A Tale of Pirate Taxis

The following article is a contribution by Davin Chee and was first published on Libertarian Society Singapore

Here’s something that you might’ve missed if you haven’t been looking carefully.

Did you know that Singapore’s minimum age requirement to be a taxi driver is 30? It’s almost hard to recall, but yes, it’s true. Growing up, before Grab and Uber hit our shores, our roads were populated by older gentlemen who found a profession in driving cabs.

I have a few young friends who are Grab and Uber drivers, and I’ve always been intrigued by why they’ve decided on that as a career. My experience watching society’s paradigm of the “taxi uncle” made me believe that it wasn’t a job that young people found much interest in.

A fresh-eyed graduate still in university, my friend, whom we’ll call James, is a part-time taxi driver who works with both Grab and Uber to get money to pay his school fees. He tells me that he enjoys the high profit margins, the flexibility of the job, and also the ability to make new friends along the way.

Since its inception, companies like Grab and Uber have greatly benefited ordinary citizens like you and me. Hate to stand along the streets and wait? Call an Uber. Want to pool? Call an Uber. These little luxuries were not available to us before they arrived, so imagine my surprise when it was made known to me that the government, instead of allowing this wonderful enterprise to grow, has decided to clamp down on this booming industry. Why would they do that?

Pirate Taxis

Doing some research, I found that the issue that we are facing is remarkably similar to the “pirate” taxis of the 1950s. Pirate taxis were the term to describe private cars that operated as taxis without the meddling hand of the government. They picked up passengers at negotiated rates and were often touted as economically beneficial and convenient.

In the debate on the Road Traffic (Amendment) Bill in 1957, late legislative assemblyman Mr. Lim Cher Kheng says:

“I still remember, Sir, during the Hock Lee riots and the strike by the Singapore Traction Company, that I suggested the relaxation of certain measures against the pirate taxis because, during that time, it could be said that our entire transport facilities had come to a stop and that the pirate taxis then rendered a valuable service. They were running in the most reasonable way. For example, I took three trips, one from Robinson Road to Alexandra Road, for which I paid 50 cents; from Bras Basah Road to Serangoon Road, I paid 70 cents, and from Changi Market to Changi Point, I paid 50 cents. I think it was a wonderful service to the public during that period.”

The era of pirate taxis was a period of flourishing. What did Singapore do in response to this?

The government essentially declared war on pirate taxis syndicates through measures such as raising diesel taxes, and stronger enforcement like the suspension of pirate taxis drivers’ licences for one year if caught and denoting pirate taxi operations a seizable offence where offenders could be arrested on the spot on the spot and charged the following day. — 50 Years of Urban Planning in Singapore, Chye Kiang Heng

If you’re shocked, you’re not alone.

In the very same debate above, Mr. Lim Choon Mong, father of current MP Ms. Sylvia Lim leaves us with this very quotable gem.

“The existence of pirate taxis is an evil, not because it comes about of its own free will. It is created by our bad transport system. If our transport system had been good and if it had been convenient for everybody to travel by this means to their places of employment and homes, pirate taxis cannot exist: I should say that people would not even want to own private cars if the public transport system is good.”

Indeed, if public services can sate the demands of the public, there would not arise a need for private services.

Unfortunately, that is not the case, and despite the constant calls for improvement, public taxi services are unable to match the efficiency nor quality of private hire cabs.

The Bane of Regulation

“Regulations are good – they protect the consumer!”

What happens when regulations trump common economic sense? On the surface, whilst the idea to protect citizens via the means of strict regulation has been always been thought of positively, what actually happens when lawmakers enforce such regulations to “promote competition” is that it creates an artificial barrier to entry; it entrenches the current status quo and makes it harder for entrepreneurs to go into the industry. Entrepreneurs will also find it harder to stay in business given the elevated requirements and operating costs.

Some very prominent examples include the telecommunication companies regulated by the Infocomm Development Authority of Singapore (IDA). Companies like Singtel, Starhub and M1 have very little incentive to improve the values that they offer – since any competitor that might want to come into the industry would have to pass the bureaucratic red tape of the IDA first. What this eventually leads to is less value-for-money for the consumer.

If one questions the veracity of this claim, simply observe the mass migration from existing telecoms to new entrant Circles.Life, and of how the established companies scrambled to maintain market share upon its launch. The discerning can also see that this is not merely isolated to telecommunication companies – Uber and Grab consistently have promotions because they’re competing with one another for consumers to use their app, once again clear evidence that competition leads to better outcomes for consumers.

Some might, at this point, cry out indignantly – “What if companies want to be greedy and sell us defective products?”

To that, I point you to the expensive lesson that Samsung has learnt — to this day it has not quite recovered from the stigma of exploding phones. It’s precisely the profit motive that serves the consumer; it is healthy, free competition that protects them against monopolistic prices and exploitation. Government regulation inevitably erodes the latter while misguidedly championing the former.

If economic progress is something that we want, it is government intervention that we need to leave out of business. Indeed, be it taxis or telecommunications, the dire need for innovation and progress in our country is precisely why we cannot afford such “protection” for our companies.

All we need to do is to allow the marketplace to function.

 

 

 

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