Why Banning Uber Isn't the Solution to French Cab Drivers' Problems
Choice uber alles.
A specter is haunting Europe — the specter of capitalism.
French cab drivers are frightened out of their gourds by Uber, the ride-for-hire app. So last week they overturned cars, burned tires and incited general mayhem. Then one of them said, evidently with a straight face, "Why isn't the government enforcing the law? It's apparently possible not to respect the rule of law."
The complaint was not quite so weird as it sounds: Recent French law prohibits both the ride-sharing app Uberpop and unlicensed taxi-driving, but Uber has continued to operate while awaiting a final court decree that would shut it down. But in another sense it is grotesquely wrong: meting out indiscriminate violence to demand the government threaten further violence — operation of Uberpop can get you two years in a French prison, kid you not — to make consenting adults stop engaging in free and peaceful economic activity. On Monday French authorities arrested two Uber executives for the unpardonable sin of offering people a product they really seem to like.
And they're not alone. As The Wall Street Journal reported Friday, "Courts in Spain, Germany, Italy and the Netherlands (also) have banned Uberpop." The reason is that Uber's ride-sharing and ride-for-hire services are immensely popular — far more popular than traditional taxi services. So the traditional taxi services want the government to do, by force, what they cannot do themselves: keep Uber from enticing customers by offering a more appealing product at an appealing price.
Which is pretty astounding, when you think about it. It would be like telegram companies trying to outlaw telephones. Like record companies trying to get digital music banned. Like the Postal Service demanding prison time for anyone using email.
Taxi drivers have some legitimate beefs, of course. They often have to pay outlandish sums for the privilege of doing business. Many places restrict who can drive a cab by requiring a medallion, then limiting the number of medallions — which drives the price of one into the stratosphere. Boston, for instance, allows fewer than 2,000 medallions, each of which costs upward of $700,000. Boston cabbies end up having to pay medallion owners fees of $100 or more for a single driving shift. Not surprisingly, this translates into exorbitant cab fares.
Uber, which has been largely unregulated, has not had to put up with any of that. This naturally frosts the shorts of traditional cab companies. But the appropriate answer is to relax the rules that constrain them — not to ban the competition. Yet banning the competition often is the reflex reaction from both government and the private sector. Here in Virginia, the state slapped Uber and its closest competitor, Lyft, with cease-and-desist orders after they began operating in the commonwealth. Fortunately the state eventually relented and allowed the services to operate under certain conditions, such as background checks and insurance coverage for all drivers.
But many states, including Virginia, frequently stifle competition in other ways. Thirty six have some form of certificate-of-public-need (CON) regime. The CON system requires hospitals, physician practices and other medical providers to get state permission before they make major new investments — and sometimes even minor ones. Existing providers often exploit the system to keep potential competitors from opening up shop.
Many states also use occupational licensing to restrict who can enter certain fields. Half a century ago, only 5 percent of occupations required some kind of permission slip from the state. Now nearly one-third do. The requirements often have little relation to public health or welfare. As a Brookings Institution paper points out, in many states you face stiffer licensing requirements for becoming an interior designer than for becoming an emergency medical technician. Who knew the interior-design cartel had such good lobbyists?
In France, President Francois Hollande said Uber must be shut down and its "vehicles must be seized." The AP reported that Interior Minister Bernard Cazeneuve "rushed back from a trip to Marseille to meet with taxi unions," as if consensual economic activity was some sort of titanic natural disaster (which, in France, it well might be). Uber "must be closed," he fumed. "The government will never accept the law of the jungle."
Now that's rich. Like Pope Francis, who has said market economies are "lacking in ethics," the interior minister has a funny way of looking at things. Civilized societies — societies that respect the inherent dignity of every individual — recognize the truth in Milton Friedman's observation: "The single central fact about a free market is that no exchange takes place unless both parties benefit." Ford Motor Company will never sell you a car at the point of a gun; free enterprise depends, above all, on mutual consent. It's the uncivilized brutes who try to get their way by force.