With all of the controversy surrounding Uber these days — especially as it relates to government oversight — it was good to see the New York Times Editorial Board take a skeptical view of one of the city’s key anti-Uber arguments. Unfortunately, that good feeling was short-lived as the paper ended up advocating a tax-driven approach to controlling Uber’s growth.
Preventing Uber from operating in a community — or making it excruciatingly difficult — makes no sense. It’s a service that many consumers want. It’s a service that provides good revenue streams for current black car drivers looking to fill in gaps in their schedule and other individuals looking to pick up some extra income. Some new livery workers are even coming in to the system as a result of the explosive growth that Uber has experienced.
But change is hard and existing market players have tapped in to every possible approach to protecting their longstanding revenue streams. Rather than competing on the merits, they are looking to government to rescue them.
Far too many communities have fallen prey to these efforts at pure protectionism masquerading as good government.
In the Big Apple, the New York Times today calls out the phony baloney arguments being made against Uber and other similar services. In particular, critics claim that Uber is contributing significantly to traffic congestion in Manhattan.
That’s rubbish. These ride sharing services are filling an important role in the transportation ecosystem of the most populous island in America. As a frequent visitor to the city, I can tell you that it is often quite challenging to find a taxi when you want one — especially if it is anywhere near rush hour or there is any hint of bad weather (hot, cold, rain, snow, etc.).
The Times correctly points out that the congestion likely has not a darn thing to do with car services like Uber. Rather, it’s a function of population and overall transportation demands. At the same time that average traffic speeds have fallen in the city (the cornerstone of the anti-Uber congestion argument), the Times says that subway ridership is at its highest level in 65 years. So it’s not like people are eschewing the subway for a Town Car.
Unfortunately, the Times doesn’t stop at saying there shouldn’t be a cap on services like Uber. It’s easy to get on board with their argument that Uber and other ride sharing companies should be allowed to continue on.
It’s not quite as easy to stomach their alternative policy solution. It turns out that they want to tax the heck out of Uber instead.
Let’s look at the paper’s specific argument:
the city could raise the current surcharges on metered-taxi rides and apply those surcharges to rides in cars affiliated with Uber and other similar services.
The higher fees could be applied to the parts of the city where, and the hours when, congestion is at its worst as a way to raise costs and reduce passenger demand. Taxis and other for-hire cars would benefit since they would spend less time stuck in traffic. The added money could be used to support better subway and bus service, which is the best way to fight congestion.
Unfortunately, this is all too often the view of those who believe that government needs to find just about any excuse to shape private behavior. In the minds of the editorial writers at the New York Times, this is a win-win. Taxing Uber would mollify those who don’t like the service by causing reduced usage while also raising government revenue to subsidize other services that are having trouble competing on the merits.
Innovative solutions shouldn’t always worry that they will need to look over their shoulders at politicians looking for revenue streams or cowering to the demands of entrenched businesses failing to evolve along with the marketplace.
Ultimately, regulating new businesses like Uber through rules or tax policies will be doomed to failure. You can’t prop up the existing taxicab industry or public transportation on the backs of a service that many consumers clearly prefer. It may slow growth and postpone the inevitable, but it’s hardly the solution that benefits the most people.