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Banning Uber Undermines Innovation

Uber is the ride-sharing application that connects freelance drivers with would-be passengers. I do not personally have the app, but have used the service several times with friends. It is convenient: Credit card information is stored with the service and payment and tip are automatically billed, so no money actually changes hands, making it as convenient as “E-ZPass” is for highway toll collection. Uber is even more convenient, however, since cars can be ordered through the app, and a map actually shows where the promised car is. Uber users, in other words, need not ever worry about not finding taxis during torrential downpours or waiting endlessly—as I have in suburban Washington D.C.—for taxis to come long after their reservation times and after multiple calls to dispatch promising that they would arrive in just five minutes, when they never came.

Not surprisingly, as riders have flocked to Uber, taxi companies have cried foul. Taxi drivers have staged mass protests in London and, in many jurisdictions, taxi companies have sought legal remedy. Virginia was one such battleground, and San Francisco another. Now Germany has imposed a nationwide ban on the service. Many taxi companies claim they have the public interest at heart, because they adhere to far stricter regulations. Allow me to shed crocodile tears for the taxi companies. I lived in New Haven, Connecticut, throughout the 1990s. One taxi company had a near monopoly and fought tooth and nail to prevent competitors into the market, buying up all the medallions. While that company would claim that the market was saturated and cite the number of medallions issued, a good number of those were simply stashed away so that taxis were always scarce. Both service and convenience suffered. Recently, I was in Austin, Texas, waiting for a taxi in front of a prominent hotel. The bell cap said they had similar problems, with far more taxis operating on paper than in reality, with the net result being inconvenience.

Let us hope that as Uber expands, more politicians and regulators will turn a deaf ear to taxi company complaints, and instead let the market service the consumer. The simple fact of the matter is that consumers choose Uber because it is convenient. They like the services that any taxi company could have employed but didn’t. To try to shut down Uber and similar companies to protect taxi companies or their drivers is akin to shutting down blogs because newspapers don’t like the competition. Thankfully, regulators didn’t stop computer companies in the 1980s out of deference for the typewriter companies which they displaced. Or, for that matter, no one would seek to stop the automobile because it might put horse-and-buggy drivers out of work.

I wrote my dissertation about telegraphy in the Middle East, and spent more time than I cared to in the archives of the Institute of Electrical and Electronics Engineers. Perhaps some telegraph workers cried foul with the advent of radio, but no judge sought to mandate continued adherence to the wires. For all their lip service to “green energy,” utility companies dislike the fact that consumers can install their own solar panels and thus make themselves less reliant on the traditional energy giants. More power in such cases to the consumers and the marketable solar installation kits. Both email and private companies like FedEx and UPS have eaten into the profits of the U.S. Postal Service, but no one suggests banning them. Should driverless cars hit the market, whole industries—from auto insurance companies to parking garages—might go out the window along with that talking lizard from late night television commercials.

Change can be disconcerting, but it should not be the job of regulators to stymie innovation, even if it threatens whole industries. Nor should politicians expect that new technologies should abide by outdated regulatory systems. If taxi drivers want to defeat Uber, let them do it by serving the customer better, not by crying to judges and politicians. And if Uber leaves some consumers with a bad taste in their mouth—as some drivers have—then let them fall to the resurgence of more user-friendly taxis or the next generation of competitor.


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