We share the sentiments of our friends at Revitalization Partners, who recently used their newsletter to stand up and say, “Let the open, competitive free market determine the success of taxis vs. ride-sharing, not government regulations.”
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The following is an excerpt from a recent Revitalization Partners newsletter…
The battle between the entrenched taxicab business and the new ride-sharing industry in Seattle is depicted as a referendum on innovation and cutting-edge technology for the 21st century. In other words, up-from-the-bootstraps immigrants versus the entrepreneurial elite, or the past versus the future. This should not be the way this commercial conflict is framed.
This isn’t about transformative innovation. After all, we have on-demand access to both private cars and taxis with a mobile app. No, this is a question of regulation versus non-regulation.
Taxis are licensed and regulated, providing a level of consumer protection and safety. But prices are highly fixed and competition is limited. There are few incentives for improvements in service. Ride-sharing is currently unregulated, offering virtually no consumer protection. The quality and condition of drivers and cars is unknown and there are no licensing or insurance standards.
So, should ride-sharing be banned? Absolutely not! Government should not regulate the quality and level of consumer protection for everything.
There are cases where a completely unregulated system would create unacceptable consumer risk. Providing water and food falls into this category. But, if a consumer wants to get into a car with a driver of his or her choice, for a negotiated price, then local government definitely should not be involved.
Let the open, competitive free market determine the overall success of the ride-share endeavor. Taxis are part of a private industry. They should have to compete with other private entities.
The two key questions are: Does the market value the consumer protection that cities provide in the case of taxis? And, are consumers willing to pay the extra cost for that protection? The emergence of ride-sharing will eventually help us answer those questions.
The one point of commonality in this struggle is that both the taxi business and the ride-sharing industry say that they are creating and protecting jobs. They are both right and that’s one of the reasons why it’s still unclear which option will win out. It also helps explain why Seattle recently suspended limits and regulations on ride-share companies, only a month after they were enacted by the City Council and reluctantly signed by Mayor Ed Murray.
The battle over ride-share regulation is being waged in other cities around the nation. And, in addition to letting the market dynamics play out, we’ll soon find out whether governments are going to get in the way of disruptive new industries that provide fresh choices for consumers in the 21st century.