Wednesday, March 5, 2014

Uber Unwelcome

If you were to ask a conservative on the street what his most fundamental belief is, he would likely say limited government. If you asked him about his second most fundamental belief, it would likely be free enterprise. Given these values, it should come as a surprise to conservatives that five Republican State House members, in addition to one Democratic member, have introduced a bill that will expand government regulation and throttle free enterprise in an entire service industry. H.B. 907, otherwise known as the “Uber Bill”, will heavily regulate the new ride sharing and ride referral industry which has boomed in cities across the country.

If you haven’t heard of them yet, Uber and Lyft are services which provide on-demand car rides ordered via smartphone apps. These startups take advantage of the mobile technology that 55 percent of all Americans now carry, and this is starting to hit traditional cab services where it hurts. (link)
The above is from Georgia, not Tennessee thankfully, but we need to be vigilant. Probably, not on the State level so much, but certainly on the Metro Council level.  The overwhelming majority of our Council are Democrat and as such, commitment to limited government and free enterprise is not part of their philosophy, and while we have several Republicans on the Metro Council, they don't vote like Republicans.  The commitment to limited government and free enterprise of the Republicans on the Council is not assured.

Uber operates in 70 cities on six continents and is in Nashville. Also a similar service, Lyft, is in operation in Nashville. Another service, Sidecar, is similar but not yet in the Nashville market. All of these services operate similarly. They use a phone app to connect drivers offering a ride with customer wanted a ride.

In January of this year, the Council passed legislation that slashed the minimum fee that a vehicles for hire could charge from $45 to below $10. This reversed a policy adopted in 2010 that imposed the $45 fee minimum. This made it possible for Uber and Lyft to operate in Nashville

In 2010 a new type of service had made its appearance in Nashville called "black sedans." . This service provided clean luxury cars and charged  a set fee rather than a per mile fee like a taxi. They were a much nicer ride than a taxi but not as ostentatious as  a stretch limousine. This new service charged a minimum fee of only $25.  Soon they were proving popular and cutting into the market share of the luxury limousine people.

The limo folks went to the metro council and got legislation passed that set a minimum fee of $45 for a limo ride and imposed other onerous restriction on this new service to force them to operate like limousine companies.

Since that time, Nashville has built the massive Music City Center and experienced a major uptick in tourism. It quickly became apparent that the city had an insufficient number of taxis or other means of moving people. Black sedans were becoming popular in other cities but were scarce in Nashville because of our regulation. Also, the city was only slowly increasing the number of taxi permits. Also, the new app-dispatched services such as Lyft, Sidecar, and Uber had made their appearance in the market but were not legal in Nashville. The convention and tourism people realized Nashville had a problem.

The bill passed in January undid the major part of the damage done in 2010. It allowed black sedans to charge a lower fee and it made possible the app-based services such as Uber. The bill was not a perfect bill. The other onerous regulations that applied to black sedans were still on the books. I think the Council should have completely removed the minimum fee rather than just reduce it, however the minimum is so low that it has no impact.

The lowering of the minimum fee was a great advance and was a victory for freedom, a market economy and common sense. However, the Council did not vote out of any principled belief in limited government and free enterprise but out of a pragmatic realization we needed more public transportation in Nashville. When the bill that imposed the $45 minimum in 2010 passed, it passed unanimously.  The members of the Council who call themselves conservative voted for it. An attempt in 2012 to repeal it, could not get the votes to pass, including the support of all of the council's "conservatives."

We need to elect some principled people to the Metro Council who really believe in free enterprise and limited government. I don't think this battle is over. In cities and states across America, there are attempts to curtail or drive out of business these new forms of transportation services.  I suspect that at some point we will again see an attempt to curtail these services here in Nashville.  Some in government think we need order in the market place.  They see competition as a threat to order. Once we have met the immediate need to service the uptick in  new tourism, I expect to see an attempt on the part of the city to reign in the providers of transportation services and restrict innovation and entry into the market place. The liberals will feel a need to bring order to the market place and the "conservatives" will go along with them unless we elect a new breed of conservatives to the Council. 

I have reported extensively on the issue of Metro's war on free market transportation . To read more about Nashville's shameful record of transportation price fixing follow this link: Price-fixing.

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