Defend Truth


The oppression of taxis

Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets.

Minibus taxis are a living, thriving argument against modern myths about the limitations of the free market. Now, taxpayer-funded public works projects are threatening the livelihoods of hard-working drivers.

On a recent road trip, I took the opportunity to use minibus taxis. Research, you see.

I chose them as a cheap means of getting from Brooklyn, Pretoria to a coffee date with Daily Maverick editors and friends in Rosebank, Johannesburg. When I arrived, only a few minutes late, Xanthi Payi expressed his astonishment that I’d take my life in my hands, and I was declared blacker than Sipho Hlongwane.

The three-leg route (from Brooklyn to the Pretoria city centre, to Park Station in Braamfontein, and thence to Rosebank) took about two hours. Much of that was accounted for by an accident near Midrand. I never had to wait more than a few minutes for a taxi, no matter whether it was at a rank or along the road. The total fare each way was R46.50.

Not much had changed since I first used them in the mid-1990s.

Although only one of the six taxis I used was one of the fancy new models financed under the taxi-recapitalisation plan, the vehicles are for the most part in good repair.

Drivers are, with few exceptions, highly skilled and professional. Sure, they push into small gaps, but so does most everyone else in Gauteng. At least taxi drivers have the excuse that they’re on a tight schedule, harrassed by taxi owners and passengers alike. If you work with them, they’ll return the favour.

The taxi ranks might look chaotic, but they run like clockwork, and every one has a few fellows on duty who’ll see a lost-looking mlungu and shout, “Speak, friend!”

You still need your arithmetic wits about you if you’re in the front seat, collecting fares and passing back change. You can still use your mobile phone without fearing it will get stolen, and are still likely to find an interesting conversation en route. You still get no mercy from drivers and occupants who find it amusing not to speak English. And you’re still as uncomfortable as everyone else when it’s 34°C outside. Sweat is the great equaliser.

Amid the noise and haste, the minibus taxis got me there and back in perfect safety, perfectly cheaply. It was all very familiar. Why fix what works?

The taxi industry is an icon for what capitalists can do when there is market demand, and entrepreneurs are left free to innovate to meet the demand.

South Africa used to be a country in which the state forcibly moved its lowest-paid working class as far as possible away from their places of work. This evil created a clear need: inexpensive, readily available transport for the masses.

Where there’s a need, there’s a profit opportunity. This was no exception, and so, the minibus taxi industry was born.

That a free market cannot work when the market is poor is one of the myths that it shattered. The relatively low incomes of passengers simply meant that prices had to be low. Profit came only with hard work and impressive economies of scale.

Another myth the taxis disproved is that only the massive coffers of the state can support large-scale services such as public transport. This industry thrived despite government, not because it offered help.

With the birth of this industry also came problems, of course. South Africa was always bad at protecting lives and property, especially if you were black. In such an environment, it was little wonder that legitimate measures to protect their own property soon extended to underhanded and sometimes violent means to quash competition.

This, however, is not an argument against the taxi industry, but against a government that is unable to enforce laws that prevent intimidation and violence to protect the business interests of commercial cartels.

The iron-fisted rule of the taxi associations, the firm grip they have on routes, and the short shrift they give to rivals, is a troubling feature of the industry. It limits competition, which reduces capital investment and keeps prices fixed.

Passengers are well aware of this, and would gladly choose alternatives, if they’re perceived to be cheaper, faster or safer.

Unfortunately, instead of enforcing laws that would enable free-market competition to meet this desire, the state is heading the other way. It is building alternative public transport options, and pouring taxpayer billions into them.

The driver on the Johannesburg-Pretoria run does the hour-long trip about six times a day. Each run is worth exactly R660, at R30 a head. He earns R1,300 a week for his trouble, though he thinks he’s worth R2,000.

He’s not sure when the Gautrain will start running, but doesn’t expect it will take his passengers away. That’s because he thinks it will cost R100 like the Sandton-airport route, and even if it’s only R50, he offers a better price.

When I said it would be more like R25, he was speechless. His eyes wide in disbelief, he waited for me to say I was kidding.

I wasn’t. Gautrain spokespeople are coy about exactly what it will charge when the service goes into operation in the second quarter of next year, but the likely price on the Johannesburg-Pretoria run will be less than a taxi fare. And it will be faster. And quieter. And cooler. And unaffected by traffic jams.

As if tax-funded undercutting is not enough, soon there will be many new toll points on the road, too, and the government is merely “considering discounts for public transport vehicles”.

In short, by Easter, the minibus taxi drivers will be screwed, their Public Driver’s Permits as useless as the government that issues them.

The Gautrain people will tell you, as they told me, that they’re creating thousands of jobs. To be exact, it has created 96,600 “direct, indirect and induced” jobs to date. Ignoring the weasel-words in that description that scream “speculation”, this isn’t the whole story. After the construction phase, that number suddently drops to only 2,700.

And even if you grant every one of the jobs they claim (even the “induced” ones), this is still a whole lot of jobs created by private airport shuttle services and taxi owners, stolen, and then handed to other people who did nothing to deserve them and can’t cut the mustard without tens of billions of rands in taxpayer largesse.

It’s one thing for someone to lose out against fair competition in the open market. When rivals have to meet the same costs, but have found a way to sell a better service more cheaply, the loser has to improve, or go out of business. That’s how the market works to ensure the survival of only those suppliers who prove to be the best at meeting demand.

This, however, is different. This is competition by the state, using exclusive rights not available to citizens, and artificially propped up by taxpayer funding. In short, by its use of force – first in extorting the tax required as capital, and then in imposing laws that favour it – it is the most unfair competition imaginable.

Even when it falls into disrepair and fails, as so many public works projects have done before, it will probably be allowed to survive, like an undead monster feeding on other people’s money as it tramples private entrepreneurs underfoot.

Now, it would be nice to explain to taxi associations why free-market competition is a good thing. Why, instead of operating like a mafia cartel, they should submit to the laws that grant everyone equal right to operate a business for profit.

But how do you explain this to a guy who worked hard to qualify as a driver and earn himself a slot on a profitable route, only to lose it, not to a harder-working rival but to someone with a cosy government job for when he’s not on strike?

How do you explain to a taxi owner, who took the risks of building his business and investing in his fleet that half of it will be standing idle from April next year, because the government that is supposed to protect his property has decided to put him out of business instead?

You can’t. Because there is no way to explain that in terms that do not justify their own resort to mob tactics and violence.

Update, 7 April 2011: The Gautrain has released fares for its new routes. The route in question, from Park Station in Johannesburg to the Pretoria CBD, will cost R37, or R7 more than a taxi trip. Toll fees have yet to be priced into taxi fares. The full Gautrain fares schedule can be downloaded here. DM


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