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Deregulate New York City!

James Surowiecki
Posted Tuesday, Oct. 12, 1999, at 3:25 PM ET

The biggest news here in New York City last week was the sudden crackdown on double-parking. Traffic cops descended on Upper West Side neighborhoods and midtown business streets and issued a slew of tickets. Because residents are accustomed to double-parking on days when street-cleaning takes place--you double-park from 8 to 11 a.m., blocking in all the people who are parked legally--the crackdown was assailed as the effective criminalization of an accepted social custom. (In some sense, it probably was, and in Moneybox tomorrow, I'll have something on whether this matters.) But the more interesting aspect of Rudy Giuliani's latest attempt to bring order to our fair city was the way it showcased how little parking there is in New York.

Now, as someone who drives fairly often into the city, I'm pleased by the crackdown, since double-parkers have the magical ability to turn three-lane avenues as wide as an Interstate into slow-moving country roads. (New York drivers will happily double-park, even while they're in their cars, rather than park a car too close to a fire hydrant, even though doing the latter will let traffic move smoothly. I'm hoping the recent crackdown will change this habit.) And it's certainly true that most double-parkers are just people trying to avoid paying for a parking garage, or deliverymen trying to avoid having to walk around the corner. So no pity for them. (Except when they're me or my friends, of course.) But people want to avoid paying for a spot in a parking garage because $8 seems a bit much for a half-hour. And, in any case, parking garages are usually full. These two phenomena are not, needless to say, unrelated.

In fact, there are way too few parking garages in New York relative to the traffic, because the city, since the end of World War II, has limited the number of garages that can be built. For the existing garage owners, this is a great deal, since it means that in most neighborhoods there's effectively no competition. Parking real estate is not quite as valuable as land in the Hamptons, but it has a similar characteristic: The supply isn't getting any bigger, even as the demand grows.

There was an idea behind the limits on garages, which was that if you make it easier for people to park in the city, you make it easier for them to drive into the city, and "we" don't want that. But in a deeper sense, the limits on garages are emblematic of the way successive administrations in New York have handled most things: They have consistently assumed that without a strong managerial hand, the city would degenerate into chaos.

Take taxis. Why is it so hard to get a cab in midtown, especially on a rainy day? Because obtaining a taxi medallion is next to impossible, and the price of the medallions has soared out of sight. Cab fares are, of course, regulated, but that means only that the pricing is determined by whatever relationship--good or bad--exists between the Taxi Commission and the small number of companies it's dealing with. Opening the market to new competitors would increase the number of taxis on the street--that's the whole idea--and it would drive down prices. The fear seems to be that if you opened the market, you'd have a deluge of cabs, marring the relatively pristine streets of Manhattan. And perhaps you would at first. But pretty quickly the supply of cabs in the city would approximate the demand.

A similar point can be made about rent control and about the haphazard application of zoning ordinances to commercial establishments. Pace a recent Chatterbox piece, New York is certainly an exception to his rule about cheap movie tickets, and one reason is that there are too few movie theaters here to meet the demand. That's partly because of the high cost of real estate, but it's also about the sheer effort it takes to negotiate with the city to build a movie theater.

One might say, "Thank god someone is looking out for the city," instead of letting it be taken over by developers and entrepreneurial cab-company owners. In that sense, the implicit governing philosophy in New York has been "avoid the tragedy of the commons" (while also letting the people on the inside wet their beaks over and over again). I don't really think a city is a commons that will be destroyed if there isn't someone to tell us all what to do. But if it is, then all those ticketed double-parkers are just necessary victims on the continued path to order.

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James Surowiecki writes the financial column at The New Yorker.
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The Fraymaster responds:


Many Fray posters disagreed with Moneybox's take on NYC cabs:

I think Moneybox has lost it. The last thing Manhattan needs is more traffic and that is what would be the result from more cabs and more parking garages. If anything, what Manhattan needs is for people to stop driving into the city and take a train. The way I see it, anyone who chooses to drive in to the city when there are perfectly reasonable alternatives deserves every bit of hassle they get.

(To reply, click here.)


Moneybox is likely correct about taxi medallions and rent control. But I am not convinced about parking on two counts:

The value of land in Midtown Manhattan is somewhere in the neighborhood of $2500 per square foot. This high land cost, along with the high cost of constructing underground parking, means that more parking might not be economically feasible (i.e., land might be used more profitably for apartments, office space, and hotels.)

Even if new garage space were feasible under current conditions, there is a good chance that it should not be built. While I tend not to worry about market failure unless it is large, in the case of automobiles, it is large. Edwin Mills of Northwestern University estimates that the social costs of automobiles could be internalized with a $2 per gallon gas tax in Chicago. In NYC, the tax would have to be higher than that. But there seems to be little political will to impose rational gas taxes, so second best solutions, such as regulating garage space, are likely better than allowing unregulated garage space combined with subsidized auto travel.

(To reply, click here.)


Deregulate taxicabs? Huh? Never mind the number of cabs that would cause. That's not the reason they're regulated. Just think about what would happen.

1. New York City would lose all its medallion revenues.

2. Anybody could set themselves up as a cab driver, driving unsafe cars, ripping off customers, with very little chance of being sanctioned.

3. New Yorkers would have no idea how much they were going to be charged for a cab journey. Presumably, umpteen different companies would be set up, each advertising their low fares, and we'd have to work out which was the cheapest, or try to remember which was which. In any case, 95% of the time we'd still just get into the first cab which came along, and pay whatever they charged, so there really wouldn't be much incentive to drop fares. You get more revenue by raising them.

(To reply, click here.)


New York has been mostly badly managed for a century, with the exception of the period under LaGuardia, and perhaps today under Guiliani.

However, one of the smartest things done was to discourage the ownership of cars in the city. Look at cities like Paris, where the administration has built underground parking garages wherever possible. This was done to generate revenue for the city, to make the French automobile manufacturers happy since they sold more cars to Parisians, and to make Parisians happy since they feel it is their God-given right to own and park a car in the city.

The result is pollution and traffic jams of a magnitude one doesn't see in New York except when trying to leave Manhattan during rush hours or on the Van Wyke Expressway. The worst thing that New York City could do would be to add more parking. All that would do is bring more cars into the city. One can't compare the parking situation with that of taxicabs. As in many other cities, including Paris, the numerous clauses protect those who own the medallions.

(To reply, click here.)


--Michael Brus (10/13)

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