LOS ANGELES, September 1, 2014 – City governments are cracking down on a couple of new, groundbreaking companies that deliver their services via smartphone apps. Their stated reasons for doing so, under the cover of “public safety” or “illegality,” are nothing less than anti-capitalist and anti-freedom tactics meant to thwart price and service competition for established, crony capitalist companies.
This pair of virtual cab companies essentially duplicate each other,’s efforts. Each serves two different groups − individuals with a car, free time, and the desire to make a few bucks; and those who need a ride but don’t want to call a traditional taxi service. Uber and Lyft apps provide a way to connect these two groups together via personal electronics. And make each company a nice profit while doing so while saving the customer some money.
A comment by a Hoboken cab driver:
The driver’s vehicle will not be covered. The driver either has to lie to the insurance company and say they were not doing a ride-share application or take the chances and be honest and lose the coverage for that accident. They’ll have no coverage and then you and I have to pay for that through the uninsured motorist fund. They are unregulated, unlicensed and they are skirting the law.
Does anyone really think that this cabbie is really upset and concerned about the insurance issues occasioned by the appearance of these new ride-sharing services? Of course not. He’s upset that Uber is threatening his business.
Pressure on city government and politicians from established taxicab companies is all about turf-protection and has nothing to do with concerns about the public welfare. Imagine what the owner of the horse-drawn carriage company was thinking when Henry Ford’s invention started showing up on the roads. This is essentially a parallel idea.
Example #2: MonkeyParking
This Rome-based app only has a couple of U.S. locations. But where it is available, it allows individuals using Apple’s iOS to exchange information as well as money regarding parking spaces that are about to be available. An individual leaving a parking spot puts the info into the app and others in the area looking for a spot supply a financial bid for it. In other words, the information is monetized by others wishing to park in the newly-open space.
The city of San Francisco was not amused. The company recently was forced to shut down operations there after receiving an official cease-and-desist notice. Part of the statement from the City Attorney:
Technology has given rise to many laudable innovations in how we live and work − and MonkeyParking is not one of them. It’s illegal, it puts drivers on the hook for $300 fines, and it creates a predatory private market for public parking spaces that San Franciscans will not tolerate.
The city’s motivation on the issue−financial transactions occurring as part of an exchange of information−seems less about protecting existing business interest in this case. Rather, it revolves around a fundamental philosophical issue the city seems to have with capitalism. Notice the word “predatory” in the statement above. The use of that term implies that someone in the exchange is being taken advantage of or being forced to do something against their will, a dubious proposition at best.
In both these cases, municipalities are attempting to strangle businesses attempting to meet legitimate consumer needs in a way that proves inconvenient to governments or established, deeply entrenched competitors.
Creative entrepreneurs like Uber, Lyft and MonkeyParking have figured out a way to profit by solving a common urban problem. But entrenched business interests and a philosophical dislike of marketplace economics by sclerotic governments are the barriers being put in their way. Hopefully, genuine capitalism will prevail.