It's Uber v. Taxi in Minneapolis
I worry the ref in this contest is on the take
The Minneapolis City Council has voted to force Uber and Lyft to completely throw their business model in the trash and instead pay their drivers some amount determined by the council — and enthusiastically supported by the local crony taxi companies, I’m sure.
Uber and Lyft are responding by saying they will pull their services from the area rather than comply. The ordinance is slated to take effect May 1, so there’s some time for public pressure to come to bear and for these fools to reverse their edict.
Time will tell how this plays out.
This is nothing new for these ride-sharing services. Ever since they burst on the scene, entrenched (and famously corrupt) “medallion”-based cab companies and their government lackies have tried to build a moat around their crony castles and keep out the competition.
Fortunately, these efforts have largely failed. Mostly because these ride-sharing innovations are so much better than taxis that customers and drivers of Uber/Lyft have threatened to riot if local governments forbid them to operate.
The “face” of this ordinance in Minneapolis are Uber/Lyft drivers that have gone to city hall to demand this government action. These poor suckers are just pawns being used by the taxi companies who don’t like competition.
Remember, nobody forced these people to become Uber/Lyft drivers. They freely chose it. Clearly, from the drivers’ perspective, driving for these ride-sharing companies was their demonstrated preference. It’s what they freely chose to do.
How are their lives going to be made better once the city council drives Uber and Lyft out of town? They will simply be unemployed and have to take some other job — perhaps with one of the crony cab companies that they already indicated they’d rather not work for.
Nope. This doesn’t help drivers. Or customers. It helps the holders of medallions — the crony privilege to operate a cab in a corrupt jurisdiction. I suppose it also helps corruptible government officials too.
And once crony politicians chase the capitalists out of town and realize that their citizens will miss those services, what do they say they’ll do? Try to cobble together some properly socialist government franken-boondoggle to replace it, of course.
Insanity.
It’s truly sad when you realize what a beautiful innovation ride-sharing is. Uber and Lyft deserve a Nobel Prize in Economics for what they did in improving the seemingly simple service of one person giving another person a ride in exchange for money.
The app coordinates supply and demand beautifully. It facilitates payment easily and securely. It manages reputation and vets both driver and passenger. It gives the price before the trip, strengthening the expectations of both parties.
It also gives driver and passenger access to a shared map, so nobody need worry about A) getting lost, or B) getting “long-hauled” — a lovely tradition cabbies have of turning a short, cheap fare into a long, costly fare by driving a passenger unfamiliar with the city the long way to their destination.
The Uber and Lyft apps are free market miracles. They lower transaction costs to near zero. They coordinate supply and demand, and not only in normal situations. With surge pricing, these apps incentivize the increase of the supply of drivers and decrease the demand for rides exactly when the market needs this coordination most.
On the margin, more drivers come out for higher prices. Similarly, passengers who have closer substitutes available (car-pooling, walking, calling a friend, etc) choose cheaper alternatives.
Ronald Coase would have absolutely loved these firms and the market service they provide. Millions of drivers and passengers currently do, too.
They are smart.
The Minneapolis City Council is dumb — or perhaps just crooked.
Either way, I really hope (for the sake of Minneapolis residents and visitors and would-be drivers) that this crappy ordinance is reversed before it’s too late.
Naturally,
Adam