Uber

After Winning Regulatory Battle Against Ride-Sharing Firms, Austin Turns to Black Market and Deregulation

The mess left in the wake of a battle with Uber and Lyft has city residents using illegal drivers to get around and officials considering dropping many rules

|

Austin, Texas residents voted earlier this month to leave themselves stranded by the side of the road frantically searching for a ride. Well, that's not what they'd say they did. Strictly speaking, they voted to stick it to corporate interests—by supporting political interests who favored other corporate interests. In response to Austin voters' refusal to pass a ballot measure to overturn new city regulations on the ride-sharing services, Uber and Lyft promptly ceased operating there. And that left plenty of people stranded.

Fortunately, as always when government makes it difficult or impossible to do business legally, people will do it anyway, despite the law. That's not an ideal solution, but at least it helps get people where they want to go. And bizarrely, pro-regulatory city officials may be poised to belatedly embrace deregulation as a solution to their ills.

Before Uber and Lyft, the city was served only by heavily regulated taxi companies that were protected from competition and unresponsive to the market. "The City of Austin has issued just over 900 taxi permits. Fares are set by the city, and there is no incentive available to encourage drivers to work late-night shifts when demand peaks," points out Time Warner Cable News.

By contrast, the popular ride-sharing services offered flexible pricing and a dynamic pool of drivers to get passengers from one place to another. Mediocre, politically protected taxi companies were uncompetitive. So city officials moved to force Uber and Lyft to operate just a bit more like those taxi companies with whom politicians had long relationships. Led by Ann Kitchen, who has received substantial political donations from the taxi industry, city council members voted to subject "transportation networking companies" (the bureaucratic moniker for ridesharing outfits) to red tape including city background checks and fingerprinting.

This was a hobbling blow to outfits that aren't traditional employers, but specialize in brokering deals between providers and customers.

Uber and Lyft weren't happy, and moved to place a measure on the ballot to rescind the regulations. But it wasn't just a battle between corporate interests and local pols. Petitions for the measure were distributed by bars and nightclubs supportive of services that safely and dependably transported people to and from their doors, and signed by those same customers.

But that wasn't enough. A majority of the 17 percent of Austin voters who turned out chose to stick it to big business—and to themselves. And Uber and Lyft pulled out of the city.

By all reports, the results have been a mess. About 10,000 drivers lost their gigs, bars are reporting a decline in business, and some honestly unanticipated hiccups have been reported, such as particular inconvenience for disabled residents who need to find new ways to get around.

And, ironically in the wake of a "victory" for pro-regulation forces, there's been a big surge in completely unregulated rides arranged by word of mouth, through closed social media groups, and through peer-to-peer services. On Facebook, Austin Underground Ride (currently around 6,500 members) urges former Uber and Lyft drivers to join. "You can post your availability and info on this page and continue making the money you need to feed your families and pay your bills. Riders can post here their needs for a ride as well. We don't need anyone. We can make our own deals as people and take care of ourselves."

On a similar note, Arcade City tells potential downloaders of its app, "Our drivers are entrepreneurs, free to make their own choices about how they want to comply (or not) with government regulations. Some of our drivers want to get fingerprinted and comply with the Austin regulations. Some do not. We respect their choices." The company's Austin Facebook page currently has over 28,000 members.

Technically, underground drivers are breaking the law if they charge more than the federal reimbursement rate of $.54 per mile, and some are concerned about police stings. But the transportation black market has arranged itself to be as undetectable as possible.

That nobody saw this coming is hard to believe. Maybe city officials just don't care.

"The most influential factors on the shadow economy and/or shadow labor force are tax policies and state regulation, which, if they rise, increase both," notes economist Friedrich Schneider of the Johannes Kepler University of Linz, Austria.

Schneider's sentiment isn't isolated.

"Red tape and bureaucratic extortion (bribing) make starting a new business officially a not very attractive option and can lead new firms to the informal sector," warns Maxim Bouev, who is now head of the Department of Economics at European University in St. Petersburg, Russia.

The outcome of new regulations that drove major companies out of a market should have been easily predictable.

Official Austin has been doing its best to fill the gap left by the departure of Uber and Lyft with options other than defiance of the law. The city has encouraged small ridesharing companies to enter the market, it's trying to place the sidelined drivers in new jobs, and local techies are even trying their hand at a new non-profit entrant that will abide by city rules and keep passengers happy.

But the city's massaging of former drivers has resulted in little but "long lines" and "frustration" according to the Austin American-Statesman. And the small competitors and old-line taxi companies have been overwhelmed by unsatisfied demand, with many calls for rides going answered after extended delays, if at all. "Austin has gone back in time 20 years, to an era where the taxi monopoly and the Hertz cartel had a total chokehold on visitors," The Drive reports.

A little late, but better than never, one city official thinks he's found the solution: partial deregulation. "[C]urrent ground transportation regulations for taxis and limousines should be evaluated and brought into alignment with those for transportation network companies," Austin Transportation Department Director Robert Spillar wrote in a memo to the mayor and city council dated two days after Uber and Lyft left town. The changes he recommends "represent a deregulation of the taxi and limousine industries in Austin and would allow these mobility providers to compete in the open market, with the transportation network companies and with each other."

If adopted, that would be… just a bit of a shift in direction for government officeholders who fought to force unwelcome red tape on an industry and lost its major players as a result. It would involve undoing not only their recent policy errors, but the damage they've inflicted over many years. That may take a while.

In the meantime, riders may have to rely on unregulated black market in transportation to make up for the mess created by Austin's pro-regulatory push.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

79 responses to “After Winning Regulatory Battle Against Ride-Sharing Firms, Austin Turns to Black Market and Deregulation

  1. As an OU grad, I find Texas-prog tears to be even more salty and delicious than other tear varieties!

    Leave it to the self-proclaimed “Berkley of the South” to bow to union pressure/crony capitalism and thereby nutpunch their own economic interests in the name of liberal ideology. It’s like a ready-made case study for demonstrating why micro-managed, spoils-based, feelz-privileging monopoly systems cannot create or sustain economic growth.

    Aside from all the money that this is and has already cost local businesses, imagine all the start-ups around the country that take one look at this fuck-up and cross Austin off their list of potential expansion possibilities.

    I say, let there be much wailing/gnashing of Berniebro teeth in the land south of the Red River!

    1. P.S. In such a circumstance we OU fans often say: “Boomer Sooner! Texas Sucks!”

      1. OSU grad here. I hate both Norman AND Austin 🙂

        1. Texas A&M grad here. Norman and Stillwater are okay. Austin is definitely hate-able.

          1. Too far to the nearest brothel/sheep ranch?

            1. Clich?-ists will clich

        2. I don’t know about Austin, bit it’s been, what, two years since the last tornado went through Norman? They should be due for another.

    2. This hurts. Bad enough that I can no longer use Lyft in Austin, now I have to have it lorded over me by a Sooner? I need a drink.

      1. Sorry m’friend, low hanging fruit, so to speak! But I didn’t realize that there were any libertarians in Austin! Down there I imagine that you have to draw figures in the dust to communicate like the ancient Christians or risk being thrown to the lions yourselves? In any case, take care and God’s speed to you sir! If you ever decide to cross north into Indian Territory there’s a “delicious” *gag* point beer with your name on it, my treat!

        1. *3 point beer

        2. But I didn’t realize that there were any libertarians in Austin!

          Oh, there are, my friend.

          Texas is a surprisingly libertarian place, and even Austin has a significant contingent of us around.

          Hopefully saner heads will prevail over the idiots doing victory laps over this FN vote, and get ride sharing back up and running before ACL in October.

    3. My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can’t believe how easy it was once I tried it out. This is what I do… http://www.earnmore9.com

  2. “Bad luck” strikes again!

  3. And, ironically in the wake of a “victory” for pro-regulation forces, there’s been a big surge in completely unregulated rides arranged by word of mouth, through closed social media groups, and through peer-to-peer services. On Facebook, Austin Underground Ride (currently around 6,500 members) urges former Uber and Lyft drivers to join. “You can post your availability and info on this page and continue making the money you need to feed your families and pay your bills. Riders can post here their needs for a ride as well. We don’t need anyone. We can make our own deals as people and take care of ourselves.”

    Agora Baby !!!!

  4. All these towns and cities fighting Uber and Lyft and not just fighting companies; they’re fighting an innovative and new way of commuting. People love it.

    It’s an exercise in futility and stupidity to waste energy on entrenched interests. If trad. taxis were worth their own salt and had any real pride, they’d look at what Uber and Lyft are doing, examine the market (because they never had to) and IMPROVE.

      1. Indeed.

    1. Never underestimate the inertia of dirty money.

  5. seriously sucks to be STUPID…don’t it.

  6. “mobility providers”

  7. Austin American-Statesman, Johnson: Even those with felony criminal records deserve dignity
    …I don’t have a preference for any specific language to use for people with criminal histories, provided we identify them as people first. Maybe if we start thinking of them as people, we will treat them with dignity and they will have an easier time reintegrating into society after having served their time. This will make us all feel safer.

    There is little question that people struggle after getting out of prison ? but to presume that someone who has committed a violent act will eventually return to prison defies the facts. Many people come out of prison fully rehabilitated, often through their own efforts. Sadly, people with criminal backgrounds face lifetime discrimination in regards to housing and employment….

    1. Story time: When I was in law school, I had a summer job working on a challenge to a state’s sodomy laws under the state constitution. My boss chewed me out for referring to a “disabled person” in one of the pleadings instead of a “person with disabilities.” Later that day, I overheard him on the phone saying that he had favored another person’s appointment to the organization’s board because that other person was, and I quote verbatim, “an articulate black man.”

      1. It’s shit like this which led me to go rogue and start my own business. I didn’t care what business it was, so long as I was far away from it.

      2. Be fair. The black guy was probably “really clean” too.

  8. In the same vein, from the market for health care in New Hampshire.:

    “Elliot, Dartmouth-Hitchcock merger could face antitrust challenge ”

    http://www.unionleader.com/Ell…..=mobileart

    From the article:

    “Whether that’s good or a bad for consumers and the health-care market in New Hampshire is something that regulators in the state’s antitrust and charitable trust departments will have to decide.”

    People can’t decide; only top men.

    1. I’ve stopped buying that whole “Live free or die” thing.

      1. too many mass-holes moved to New Hampshire.

  9. Another Proggie Paradise strikes a blow for the little guy.

    1. A Proggie Paradise strikes the little guy another low blow.

      FTFY

    2. Another Proggie Paradise strikes a blow for the little guy entrenched interest.

  10. I laughed way more than I should have reading the title of this post. Too much schadenfreude for Proggie fuckos that bend over and take in the ass from their local paymasters. Too bad so many of the dipshit voters are just as mentally warped. I asked a friend who is from Texas and he confirmed that Austin is a Progtard shithole. I’m all in favor of black market privateers sticking it to the taxi cartel asswipes.

    “Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.” – H.L. Mencken

    1. “Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.” – H.L. Mencken

      This I steal.

      1. If you want more stealable quotes, H.L. Mencken is your man.

        1. H. L. Mencken’s quotes are so good, I should just read some of his work.

    2. Austin, uuugh
      /Hank Hill

    3. Only a tiny number of the voters are mentally warped – most of them were normal enough to not even bother showing up for this vote.

      1. This was foisted on us by 9% of the registered voters in the city, with 8% of the registered voters in opposition. Even here in progland, common sense almost won.

    4. “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.”

  11. I have a friend at work who is a pretty hardcore leftist, but in a way that makes me sense some libertarian potential underneath it all (he loathes Clinton). Anyway, him and I fight over this situation constantly. He’s convinced that this is just “uber throwing a fit when people make a sensible request.” If I can just get him to understand the futility and stupidity of gov’t regs here, I’m sure I can get him to embrace the darkness fully. I’ll let you all know!

    1. His “Higher Authority” a.k.a. ‘god’ is the state. Giving god commandments to shackle the proletariat / ‘unter-meinchen’ / ‘fucking-rednecks’ is what is right and moral in his eyes. You are demanding apostasy.

      1. This.

      2. I am, and it is a hard ask. But then again, if becoming a libertarian was easy, we wouldn’t be the party of 1% !

        1. \\if becoming a libertarian was easy, we wouldn’t be the party of 1% !\\
          Truth. Just understanding the full implication of “minding your own business: when living in progtopia is mind bending.

        2. It’s hard because most people are so used to government controlling everything that they think only of how to get their own. Occupational licensing, for example: people don’t think about barbers needing thousands of hours of schooling, and even if you bring it up and they allow as to how it might be excessive, to eliminate it entirely is beyond their grasp. To eliminate occupational licensing for doctors, lawyers, civil engineers, and other “professionals” just labels you as an anarchist, and even there, they can’t understand that anarchy is not chaos.

          1. For advice on massaging conversions, check out the Screwtape Letters by CS Lewis. Hilarious stuff and most of the people described appear to have liberal-douche (LD) type personality traits, much like your friend!

            1. Oh he is a douche, but he’d be a douche even if he was a libertarian!

              Thanks for the suggestion though. That’s the book all about the devil chatting with his devil buddies on the best way to corrupt people, right?

            2. I would love to see a libertarian rewrite of The Screwtape Letters.

  12. Austin deserves this. Good and hard.

    1. yes they do, I hope their is a group lawsuit over DUI deaths

  13. It would be interesting to know haw many of the people who voted against the referendum have never themselves used either Uber or Lyft.

    Also, how many of them were dependent on legacy cabs for their livelihood.

    1. approx 9% of the registered voters voted against it – I’d say that a huge portion of the 9% were either cab drivers or friends/relatives of cab drivers.

      1. When I was voting, I was must have been the only person under the age of 55 at the polls.

    2. It’s even weirder than that. My bleeding heart liberal GF likes using Uber, but would have voted for this mess because she thought it would make things fairer and wouldn’t really result in what happened.

      She didn’t vote because we were out of Austin on a road trip — I wouldn’t have voted because I’m a hardcore anarchist and know the odds against my vote mattering — versus the odds of registering to vote subjecting me to jury duty and other bullshit.

  14. Austin, Texas residents voted earlier this month to leave themselves stranded by the side of the road frantically searching for a ride.

    You know, I don’t understand why you guys aren’t pushing the *real* story here – Austin residents didn’t vote for SHIT.

    17% voter turn-out and slightly more than half of them voted for the ban. That’s less than 10% of the registered voter population. That’s not democracy. That’s not a legitimate vote.

    But we seem to be conditioned to accept the results of any vote as legitimate no matter how unrepresentative that vote is.

    1. Unfortunately, that IS how democracy works – whoever shows up for a vote gets to try to order around everyone else,

      Fortunately, as this article points out, everyone else gets to find ways around the stupidity of the authoritarian minority.

      1. Maybe there out to be a quorum law on voting? X% of registered voters must turn out to vote for the election to be valid.

  15. RE: After Winning Regulatory Battle Against Ride-Sharing Firms, Austin Turns to Black Market and Deregulation

    This cannot happen in the People’s Republic of Austin.
    The little people must conform to the will of their obvious betters enslaving them.
    Otherwise freedom and individual choice might break out.
    Conformity, compliance and obedience by the little people is key to any socialist slave state.
    Just ask Comrade Bernie, Trump the Grump or Heil Hitlery.

  16. That nobody saw this coming is hard to believe. Maybe city officials just don’t care.

    It’s the latter, trust me.

  17. I’ve made $64,000 so far this year working online and I’m a full time student. Im using an online business opportunity I heard about and I’ve made such great money. It’s really user friendly and I’m just so happy that I found out about it. Heres what I do,

    =========== http://youtube.nypost55.com

  18. The only positive outcome of this Uber/Lyft debacle has been that I now have a less polarized and inflammatory subject, with which to illustrate, to my more progressive friends, what happens when government decides to get involved in an industry, and creates a black market, that ends up serving fewer people at greater risk – or the opposite of what was well-intented, I’m sure.

  19. these fucking progs couldn’t see past the fog; down with korporations!!! oh shit, how do I get home without getting a DUI? thankfully we’ve got 10 or so pedicabs in Austin

  20. I’d give every cop who fired a round 20 years in prison.

    Every other cop who was nearby and did nothing should be fired and barred from every serving in law enforcement again. If investigation showed that there should have been or was audio/video recording and the cops failed to use the proper equipment or destroyed evidence, all should get an addition 3-5 years in prison.

    I’d fire the entire chain of command – right up to the chief of police.

  21. I gave a ride (Uber) to a cute artist from Austin the other day and she relayed the speculation that the citygov was motivated by missed revenue from DUIs!!

    I suggested that was awfully cynical, and she said “Texas politics. You can never be TOO cynical.”

  22. Make 7500 bucks every month? Start doing online computer-based work through our website. I have been working from home for 4 years now and I love it. I don’t have a boss standing over my shoulder and I make my own hours. The tips below are very informative and anyone currently working from home or planning to in the future could use this website??

    ~~~~~~~~~ http://www.NetSelf70.com

  23. I just wanted to reach out and say “thanks” for mentioning YOUR BRAND in your excellent article.

    http://indguru.com/2016/sbi-po…..oad/10750/

    http://indguru.com/List/teaching/

  24. Governments, in the united States under common law, have no authority over Sovereign Persons who are peaceful in their day-to-day conduct, no harm, no crime, and that includes jitney drivers.

    Unfortunately our common law, mala in se, has been replaced by statutory law, mala prohibitum as applied to the Sovereign People of the united States (lower case intended). The political class had to find a way to control the conduct of the Sovereigns, VOILA, statutory law does the trick.

    With statutory law the political class controls where our children go to school, who drives taxis, whether of not we smoke cigarettes in public, the price of milk and eggs, how much sugar is in our breakfast cereal or whether the people who use bathrooms sit down or stand up when urinating.

    We the People must regain control over the political class if we are to survive as a republic. It is time that we return to common law AND re-institute citizen’s grand juries with the full legal authority of the sheriffs to implement the jury’s decisions against office holders and bureaucrats who violate their oaths of office..

  25. I’m making $86 an hour working from home. I was shocked when my neighbour told me she was averaging $98 but I see how it works now. I feel so much freedom now that I’m my own boss…
    I work through this URL. Go here,,,
    This is what I do.————- http://www.earnmore9.com

  26. I’m making $86 an hour working from home. I was shocked when my neighbour told me she was averaging $98 but I see how it works now. I feel so much freedom now that I’m my own boss…
    I work through this URL. Go here,,,
    This is what I do.————- http://www.earnmore9.com

  27. My Best friend makes $96/hour on the internet. She has been laid off for six months but last month her paycheck was $12800 just working on the internet for a few hours. you have nothing to lose…
    Read more on this web site..
    Go to tech tab for work detail.——————– http://www.earnmore9.com

  28. I am making $95/hour working from home. I never thought that it was legitimate but my best friend is earning $12 thousand a month by working online, that was really surprising for me, she recommended me to try it. just try it out on the following website…

    —————————————>>>> http://www.earnmore9.com

  29. Start making more money weekly. This is a valuable part time work for everyone. The best part work from comfort of your house and get paid from $100-$2k each week.Start today and have your first cash at the end of this week. For more details Check this link??

    Clik This Link inYour Browser?

    ???? http://www.selfCash10.com

  30. Great article! A friend of my drive for uber in Chicago, it looks like the same thing will happen there.

Please to post comments

Comments are closed.