How Austin Drove Out Uber And Lyft

How Austin Drove Out Uber And Lyft

Uber and Lyft were driven out of Austin under the guise of “consumer safety,” a textbook example of how government-backed cartels force out competition.
John Daniel Davidson
By

It seems there’s no new product or service that meddling liberals won’t figure out a way to regulate out of existence under the pretense of knowing what’s best for you.

Over the weekend in the liberal bastion of Austin, Texas, a handful of pro-regulation voters opted to keep in place a host of petty, irrational, and burdensome regulations the city council imposed on ridesharing companies like Uber and Lyft in December. In response, the companies suspended operations effective Monday, making Austin, despite its tech-savvy reputation, the only major U.S. city without ridesharing.

The story of how Uber and Lyft were driven out of Austin is a textbook example of how government-backed cartels force out competition under the guise of creating a “level playing field” or ensuring “consumer safety.” In this case, the cartel is the local taxi cab lobby, which successfully saddled Uber and Lyft with cab-like regulations that shouldn’t apply to ridesharing companies. The result is that thousands of enterprising Austinites have been deprived a source of income, while thousands more have been deprived of ridesharing services that were reducing congestion and drunk driving while expanding transportation options to underserved parts of town.

The False Claims of the Anti-Ridesharing Crowd

Here’s what happened. Back in December, Austin’s city council passed an ordinance requiring fingerprinting for drivers, “trade dress” for rideshare vehicles, restrictions on where drivers can pick up and drop off passengers, and an onerous data reporting scheme. Among the many justifications offered by the city council, the taxi lobby, and their cheerleaders in the local press was the need to “create a level playing field.”

Uber and Lyft suspended operations effective Monday, making Austin the only major U.S. city without ridesharing.

In response, Uber and Lyft collected more than 65,000 signatures—more than three times the required amount—in support of a more reasonable ordinance to regulate ridesharing. It was placed on the ballot as Proposition 1 and a special election was held May 7. A paltry 17 percent of voters weighed in—in a city of more than 885,000—and the pro-regulation crowd won the day by a vote of 48,673 to 38,539, thanks in part to the confusing ballot language.

The editors of the Austin American Statesman claimed that the real issue at stake was not whether Uber and Lyft should have to fingerprint their drivers, but whether “it should be corporations or Austin’s elected leaders that write the rules for doing business in the city”—as if taxi cab companies haven’t been writing their own rules in Austin for decades. Just like in most cities, it’s hard to imagine a more corrupt collusion of local government and special interests than the local taxi cab cartel, where three cab companies hold every city permit and a single company, Yellow Cab, owns 68 percent of them.

But anti-corporate rhetoric plays well in Austin, so ridesharing opponents pushed it as far as they could. They claimed that Uber and Lyft “exploit” their drivers because as private contractors they don’t get benefits and don’t have control over rates, which are set by each ridesharing company according to demand. Taxi cab rates, by contrast, are set by the city based on the whim of municipal bureaucrats.

It’s hard to imagine a more corrupt collusion of local government and special interests than the local taxi cab cartel.

What was lost in the debate over Prop 1 is the degree to which cab drivers are actually exploited. According to a 2010 report on Austin’s taxi industry, the average cabbie in Austin works more than 12 hours a day, 6.5 days a week, makes $2.75 an hour, and takes home $200 a week before taxes. Taxi drivers have no insurance or benefits and no say in city ordinances that regulate the industry. You know who does have a say? The “franchise holders”—cab companies the city has issued permits.

It shouldn’t have to be spelled out, but of course Uber and Lyft drivers own their own vehicles, unlike cabbies, which means they already have to clear several regulatory hurdles like having a driver’s license, vehicle insurance, and current inspection and state registration. Creating a separate license for them would be redundant, just like most occupational licensing schemes are. If you’re street-legal, then you should be able to give anyone a ride, whether it’s a friend or someone who hailed you on an app. If there’s one thing we shouldn’t try to recreate for a new generation of app-based, on-demand companies like Uber and Lyft, it’s the archaic, collusive model of the taxi cab business—especially not under the pretense that doing so is in the best interests of the drivers, the riders, or the public.

A Solution In Search of a Problem

In addition to being corrupt, the taxi cab business model simply isn’t equal to the demands of a large city like Austin. To really understand the insanity of effectively banning ridesharing services in Austin, you have to experience the abysmal state of transportation in this city. Every year, Austin ranks among the worst cities in the United States for traffic congestion, coming in at No. 21 in this year’s TomTom Traffic Index, an annual report detailing the world’s most traffic-congested cities. About 93 percent of Austin residents own vehicles, and with the population surging, city planners have been wracking their brains for years to figure out a solution.

You’d think ridesharing would be a priority for a city like Austin, but you’d be wrong.

What’s more, Austin has a problem with drunk driving, in part because downtown Austin has the highest numbers of bars per capita in the country. That’s probably why the city’s police chief, Art Acevedo, told the city council that ridesharing companies in the city were a public safety asset and that “getting people off the street and home safely helps with our DWI problem, no argument about it.”

Last year, 102 people died on Austin roads, the highest number ever recorded in the city. To get that number down to zero, the city has launched its “Vision Zero” plan, which includes 66 different recommendations for reducing traffic fatalities. You’d think something like “make it easy for ridesharing companies to operate in the city” would be among them, but you’d be wrong.

The Left’s Insatiable Urge to Regulate

Alas, the impulse to regulate everything under the sun isn’t unique to Austin liberals. It’s endemic among progressive bureaucrats at every level of government. Last week, for example, federal bureaucrats at the Food and Drug Administration announced what amounts to an eventual ban on e-cigarettes, “for the protection of public health.” The FDA intends to treat e-cigs like any other tobacco product, even though they have about as much to do with cigarettes as ridesharing has to do with taxi cabs—and even though the Royal College of Physicians just released a landmark report that claims substituting e-cigs for cigarettes “has the potential to prevent almost all the harm from smoking in society.”

It seems like every time the free market comes up with something really useful that solves problems and that people really want, whether it’s e-cigs or ridesharing, petty bureaucrats come up with an excuse to kill it. I know it sounds crazy, but it’s almost like they don’t care about solving these problems.

John is a senior correspondent for The Federalist. Follow him on Twitter.
Photo rmnoa357 / Shutterstock.com

Copyright © 2017 The Federalist, a wholly independent division of FDRLST Media, All Rights Reserved.