The other day I received a forwarded email informing me that in Mumbai there is a traffic law which requires that a taxi driver has to comply with a request — no, not request but rather a demand — for service. Here’s what the email said:
Do you know, Rickshaw & Taxi Drivers do not have a right to say NO. So remember that each time the rickshaw/taxi driver tells you a NO, take down his vehicle registration number, note the time date and place, please click on the following link and register your complaint.
We have had enough of these guys bullying us around, and refusing to ply specially when its urgent. They have been told that they cannot say a NO to any customer when their meter is FOR HIRE! not even for short or long distances. I’d suggest you stop asking them whether they will take you wherever you wish to go and rather tell them where you want to go. And if they refuse. REGISTER a COMPLAINT. Let’s teach these guys who’s the customer , and who’s the boss!
I did not care much for the tone of the email. It was needlessly adversarial. The ending suggests an unhealthy attitude of putting someone who is most likely struggling close to the bottom of the economic ladder firmly in his place. If one has any doubts about whether one has the upper hand in the taxi-driver/rider relationship, there is little room for debate. This rule needlessly imposes additional burden on the party that is already socially disadvantaged. Even more importantly, it makes no economic sense, as I argue below.
Imagine that you wish to travel south and the taxi driver you encounter wishes to go north for some reason (such as his home being in that direction or that he had previously arranged to pick up fare somewhere north.) Forcing that driver to take you south is wasteful because there may be other taxis which would be happy to travel south. The economic waste arises from the mismatch between the preferences of the parties involved.
Which brings us to the most important principle ever discovered by humans about economics: trade is welfare improving provided it is voluntary. Conversely, coercion in trade leads to avoidable losses. If any party is forced to participate in a transaction, the full gains from trade are unrealized. People should not be forced to sell their labor or their goods. This principle is not only good economics but it lies at the foundation of a free society. Involuntary servitude is characteristic of regressive regimes and socialistic societies.
My objection to the Mumbai taxi law (and I am assuming that it indeed is the law) arises from a matter of principle. A society which does not value individual freedom is doomed to poverty. Every one of us has to have the right to refuse to provide service to anyone without having to justify it. Yes, it would be inconvenient for me personally if the only taxi driver available is unwilling to be hired by me. But the possibility of occasional personal inconvenience has to be balanced by the greater threat that I face when society enlists me for involuntary servitude. It is a slippery slope and it is easy to slide from forcing taxi drivers to obey orders to people being forced to bake bread when they are more inclined to build furniture.
I recall a story which I had read many years ago in high school. I think it was by “Saki” and the title was (if memory serves) “All About a Dog.” It was a dark and stormy night and the driver of a bus notices that the lady who boarded the bus was carrying a small lap dog. He stopped the bus and asked the lady to get off the bus as the law was that no dogs were allowed on board. It was late at night and she would have had serious difficulty finding alternative transportation. The other passengers had no objections to the lady with the small dog and pleaded with the driver to please allow the passenger to continue. The driver refused to drive any further. I don’t recall how the story ended but the writer made the point that while the driver stuck to the letter of the law, he clearly violated the spirit of the law.
I am not sure how bad laws get enacted and how one can go about removing them from the books. I think that the taxi law should be removed. Personally, I always move on to the next taxi if one is reluctant to take me as a fare. In a small way, I feel a sense of satisfaction that I have not reduced social welfare and caused economic inefficiency by insisting that service be involuntarily provided even though that may be the law.
So what would I do if I really needed to go somewhere and the only taxi available refused? Actually, there is always a price — a ‘reservation’ price — above which the driver would be willing to drive me. If my need to get the service is sufficiently strong, I should be able to meet that price. Yes, I am a market economist and I will only enter into a transaction where both parties are willing and able. Otherwise we would be on the road to serfdom.