Taxis and taxes

Austin, TX

As a hairy and sometimes cynical fellow prone to a political rant, I have always felt some natural affinity for cabbies.

But I acknowledge that I am part of a small minority in this regard, with no shortage of stories in almost every country I have visited detailing a lazy, smelly, rude, racist, violent or generically unpleasant taxi driver.

More to the point, I like innovation more than I like taxis and so have been an advocate (and customer) of the disruptive, ride-sharing, tech-enabled forces like Uber and Lyft that have unquestionably changed the face of human transportation.

Not only have these startups provided greater competition and customer service to commuters, their emergence has had a whole raft of ancillary benefits, giving birth to a sharing economy and flexible new workforce in control of its own destiny.

For example, when I was recently in LA, an Uber driver and aspiring actor told me his flexible new job was allowing him to continue turning up to auditions, when previously he was forced to get a 9 to 5 or inflexible hospitality work when savings ran out. There are doubtless thousands of cases where the advent of the sharing economy has allowed people to continue pursuing creative and life passions, more effectively run households and raise children or simply time out to meditate, thereby becoming a more peaceful member of society.

All of these beneficial outcomes can be attributed to the success of apps that allow ride-sharing or comparable sharing services. They have contributed to a more productive, inter-connected and innovative global economy in recent years.

And yet, governments across the US and globe have attempted to thwart their success, regulating them to the extent that they can no longer run cost-effectively and are forced out of town, using that politician’s trusty old stead of safety and security.

Here in Austin, Uber and Lyft last month announced they would be exiting the market unless some particularly onerous local regulations were repealed. The ride-sharers were successful in getting a proposition out to public vote, but the Austin City Council’s (taxpayer-funded) scare campaign had already done its damage. The proposition failed and Uber and Lyft packed up and left town, bindle over shoulder.

In a city with very little public transport infrastructure, thousands of college kids and creatives, and a world-renowned nightlife, the impact has been severe. Many small businesses are already suffering and lives will be affected. I’m not embellishing when I say I have witnessed real tears being shed over the decision.

The megacity of Chicago is now facing a similar dispute and New York City’s regulation-happy mayor Bill De Blasio only allowed the ride-sharers after caving to immense public pressure, as did Mike Baird in New South Wales.

The debate reflects one of the most enduring conflicts in political philosophy: the trade-off between freedom and security.

The fact that it has become so heated here in the US again reflects the contradictions at the heart of America, whereby its most conservative citizens pay lip service to liberty but at the same time are so vulnerable to fears and insecurities fuelled by elected officials with ulterior agendas – so much so that they will actively back government intervention in the market.

The argument against Uber (at least publicly) is that it contains inherent risks, unlike taxi drivers who are licensed and accountable, not just to their employers but to the relevant local authorities. Uber drivers could be murderers or rapists or – worse – illegal immigrants, or so the propaganda goes (because no one has ever been assaulted in a licensed cab).

Of course, the real reason is that these licensing regimes are lucrative sources of income for governments addicted to other peoples’ money. Cabbies realised a long time ago that it was easier to pay lobbyists and union bosses to stop progress than it was to actually innovate and provide a better and more competitive product to consumers. Over the last few decades, many a government has done dirty deals with the cabbies’ unions, scratching each other’s backs in a mutual bid to avoid public transport investment.

Politicians should not bend over backwards to help out Uber and Lyft, but neither should they put obstacles in their way to help out their cabbie mates and subvert to will of the paying customer. It is textbook ‘crony capitalism’.

American politicians should be especially wary, as they are reliant on votes from an electoral majority that believes implicitly in free markets and private property, even if they are susceptible to scary advertising.

As Benjamin Franklin wrote, “those who surrender freedom for security will not have, nor do they deserve, either one.”

russian week
Image source: Russian Week

Published on 25 May 2016

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