Ride Hailing: Free Enterprise at its Worst

 

 

One of the elements always present in a free enterprise system is the competition to find a new business or a new product that is not subject to any government regulations on safety, quality control, or training. Lucky operators who find such a business can rush in and scoop huge profits before human nature (greed, laziness, stupidity; you know the story) takes over and all the usual problems arise, at which point government regulation steps in and spoils all the fun.

Internet-based services like ride hailing and Airbnb — and the Internet itself — are perfect examples. Those who got in at the beginning made exaggerated profits because they did not have to take any of the precautions they should have if they kept in mind the safety and wellbeing of customers and society.

I am reminded of a friend who called a ride-hailing company to go to the airport in a big Canadian city. The inexperienced driver demanded a street address because that was the only way he knew how to use his navigation system. My friend ended up having an argument with the driver outside the business offices of the airport, miles from the Departures area. When the driver called his supervisor, he was told to throw the uncooperative passenger out of his car. True story.

Ride Hailing

British Columbia is in the process of setting up regulations for ride hailing to begin in the fall. A CBC radio phone-in show on the topic last week was very revealing. What I heard were two specific points of view.

First was from the business proponents. They were concerned with getting the system up and running as quickly as possible. Their worry? If Class 4 commercial driving licenses were required, there would be a huge backlog at the testing offices, and people wouldn’t be able to start driving because of it. They were also concerned with the cost and time involved in taking the test and following the regulations. Their solution? Allow Class 5 people to drive.

In other words, they saw regulation as an impediment in their path to make money. Most of the time-frame arguments were specious, because we don’t have ride hailing right now, and we’re not exactly suffering. If it takes a few more weeks to get people driver tested and criminal record checked, I guess the average B. C. commuter will survive. Once the first rush is over, it will all settle down, anyway. But no, these businessmen were concerned that, faced with the delay, potential drivers would “lose interest.”

Which brings us to the second argument, from potential drivers who “just wanted to make a bit of money and help people out.” Their comments revealed a very specific attitude. “I see this as a chance to make a quick buck. I have no intention of putting any effort or commitment into it.”

This determination by drivers to keep their moneymaking on a strictly amateur basis is the cause of so much of the trouble in all these start-up industries. No regulation, no insurance, no training, no equipment checks, no concern for clients or the safety of the general public.

Public Service Needs Regulation

No, I don’t want to see my teenage relatives driving drunk because they can’t find a cab. But I also don’t want them riding around with an untrained, underinsured and unknown driver in an unsafe vehicle. Nor when I’m on the road do I want a bunch of inexperienced amateurs driving around with the added pressure of a professional occupation distracting them from their driving. Next time you’re in a taxi, see how much time the driver spends tending to business while he’s driving.

The Level Playing Field

I’m not an apologist for the taxi industry, but it’s pretty obvious that if you turned a bunch of easy-money drivers loose, the professionals would soon be out of business, thus making the situation worse, not better. Remember that the high taxi fares are not the fault of the drivers. The cost is the fault of civic governments that allowed the price of a taxi permit to escalate past the half-million-dollar mark in some areas.

Ride-hailing drivers and taxi drivers should be subject to identical safety and business restrictions. If the ride-hailing system is really superior, then it will get market share. If the taxi company prices are really too high, they will lower them or get out of the business. And if the civic governments would allow drivers to get their taxi permits from the city at a fixed rate instead of bidding for them on the open market, it would certainly help. In fact, this would be a good time for taxi drivers to start looking for other work, anyway. In ten years time their occupation will become extinct due to driverless cars, and the licenses will be valueless.

Of course, the thorniest question of all is what to do with the present licenses that have huge price tags attached. You’ve got a bunch of people with millions invested in licenses, thanks to thoughtless bureaucrats. You can’t just suddenly make those assets worthless. The only fair solution seems to be for the civic or provincial government to buy them all back at fair market value, whatever that is. And thus the speculators who drove the price up in the first place made a lot of money, and our taxes pay for it.

Doesn’t it make you boil when the only possible solution to a problem is government regulation, and all you can see is the government making a mess of it?

 

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