Luke’s Log- Thoughts from a Taxi Driver on Fair Governance and the Uber Model

Today I had the pleasure of riding to Reagan National Airport from Georgetown in a taxi, driven by a bearded old man of Pakistani origin who identified as American and nothing else. My kind of story, naturally.

We talked about various things on the ride; I made sure to ask his thoughts on Uber.

Uber, as we all know, has revolutionized taxi service and is driving old cab industries out of business in the coastal blue cities. The taxi drivers’ unions are fighting back. It would be natural for my taxi driver to hold a grudge against Uber, which offers much lower rates than taxis and thus is more convenient for, and steals away the business of, many previous taxi customers.

But that wasn’t why my driver held his grudge. Instead, he first explained that he had absolutely no grudge against other services that took away taxi business, like buses and shared-ride vans. These, he explained, follow the same rules and regulations as taxis- their drivers are required to have special licenses and go through background checks and training, they face stringent insurance requirements, and current policy requires that their members are unionized.

But Uber faces no such requirements. The only requirements for being an Uber driver are that one be 23 years old or older, and that one possess a drivers license. Aside from these, there are no real regulations, and presumably the company is shielded from bureaucratic probing by its corporate lawyers and its influence in local governments that would otherwise regulate it.

Thus Uber, which provides the same sort of service as the taxis, vans, and buses, is not operating on the same playing field as they are. It has a preferential regulatory environment, which means it can afford to offer lower rates to customers, which means it can out-compete them with an unfair advantage. This is not a free market system. Uber has an unfair advantage over the legacy models of taxis, buses, and vans.

I’m all for creative destruction, innovation, and entrepreneurship. I think companies that can exploit gaps in the current business environment and get rich off of them are the modern captains of industry and the progenitors of the future.

But, as Teddy Roosevelt said in his day, it is absolutely imperative that the playing field be a fair one, and that every individual and corporation has the chance to prove themselves in the market of public opinion and public choice in fair competition with their rivals. And Uber’s presumable unfair practices point out a bigger problem in American business and policy culture.

Corporations in every industry, most notably finance and banking, but spreading out to construction, manufacturing, energy, tech, services, the various apps, and everything else, will refuse to play by the rules if they can, if it means they can make a profit off of it and get away unscathed. It happens every day, and is on the rise. The most time-tested way to combat this, aside from character in the hearts of CEOs, is sound government regulation and vigorous government intervention in every case of unfair practice.

But, aside from the fact that governments at every level are inundated with money and favors from these very corporations that seek to bypass the rules, government itself is in disarray. Aside from being completely insolvent and relatively inefficient in its bureaucratic model, the regulatory system at all levels is too complex for the common good, and is oftentimes outdated. There is no reason a taxi driver should spend two years getting a license, but in some cities, that is the model. There are innumerable examples of draconian regulations impeding development and growth, and even more of corporations seeking every possible way out or just ignoring regulations entirely. Some corporations and industries, particularly unionized ones, are more wedded to these old regulations. But they make life hard for startup companies, the true innovators, and serve no useful purpose in the modern world.

Mark my words, I WANT to see companies like Uber succeed. They can make a real difference in making life better and more convenient for hundreds of millions of Americans. Their networked model can integrate the powers of information technology with sound physical infrastructure, and thus open the ground for a more powerful economy than any our nation has ever known.

But I want their innovation to be coupled with a sound respect for the rules of the system, and correspondingly, the rules of the system need to both be simplified and more stringently enforced. Therefore, two imperatives face us as a nation if we are to have a truly innovative and fair economy.

First off, we must simplify our regulatory code en masse to make way for the Ubers and Airbnb’s of the world to compete fairly. We must break the power of unions and corporations wedded to the old model, and we must establish a system where innovative companies can succeed.

Second, we must stringently enforce that said regulatory code, remove the influence of corruption in politics, and ensure that no level or agency of government is in any way beholden to any man or corporation.

We are living in a social and political failure of massive proportions. My taxi driver was right- we need a fairer system. But we also need a better system. And the preservation of a truly free market, possible only with a vigorous and active government beholden to no interests, is the most truly conservative and truly progressive end we can strive for. May the great reformers of the 21^st Century take these words to heart.