Uber Promises Horizontal Economy Of Future Vs. Vertical One In Taxi Rules - And Response

  • Tuesday, December 16, 2014
  • David Tulis

The rising conflict between Uber and Chattanooga-area taxi services is typical of how technology is destabilizing existing business models yoked to government’s repressive marketplace measures. 

Tim Duckett, who owns the city’s largest taxi company, is complaining to the city transportation board and arguing that Uber should be suppressed because drivers in its network of service providers haven’t filed the proper papers and are operating outside the taxi-as-regulated-industry paradigm. 

Uber is a $41 billion company in Silicon Valley that connects through smart phones networks of independent contractor drivers with member riders who buy lifts for a fee, 20 percent of which goes to the company. The business model is fairly described as centralized at its servers and business model, distributed in the 250 cities in which it provides communion between car owner and ride seeker. 

Mr. Duckett of Millennium Taxi Service is jabbing his finger at the city code, demanding that since it’s enforced against him, it be used to whack the head of Uber and local residents who make at least partial livings as new-model "cabbies." 

Clunky claim to authority
The city charter gives the city authority to regulate taxicab operators under city police powers.


To license, tax and regulate taxicabs, automobiles for hire, trucks and buses; to fix a rate to be charged for the carriage of persons and property by any vehicle held out to the public use for hire within the city; to require indemnity bonds, issued by surety companies, or indemnity insurance policies to be filed with the city by the owner or operator of any such vehicle for the protection of the city or any person against loss by injury to person or damage to property, and to make all needful rules or regulations for the government of such conveyances and their operation within the city and for a distance of seven miles beyond the city limits; to issue certificates of convenience and necessity for the operation of taxicabs, automobiles for hire and buses, and to determine the number of taxicabs, automobiles or buses needed for the furnishing of transportation to the inhabitants of the city and the public in general. (In the enumeration of powers section of the charter, sec. 2.1 (16). Italics added)
Uber drivers don't hold themselves out to "public use," but to members of the Uber network only. This clause is a likely escape hatch for the Uber experiment. 

Taxis are a cartel whose prices are fixed, for better or worse, by city government. As controlled businesses, they make the best of that bristly regulatory embrace, and have a stake in keeping out competitors to keep demand high for their vehicles.  

The city charter and the code that gives details of how taxis are to serve the public are condescending of Mr. Duckett and other owners, making them out to be imbeciles and careless of their customers. Rulemaking is emasculating and presumes conflict between provider and customer, rather than harmony.

Uber’s alternative vision
City council members are attempting to account for the digital revolution with an analog framework. They want to continue to regulate taxi companies and to enfold Uber in that economic structure. Ken Smith and Chris Anderson might be prudent and cautious not to attempt to regulate Uber, but to realize the old framework is shattered. 
 
Decentralization and the Internet are promising to liberate many areas trapped in nation-state aligned centralization. Media, telephonics, banking, education are just four. Old-model newspapers and tax-supported schools face extinction if they cannot reduce costs and better meet the shifting needs of the market and the growing unwillingness of people to settle for 10th best. 
For all its vast capitalization, Uber represents at least partly the local economy vision of the future. An economy that is not vertical, but horizontal. It’s not the economy of the pyramid, like the one engraved on the back of the F$1 bill; rather, it’s the neighborhood and borough. It’s an economy not of the controller and the controlled, the surveyor and the surveiled, but of the free.
Mr. Duckett, like most of the rest of us and our city council representatives, are trapped in a scheme where civil authority sees its duty to “determine the number” of taxis and service providers that are needed for the city. We think somehow that civil authority knows best, has the most accurate reading of the needs of the people, and is best able to assure their safety. 
We live in a litigious society. That being so, we should perhaps consider asking city government to abandon taxi regulation entirely, to NOT exercise a police power granted by the general assembly. It should perhaps rely on local economy and the city’s inhabitants to determine what is needed and how innocent transportation services in the free market are to be provided.
To progressive, statist-oriented theory, the market is a sin, a disorder, a chaos — with danger at every stoplight and every turn in the road. Maybe Uber is operating illegally. So what? It is not involving itself in any sin, wrong, hurt, tort or injury. Decentralization allows for the market to work. If a wrong is done, a lawyer surely will file suit on contingency. 

— David Tulis hosts Nooganomics.com on Hot News Talk Radio 1240 910 and 1190 AM from 1 to 3 weekdays, covering local economy and free markets. 

* * * 

Of course Millennium owner want UBER to stop. The local cab companies have a city sponsored lock on the cab business.  People can make there own decision about how they want to get around. If a person wants to join an app-based ride company and not have to deal with the local cab companies then they should be able to do so with out interference from the city.   

 

James Blevins

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