Much of the comment thread on my War on Cabs piece is pretty awful. But there is one line of commentary that's worth dignifying with a response, and that is the suggestion that the obvious solution to our current regulatory crisis would be to deregulate the industry:

[R]egulating the precise number of taxis is a classic example of something the government should let the market decide.

Except, Seattle already tried deregulating its taxi industry. And failed.

As outlined in a 2001 report from the city Consumer Affairs division, Seattle abandoned a half-century of taxi regulation back in 1979, eliminating its rate-setting authority and opening the industry to all comers. The expectation was that the magic of the market would lead to lower prices, greater efficiencies, and better service. Yay, competition! But it didn't work out that way:

The taxicab industry was deregulated in 1979 because it was believed that competition would provide the public with improved service and lower rates. In fact, service quality declined and rates were often higher. Subsequently, the taxicab industry was reregulated starting in 1984. Initially, rate ceilings were established and later a moratorium was placed on issuance of new taxicab licenses. Seattle, like nearly all of the other cities that experimented with deregulation, eventually returned to regulation of entry and rates.

And that's not just a city bureaucrat's conclusion. Writing in the pro-market AEI Journal on Government and Society (and posted to the libertarian Cato Institute's website) Evans School professor of government affairs Richard O. Zerbe Jr. explained back in 1983 that despite its promises, taxi deregulation in Seattle resulted in "unexpected problems" and "widespread consumer complaints." Deregulation, Zerbe concludes, is not as simple as free market advocates think:

The lessons of Seattle taxicab deregulation are more complicated than the simple one that deregulation works or does not work. First, a change in regulation—from more to less, just as from less to more—can have unexpected side effects. Second, reformers should realize that, in some markets, even institutional structures that at first appear to restrict entry … are compatible with a competitive (low-cost) solution. To view the choice of polices as a black-and-white dichotomy between regulation and deregulation is much too simple.

I don't envy the council in addressing this complicated issue. The current regulatory regime in which the number of licensed taxi drivers far exceed the number of licensed taxicabs has created a market imbalance that leaves drivers at the mercy of the owners. This has not only made it difficult for taxi drivers to earn a living above the cost of their lease and other expenses, it has also driven many former taxi drivers behind the wheels of for-hire vehicles, while fueling the rebellious attitude that has led for-hire drivers to ignore the regulatory prohibition against picking up passengers who hail them from the street. Meanwhile, both taxi and for-hire drivers are facing new competition from difficult to regulate app-based services like Uber, SideCar, and Lyft.

A demand study will determine whether there is a need to increase the supply of licensed taxicabs. But totally removing barriers to entry is an experiment that has already been tried. So to simply suggest, as some will, that the market not government should be making these decisions, would be to ignore real world experience in Seattle and many other cities.