Innovation vs. Big Government: Uber Tries to Revolutionize the Cab Industry

When you want a taxi, how do you get one?

Do you run to the edge of the street waving your hand like an over eccentric grandparent (who, by the way, hasn’t seen you in a while)?

Do you calmly walk to the street corner in front of your apartment and raise your thumb in the air (like some highway hitchhiker)?

Or are you the type of person who just waits for the cab driver to pull up next to you (as if he knew you needed a ride by osmosis)?

It’s safe to say that you’re one of three individuals I mentioned above, but do you know which personality you’re definitely not?

The Uber Personality

Uber PersonalityThe Uber Personality doesn’t wave their hands in a frantic fashion.

The Uber Personality doesn’t do the “thumbs up” game. That’s so last year.

The Uber Personality doesn’t wait for a taxi to show up. That’s just not realistic to them.

All The Uber Personality has to do is pull out their iPhone, open up an app, and request a taxi with the click of button. No waving, no anxiety, no hassle.

This is innovation. The innovation of the taxi-cab industry.

But Big Government Doesn’t Like it

No, no, they don’t like it one bit. Uber’s a threat to the taxicab industry. “The homegrown industry is hit hard” as one aged councilman pointed out.

But what Mr. Sympathetic-toward-the-plight-of-status-quo-taxi-companies didn’t mention is that “homegrown industry” doesn’t mean mom and pop taxi services. It represents the monopolized DC taxi industry that the DC Taxicab Commission is tasked with protecting.

Or should I say, shielding from domestic and foreign services that pose a threat to the status quo that is the DC taxicab industry.

And Big Government Tried to Fight it

They tried to fight Uber’s innovation in several ways.

One of the ways was passing a law that would require every taxicab in DC to have a medallion to operate.

But what really made this bill horrible for the industry was the cap on medallions. Not to mention that most cab drivers wouldn’t be able to purchase one. Established companies would get first pick (don’t you love Big Government fairness?).

Don’t forget that the DC lawmakers had no idea of how many taxicabs operated in the DC area, but the 4,000 medallion cap would destroy the industry.

This system would destroy the relatively open-access taxi industry in D.C., in which the majority of drivers are owner-operators free to make their own schedules and keep whatever money they earn on the job. In cities such as New York and Boston, drivers pay upwards of $800 a week to rent their medallions. [emphasis added]

Add to that a weight limit on taxicabs, which would effectively kill Uber’s low cost taxi (UberX), and you’ve got a strong barrier against Uber’s taxi revolution.

UberX The Low Cost Uber

But They Failed

Despite all the fear-mongering, cries of consumer danger and possible terrorist attacks (Yes, you heard that right) Uber won in the end.

Though it did take a vote from the DC Council to make Uber “legal.”

Uber’s Win is Only a Minor Detail

What do I mean by that?

It’s not the legalization of Uber in DC that’s important. It’s that this fight happened in the first place.

The DC council should never have poked their noses where it didn’t belong.

The DC council should never have set up a commission on taxicabs.

The DC council should never have got in bed with taxicab lobbyists.

Once you start passing legislation in the name of customer safety you sacrifice market innovation (Click to Tweet). Big Government rears its ugly head, and the age of innovation fades into the age of stagnation. (Click to Tweet)

Big Government Brings About a Boring Market

Do you like your iPhone? Are you enjoying that high-speed internet connection while you read this? If you are then you can thank the Free Market for it. (Click to Tweet)

Big Government had nothing to do with it. In fact, if it had any part in it the iPhone would probably be glitchy and your internet connection would be slower than a snail.

Don’t believe me? Take a look at the Obamacare website. The site’s a pathetic excuse for coding. Simply put… it sucks.

Innovation Doesn’t Come from Bureaucrats

The government doesn’t run on the same Market rules that the rest of us do. They can’t gage supply and demand. They don’t have an incentive to provide the best product, service or experience for their customer because the customer has to come to them no matter what.

It’s even worse when it’s a bloated government filled with lobbyists and politicians on the pay-role.

Big Government Breeds Market Interference

The bigger the government, the more lawmakers poke their noses in the Market, which means more regulations. (Click to Tweet)

The more regulations the more businesses have to be involved in the political process. They now have an incentive to hire lobbyists and coddle politicians, because those politicians are making laws that affect them and their business.

That’s why government interventionists (supporters of market regulation & control) shoot themselves in the foot.

Their intentions are good, but their methods end up creating a corrupt Market and government.

Market Intervention Kills Innovation (in the End)

Uber’s push into the cab industry is a perfect example of this. The DC Council might have had good intentions when they first started regulating the taxicab industry, but it didn’t last long.

Taxicab companies soon leveraged this new power in their industry to squash anyone that posed a threat to their business.

Uber doesn’t own a fleet of taxis. They just make it easier for you to get a cab. If anything, Uber is beneficial to taxicab companies. The easier it is to get a cab the more money you rake in.

But the taxicab industry didn’t see it that way.

They Want All of the Power & Control

Thanks to the DC Council the taxicab industry had complete control over the winners and the losers. They controlled their market.

Uber’s a threat to their control.

They can no longer pick the winners and losers. They can’t keep the innovative little guy out of the market. They can’t protect the status quo. Uber killed the status quo.

Innovation Kills the Status Quo

Let’s go over it all really quick…

  • Market interventionists start regulating the market
  • Companies catch on and start hiring lobbyists and politicians
  • They use them to pass regulations to protect their business and control the winners and losers
  • A new startup comes onto the scene and they threaten the status quo
  • The industry then uses their lobbyists to push out the new startup
  • Innovation is killed and the customer suffers

This is how it usually goes down. Fortunately for Uber, they made it through by partly playing the game and by mobilizing the customer and taxi driver.

Uber Innovation in the Taxi Industry

Conclusion

This is why a bloated government (and an overregulated market) are enemies of innovation.

You can’t have an overregulated market and expect companies like Uber, Apple and Microsoft to pop up and thrive. Yes, a few get through, but you’ll never see their true potential…

And you’ll never see the startups that didn’t get a chance, because they were strangled by the regulatory snake.

If you don’t believe me by now, then I don’t know what else to tell you. Try to build a revolutionizing product or service in a highly relegated market and tell me what happens.

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About John-Pierre Maeli

Keeping it simple and crystal clear, because anything else is useless. I'm here to not only inform you, but to also connect with you. That's what The Political Informer is all about. Feel free to follow me on either Twitter or Google+ Let's talk!

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