Thou Shalt Not Share
But the sharing economy is winning
By Mark Luedtke
Publication date: 120616
Taxi companies have declared war. In a handful of years, Uber and its ridesharing model went from nothing to the most valuable startup in history. Two and a half years ago, Uber was worth $18.2 billion. The New York Times valued Uber at $62.5 billion in December of 2015. Clearly this valuation is a product of the bubble, but there’s no arguing with Uber’s stratospheric growth.
There’s a reason for this. Uber is superior to taxi companies. That’s because taxi companies are organized and cartelized by governments. Uber’s cars tend to be cleaner, the drivers friendlier, and the service more reliable. So for government-controlled taxi companies, there’s only one thing to do: get governments worldwide to use their power of coercion to degrade and shut down the competition, harming consumers in the process.
That plan is working well in Europe. The Stack reports, “Global ride-sharing crusader Uber, which rarely passes a day without skirmish in one of its target markets worldwide, has had a particularly tough 24 hours, as France fines it for running an ‘illegal taxi service’ and German courts uphold a protested ban on running an ‘unlicensed’ service.”
Germany, France, Spain and Italy have banned Uber. France also prosecuted and fined Uber executives. But in the European Union (EU), unelected continental bureaucrats have the final say. Fortune informs, “Uber will seek to convince Europe’s top court next week that it is a digital service, not a transport company, in a case that could determine whether app-based startups should be exempt from strict laws meant for regular companies.”
That difference is at the heart of all of Uber’s legal battles which it’s also fighting all over the US. The facts are not important in any of these cases. Neither are Uber’s social benefits, like reducing drunk driving. The only thing that matters is who pays rulers the most so rulings favor the most politically-connected party which has been the taxi companies. Uber recently figured that out and responded in kind. Now it’s winning those battles at least in the US. “The success [in Colorado], says Justin Kintz, Uber’s head of public policy for North America, is ‘a tale as old as time—it’s the power of the people,’” writes Bloomberg. “It’s also a tale about the power of backroom lobbying. Although Uber promotes itself as a great disrupter, it’s quickly mastered the old art of political influence. Over the past year, Uber built one of the largest and most successful lobbying forces in the country, with a presence in almost every statehouse. It has 250 lobbyists and 29 lobbying firms registered in capitols around the nation, at least a third more than Wal-Mart Stores. That doesn’t count municipal lobbyists.”
This illustrates how rulers drag businesses into the parasitic political economy. Rulers forced Uber to waste resources fighting coercive attacks from government that could have been used to improve the quality of life of consumers.
So far, Uber has managed to avoid being banned by major US cities except Austin, Tx. Dayton’s taxi drivers want Dayton’s rulers to do the same.
Government doesn’t just target Uber. It targets all sharing apps including Uber’s competitors and home-sharing. Home-sharing app Airbnb is under attack because it threatens the politically connected hotel companies. The Mises Institute relates, “Late last week, Governor Cuomo signed legislation which made his position on the sharing economy painfully clear to New York City residents. Capitulating to the whims of the traditional hotel industry, Cuomo made history by adopting the nation’s strictest home-sharing regulations, essentially banning the home-sharing industry from operating within city limits.”
Similarly, the Federal Aviation Administration (FAA) shut down flight-sharing apps. Government is about protecting the status quo from improvement by shutting down innovative competitors to politically-connected businesses. That’s why Massachusetts taxes ride-sharing to fund taxis.
Despite losing numerous regulatory battles, ride-sharing companies are clearly winning the war. Uber facilitated its billionth ride last December. Like the word google entered common lexicon as a specialized substitute for the word search, the word uber has already entered common lexicon as an alternative to the word taxi, and it’s done so more rapidly.
And Uber continues to innovate. It added technology to compete with buses. Lack of regulations in Pittsburgh convinced Uber to use the city to test its self-driving fleet. Its self-driving truck recently delivered 2,000 cases of beer.We would live in a Jetsons’ world if we would just get government out of our way.
Originally published in the Dayton City Paper.