Wednesday, April 16, 2014

Restrictions on earning a living - Uber edition

Last spring we had Timothy Sandefur present on "The Right to Earn a Living", and he discussed many cases where governments restrict job opportunities.  This is often done to protect companies already in the industry, but they usually claim it's for consumers' well being.  The two opeds in the USA today this week really highlight this issue.

First, the oped on the case for Uber:

Excerpt 1:
Now there's a profusion of alternative ride-sharing companies such as Lyft, Sidecar and the best-known one, Uber. Uber's increasingly popular, least-expensive UberX service enlists thousands of owners of small, late-model cars to cruise the streets of 96 cities in the U.S. and abroad, waiting to be summoned through a smartphone app.
And later:
Amid the wave of controversy, two principles ought to drive the policy process going forward.
One is that any business that carries people for hire should be subject to some basic rules to protect the public. Under heavy pressure, Uber has increased insurance coverage, but its background checks look back just seven years, and it appears to accept the safety checks that apply only to personal vehicles rather than commercial ones.
The second is that more competition is better than less. 

Uber, Lyft and other "ride sharing" companies are violating the laws and regulations that govern for-hire transportation everywhere they operate. In fact, ignoring the law is crucial to their success. They are competing unfairly with traditional taxi businesses that abide by the law, while endangering the jobs of thousands of small-business owners.
You, dear reader, should find it sickening that the hundreds of millions of dollars raised by these companies are being used to undermine small businesses. The profits from these investments are earned on the backs of an industry made up largely of immigrant drivers.
Uber and the like are simply not what they claim to be. They are not ride sharing, and they are de facto (unlicensed/uninsured) taxis. Calling them ride-sharing companies is simply misleading, because they don't "share" rides, but charge for them exactly as most taxis do.

My thoughts:

1. The opposition to Uber here is typical.  They're from the industry that wants to protect their higher wages.  But they're claiming it's in the interest of the public safety and there should be licensing.

2. The opposition seems to ignore that the drivers of Uber cars are also "small businesses".  So while it's true that they're trying to take market share away from traditional cabs, and in that sense "undermine small businesses", the same could be said for every other small business that's competing in the marketplace.  The local Applebees seeks to undermine the mom-and-pop diner.

3. I disagree with the pro-Uber argument that " business that carries people for hire should be subject to some basic rules to protect the public".  Let the marketplace decide.  If some people want to take more risks but pay less, that's fine.  People make those choices every day when they work construction jobs (instead of paying less, they "make more" to take a greater risk, but it's the same principle) or drive a car that isn't rated as the safest to save money. 

I've also found it laughable (but sad) that taxicab drivers would get licenses in the first place.  It's a case of crony capitalism.  With a license, you can make more money, so politicians have more power (and often can be bribed).  That, unfortunately, will likely mean many cities will ban Uber.


  1. matthew, so what you are saying is that any one any time should be able to do what ever they want in any way they please with out any rules to operate under what so ever? Is that correct?
    and if gvt has reasonable regs rules and laws governing any business activities thats protectionism for the incumbents?
    like say your airline pilot or the airlines then?

    jez say'in....

  2. hhhhmmmm? nureo surgeons? too?

  3. nuclear power plant operators?

  4. Pilots, doctors, train engineers, 18 wheel truck drivers,taxi and limo drivers are all required to be drug tested, fingerprinted and have medical exams. This is to protect public safety. UBER and Lyft do none of that nor do they have licenses and permits for each vehicle.
    An UBER driver ran over and killed a six year old girl in San Francisco. Several years earlier, he was involved in a high speed police chase over 100 mph and he had his wife and kids in the car with him. So much for UBER background checks. UBER insurance refused to pay. These are just a few reasons why UBER should be banned in all 50 states.