As people celebrate freedom this Independence Day, the left continues to fight on behalf of an industry monopoly and against consumer freedom.
Historically, liberals championed “trust busting” laws prohibiting monopolies. Since the monopoly in question is made up of union members, often in a government partnership to limit competition -- they cried foul. Just look at the upstart companies disrupting the highly regulated taxi “cartel,” that has the left furious.
Companies like Uber, Lyft and SideCar harnessed technology and created apps to connect people who want a ride, to willing drivers near them. While there have been some concerns, they also have many satisfied customers. The rideshare companies also have a fight on their hands from regulators trying to keep them out of their cities or states, and from the left-wing websites and economists claiming they are “exploitative” or “terrible for the economy.”
Dissatisfaction with taxi service, which in many cities are a government-backed monopoly, is part of the reason ridesharing smartphone apps became popular with riders and investors.
The city of Chicago gets 12,000 complaints about taxi cab service annually, according to The Washington Post. If Chicago is any indicator, customers aren’t exactly raving about taxi service in their cities.
Free market enterprises connecting willing drivers to willing passengers angered taxi drivers and unions, government regulators and left-wing websites and news outlets Mother Jones, Alternet and Huffington Post. The thrust of their arguments were the competition is unfair, and that they won’t provide good or safe service.
Taxi drivers and their unions have protested in cities including Washington, D.C., London, Madrid and Paris. In D.C., the Teamsters union helped clogged streets, but a trade group representing the fleet owners was behind the most “aggressive” protests, The Washington Examiner reported. That fleet owners group has launched a huge national campaign against ridesharing.
Authorities in Seattle, Miami, Portland, Virginia, D.C., Maryland, New York City, have all attempted to block or impose regulations on ridesharing companies. Even Uber’s home city of San Francisco, is looking at ways to regulate the practice, according to the San Francisco Examiner.
The International New York Times, a product the Times launched in 2013, criticized the phenomenon saying Lyft “is a company somewhat in denial about being, well, a company.” Clearly rejecting the startups’ self-labeling, the INYT said, “This ‘we’re-basically-just-a-phonebook’ posture has real benefits for these companies ... it helps them sidestep employment laws, regulation and licensing, certain taxes and more.”
Alternet’s Allegra Kirkland condemned Uber and similar businesses on June 22, complaining about the “5 Traits” it “Shares with Exploitative Old School Capitalist Companies.” But her left-wing criticisms were used as a source by Time magazine’s website and were republished by Salon.com.
According to Kirkland, companies offering ride-sharing are unregulated -- meaning they don’t have taxi licenses and regulations. Being licensed, insured and background checked wasn’t viewed as regulation from her perspective.
She also complained rideshare apps are exploiting labor because their drivers “don’t receive any of the protections afforded to full-time laborers” and more.
Left-wing economist Dean Baker was even harder in The Guardian on ridesharing and private home rentals such as AirBnB, warning “this new business model is largely based on evading regulations and breaking the law.”
“Uber drivers and cars should have to meet the same standards and carry the same level of insurance as commercial taxi fleets,” according to Baker. Wouldn’t that them make them taxis?
The Washington Post Reveals the Impact of Regulation on Cabs
All those taxes and regulation as well as the artificial scarcity of taxis in certain cities are what make it difficult and expensive to become a taxi driver, and lucrative to be a medallion holder.
Although the national news media often reveals a liberal pro-regulation mindset, The Washington Post offered a surprising balanced take on the taxi/ridesharing feud on June 22. Emily Badger’s lengthy business story explained, in great detail, how “a taxicab is a car remade by government, modified dozens of ways by edicts within subsections of articles of the city’s tax code.”
A cab driver showed her that everything from how the car is painted and marked, to the “mandatory stickers” that taxi drivers must buy and display in their vehicles is the product of regulation. All of those modifications cost money.
Badger also noted that in some cities like Chicago and New York, the government controls the supply of cabs by only allowing a certain number of taxi medallions. That means medallions’ value can reach $300,000 to $1 million, because of the artificial scarcity. Without a medallion, you aren’t a legal cab, so people make good money leasing out their medallions. “The system in Chicago and elsewhere is dominated by large investors,” Badget noted.
“The taxi industry warns that without medallions, cities with lose their control over an essential public service,” Badger wrote.
That’s why companies like Uber, Lyft and Sidecar scare the left and city governments so much. “They’re fighting to protect an asset that was worth about $2.4 billion in Chicago last year,” said Badger.
Critics have pointed out that Uber has been sued by taxi drivers who say the company is breaking the law, and on behalf of a taxi driver in Boston over allegations of “tip-skimming.” More recently, San Francisco regulators warned they might shut down ridesharing companies if they continue airport pickups without permits. There were also some frightening headlines including a tragic accident where a child was killed by a driver who was registered as a driver with Uber (but not working for them at the time), and an alleged kidnapping of a woman in L.A. by a man who was asked by a valet to take her home. He was not working for Uber at the time.
Lefties Champion More Regulation, But Right Calls For Less
The left claims that companies wanting to compete with taxis should be regulated, but conservatives and libertarians say the opposite. That removing excessive or outdated regulation would better serve the public.
Writing about the London cab strikes against Uber and ridesharing, policy analyst Matthew Feeney of the libertarian Cato Institute said less regulation is the answer. “The answer is not to make new and innovative companies like Uber conform to already out-of-date regulations and legislation, but rather to liberalize the market Uber and London black cabs are competing in,” Feeny said.
In another blog post about Virginia’s cease-and-desist letters to ridesharing companies, Feeney noted, “Uber and Lyft are popular for a reason: they provide a reliable and desired service at prices customers have indicated that they are willing to pay. In a fair and level playing field with fewer regulations, their competitors would have to rely on improving their own services rather than on market-distorting legislation.”
The Virginia decision upset Megan Cairns at the American Spectator. Cairns wrote, “As a Virginia resident and satisfied Uber customer I would like to thank the Virginia DMV for protecting me from the dangers of affordable and convenient transportation.”
Seattle also tried to crack down on the companies. In March 2014, Seattle decided to cap rideshare drivers to 150 drivers at a time. Uber reacted saying it would be “unusable,” The Daily Signal said. Together, UberX (the lowest price Uber service), Lyft and SideCar employ about 2,000 drivers in that region. But as of June 16, the mayor of Seattle had brokered a deal to lift that cap, pending City Council approval.
Heartland Institute also argued that more regulation is not the solution to this fight. Government relations coordinator Alex Monahan wrote, “Consumer demand for ridesharing services, however, demonstrates why additional regulations on transportation network providers are unnecessary. Rideshare companies must build customer loyalty and positive feedback in order to exist. This serves as a market-based form of regulation.”
“In order to build a large customer base, companies do background checks of prospective drivers, use traditional cars that don’t look like taxis, and utilize consumer rating systems to ensure only the best drivers and vehicles are available to their customers. Customer loyalty and demand for ridesharing have been booming in large part because it offers consumers an alternative to the traditional cab industry,” Monahan explained.