Uber, Traditional Taxicabs and the Failure of Regulation

Read Larry Downes’s comparison of UberX to a traditional metered cab, and you will readily understand why the following is happening:

So traditional taxi and limo services are responding the only way they know how to—by using legal challenges and regulatory obstacles to block or even ban the services.  In some cities, including Portland and Miami, they have so far been successful.  In other locations, including the District of Columbia the start-ups have managed to deploy their fanatical customers to help put pressure on local regulatory boards to reverse earlier bans.

What started out as a fight over price and quality has turned into a fight to win the hearts and minds of regulators.

That fight took an ugly turn this month when Seattle’s Committee on Taxi, For-Hire and Limousine Regulations voted to limit the number of vehicles UberX and two similar services could operate to 150 each, down from an estimated 2,000 that had been in service.

Explaining her rationale for the vote, city council member Sally Clark, who chairs the Taxi Committee, explained, “No, I don’t want to ‘temporarily’ kill innovation, but I do want to buy a year for the taxi world to adapt.”

Clark’s rambling blog post and a subsequent one written after the vote give all sorts of explanations as to why it is in consumers’ best interests for governments to protect taxi and limo services from market competition even when every other business large and small must compete on its own merits.  These include concerns over the training of drivers, adequate insurance, and protecting consumers from unfair pricing.

She also notes that most of Seattle’s drivers are immigrants.  And those immigrants may have had to pay as much as $150,000 on the “gray market” for the right to operate for-hire vehicles, because, Clark notes without irony, Seattle hasn’t issued new medallions for over twenty years.  (The City Council issued a moratorium in 1990).  And anyway, she concludes, companies such as Uber have raised millions in “massively successful” venture financing rounds, suggesting, I guess, that they are all run by fabulously rich people.

The incoherence of regulators such as Clark isn’t much of a surprise.  Like the taxi and limo drivers they oversee, the regulators haven’t had to deal with disruptive technological change for decades.  The committee was created to protect consumers, of course, but after all this time working exclusively with the industries they regulate, it’s not surprising to find something at work akin to what psychologists call Stockholm Syndrome.

Companies like Uber and outfits like food trucks tend to go the extra mile in making customers happy, which is why traditional, staid businesses are so threatened by them, and why those staid businesses call in government regulators to protect them from the big, bad, mean and unkind free market. And too often, those regulators–who in the case of the benighted Sally Clark, are also elected politicians–are more than willing to coddle the complainers, all at the expense of consumers. I have to wonder why anyone who relies on good taxi service in Seattle bothers to elect and re-elect people like Clark; she clearly doesn’t have the best interests of her constituents at heart when it comes to issues like these. And just imagine how many other ways politicians and regulators use regulations to protect select interests at the expense of the public at large.

(Link via Geoffrey Manne, via social media.)