"Uber's Real Crime is Giving in to Politics as Usual"
In a very short time, the ridesharing service Uber has gone from being "everybody's private driver" to everybody's favorite punching bag. Stupid reactions to problems with drivers and juvenile responses to bad media coverage—including threatening journalists with doxxing—will do that to even the most-lauded new-economy startup.
In a new column for Time, I argue that Uber's real crime is that it is currently colluding with local governments to write regulations that give it room to operate while disadvantaging its current and future competitors. Snippets:
In September…the company hired former Barack Obama adviser David Plouffe specifically to work with local governments. "Uber should be regulated," says Plouffe, who hails the legislation he hammered out in Washington, D.C. as "groundbreaking legislation [that] provides a model going forward."
That model is one that gives clear advantages to Uber, which has more market share and political clout than its rivals such as Lyft and Sidecar. What the legislation does is establish "burdensome new ridesharing regulations" dictating minimum ages of drivers and other requirements that will make it more difficult for competitors to catch up to Uber or enter new markets in the first place.
In The Myth of the Robber Barons, historian Burton W. Folsom made a distinction between market entrepreneurs, who got rich by providing goods and services to people at cheaply and efficiently, and political entrepreneurs, who maintained and grew their market share by lobbying for regulations and special privileges that gave them an edge. Folsom underscored that it's common for market entrepreneurs to become political entrepreneurs (think Thomas Edison, who used all sorts of political connections to kneecap market rivals).
Uber's latest strategy may make sense from a business point of view—Plouffe even calls it "Uber-mentum"—but if you believe in free markets, it's just as dispiriting as most of the other things that have ginned up anti-Uber fervor. And to the extent that new regulations make it that much harder for the next great disruptive business to come along, it's worse still.
A few weeks back, Reason's Stephanie Slade reported on the detente between Uber and D.C. officials. Read about it here.
Here's an in-depth look at Uber's new regulatory mind-set by Marc Scribner of The Competitive Enterprise Institute.
Last year, Reason TV's Rob Montz reported on the "Uber Wars" being waged in the nation's capital. Take a look: