In light of Matt Yglesias’s very good column on Uber — the basic point is that Uber, the new app-driven car service service (not a typo), thrives because we overregulate taxi cabs in virtually all major U.S. cities — I thought I’d draw your attention to Lisa Margonelli’s superb October article on Brooklyn’s dollar van fleet, a successful private mass transit system that is, inevitably, illegal:
America’s 20th largest bus service — hauling 120,000 riders a day — is profitable and also illegal. It’s not really a bus service at all, but a willy-nilly aggregation of 350 licensed and 500 unlicensed privately-owned “dollar vans” that roam the streets of Brooklyn and Queens, picking up passengers from street corners where city buses are either missing or inconvenient. The dollar van fleet is a tantalizing demonstration of how we might supplement mass transit to include privately-owned mini-transit entrepreneurs, giving people alternative ways to get around, and creating jobs.
To see how the dollar van universe works (I’ll get to why it’s illegal in a minute), I spent a morning riding around with one of Brooklyn’s dollar van entrepreneurs, Winston Williams of Blackstreet Van Lines. I caught up with Winston’s pink, advertising-covered van on Livingston Street in downtown Brooklyn and hopped in the front seat, and off we went up Flatbush Avenue. Almost all of the dollar vans are Ford E350′s, with a high body and side doors and enough seats in the back to hold 14 people. Once you notice them in the parts of Brooklyn and Queens where they work, they’re ubiquitous. Winston looks in the rear-view mirror and explains that the trick is to keep a distance between the vans in front and the vans behind to maximize the chance of getting passengers. At $2 a ride, he needs to get 14 people in the van on the 5.6 mile trip from downtown Brooklyn to King’s Highway to turn a profit. The cost of licensing, insuring, staffing, and fueling the eight vans in his fleet is considerable.
Some people worry that dollar vans pick up passengers who would otherwise ride the bus, but Columbia Assistant Professor of Urban Planning David King and doctoral student Eric Goldwyn say that’s not likely. Dollar vans seem to complement the bus service, and they have real advantages. Goldwyn has ridden in the vans and conducted tallies where he’s found that on some corners there are four city buses an hour and 45 to 60 vans, meaning that passengers literally don’t have to wait more than a minute for a ride. Also, the vans can be a lot faster than public transit. A service that runs between Chinatowns can get from Flushing to Sunset Park in 20 minutes while the subway will take an hour and 13 minutes at minimum. And for regular riders, there are other perks. “I’ve heard they offer more services — for example, they’ll wait while a parent walks a child up to the door of daycare or a school.” That is service that you can’t get from a bus.
Some people might worry that dollar vans pick up passengers who would otherwise ride the bus, but I have a hard time seeing why. I assume people are fretting over a potential “adverse selection” dynamic, in which public buses only serve those who can’t afford private alternatives. But the striking fact is that these dollar vans are cheaper. If the dollar vans displace public buses, public funds could presumably be diverted to other efforts to increase and improve mobility options for the poor or to some other valuable public purpose.
There is great potential for dollar vans in other New York neighborhoods, and indeed in inner suburbs across the United States. Yet as Margonelli explains, such private alternatives are often illegal:
You might want to know why, exactly, jitneys or dollar vans are illegal in most states. The answer lies in the history of public transit. Until the early 1950s, most transit systems in the U.S. were privately owned companies that operated as regulated monopolies (like electric utilities today) and expected to provide transit service to an entire city. In exchange, they got the right to be the city’s only transit service. Transit ridership peaked during World War II, but the transit companies slid into bankruptcy afterwards, as they were expected to serve greater suburban areas, service declined, and more and more federal money went into highways — all of which tempted people to buy cars and abandon the trolleys and buses. Most of the country’s 200 private transit franchises died in the 1950s. (Roger Rabbit had nothing to do with it. I swear.) In the late 1950s, cities took over the bankrupt transit lines and tried to make a go of them, retaining for themselves the monopoly on the right to provide service. In the early 60s the feds became involved in propping those systems up, but without much enthusiasm. Meanwhile, private transit were prevented from driving the streets even when they offered serviced different from the public transit agencies.
What’s interesting about dollar vans, if they’re properly licensed and insured — and reasonably legal — is that they could gravitate to where the riders are and where they want to go faster than public transit, which requires more infrastructure and meetings. In some cities, bus routes have histories going back decades, and they don’t change to reflect how people’s lives and work habits have changed. (They certainly don’t stop at daycare centers.) Dollar vans are out there to make a buck, and that’s not bad for passengers.
For a wonderful discussion of related issues, I strongly recommend Michael Munger’s conversation with Russ Roberts on Chile’s late, lamented private bus system, the ills of which could easily have been solved by auctioning curb rights.
Briefly, let me just note that dollar van entrepreneurs and workers are exactly the kind of people conservatives and libertarians (and market-friendly liberals more broadly) should celebrate and defend. Dollar vans are primed to flourish if made legal and compatible with smartphones, thus creating a potentially lucrative sharing platform.