Monday, November 18, 2013

Technology may break the anti-free market, crony capitalism Nashville model of transportation

If you watched John Stossell last night, you again saw the embarrassing story of how Nashville outlawed affordable Black Sedan transportation services by making them charge the same fees and operate like the luxury limousine companies. The Nashville story was part of a program showcasing how government regulations stifle innovation and protect existing companies from competition. (To learn more about Nashville's limo price-fixing follow this link)

Another segments showcased how in Kentucky, new moving companies are prohibited from entering the market unless they can get a certificate of necessity. This  allows existing movers to block new competition. To illustrate the absurdity of this, Stossell compared it to what would have happened if Starbucks would had had to obtain a certificate of necessity before opening new coffee shops. There were plenty of places to buy coffee before Starbucks. If we would have had the same environment in coffee shops as in transportation or moving companies, there would be no Starbucks.

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Another segment featured the innovative ride sharing program called Lyft. People who want to give rides are matched up with people who need rides by way of an app and on-line application. The ride provider and the person needing a ride, check each other out on-line. Lyft makes sure the providers meet liability insurance requirements and have safe driving records and beyond that, there is not a lot of bureaucracy. No one has to accept a particular fare and no one has to take a particular service provider. No money directly changes hands and Lyft handles the receipts and payments. As is to be expected, cab companies are fighting and trying to ban Lyft. (To see a video learn and more about Lyft, follow this link,)

There has long been other models for putting people who need a ride in touch with people wanting to offer a ride. There has long been para transit in third world countries. When I was a young man living in Thailand, there were buses and taxies, but there were  also pedicabs and other forms of transportation. There was a  hybrid between a taxi and a bus.  It was priced between bus fare and taxi fare and traveled a relatively fixed route but would deviate off of the regular route to take people to their door. That was legal in Thailand but was illegal and is still illegal in America.

While vacationing in Turkey some years ago, Louella and I stayed at a beautiful seaside fishing village-resort called Assos. We arrived at night by taxi. When we got ready to leave we wanted a cheaper means of transportation and were told where to catch a minibus. We got on the bus and waited and waited. Finally I inquired when we would be leaving and with the language barrier  I finally learned that their were options. We could leave now for one fare, or wait until more people arrived and pay a cheaper fare. If it was full, it was a really cheap fare. I don't know what would have happened if some  had wanted to wait until it was full and some wanted to go immediately, but their system somehow seemed to work.

America prides itself on being a free market capitalistic country, but in many ways we are a lot less free than the rest of the world. When it comes to transportation, we want everything to fit in a neat box. Transportation providers must be buses, taxis, or limousines. Innovation and competition is not permitted. This is more so in Nashville than other cities.  Nashville is one of only seven cities in America with a minimum fare for limousines, which in Nashville, includes Black Sedans.

Finally, technology may break the anti-free market, crony capitalism Nashville model of transportation. We have enough cars on the road. Not everyone has to have their own vehicle. We already have bike share programs and zipcars. With people becoming aware of services like Lyft and Uber and Sidecar, people may demand  that government get out of the way and let the market work. I hope so. One thing that would help would be if we elected people to the Metro Council who believe in capitalism.

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