It is a serendipitous quirk of both my campus and my interests that I can have a conversation that ranges naturally from Uber to dairy policy. A student from a dairy farm was asking my opinion on the TPP and was bemoaning the threat to dairy supply management. In the next breath he was talking about how much he was looking forward uber coming to Guelph as he’d tried it in Toronto and it was amazing. “Taxis are over-priced and hard to get. They need real competition.” I smiled and suggested to him that the taxi industry was under supply management just like the dairy industry was and that he was asking for regulation of his own industry while challenging it in another. He scoffed and left and after more thought I was struck by how similar the regulation in both industries is but how different the media and political responses were to challenges to the status quo.
So are they really that similar?
Taxi regulation is municipal but in most municipalities, supply is constrained and rates are established centrally. In the dairy industry, supply is constrained although it is output (milk) rather than inputs (taxis). Milk price is established centrally (like taxi fares). In both cases critics say the prices are too high. Taxi plates or tags have value. In New York City the medallion or tag can change hands for as much as $1 million. In Toronto the car plates have been valued for as much as $400,000 but changes in regulation and the emergence of Uber has reportedly reduced this to around $100,000 to $150,000. The value arises due to the barriers to entry and the regulated prices. In the taxi industry someone can own the tag/license and rent it to another driver for a fee – although there is a move to require the holder to drive a minimum amount in Toronto. In dairy the quota holder has to produce milk.
The rationale for intervention in both industries is similar too. Fair returns for producers/drivers. Production standards and safety for consumers. Matching demand with supply to ensure reasonable returns.
If you think about it it’s remarkable how similar the language is in each case.
Dairy supply management is protected by high tariffs on the importation of dairy products. It is a decrease in these tariffs that concern dairy producers. If tariffs go down there is fear that more dairy products will come into the Canadian market taking share away from the Canadian products and putting downward pressure on price. There is some slippage now with blends that circumvent the tariffs but to date neither the European nor Pacific (including the US) products are coming in. The diary producers are worried and are airing their concerns.
The taxi industry is feeling pressure on two fronts. Some municipalities are issuing extra taxi permits increasing supply. With flat demand the return to individual drivers decreases. This is exacerbated by Uber whose drivers do not have the regulatory costs or prices. Taxi drivers are feeling the pinch and are raising a stink.
How are they being treated differently?
Both industries are being vocal about the threat. They are both being covered in the media. It is my perception that taxis and Uber are receiving more media coverage but I expect there are a couple of reasons.
1 – Uber is growing and there are news and announcements regularly
2 – the pressure is high and growing on taxis while it is largely a threat to dairy thus far
3 – the national election campaign has started and the trade talks have been put on the back burner.
What is interesting is the political response. National and provincial politicians have come out strongly in support of the dairy industry. The Premier of Quebec stated that he could see legalizing Uber. I can’t imagine him saying the same thing about increased dairy imports. The dairy lobby is strong (although there are likely more taxi drivers in Canada than dairy farmers). We also value food and food sovereignty highly so likely are more amenable to helping the dairy industry. As Canadians we also have a much better understanding of taxis. More of us have experience with cabs (and not always pleasant ones). Dairy farms are an abstraction to most Canadians.
The evolution of the discussions in both industries will be interesting to watch. Will the regulations be changed or removed or time? Will we treat both industries the same from a policy perspective given the objectives appear to have been the same? The industries are more similar than different.
Clearing My Head 