Local Governments Blocking Competition and Hurting Consumers

For several years, car-sharing companies like Uber and Lyft have been fighting battles in cities across the country. City councils, at the urging of taxi cartels and other interest groups, have attempted to regulate these new services, sometimes out of existence.

Uber and Lyft provided a new service that cut into the entrenched and protected taxi industry, and rather than innovate and provide better or a more compelling competitive service, the industry asked government to step in and handicap the competition. This happened in cities ranging from Chicago to Washington, DC to New York—in almost all cases, the car sharing services have won, thanks to outspoken consumers demanding these competitive services.

Lately, there’s been a rash of new cities threatening to shutdown or heavily regulate car-sharing services. In Nevada, where Uber began their rollout just last week, the Nevada Taxicab Authority, with the backing of the state Attorney General, began impounding the cars of Uber drivers and handing out citations. Similar things have happened to drivers in Reno, NV as well. The Attorney General attempted to get a temporary restraining order, but was denied by a District Court Judge in Clark County. Apparently the lax and laissez-faire attitudes of Nevada do not extend to startups that disrupt protected industries.

Eugene, Oregon has seen similar fights, with city officials ordering Uber to cease operations in the city, at the behest of a special industry group formed by 13 of the 15 taxi companies in the area.

Some cities are finding their way, like in Washington, DC, where the city council passed a bill that allows for these ride-sharing services. Though opposed by the taxi cartels and the Teamsters union, and protested through a traffic slowdown stunt that snarled traffic in the district, the bill was passed by the council last week by a vote of 12-1.

The going hasn’t been as easy in Philadelphia, where drivers (same as in Nevada and Oregon) have had their cars impounded and given citations. The hatred towards Uber in Philadelphia amongst those in the industry it’s upended has reached a fever pitch, where a local cab executive compared Uber to the terrorist group ISIS.

Some in the industry just do not want to see new competition by more efficient and cheaper ways of doing business. At some point, surely, buggy makers were upset over the advent of the car. But companies like Uber create new industries and new jobs, and helps to create entrepreneurs who are starting their own businesses.

Almost anyone can become an Uber driver if they have a safe driving record. Many folks are driving full-time, while others are using it as a side-business to supplement their current income. According to Uber, full-time drivers can make up to $90,000/year in New York and $74,000/year in San Francisco. Anecdotal reports show other cities with comparably good rates.

In every case, over-regulation of these car-sharing services is just an example of government attempting to protect an incumbent industry—very rarely are policymakers looking out for the best interest of consumers. In order to do that, local governments should stay out of the way of these new startups, and let them do what they do best—deliver innovative services to the consumers that demand them. Crony capitalism doesn’t work

Zack Christenson writes on digital tech issues for the American Consumer Institute Center for Citizen Research, a nonprofit educational and research organization. For more information about the Institute, visit www.theamericanconsumer.org.

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