“What we got right now with Uber drivers in Las Vegas is that they are doing sort-of like sting operations. [Police] come in to give a citation to the driver and impound the car because they say you are charging too little,” Uber founder and CEO Travis C. Kalanick said in a recent interview with Luke Rudkowski of We Are Change. “The [police] who are coming in to impound the drivers, are wearing ski masks and cuffing drivers.”
The multinational ride sharing corporation Uber has been a thorn in the side of government and organized labor from the very beginning. Uber provides a quality service at an affordable price that the government-cartalized transportation industry just can’t match.
As true free market entities, companies like Uber, Lyft, and Sidecare operate outside of government regulation allowing customers to voluntarily choose from a variety of drivers in their area for their transportation needs.
The company’s smartphone app connects someone who needs a ride with someone willing to provide it. It’s already in use in more than 200 cities across the United States and more than 40 other countries. And it’s very popular with riders, who generally pay less than they would for a cab with faster service, and drivers, who tend to drive part-time for extra income.
Uber drivers are insured contractors subject to background checks and vehicle inspections.
But those aren’t the only steps taken to make sure riders aren’t harmed or scammed. The Uber app allows riders to rate drivers, data that become accessible to future potential passengers. If a driver is rude or reckless, he’ll get a poor rating, and Uber riders won’t get in his car. Meanwhile, drivers can rate passengers who are rude or get sick in the car.
Payments are handled electronically, through the app — no cash — with Uber getting a 20 percent cut. And because driver and passenger agree on a price before departing, passengers don’t have to worry about a meter or being long-hauled.
Without a large barrier of entry imposed via governemnt licensing and regulation, every individual with a car is a potential small business owner. This is what regulation truly seeks to prevent.
It is hard for the political left to accept that their good intentions promote the exact opposite of their desired result. For those at the top of their respective industry however, government regulation promotes precisely the desired result: the elimination of competition in the market.
The way government is treating Uber drivers and riders exemplify perfectly the relationship between regulation and the poor. Licensing prices poor people out of the market. On both the provision end and the consumption end of a service.
“Regulation hurts the people the politicians claim to help,” says libertarian political commentator John Stossel. “People once just went into business. But now, in the name of ‘consumer protection,’ bureaucrats insist on licensing rules. Today, hundreds of occupations require expensive licenses. Tough luck for a poor person getting started.”
Regulations on transportation services are intended to protect consumers, but for the most part succeed only in raising prices and reducing quality of service, according to a report by the Mercatus Center.
The report’s authors, economics professors Stewart Dompe and Adam C. Smith, contend that ridesharing services like Uber and Lyft are “revolutionizing taxicab and transportation services,” but have come under fire from “entrenched interest groups… [that] use government to protect their privileges and stifle market innovations”—a process known as rent-seeking.
“The goal of rent-seeking,” they explain, “is to create higher profits by lobbying politicians to impose costly regulatory burdens, such as licensure, safety prescriptions, and price controls, on their new competitors.”
A good example is the case of Jestina Clayton. Ten years ago, she moved from Africa to Utah assuming she could support her children with the hair-braiding skills she learned in Sierra Leone.
For four years, she braided hair in her home and made decent money. But then the government shut her down because she doesn’t have an expensive cosmetology license that requires 2,000 hours of classroom time to complete. That’s 50 weeks.
The Institute for Justice (IJ), a public-interest law firm that fights oppressive government regulation, says “not one of those 2,000 hours teaches African hair-braiding.”
IJ lawyer Paul Avelar explained that “[Utah] passed a really broad law and left it to the cosmetology board to interpret.” Guess who sits on the cosmetology board? Cosmetologists! And they don’t like competition.
Clayton filed a federal lawsuit against the state of Utah over its licensing process for her craft, arguing state regulations violated her right to earn a living. A federal judge ruled that the state’s requirement that Clayton get a cosmetology license to braid hair was “unconstitutional and invalid.”
“It doesn’t take a lot of money to become a taxi owner-operator and earn more than $40,000 a year. One needs a car, an insurance policy and ancillary interior equipment to make a car a taxi,” free market economist Walter E. Williams said in a recent article. “In New York City, to be a taxi owner you’d have to purchase a license — called a medallion — that in June 2012 cost $704,000. New York’s Taxi and Limousine Commission restrictions that generate such a license price outlaw taxi ownership by people who don’t have access to $704,000.”
By contrast, Williams said, in Washington, D.C., the annual fee for a license to own a taxi is around $200. “I’ll let you guess which city has more taxis per capita, cheaper fares and more minority taxi ownership,” he asserts. “There are vested interests who benefit from keeping outsiders out and therefore enrich both companies with large fleets and single taxi owners at the expense of would-be owners and the riding public through higher prices.”
There are many parties or groups with monetary incentive to drive competition out using the force of government in order to consolidate monopoly in the transportation industry. Taxi companies, drivers unions, and government itself all have a vested interest in restricting the choices that markets provide.
The domestic enforcement arm of government, the police, also have vested financial interest in enforcing regulations. In recent months we have seen more and more targeted law enforcement operations geared toward ensnaring drivers of Uber and Lyft.
Police in Madison, Wisconsin appear to be conducting routine rounds of sting operations on ride sharers. Back in April, an operation resulted in $1,300 in fines for drivers and in August, a second operation netted $1000 in fines for the department.
Officers in plain clothes used apps to summon rides and then cited the drivers for violating the city’s taxi ordinances and for transporting passengers for hire without a license.
A police captain in the traffic division said at the time that the fines were meant to “send a message that the city was not going to tolerate their operation without licensing.”
After police in Pittsburgh issued dozens of tickets, with penalties varying from $25 to $300, to drivers for operating without licenses – judges issued cease-and-desist orders to both Uber and Lyft after the Pennsylvania Public Utility Commission filed a petition against them on June 16.
Since then, Uber won an experimental license to arrange private rides throughout much of Pennsylvania, a victory that came with a warning “to abandon its anarchist ways” and comply with state regulators.
The state’s Public Utility Commission said the taxi industry needed innovation, but it called Uber’s two-year license a “last chance” for the company to cooperate.
“Innovation alone is no excuse for ignoring the law, any more than a new and innovative way to rob banks should be encouraged and condoned,” said PUC board member John H. Cawley, who reluctantly voted yes.
This is how out of touch governemnt bureaucrats are. To equate a voluntary exchange that benefits both parties with bank robbery is not only intellectually dishonest, it is intellectually lazy. Uber drivers and riders do business with each other voluntarily because they both benefit from the interaction. There is no force involved, no coercion, and definitely no theft.
It is a mutually beneficially exchange. Who is government to tell someone what kind of transportation service they can use?
The 4-1 vote will allow the smartphone app-based service to provide cars in the Pittsburgh area and across much of the state, but not in Philadelphia, where the city’s oft-feared parking authority regulates taxis.
The Philadelphia Parking Authority has been sparring with Uber drivers, impounding cars and issuing $1,000 fines. The agency considers them unlicensed cabbies because they do not have taxi medallions, which can run as much as a half-million dollars in the city.
Officers working with the city Department of Transportation has also conducted similar stings in Austin, Texas.
Late last month, at least five drivers, four in Las Vegas and one in Reno, Nevada, were cited by regulators for a combined total of up to $10,000 in fines.
One driver relayed the experience describing five unmarked white Nevada Taxicab Authority vehicles surrounding his blue Ford Focus as he was driving east on Fashion Show Drive about 3:30 p.m. He was pulled over while trying to drop off two passengers. Two undercover officers wore black ski masks.
“It’s like a sting. It was crazy, man. They had one cop on the front telling me to get out of the car, if I had any drugs. It was wild,” the man said.
In a recent interview with We Are Changes’ Luke Rudkowski, Uber founder and CEO Travis C. Kalanick talks about Uber, police tactics used against Uber drivers and “insane government regulation.”