Dec 022013

Owen Courreges

In the wake of recent high-profile complaints about the New Orleans Taxi Bureau, one suggestion has been for New Orleans to emulate New York’s system for regulating taxi cabs by creating a new taxi/limousine commission and adopting a medallion system.  In my view, this is a monumentally bad idea.

An impetus for this proposed change is related to complaints against the New Orleans Taxi Bureau and its chief,  Malachi Hull, including an incident I wrote about previously when a Taxi Bureau inspector, Wilton “Big Will” Joiner, slammed a tour guide in the side of a parked car full view of a crowd of appalled tourists.  This was troubling because Taxi Bureau investigators aren’t peace officers; they lack authority to detain or arrest anybody.

It’s clear that the Taxi Bureau is ill-managed and corrupt, and institutional changes certainly shouldn’t be rejected out of hand.  However, New York’s supposed “reforms” are not something New Orleans should replicate. 

Unlike in New Orleans, New York has always used peace officers for implementing its taxi regulations.  This was previously done via the so-called “Hack Bureau,” which was simply an office within the NYPD.  After the Taxi and Limousine Commission was created in 1971, taxi inspectors continued to be peace officers, even though they merely enforce administrative regulations.

There are at least two reasons that this is problematic: 1) peace officers are expensive and New Orleans, being cash-strapped, can’t afford to use them for enforcing administrative laws; and, 2) peace officers have authority to use force (an authority they are likely to exploit), which shouldn’t normally be necessary in merely enforcing taxi regulations.

Indeed, this has caused no end of problems in New York.  Taxi enforcers don’t exercise more discretion when you give them more power; to the contrary, they become more abusive and brazen.  In 2004, for example, a New York Taxi Commission inspector actually arrested 60 Minutes reporter Mike Wallace (who was then 86 years old) for disorderly conduct simply because he questioned how his driver was being treated.

If people like Wilton Joiner are given police powers, they won’t only slam tour guides into cars, they’ll be arresting tourists for having the audacity to voice concern.

On the other hand, if the bureaucracy of the New York Taxi and Limousine Commission actually engendered clean, responsible governance, it might still be something worth looking at.  Instead, it has been rife with scandal and mismanagement.

For example, Jay L. Turoff, a former chief of the New York Taxi and Limousine Commission and owner of a fleet of cabs, pled guilty in 1989 to mail fraud stemming from a scheme to misappropriate 23 taxicab medallions and more than $500,000 in taxicab revenues.

Moreover, the Taxi and Limousine Commission was successfully sued by drivers in the late 1990s related to “Operation Refusal” in which the city targeted drivers for allegedly refusing service.  Alas, the Commission did so by brazenly disregarding drivers’ constitutional rights, denying due process and clamping down on protests.

Nevertheless, the biggest problem with taxi regulations in New York involve the medallion system itself. Last week, Uptown Messenger columnists Allan Katz and Danae Columbus argued that creating a property right in a license to operate a taxi cab will allow drivers to generate wealth and provide them with a substantial business asset.  However, this has not been the experience in New York, where medallions are almost entirely owned by wealthy investors and the drivers themselves are simply independent contractors.

Your average cab driver in New York leases his cab from a medallion holder and has to pay roughly $130 before they break even, forcing them to work long hours for low pay.  This wasn’t always the case.  Some cab drivers owned their medallions at first, and the rest were employees of medallion holders who earned a decent living and were paid benefits.  However, in 1979 the Taxi and Limousine Commission allowed medallions to be leased out for 12 hour shifts, turning drivers into independent contractors.

The result is that cab drivers are poor and fares are too high, all so that the wealthy bastards who own medallions can get a massive return on their investment.

Oh, and it is a huge investment.  The market price of a New York taxi medallion has ballooned to over $1 million.

Why are they so expensive? It’s because the number of taxi medallions has barely been increased since they were first introduced in 1937.  Medallion owners lobby fiercely to ensure that the number of medallions stays virtually constant guaranteeing that that scarce resource will continue to increase in value (and meanwhile, the public faces a severe shortage of cabs).

The long and short of this is that New York’s system of regulating taxi cabs is expensive and highly dysfunctional, and certainly not anything that New Orleans should be looking to copy.  By comparison, the New Orleans Taxi Bureau and our system of licensing are coherent and sane.

The problem has related more to a lack of oversight by the mayor’s office.  It’s easy to blame structures instead of the individuals when an arm of government goes sour, but this is one scandal that Landrieu needs to step up and own.  Hull smelled bad when Landrieu hired him, yet he did anyway.

That said, providing greater oversight of the Taxi Bureau should certainly be on the table, and perhaps some institutional changes could prevent further scandals.  Irrespectively, whatever path we take should be more modest and tailored to our own needs.  We definitely should not repeat the mistakes made by other cities, particularly when they are as glaring as New York’s.

Owen Courrèges, a New Orleans attorney and resident of the Garden District, offers his opinions for on Mondays. He has previously written for the Reason Public Policy Foundation.

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  • H. J. Bosworth JR.

    Good story Owen, I liked the results of your research on the NY taxicab system. Thank you!

  • Moses

    I have had two out of town guests get stuck with counterfeit money that was given as change from taxicab drivers. Yes, it could be money that was given to the taxicab driver from a previous passenger and then passed on to the next passenger. However, I reported it to the TaxiCab bureau. And. of course, nothing really can be done about it. But my money is certainly checked at retail stores. So, something could be done about it – if the Taxi Cab bureau would take the initiative to be sure that Taxi Cab companies give out REAL MONEY as change. Just a suggestion.

    • Owen Courrèges


      The Taxi Bureau should certainly be more responsive to customer complaints of that nature, certainly, but I think it’s more a matter of having a clean and efficiently-run office — something we don’t have right now.

  • Ben

    Uber wants into the New Orleans market too, and I fully expect a big fight. There is just too much entrenched corruption, right down to cabbies having to pay hotel bell staff bribes in order to pickup passengers.

    • Owen Courrèges

      Having Uber would certainly be a good thing, and I expect some of the larger cab companies to start working towards that since it would serve to increase business. You’re correct that there is some corruption here, but I don’t see that as preventing the use of an app to call a cab.

      • Joel Wietelmann

        The problem, as I see it, stretches well beyond the digital conveniences of Uber. The sad fact of the matter is that despite even the positive regulations that Hull (who needs to be fired immediately regardless) has put in place, they are not enforceable on any sort of effective scale.

        Since taxis have had to add rider-swipeable credit card machines, my only 2 rides in taxis have ended with me swiping my card only to find it not working. While the cabbie shrugs his shoulders until I inform him that, no, I do not have cash and will not pay cash, at which point he reaches under a coat to pull out an electronic gizmo to activate the card machine.

        The other major issue is taxis’ unwillingness to leave tourist traffic areas. Try to get a taxi from Uptown to the Lakefront when your car is broken down and you have somewhere important to be. The dispatcher will tell you no one is available. On a weekday. In the middle of the day. There’s a regulation that says they can’t refuse you service to destinations within city limits. But who can prove that they’re unwilling instead of just busy like they claim?

        The only thing that can fix our taxi system is fear. And Uber’s no-nonsense system, where you can see that you’re going to be picked up, where the cabbie can’t give you the runaround about your credit card, is the quickest way to put the fear into them to get their act together.

        • Owen Courrèges


          Having enough cabs to where nobody is reluctant to accept fares would go a long way towards solving those problems. A shortage of taxis, whether caused by hard limits or general over-regulation, will make it to whether cabbies are spoiled for choice — so that riders suffer.

          The issue with the credit card machines is also something I’ve heard about. I personally haven’t had any problems, but I know it’s a creeping issue. I think the solution is for riders to report drivers who claim that their machine isn’t working — because they’re not supposed to operate with a non-functioning machine. People need to be reporting it and the Taxi Bureau should be investigating those complaints.

          However, I’ve also heard that the reason why drivers hate the machines is that the regulations require them to only use certain approved vendors that charge excessive amounts. That’s just a rumor, but if it’s true, it’s a problem. Taxis should be able to use any credit card vendor, provided they accept all major cards.

          I like the idea of Uber, but I also feel that it’s not the only cure to these problems.

          • kmsoap

            The limited number of permitted vendors for credit cards is a reality. Any teen with a smart phone can take cards via Square or other apps at about half the cost of the approved vendors. Unlike the free market, there is no way for drivers to recoup the cost of taking cards, as their fares are set and regulated by government.

            If the machines are actually malfunctioning, that’s an additional burden, especially if drivers are not supposed to operate their business without them. I realize some think the drivers are being deceptive, but if the city’s long history of technology fails is any indication, I am not so sure. It is as if they told the drivers they all had to have repairs done by a particular shop that has a history of not being very good at their job. Additionally, the drivers need to work whether the machines are working or not, so this situation is designed to create an outlaw society, where people are virtually required to break the law to go about their daily business.

            Adding more rules is not the solution. we keep piling laws upon laws due to lack of enforcement of the current laws on the books. If we actually enforced the rules we have, people would be rioting in the streets and protesting a police state. Perhaps if we invested all that time, effort and money spent lobbying for new laws on fixing enforcement, we would find a few laws we could eliminate.

  • Ben

    I’m all for it, Uber or something like it. Uber really does try to disrupt the pricing/regulation of rides, and that’s where they’re getting a lot of heat from competitors and regulators. But it could also be as simple as just having a United Cab app to summon them.

  • Owen Courrèges


    I know where the regulations are, but this goes beyond that.