Ridesharing company Uber is back in operation in Broward County, Florida after a brief fight with county commissioners.
Following a proposed set of regulations that would have required ridesharing drivers to submit to criminal background checks and purchase commercial insurance and local work permits, Uber suspended operations county-wide, including in popular tourist destinations such as Fort Lauderdale and Pompano Beach.
Citing public disapproval, Broward County commissioners backed down from the proposal.
Safety for Whom?
Robert Krol, a professor of economics at California State University–Northridge, says taxicab regulations are less about protecting passengers and more about protecting taxicab company owners from competition.
“What always comes up is the safety issue, as if the taxicab driver or taxi service is necessarily safer than an Uber or Lyft kind of ride,” Krol said. “It’s just clear to me that taxicab services aren’t necessarily superior or safer. There’s no real hard evidence to support that.”
Instead of protecting taxicab companies against competition, Krol says incumbent businesses should have to compete equally with new entrants into the market.
“It seems to me what you want to let them do is let the taxicabs compete with the ride-shares,” Krol said. “Let them adopt the same types of technology and just let the competition play itself out.
“If [taxis] are the ones that can’t compete, they’d have to change the way they do business. They’d have to improve service quality,” Krol said. “To me, that’s the way we want to go, and I think it’s somewhat inevitable.”
Seeking Rent, Not Safety
Sal Nuzzo, vice president of policy at the James Madison Institute, says the Broward County commissioners’ regulations didn’t promote the best interests of consumers and taxpayers.
“The entire system for regulating the act of driving other people around for a fee is textbook rent-seeking,” Nuzzo said. “The idea that taxicab drivers are safer because of a government-backed regulatory system is a red herring.”
Exposing Regulatory ‘Fantasy’
Services such as Uber are shaking up old assumptions about regulations and the economy, Nuzzo says.
“[Citizens] have become immune to and expect a certain degree of negative effect to arise with government,” Nuzzo said. “So when an innovation like Uber comes along that does better with less government regulation—it accomplishes the regulation on its own because it has a market incentive to do so—the entrenched regulatory cartel screams whatever they think will resonate most.
“In reality, Uber is able to do in the free market what we have abdicated to government for far too long,” Nuzzo said. “Uber has effectively pulled back the veil and exposed the fantasy that government needs to regulate everything we do, for our own protection.”
Andrea Dillon ([email protected]) writes from Holly Springs, North Carolina.