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Who’s against competition in taxi services? The people who own taxi companies

2014-07-07T16:13:58+00:00

I recently spent a couple of weeks in downtown Chicago, and not by choice. But a co-worker introduced me to the magic of Uber, a ride-sharing company which competes directly with taxi companies. You download the Uber app onto your cellphone, then place a bid for a ride from point A to point B. Any number of nearby drivers who have signed up with Uber and who have passed Uber’s stringent security and background checks can offer bids on your ride. The beauty of the system is that at the end of each ride, the customer rates the Uber driver, and the Uber driver rates the customer. If you behave badly as a driver, customers can see your ratings and can reject your bids. If you behave badly as a customer, drivers can see your ratings and can refuse to bid on your ride. 

It’s a beautiful system. And taxi companies and large city governments hate it, because it competes successfully against their monopoly on the taxi trade. When New York City sells a taxi medallion (the badge which says you can operate a taxi legally) for more than $1 million, only rich people who own fleets of taxis can afford it. New York City likes the existing monopoly because it makes the city money. The rich fleet owners like the monopoly system because no one else can afford to buy a taxi medallion. Customers hate it because it keeps taxi rates high and the number of available taxis relatively few. Taxi drivers hate it because they are hog-tied by a massive network of government regulations, and they can never hope to work independently for themselves because it costs too much. 

Uber drivers and customers, by comparison, are free. Free to negotiate their rates, free of taxes and regulations. Free to arrange transactions between consenting adults, unfettered by government intrustion and governmental pricing. That’s why people like the system. There are other companies similar to Uber, like Lyft and Sidecar

I enjoy seeing capitalist companies like these thumb their collective noses at government’s impotent attempts to regulate them. I hope they continue to thrive. 

 

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