Thursday, June 18, 2009

The Problem with being an Economist....

So...Monday morning this week. We are in Paris, ready to go out for a big day. We get up, breakfast hearty at the hotel buffet (croissants....yum. Coffee, yogurt, fruit...a fine start).

And then we go out to try to catch a taxi. Now, it is June, which means tourists, and it is raining hard. We wait for a taxi for 20 minutes, at the taxi stand. Two other people are in front of us in line. One leaves, giving up. We decide to try to take the Metro. But after walking 30 meters, a taxi stops when we wave!

We start to get in. But I look back, and the woman who had been ahead of us in line (I would guess she was 70) has taken two steps toward us, and is now standing, staring. We can't seriously be going to steal a taxi from an old woman, right? On a rainy day? The LMM, who has gotten into the cab, gets out, leaving the door open for the lady. I wave to her, and the woman smiles and walks quickly over. She nods to acknowledge the gesture. All fine. Except that:

1. The cab driver pulls up, after the lady gets in. He rolls down his window, and yells at my wife for leaving the door open. The LMM is just mystified, as am I. I guess I don't expect credit for doing the right thing, and letting the other lady take the cab. But to get yelled at? True, leaving the door open meant he couldn't take off. But that's his problem. And, the elderly woman did in fact get into the cab, through that very open door. And it wasn't raining that hard.

2. We are still stuck, cabless, in the rain. And the rain started to pick up. It is pretty miserable. How can the city be so messed up, that there aren't enough cabs? We have been waiting now for 30 minutes, and have pressed the "call" button a dozen times! This is obviously a poorly thought out system. We shouldn't have to fight with old ladies over taxis. There should be enough taxis. Clearly a market failure.

(Now, the problem with being an economist....)

The downside of understanding economics is that I know the truth. This is NOT a poorly thought out system, and it is not a market failure. It is a peak load problem. There couldn't possibly be enough profitable ride-fare opportunities to pay the average costs of enough taxis to satisfy demand on a rainy summer day in Paris. Many people in the city will be taking taxis, and of course all the Americans who are afraid of the Metro will be taking taxis, also. The answer is: Get....on..... the....Metro. It is underground, it is fast, and it goes everywhere. And if you say, "But I'd rather take a taxi," that's fine, but you have to recognize that since taxis are not allowed to raise their rates on rainy days there can't be, and normatively SHOULD not be, enough taxis to satisfy demand. Some other rationing mechanism (in this case queuing) has to take over.

So, I couldn't even complain. The Paris transport system is perfectly rational, if you accept the large subsidy that goest to Metro as rational. Darn it, nothing to whine about. I hate it when there is nothing to whine about.


richard said...

Several years ago, a Dutch Minister commented that France is a very nice country, but unfortunately was also home to a lot of french people.

Of coarse, that ended up in quite a row: she had to apologize and all kinds of naughty things were said.

Michael said...

I would have thought the Parisian version of the Gbike would work, even in the rain.

br said...

What do you mean you can't complain! If taxis were allowed to raise their prices on rainy days, the market [and a few extra Euros] would have resolved the problem.