Let’s Deregulate Everyone Instead Of Applying Outdated Rules To New Ideas

Let’s Deregulate Everyone Instead Of Applying Outdated Rules To New Ideas

When new startups show up on the scene, the knee-jerk reaction of bureaucrats is to hobble the new players instead of liberating the whole industry.
Georgi Boorman
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In an attempt to appease the taxi lobby, the government of Massachusetts has decided a five-cent tax per trip on ridesharing services (out of a total 20-cent fee) should directly subsidize the local taxi industry. In other words, because many customers like ridesharing such as Uber and Lyft better than taxis, government is going to penalize their choice by forcing them to pay for the alternative.

The fee is part of a new package of industry regulations that appears to be a compromise between long-established taxi companies’ harsh demands (they would prefer an outright ban on ridesharing, or harsh rules such as fingerprinting for drivers) and the previous “unregulated” status.

Reuters quotes a Boston-area taxi company manager: “They’ve [ride sharing companies] been breaking the laws that are on the books that we’ve been following for many years.” That’s not exactly true. While ridesharing accomplishes the same task as a taxi service, it does so differently than taxis so is exempt from regulations written specifically for the taxi industry. One could call it exploiting a loophole, but that’s quite different from “breaking the laws.”

If I Can’t Have a Free Market, No One Can

Nevertheless, transportation cronies, namely taxi unions, have been bleating for half a decade now that ridesharing companies need to carry the same regulatory burden as the taxi industry. While some regulations are necessary to protect both drivers and clients, many are simply onerous. Despite the burden, the “taxi cartel’s” cozy relationship with local governments produces regulations that insulate established market players from new competition, because the bureaucracy through which they must maneuver just to get started can be prohibitively expensive to navigate.

Then came a “disruptive technology,” an app that connects drivers with people nearby who need a ride. Instead of hailing a cab from the sidewalk, people order rides from their smartphone. This new method has proven immensely popular, all without the red tape union-backed legislators and the taxi industry claim is “necessary.” The lesson established players take from this disruption, however, is not that government should lessen its regulatory drag, but shackle new players with the same ball and chain or else ban them altogether.

These rent-seekers push for as much regulation as they can get. For instance, although the Seattle City Council a few years ago ultimately rejected a cap on the number of rideshare vehicles in the city, they recently passed a law allowing contracted drivers to bargain collectively. That undermines the fruits of innovation, since significant pay hikes could lead to increased rates for clients, and other union mandates like scheduled breaks could lead to less flexible service and an overall loss of edge over the taxi services.

Cities like Austin and Portland have created regulatory conditions that have forced Uber out of their cities, albeit temporarily in Portland’s case. But Portland’s regulations for Transportation Network Companies (or TNC, a term encompassing both traditional taxi service and ride-sharing) are insufferable, including a “60-minute advance reservation for non-taxi ride services” and a permit cap of just 460 for all TNC drivers—regulations clearly designed to protect the taxi industry from competition.

Uber is embroiled in regulatory battles all over the world, many spawned out of the long-standing collusion between government and the taxicab monopoly. For all these companies’ faults (and there have been many PR blunders), they have stepped up to meet demand for personal transportation. If you want to really tick off the cronies, start by bypassing archaic and oppressive laws to provide a service people want.

The taxi giants of the last century are cowering. They tell the startups to beat it, because they know when they’re beat.

The Bullies Insist They’re Victims

Just like cronies decry freedom in transportation, so they do in other industries. Take education as another example: When a popular, less-regulated model enters a market (such as, say, charter schools) the instinct of the entrenched elite who run the pseudo-monopolies is to attack the new model—not by demanding more flexibility so they can respond with better ideas themselves, but by the only means they believe yields results: force government to hobble the new players.

In Louisiana, for instance, defenders of the public school pseudo-monopoly have fought for private schools to conform to the public model to receive state vouchers. This has included mandates such as requiring their students to take state tests and ceding control over admissions to the state. Louisiana and other states have seen a pattern of legal challenges from teachers’ unions, school districts, and state school boards to laws that allow other school models to receive state funding, including California and New Hampshire.

In my home state of Washington, the state teachers’ union and other plaintiffs succeeded in getting the state Supreme Court to strike down the state’s 2012 law that allowed public funding for public charter schools, citing a “lack of public accountability” because charter school overseers were not elected, but appointed. The legislature responded by passing a new charter school law in 2016. But the message from the Washington Education Association (WEA), despite charter schools’ immense popularity, is: you’re not like public schools, so you can’t exist! Yet that’s the whole point of charters’ existence: To do something different.

Attacks from the monopoly-loving on new innovators are relentless, and often completely unfounded. The Seattle Stranger recently echoed WEA propaganda in praising comedian John Oliver’s recent rant against charter schools, insisting, without citing data, that charter schools “fail kids” and public schools are underfunded.

Similarly, an NPR host was caught in blatant partiality when she attacked a string of California charter schools called Rocketship, echoing the sentiment of a union executive who criticized their homework loads as “drill and kill,” complaining it causes Rocketship’s stellar performance. Instead of complaining about a startup’s success, why doesn’t the teachers’ union insist on higher standards and, perhaps, the ability to assign more rigorous work, if that indeed contributes to Rocketship’s success?

But as in California, the WEA won’t let success go unhampered. Their new  lawsuit against the 2016 Washington charter school law maintains that “charter schools continue to be run by and responsible to non-profit companies and non-elected boards and, thus, are not accountable to taxpayers who provide funding for charter schools.” The translation: You have more freedom than we do, and we can’t allow freedom in education!

Traditional public schools are flush compared to their competitors, but they still can’t compete.

As always, their solution is to demand more money from taxpayers (just as the taxi lobby has demanded in Massachusetts) while attempting to permanently quash competition, even though Washington’s funding for K-12 per student (rising to $12,500 in the next biannual budget) is roughly twice the tuition at many private schools. The significance of this push for higher funding is obvious: Traditional public schools are flush compared to their competitors, but they still can’t compete.

Yet the WEA doesn’t spend many union dollars advocating more freedom for teachers (except against tying their salaries to performance measures like test scores) or lobbying the legislature for major reforms in how money is spent. Instead, they maintain the problem is underfunding, and that charter schools are sucking up the money they think public schools are owed.

Teachers’ unions like the WEA either value fat paychecks and power over quality education, or miss the entire point of charter schools: to do things differently. This requires freedom to design various ways of educating, to experiment to find out what works and what doesn’t. Flexibility, higher standards, and better results are what pack the waiting lists for charter schools, not how much money is being spent per student. Yet the constant refrain of the education establishment and their political backers is that disruptors must be shackled with the same regulations that burden the current establishment, in service of “accountability” and “equity.”

In heavily regulated and monopolized industries like education and transportation (not to mention health care), the industry giants who’ve spent their efforts and capital on lobbying politicians for protectionist regulations over improving their product or service continue to push for the oppression of the smaller, more nimble innovators that have found ways around their legal snares. What a pity they reject freer markets, which could benefit everyone, in favor of cronyism.

Georgi is a Senior Contributor at The Federalist, host of The 180 Cast, and coauthor of "Clocking Out Early: The Ultimate Guide to Early Retirement." Follow her on Twitter.
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