Regulatory Reform

Uber vs. City Hall

Hailing a taxi is one of the most frustrating experiences in modern city life. Unfortunately, city government seems intent on keeping it that way.

Uber, a San Francisco-based company, has developed a smartphone app that allows available limo and taxi drivers to connect with people looking for rides using GPS technology. With the touch of a button, Uber users can see available cars in the vicinity, summon a car, be driven anywhere, and pay for service (including tip for the driver) without resorting to cash. Currently, Uber is available in 15 cities including Atlanta, Chicago, Denver, and Washington, D.C, and expanding.

Here’s how James Fallows describes the Uber experience:

“In LA and San Francisco Uber seemed slightly but not cripplingly more expensive than a normal taxi. The payoff, from my point of view, was convenience (I don’t care if I have the right change, I don’t have to sit on endless hold calling a taxi company) and above all certainty. You see how many minutes away the nearest car is, rather than hoping vaguely that the next vehicle around the corner will be an empty cab.”

Yet, not everyone is happy about Uber. Like Louie De Palma on a bad day, the local government livery commissions that regulate and license taxis and limos are opposing Uber’s attempts to make life in the big city easier for residents and tourists alike. Recently, Uber announced plans to offer its service for connecting taxi drivers with riders in New York City, where hailing a cab is notoriously difficult. But those plans are being threatened by regulators at the city’s Taxi and Limo Commission (TLC). According to the NewYorkTimes, “Taxi officials say that Uber’s service may not be legal since city rules do not allow for prearranged rides in yellow taxis. They also forbid cabbies from using electronic devices while driving and prohibit any unjustified refusal of fares. (Under Uber’s policy, once a driver accepts a ride through the app, no other passenger can be picked up.)”

On September 6, the TLC issued an industry notice that said it hadn’t authorized any apps used for hailing a cab. In response to the notice, Travis Kalanick, Uber’s CEO and founder, said: “This makes New York a worse off place….People are more likely to get stranded in outer boroughs, and taxi drivers will have a harder time making minimum wage. This looks like a regularity regime resisting change, but without the regulations to back it.”

Livery commissions across the country have attempted to stop Uber from operating. Since the service began operation, regulators in Boston, Washington, D.C., and even the company’s home city of San Francisco have complained about the service and worked to curtail it; in fact, the D.C. city council almost passed legislation severely limiting Uber before a vocal opposition convinced the sponsor to shelve the plan. Uber and its fans continue to fight attempts to regulate the service out of existence.

Noticeably missing from the complaints about Uber is the harm it poses to consumers. Megan McArdle reports that the concern about Uber appears to have more to do with protecting politically powerful taxi monopolies than with protecting consumers. Antiquated, burdensome government regulations for livery service has largely failed to account for technological innovation that has enabled the creation of a service like Uber and new competition. This is a problem that ALEC members recognize and work to prevent. As ALEC’s Communications and Technology Task Force declared in its Statement of Principles for the Internet and Electronic Commerce: “Electronic commerce promises to become an increasingly vital component of our states’ and national economies.  Government policies should not hinder the creation of a workable infrastructure in which electronic commerce can flourish.”

Technology continues to enable new goods, services, and ways of doing everyday things. Policymakers should recognize rapid innovation in the economy and account for it in laws passed and rules promulgated. Or else they could be denying an innovative new service a chance at providing consumers with a better quality of life.

In Depth: Regulatory Reform

In his first inaugural address, Thomas Jefferson said that “the sum of good government” was one “which shall restrain men from injuring one another” and “shall leave them otherwise free to regulate their own pursuits of industry.” Sadly, governments – both federal and state – have ignored this axiom and…

+ Regulatory Reform In Depth