Taxi Cabs vs Uber: How Too Much Government Regulation Kills Our Economy

Underlying most arguments against the free market is a lack of belief in freedom itself.” – Milton Friedman

It’s not wholly the fault of Barack Obama that we, as a society, have advanced further into a socialist mindset, but the president has certainly done his part to make socialistic ideals more popular than they were prior to his election. He has done this very surreptitiously—well, if you’re a typical, uninformed American voter, that is. For those of us who take the time to understand the world around us, Obama’s actions have been quite obvious. His notions of the ambiguously, and continuously redefined wealthy paying their “fair share,” as well as his “we’re all in this together” reminders have driven the nail of socialist-type ideas into the increasingly tight American coffin.

Part of the socialist ideal—while not necessarily a tenet—is the regulation of business by the government. To a socialist, a free market is unfair, and cruel, and thus, must be monitored, and driven by the needs of the collective business community—which is just a fancy way of saying that the government regulates businesses and chooses winners and losers. Remember “too big to fail” companies being bailed out by the Government? Additionally, GM and Chevy, as well as numerous green energy companies like Solyndra, have been pampered by the federal government because they were deemed worthy of saving.

The growing popularity of ride sharing companies Lyft and Uber has prompted outrage from American taxi cab companies, as well as taxi companies overseas. The companies have faced numerous legal challenges because they don’t operate under the same regulations as typical cab companies. According to LXBN.com:

In Seattle, as in most places, taxi drivers are required to have a commercial drivers license and undergo regular car inspections, while Uber and Lyft drivers only have to meet an age requirement, have a regular drivers license and fully functioning car. Taxi drivers are also held to stricter pricing models while Uber and Lyft’s prices change according to demand for drivers.

While some concerns are legitimate—including insurance discrepancies—most of the outrage stems from the fact that taxi cabs are losing business. In Germany, several injunctions have been slapped on Uber. According to TechCrunch:

Dr Arne Hasse, of the Frankfurt court, confirmed the details of the injunction to TechCrunch — noting via email: ‘The Uber App violates German unfair competition law. In Germany, commercial passenger transport is only allowed with a permission by the local authorities which the Uber drivers don’t have.‘”

According to iuscomp.org, German law bans “unfair acts of competition which are liable to have more than an insubstantial impact on competition to the detriment of competitors, consumers or other market participants.

Once again, from iuscomp, an act of competition constitutes “every activity by a person with the aim of increasing the sale of goods or services, including immovable goods, rights and obligations, for his own benefit or for the benefit of a third party.”

The law goes on to list what are considered unfair practices, but that’s not the point, and you can Google it for yourself. What I see in Germany, and to a slightly lesser extent in the United States, is a regulatory nightmare. The government in Germany actually has a law that prohibits “unfair competition,” otherwise known as just…competition. It isn’t Uber’s fault that the government cannot keep up with the free market, and they shouldn’t be punished for that. The United States is not far behind. We are inundated with leaders who want to control the free market with absolute precision. Over-regulation is a cancer to a free market society.

This sort of behavior brings me to three questions: who decides what is unfair? How can we be certain that their decision is just and nonpartisan? Should innovative companies be forced to conform to outdated laws?

Talking to VICE News, Boston Taxi Drivers Association spokesperson Donna Blythe-Shaw summed the situation up perfectly:

Uber came into a city that has had a defunct regulatory taxi system that was under the control of the Police Department and burdened by over-regulation. This system has not been able to keep up with the changing times of taxi-for-hire services…So Boston was basically ripe for takeover by Uber.

Taxi cab regulations are as old as the hills, and the government should be spending their time updating them rather than trying to smother innovative ideas. Behaving in a way that stifles new ideas kills the free market, which, in turn, kills the economy. I’m not against regulations that keep people safe, so long as they are reasonable. What I am against is unions, and the government using regulations to safeguard mediocrity. Competition is healthy because it drives advancement. But when the government gets involved, deciding who wins, and who loses, advancement is halted for the benefit of those who are already in power—the taxi companies.

If taxi cab regulations are not updated to reflect the fact that we live in the 21st century, why are new companies being punished for the government’s lack of efficiency, and mobility? If the government sides with taxi companies over ride share companies, they are effectively telling any and all new businesses that if you dare to compete with an existing business, you will be crushed, because we are too lazy to allow innovation.

There are two choices. The government can side with taxi companies, allowing them to continue in their lazy monopoly, or they can update regulations to reflect the new, modern economy. I fear that the socialist leanings of our leaders will guide them to protect the taxi companies at all costs, thus terminating further innovation.

Government intervention in the free market, if not carefully observed, can bring the economy to a screeching halt. The conflict between the taxi companies, and ride share companies has highlighted this issue.