I wouldn't blame you if you had never heard of Uber and Lyft. These are two companies that are in the business of arranging car transportation. The way they work is this: If you need a ride somewhere, you open an app on your smartphone, you put in the details of your trip, and the company matches you up with a driver who will show up and take you where you want to go. You pay the driver, and the company earns a commission on the transaction.
That sounds a lot like a traditional car service transaction to me.
Uber and Lyft have been generating controversy around the country for what ought to be rather obvious reasons. They are horning in on what has traditionally been the exclusive domain of taxi companies. It is hard to think of an industry that has been more successful at using the apparatus of government to its financial advantage than the taxi industry. Defense contractors and banks, maybe.
It is a not-uncommon arrangement for airport taxi service to be set up as a single-company monopoly. For example, if you'd like to take a taxi from Baltimore-Washington International Airport, you have to use BWI Taxi, a company that has a rigidly enforced monopoly. Their familiar red-and-white cabs have the exclusive on that lucrative business. In many places, it is illegal for another company's cab even to be on the airport grounds unless it is discharging a departing passenger.
New York City famously controls its taxi business through what is known as the "medallion" system. Each taxi must be painted yellow and must display a medallion number that has been awarded by the city. These medallions are extremely valuable, being sold at auction for as much as $700,000 each. The reason why they are valuable is simple: Only a yellow cab is allowed to respond to a "street hail"--the process people usually think of when they think of hailing a cab.
(Last year, New York added a new type of cab, the green-painted "boro taxi," which is also allowed to respond to street hails in Manhattan above East 96th or West 110th, the Bronx, Brooklyn, Queens, and Staten Island. But those types of hails constitute only 5% to 8% of all street hails in New York.)
That makes fares expensive, and if you can plan your trip in enough time to call for a car service, it's usually cheaper to do so, due in no small part to the much cheaper permit cost.
Uber and Lyft are seeking to break into that market. In places like New York City, where there are already established car services and a regulatory process that is fairly easy to navigate, that's not difficult (although it is not without controversy). In smaller markets, many of which have only a single taxi company, it's provoking a tremendous backlash from the established taxi services and the politicians they own.
For example, Uber started coverage in Fayetteville earlier this month. It was reported over the weekend that two Uber drivers in Fayetteville were issued citations by undercover police officers for "operating a taxi without a license" and "operating a taxi without an inspection."
I really don't have a problem with cities' attempts to regulate this
industry for the protection of their citizens and visitors. These
regulations came about in the first place because of some terrible
abuses by taxi companies. I can see both sides of this issue. Honestly, it can be hard sometimes to see the difference between Uber and Lyft and outright hitchhiking.
There is a certain element of trust required for a ride-sharing arrangement--whether it's a conventional taxicab or a new type of service like Uber or Lyft--to work properly. Riding in a car can be a tremendously dangerous activity, so if people are going to operate a commercial business around driving, they need to be properly trained, they need to carry insurance, and their vehicles need to be in safe working order. There also need to be some assurances that they aren't operating while impaired and that they don't have a criminal background that suggests a propensity toward violent crime.
But the truth is that these things are problems whether it's a new service or a conventional taxi company. I've been in cabs with drivers who spoke little English, who may not have been living and working here legally, who couldn't find their way around without my assistance, and who drove very unsafely. Perhaps my worst experience was a cab ride from LaGuardia to Lower Manhattan in stop-and-go traffic, in which the driver repeatedly gunned it up to 35-40 mph, then slammed on his brakes at the last possible moment to avoid hitting the car ahead of us. This was a Yellow Cab, piloted by supposedly one of the most regulated drivers of all.
Uber and Lyft both claim that they require their drivers to comply with standards that ensure safety and accountability.
It's also true that the reason why Uber and Lyft have found any kind of purchase in the ride-sharing market is because the markets where they operate are underserved in some material respect--taxis and conventional car services are too expensive, or there are too few cars available at peak times, or they prefer not to operate in certain areas of town (either anytime or at night, for example).
The protection of monopolies is wrong and anti-capitalist. But allowing an anarchic market to exist, particularly where public safety is at issue, is also wrong and anti-capitalist. Cities should adopt reasonable regulations that promote public safety but lower the artificial barriers to entry into the market for rides.