Free Minds & Free Markets

"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.

Whole thing here.

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:

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  • anon||

    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.

    Considering it's about the only way for the company to survive against the inane onslaught of rules & regulations, I can't say I'm surprised.

  • Francisco d'Anconia||

    Yeah. My friend started a business several years ago. He has a lobbyist. When I call him on it he says it's not optional. You play the game or you get crushed.

    You simply cannot compete with government in your competitors pocket.

    It's sad times we live in, kidz. Ayn Rand may go down as the most accurate prophet in history.

  • ||

    It's a bad thing to pay protection money to the mob, its often a worse thing not to pay protection money to the mob.

  • R C Dean||

    Somebody kicks my $70K sled, they're going to be looking for their teeth on the pavement.

  • Drake||

    Reason #2194 while I'm never have a $70k car (adjusting for runaway inflation). If I did, I would probably U-turn before driving past a mob - particularly a union mob the unionized cops will only pretend to control.

  • ||

    I'm sure those cops in the background immediately arrested the perpetrators.

  • Loki||

    Shit, my car's "only" $40K and if someone did that I'd probably be arrested for murder shortly thereafter.

  • Zeb||

    You should probably calm down a bit then.

  • Zeb||

    And a bunch of police just stand there while someone is assaulted. Good thing they have their priorities straight.
    It always amazes me how much union thuggery people put up with in Europe. I guess maybe enough people benefit from it. Not to say there isn't union thuggery in the US, and they get away with a lot. But I have some hope that people would turn against cab drivers here if they got that blatant.

  • Warren's Strapon||

    I don't see the headline as a metaphor, by the way. Regulatory capture should be a crime.

  • HeteroPatriarch||

    Only if regulation is.

  • See Double You||

    Crime Cronyism never sleeps.

  • ||

    I'm pushing Croniarchy today as the description of our actual form of government.

  • Francisco d'Anconia||

    I like it.

  • SweatingGin||

    If the people decide, through their elected representatives, to bestow economic rents on favored groups, it is the absolute responsibility of right thinking people to oppose any attempts to bypass those rents.

    now to pitch it to slate.

  • ||

    Any talk of new industry leaders writing the regulations can't go by without mentioning Gabriel Kolko's The Triumph of Conservatism: A Reinterpretation of American History, 1900-1916 and Railroads and Regulation, 1877-1916.

    All of this has happened before, and it will all happen again.

  • Loki||

    Becoming cronyists is how you can tell a "atart-up" company has become an established player.

  • Loki||

    *start-up. Damn my shitty typing.

  • R C Dean||

    I kinda like "tart-up" company. Can you send a prospectus?

    Illustrated, I hope.

  • brec||

    juvenile responses to bad media coverage—including threatening journalists with doxxing

    Or not:
    Scott Adams, Uber Gets the Buzzfeed Treatment

  • Cytotoxic||

    The new regulations are not nearly as burdensome as the paradigm of cronyism Uber is breaking. Not even close. Uber does what it must.

  • Chad Snow||

    I'm just happy to have ridesharing in my city. It has helped me a lot. I live in an area where the bus is really unreliable. I was looking into Lyft vs Uber and I think I'm going to try Lyft for new years.


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