Canadian public policy happens to be obtaining a dose of “sunny ways.” Exactly what it needs are “Aussie ways.” Could it be being inverted constantly which makes Australians so clear-headed about economic reform?
According to some report now in the Montreal Economic Institute, a couple of Australian cities coping the Uber “problem” – only in Canada is an efficient new consumer-friendly technology categorized as being an issue – by doing exactly what most economists would recommend: namely, de-regulating taxi prices, opening the industry to more or less free competition and, simultaneously, partly paying down existing licence-holders for the hit they’ll decide to try the need for their licences, that many of them paid tens, otherwise hundreds of thousands of (Australian) dollars. In Nsw, where Sydney may be the biggest city, the payoffs will be financed with a temporary tax of a dollar per ride, by Uber or taxi.
It’s basically the same system Australia used Fifteen years ago to unburden itself from milk quotas: i.e., de-regulate dairy output and costs, let anyone in to the industry who wants in, and finance payoffs to existing quota holders by having an 11-cent per litre milk tax imposed for the eight-year transition.
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To be sure, our late authorities, the Conservative one, headed with that person whose name we dare not speak, worked out a similar plan regarding the the Trans Pacific Partnership trade agreement. Use of our supply-managed industries would be liberalized a teensy bit, for which existing quota holders would get compensation. A better policy would need to blow up supply management entirely, with or without the TPP, but even this type of supposedly radical government couldn’t bring itself to bold, Aussie-style measures, so instead we got marginal changes.
Never mind. Little reforms might have been useful steps for us timid non-Australians. Maybe, eventually, they would have led to bigger steps once the sense of the deregulate-and-compensate model started to be appreciated. Now, even such a modest reform is within limbo, however, with a new government that speaks its very own name high and low, but has yet to approve the TPP.
Why we do not proceed with deregulate-and-compensate is really a puzzle. Envy may be the marinade from the Canadian body politic, of course. Maybe we’re irked through the concept of providing compensation to individuals who were in the past able to afford almost $300,000 for a taxi licence – the cost last year in Laval, north of Montreal.
If so, we should get over it. In the first place, some licence-holders did pay that for the privilege of charging us sky-high taxi fees. Any new system involving free entry will drive the need for their licence to zero. The effect could be akin to losing your home to some fire – without fire insurance. We presumably do not want policies to achieve the same impact on people as mad arsonists would.
True, nobody forced one to spend so much on the taxi licence. Moreover, some licence-holders may have got theirs free once they were handed out at a price of zero in the 1970s, though presumably most they sold out sometime ago in a nice profit. And, obviously, licensees’ motives were far from pure. The main reason the licences were so valuable was that they permitted their holders to legally bilk us taxi users using the well-above-market prices that taxi regulators enforced which Uber is so effectively undermining.
That they were, wanted to be, and even perhaps enjoyed being legal monopolists doesn’t alter the fact, however, that lots of licence-holders will suffer a big capital loss when competition arrives. As good human beings, we might well sympathize with them for your, since we free ourselves using their extortive prices. But even when we don’t bubble over and done with fellow feeling on their behalf – they never did for us, once we paid their high costs every year – we ought to recognize the political reality they have leverage within the deregulation.
They may exercise it in ham-handed ways by blocking traffic, because they did in Montreal Wednesday and apparently expect to do in Toronto during the NBA’s All-Star weekend, or by mawkishly exaggerating their distress. One sign seen during Montreal drivers’ protests now was “Je suis taxi,” a cringe-inducing attempt to establish equivalency between service providers protecting their privileged economic status and innocent satirists gunned down by terrorists. Every self-proclaimed victim is really a “je suis” these days. Personally, je suis sick and tired of all the je suises.
The fact remains, however, that they will have leverage and appear prepared to exercise it. Compensation may not persuade them they’re being treated fairly. However it might persuade sympathizers within the general public that deregulation is being done fairly. Politically, that could prove crucial.
Australians appear to have figured out that open competition should be the norm in all industries and that if compensation helps make which happen, then temporary taxes to finance it are a suitable vehicle. What’s wrong with us that people can’t figure that out, too?
