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Canadian public policy happens to be obtaining a dose of “sunny ways.” What it really needs are “Aussie ways.” Could it be being inverted all the time that makes Australians so clear-headed about economic reform?
According to a report now from the Montreal Economic Institute, a couple of Australian cities coping the Uber “problem” – only in Canada is an excellent new consumer-friendly technology categorized as being an issue – by doing precisely what most economists would recommend: namely, de-regulating taxi prices, opening the to pretty much free competition and, simultaneously, partly paying off existing licence-holders for the hit they’ll take to the value of their licences, that many of them paid tens, if not hundreds of thousands of (Australian) dollars. In New South Wales, where Sydney may be the biggest city, the payoffs is going to be financed by a temporary tax of the 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 into the industry who desires in, and finance payoffs to existing quota holders with an 11-cent per litre milk tax imposed for the eight-year transition.
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To make sure, our late authorities, the Conservative one, headed with that person whose name we dare not speak, worked out an identical plan in connection with the Trans Pacific Partnership trade agreement. Access to our supply-managed industries would be liberalized a teensy bit, that existing quota holders would get compensation. A much better policy would have to blow up supply management entirely, without or with the TPP, but even such a supposedly radical government couldn’t bring itself to bold, Aussie-style measures, so instead we’ve got marginal changes.
Never mind. Little reforms might have been useful steps for all of us timid non-Australians. Maybe, eventually, they would have resulted in bigger steps when the good sense of the deregulate-and-compensate model started to be appreciated. Now, even this type of modest reform is within limbo, however, with a new government that speaks its very own name everywhere, but has yet to approve the TPP.
Why we do not go ahead with deregulate-and-compensate is really a puzzle. Envy may be the marinade from the Canadian body politic, obviously. Maybe we’re irked by the idea of providing compensation to individuals who were in the past in a position to afford almost $300,000 for a taxi licence – the price last year in Laval, north of Montreal.
If so, we ought to go on. To begin with, some licence-holders did pay that for that privilege of charging us sky-high taxi fees. Any new system involving free entry will drive the value of their licence to zero. The result would be similar to losing your house to a fire – without fire insurance. We presumably don’t want policies to have the same effect on people as mad arsonists would.
True, nobody forced one to spend so much on the taxi licence. Moreover, some licence-holders might have got theirs free once they were passed out at a cost of zero in the 1970s, though presumably most such people sold-out sometime ago at a nice profit. And, of course, licensees’ motives were far from pure. The reason the licences were so valuable was 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 these were, wanted to be, and even perhaps enjoyed being legal monopolists doesn’t change the fact, however, that lots of licence-holders will suffer a large capital loss when competition arrives. Nearly as good people, we might well understand them for that, since we free ourselves from their extortive prices. But even if we do not bubble over and done with fellow feeling for them – they never did for us, once we paid their high costs every year – we should recognize the political reality that they have leverage within the deregulation.
They may exercise it in ham-handed ways by blocking traffic, as they did in Montreal Wednesday and apparently plan 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 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 truth remains, however, that they do have leverage and seem willing to exercise it. Compensation might not persuade them they’re being treated fairly. However it may well persuade sympathizers in the general public that deregulation has been done fairly. Politically, that could prove crucial.
Australians seem to have determined that open competition ought to be the norm in all industries which if compensation tends to make that happen, then temporary taxes to invest in it are a suitable vehicle. Wrong with us that we can’t figure that out, too?
