanges without the fear of fine or imprisonment)

Anyway, I hail a cab and he says it’s gonna cost me $45 to get home. (It’s usually about $15). On top of that, I have to share the cab with two other folks who also have to pay another $45.

I happily take the offer.

Now, why wasn’t I outraged? Why didn’t I rampage against this taxi driver’s clear use of extortion through price gouging?

Demand. That’s why. Without this incentive to make some extra money by risking his car in the snow, that taxi driver would have stayed home for the day with his family. I was grateful that he could charge me whatever he wanted. Without the open market, no one would have any reason to drive anyone anywhere on a day like this.

Of course, next week the taxi drivers will be back on the meter system. We’ll return to a system controlled by an elected planning board, one that offers no incentive to upgrade the product or offer better services. It’s a shame.

Furthermore, if you ever want to make friends with a cabbie in DC, ask him about the new meter system, and sympathize with him when he tells you it’s ruining his ability to make a living. It’s amazing how easy it is to make economic libertarians out of people when it’s labor and services they’re after.