Or maybe we'll learn that governmental regulation isn't the only form of regulation.
Uber is better than yellow taxis by a wide margin because of market regulatory forces (reputation, repeat business, competitors, etc.) which are far stronger than governmental regulations. By shielding yellow taxis from competition (remember what these taxis were like 10 years ago?), the government actually harmed consumers and subjected yellow taxis to less effective regulatory standards.
The claim that the market forces are more effective are plain wrong.
Because uber is not operating in a free market. Uber actively destroys competition to gain a new monopoly.
We’ll be exchanging one monopoly with another.
How well monopolies work can be seen with Comcast, etc.
In other markets, where sometimes yellow cabs have been governmentally regulated, but in better ways (for example, anyone can drive a cab if they have insurance + drivers license, but only N cabs can use the cab parking), uber is not an improvement, but actually making the market worse, because they reduce competition.
Your argument is like saying "Instead of Comcast, ATT, etc we should all use Google Fiber". Great, replace one monopoly with another, and for some people – take Romanian cities, which have better internet than Google Fiber – the new monopoly would be worse.
We need an open market, not another monopoly.
And we need safe, competition-friendly regulation by the government, not private regulation, not governmentally-enforced monopolies.
In my opinion, any regulatory scheme which starts with "anyone can drive a cab if they have insurance + driver's license" is going to be worse than Uber.
One of the major advantages of Uber is the rating system. A bad Uber driver typically won't last long in the job. There isn't much that will get a bad taxi driver to stop driving. Eventually complaints might filter up to their boss or regulators, but it's a much weaker mechanism.
I think the existing regulations were mostly put in place to compensate for information asymmetry. People get into a taxi unfamiliar with the driver, the car, reasonable costs, and the area. To ensure a minimum level of competence, drivers are regulated. To ensure people don't get ripped off, fares are regulated. To ensure people don't get driven on artificially expensive routes... well, that doesn't seem to have been regulated very well.
Smartphones solve this better, though. Rather than some broad regulatory regime to ensure minimum competence from a random unknown driver, you can use an app to find out about your specific driver. To ensure you don't get ripped off, you can use an app to get a fare estimate to your destination before you book. To ensure you don't get driven on artificially expensive routes, you can just compare the route you take with the route your phone thinks you should take.
I wholeheartedly agree that we need an open market, not just another monopoly. But in doing so, we should take the lessons from Uber, not just the lessons from the past. The present looks a lot different. Any system which looks like traditional taxis and doesn't take advantage of the easy flow of information is going to be inferior.
Why do you suppose Uber created a reputation system and vets their drivers? They certainly weren't required to, but they profit from reducing asymmetry because consumers want to know their ride will be a pleasant experience.
Mandating the features Uber voluntarily chose to add will only hold future competitors back when some new type of technology moves beyond our existing capabilities. And good luck removing those regulations once those are in place. You'll have powerful companies like Uber fighting tooth and nail to keep competitors out of the market.
I never said Uber was operating in free market or that they wouldn't turn around and become rent seekers themselves (as they already have), but the reality is, Uber is subject to more market forces than yellow taxis were/are. Those market forces--not government forces--are what has enabled companies like Uber to improve on the status quo and deliver more value to consumers.
Also, how do you suppose Uber would become predacious monopoly? Certainly not by being subject to the relentless competition of new market entrants seeking to take their customers on a daily basis. Predacious monopolies (e.g., cable companies) exist in markets where they are heavily shielded from competition. When competitors arrive, their behavior changes.
> Also, how do you suppose Uber would become predacious monopoly?
In a way Google has de-facto search engine monopoly - by offering the best service that's hard to replicate because of scale effects, and by being a globally recognizable brand. Add to that Uber's eagerness to actively sabotage competition by means literally taken out of spy movies (burner phones and CCs, really?), and I can see them holding a monopoly for a while once they get it.
(And "for a while" is enough; Uber is perfectly aware that self-driving cars are coming, and is in fact preparing for it.)
I said predacious monopoly. There is an important distinction between a company with monopoly status because they provide the highest value among options freely chosen by consumers and a company with monopoly status because they are benefactors of anti-competitive governmental policies.
Google is dominant in US search, but they aren't really a monopoly. They have formidable competitors who hold nearly 1/3 of the US market. Of Google's service got really bad,I can switch my default search engine to a respectable competitor in a matter of seconds.
I certainly wasn't implying that Uber doesn't benefit from network effects and can't establish long-term dominance like Google, but if they are solely a consumer chosen "monopoly", there really isn't anything to fear. The concern is that Uber will do as taxi companies did before them and lobby for anti-competitive regulatory favors. I expect this will be the case, but this predacious form of monopoly cannot be achieved without the help of governmental regulation.
How do you regulate Uber to not take the mindshare of ride sharing services so it doesn't become a monopoly?
The problem with Uber, and Facebook, and Twitter, etc is that to have competition you need users, and to have users you need mindshare, and whoever is on top always has the mindshare.
Its also a modern phenomenon. You could Xerox it while competing copiers could effectively compete in the market by making a better product for value and getting fewer sales as a result of less marketing and brand recognition than what Xerox had, whose customers than pay an advertising and brand premium. Same with kleenex, or even search. The dominance of a competitor does not impair the competitions ability to compete unless those competitors use force of law to break a free market.
With Uber and Lyft, the more dominant Uber is, the less likely Lyft can get drivers and thus the less likely Lyft can get customers because Uber has all the customers and drivers. Its the same problem you have with operating systems, where you need the software users want, but the software also needs users to justify the investment, which is how Microsoft can continue to dominate with a demonstrably inferior product.
I'd love for there to be a way to break up mindshare monopolies, but destroying Uber through tax regulation and killing an entire fledgling industry is anything but a solution.
> Or maybe we'll learn that governmental regulation isn't the only form of regulation.
It is so by definition.
>(reputation, repeat business, competitors, etc.)
Those are not regulatory mechanisms. Those are mechanisms that enhance competition. Competitive markets usually need less regulation.
But none of those things you mentioned is going to get Uber drivers to buy the insurance they need to be covered against any harm they could possibly inflict on the people they are ferrying around.
What will happen is that eventually some gruesome accident will lead to a high profile court case and then finally governments will decide that yes, Uber drivers need to buy commercial insurance.
> What will happen is that eventually some gruesome accident will lead to a high profile court case and then finally governments will decide that yes, Uber drivers need to buy commercial insurance.
I don't understand where this misconception keeps coming from. Uber holds commercial insurance specifically covering passengers being ferried around by their UberX contractors.
Based on what definition? It's only common convention that has associated regulation with government action.
Competition is a regulating force. It's a force outside of oneself that governs and influences how they behave. I would love to charge excessive prices and line my own pockets with profits, but I do not. Why not? Excessive prices are consistent with what I want, but my customers will leave and I'll wind up with no profit, so I govern my behavior accordingly.
Based on the definition of the word "regulations". Not "regulating force", "regulations", as in a government telling you what you can or cannot do.
But anyway; competition on the market is a very powerful regulating force. It happily regulates pain, death and suffering into the work. I'm less worried about us having to re-learn the reasons for taxi laws, per 'panzagl. I'm worried that, as evidenced by people saying things like you did, that we'll have to re-learn the lessons of the Industrial Revolution. There is a reason we regulate markets, why we have employment and safety laws. Our forefathers paid in blood and tears to bring them into existence, so that most of us can enjoy working in safe environment and reasonable hours. The default, if you let competition have its way unchecked, is sweatshops.
The sweatshops claim is ridiculous. Tough industrial working conditions are needed to grow into a developed country, but it's misguided to attribute the improvements in working condition to regulations. Regulations tend to lag industry developments. Once companies like Wal-Mart are near paying their employees $10/hr (or can reasonably do so on a profitable basis), then they step in and lobby for an increase to the minimum wage. This works out nice because it (a) doesn't impact the companies already complying with proposed regulations and (b) it can be devastating to competitors who aren't. It's a one-two punch that advances the interests of particular companies and is easily mistaken by the general public as social progress.
Uber is better than yellow taxis by a wide margin because of market regulatory forces (reputation, repeat business, competitors, etc.) which are far stronger than governmental regulations. By shielding yellow taxis from competition (remember what these taxis were like 10 years ago?), the government actually harmed consumers and subjected yellow taxis to less effective regulatory standards.