Ride sharing is win-win-win for passengers, drivers and cities

Photo by Shelby Knowles

Like many business travelers, over the past couple of years I have used Uber for many of my transportation needs. Cabs are still the best option if you’re rushing from meeting to meeting in a major city and the cab is right their in front of you, but for most common transportation situations, Uber has been widely embraced by both business travelers and consumers.

As a policy person, I’ve observed the phenomenon closely. I almost always ask my Uber drivers why they drive for Uber and how much they like it. I’ve never had a negative answer — in fact, the drivers are almost always enthusiastic. Some work full time, while others are trying to hustle a little extra cash to get out of credit card debt or help their children pay for college. In those situations, it’s wonderful to not be dependent on someone else hiring you, it’s great to be able to set and adjust your own hours, and the pay is higher than most part-time jobs.

One day while on the Uber website making changes to my account, I saw the “Drive for Uber” button at the top of the page. I clicked, mostly out of curiosity. Then the idea hit me: Why not do a little research driving, so instead of writing about a policy issue from an ivory tower, I could experience it firsthand? Besides, I’d be getting paid to do research. So I signed up.

It took about a month to pass Uber’s security clearances, even though I have a spotless driving record and no criminal history. Among other requirements I had to have a clean, late-model car, and I had to agree to be rated by passengers. I took the plunge.

Driving a few weekends for Uber, I discovered that passengers are as enthusiastic as drivers. Many cities and most suburbs are taxi deserts, and the Uber option is actually a new, attractive, parking-free option. Suburbanites use it to get to sporting events, concerts, and just to nights out for dinner. They don’t have to bother with a transaction, and because of the rating system they know their driver has an incentive to be professional, as do they.

Drivers and passengers are wildly enthusiastic about ride sharing. Who could oppose a new service that is universally loved by its participants?

Government, of course — especially government at its worst.

One of the most despicable things government does is act as a protection racket for certain companies or industries. “Pay us fees and let us regulate you,” government says, “and we’ll limit your competition through medallions, licensing requirements and quotas.” Of course, cities always claim the mantle of “consumer safety” to justify these protection rackets, but it’s really about businesses getting into bed with government power to limit or outright eliminate their competition.

This sleaze has been going on between cities and taxi companies for decades, which is the definition of an entrenched interest. And sleaze it is, lubricated by taxi companies' political contributions to elected officials. One of the many virtues of Uber is that it has focused a bright light on this incestuous relationship between cities and taxi companies.

This rotten cartel is so compelling to the cities that it blinds them to the fact that ride sharing could actually increase city tax revenue. The extra income earned by drivers is taxed in Texas at the point of consumption. And evidence suggests that people are actually increasing their patronage of clubs, restaurants and events as ride sharing minimizes travel and parking complications. It’s a win-win-win for passengers, drivers and the cities, but to realize these gains city governments must surrender a small bit of tax and regulatory power that they highly treasure. In Austin, that's apparently too much to ask.

Austin self-identifies as forward-looking and open to the new, so you'd think its leadership would see ride-sharing services like Uber as an opportunity, not a problem. No, private-sector screening isn’t going to be 100 percent perfect, but neither is the government’s. The private sector generally does a much better job at things like security screening than the government does because the private sector is subject to lawsuits and the unforgiving disciplines of the marketplace. Unlike the cartel between cities and cab companies, no government is protecting Uber.

At least with ride sharing, Austin’s government has pitted itself against the new. Austinites have the opportunity to overturn the city’s mistake and begin unraveling Austin’s protection racket with the taxi industry with Proposition 1.

Tom Giovanetti

President, Institute for Policy Innovation