“Whenever the government says it is trying to help you it is important to consider how those requirements act as a barrier to new businesses, and the entrenchment interests that the new law might protect.”
Uber and Lyft have stormed the country, acting as a something called a displacement technology. Just as the DVD player displaced the VCR, ride sharing has increasingly made taxi companies obsolete. But unlike those other technologies, cab drivers have access to the government and can push for the creation of regulations. These regulations are sold to the public as a way to ensure quality and protect the people, but they act as barriers and often result in less quality options.
Most business would look at the catastrophic loss of profit that many taxi companies are currently experiencing, and consider ways they might need to change their business practices, become more customer friendly, and lower their prices as a response.
Instead, taxi cab authorities and their friends in government across the country are fighting back with excessive regulations that will stifle the new competition. New York legislatures are demanding that Uber add a tip function. They claim this protects “abused” drivers, but it represents an unprecedented attempt to force a business to change it practices without just cause.
Austin, Texas legislated Uber out of the city by requiring excessive finger printing and background checks. Again, they argued this was a safety measure, even though riders generally felt safer in ride sharing cars than cabs, and the result was that Uber left the city until the state legislature mandated uniform background checks.
Recently, Nevada legislatures demanded that Uber drivers carry exorbitant amounts of insurance. As the reader might guess, this is being sold to the public as a way to make sure riders are protected in case of an accident, but the new insurance (along with the expensive business license fee) would make ride sharing unprofitable.
It would reinforce the cab monopoly in Las Vegas, which has regularly worked to limit other options such as a Monorail extension, and drivers enjoy the lucrative “long haul” of passengers that pad the fares. The Nevada Taxi Cab Authority even donned ski masks, organized stings, and executed SWAT team style arrests of Uber drivers.
Whenever the government says it is trying to help you it is important to consider how those requirements act as a barrier to new businesses, and the entrenchment interests that the new law might protect. For example, every state has licensing requirements for teachers. These sound great in theory as ensuring highly qualified instructors for our children is an important priority.
But as OpsLens reported in March of this year, many potential educators in New York couldn’t pass a high school literacy test, yet the requirements were waived in order to obtain more diverse teachers and to please the teacher’s union. Meanwhile, qualified individuals with a Masters or PhD and college teaching experience have a difficult time switching to teach in high schools because of regulations.
Companies like Uber and Lyft receive a good deal of flak for their business practices. They are accused of cut throat capitalism, and they don’t offer benefits to their employees such as health insurance. But they do give their employees a nice side hustle, or way to make extra money by doing something as simple as swiping left when a person wants to work.
They are often cheaper, safer, and faster options than a taxi. As new companies with an unknown reputation that are hungry to compete in the market, they have more incentive to maintain high standards of safety and customer service compared to turgid monopolies. Government regulations add little to any of those issues, but they do create barriers that keep people from working there.