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Opinion

Don’t let government muscle out competition


  • By The Newnan Times-Herald
  • |
  • Dec. 07, 2021 - 10:23 AM

Don’t let government muscle out competition

Marc Hyden is the director of state government affairs at the R Street Institute, and he is a long-time Georgia resident. You can follow him on Twitter at @marc_hyden.

If there's something I've learned from mafia movies it’s that one of the best ways to eliminate competition is to get some muscle to do it for you.

Too often, businesses take a similar approach and look to the government to blunt their competition and inhibit innovation—a lesson that was on display recently in Europe. Unfortunately, this is often done to the detriment of consumers.

On a last-minute trip over Thanksgiving, my fiancée and I returned to Rome, Italy, where we frantically rushed to make an appointment in the necropolis below the Vatican. “This feels like a scene from Angels and Demons,” she jokingly remarked as we hustled through Fiumicino International Airport. She was referring to the movie in which Tom Hanks’ character is on a time-sensitive mission to uncover an Illuminati plot against the Vatican. “Sure,” I retorted, “but only if the movie featured a Roman history nerd [me] who was on a far less spectacular quest.”

Running short on time, however, we faced an unexpected obstacle. While there were taxis everywhere, none were willing to accept riders. They were on strike, a friendly Italian explained to us, and were—in large part—protesting Uber. Learning that Uber operated in Rome, I quickly hailed a ride-share, and we made it to the caverns lurking below the Vatican before it was too late.

The fact that taxi companies don't particularly like ride-share companies isn't new. They don't care for their business model and want to drive them out of business by any means other than competition. However, I was stunned by the strike’s idiocy.

Evidently because taxi companies oppose this competition and want to persuade the government to be their “muscle,” they decided to take a day off. Meanwhile, ride-sharing drivers kept working. In essence, this meant that taxis were willing to send their business and fares to ride-share companies who weren’t on strike. This is the equivalent of Wal-Mart wanting the government to shut down Target, and if the state didn't acquiesce, then Wal-Mart would send their business to Target. That'll show ‘em!

Contrary to taxi companies’ intentions, the strike showcased ride-share’s benefits and was brilliant advertising. It raised Uber’s profile in Rome and demonstrated that ride-share will pick you up, even when taxis won't.

In fairness, this experience isn’t unique to Italy. There have been taxicab strikes here in the United States, and some states and local governments have been enacting various ride-share regulations in order to protect the taxi business model. But it seems bizarre that governments would strive to prop up an industry that has struggled to evolve and compete with new innovation.

The truth is that ride-sharing filled a long-needed void and brought with it valuable societal benefits. Before ride-share crashed onto the scene, consumers were forced to rely on taxis, which weren’t known for the best services or experiences. Customers could call for a cab, but they weren’t guaranteed when—or if—drivers might pick you up. Cabs refused to come to certain parts of town, and they were often in abysmal shape—despite demanding inflated fares.

For years, my family talked about the dangerous taxicab they rode in that was strangely missing a rear door. A former colleague frequently recalls the story of a driver kicking her out of his taxicab in the dead of night halfway to her destination because he didn’t like the area. She was pregnant at the time, and the neighborhood wasn’t particularly safe.

Ride-share, while not perfect, offers a viable alternative. These companies provide a user-friendly app that permits users to hail a ride from virtually anywhere, and they know exactly when and where their driver will arrive. The rides are generally priced economically, and because of the apps’ rating systems, drivers are incentivized to provide exemplary service—as well as keeping their car in good shape. Otherwise, they risk receiving poor reviews and therefore losing out on fares.

Ride-sharing has been a benefit to consumers as well as to the workforce and public safety: It provides flexible work to those looking for extra cash; and ride-share’s emergence coincided—not so coincidentally—with a massive decrease in drunk driving arrests. As a former prosecutor told me, “We have fewer impaired drivers on the road because of ride-share services.”

While we have plenty of access to ride-share in the United States, because taxi companies tend to ask the government to shield them from competition, it can’t be taken for granted. In my travels, I’ve been to a host of countries that have fallen prey to such pressures and have banned ride-share as we know it.

Despite some calling in “muscle” to eliminate their competition, we should resist such efforts, and instead, march to the beat of innovation and progress.

Marc Hyden is the director of state government affairs at the R Street Institute, and he is a long-time Georgia resident. You can follow him on Twitter at @marc_hyden.