Uber in Austin: Another Win for Regulators and a Loss For Everyone Else

By Mike Tront

If you haven’t heard, as of this week (May 2016) the people of Austin, Texas will no longer have Uber or Lyft to use to get around town.  The city recently passed several regulations that would regulate these ride-sharing companies in the same way that taxis are regulated.  Uber and Lyft, as a response to these regulations, promised to cease operations in the city if the laws weren’t overturned.  The decision went to the voters, and the voters upheld the new laws.  Now Uber and Lyft no longer offer their much needed and desired services to the people who use them.  10,000 drivers are now out of work as well.

Most people think we need government to pass common sense regulations to keep us all safe.  However, as Uber and Lyft have shown, industries can self-regulate much cheaper and more efficiently than government.  In fact, Uber alone has several self-imposed regulations it requires before you can become a driver.  Drivers go through background checks.  They need a clean driving record.  They must have 3 years driving experience.  They need insurance, a vehicle inspection, etc.  You can view the full list here.

This efficient, self-regulation has been the main reason these companies have grown so quickly.  Government regulated taxis, on the other hand, have done nothing to innovate the industry.  Prices keep going up, and the quality of the service stays the same or gets worse.

With ride-sharing companies, we can open an app on our phone and visually see every driver on the road and where they are.  We can have a ride come to us in minutes.  Not to mention we can rate our drivers!  This dramatically reduces drivers that are rude, smelly, play music we don’t like, drive erratically, etc. If you get bad ratings people will choose not to use you.  If they get low enough Uber can simply stop working with you.  In fact, customers can get rated by drivers too!  This feedback makes the entire system safer for drivers and passengers all around.

Even with all this innovation, the price is cheaper than a taxi.  Why?  Because they operate outside of the realm of taxi regulations.  Now in Austin they no longer have that option.  Now the background checks that these companies already perform, out of their own self-interest for providing a safe environment for their customers, isn’t enough.  Now they have to do fingerprinting of their drivers too.  This is much more costly, but also much more time consuming.  Often taking weeks to months in some cases.  Not to mention it is a turn off to many prospective drivers who simply don’t want to be treated like a criminal just to get a job.  This reduces and delays the supply of drivers, which drives up the costs for everyone.

Clearly some people want this regulation in place or the law wouldn’t have been passed and upheld, right?  Very true, but this is why the market is a beautiful thing.  For those who want fingerprinted drivers, they can already go with taxis!  But here is the hypocrisy of the entire situation.  These people don’t want taxis.  They want Uber.  They want Lyft.  They know they are already safer, cleaner, and more efficient.  They want all the good stuff the free market provides.  They want all of this, but they have a  fear that if the government isn’t involved it can’t possibly be safe.  Yet they don’t like taxis.  Somehow, they think all the low costs, innovation, and customer service these ride-sharing companies provide will still be there after the government gets its claws in.  They want to have their cake and eat it too.  Thanks to these busybodies, now no one gets their cake in Austin, Texas.


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