• Uber and Lyft take a hit from politicians working with cab companies and unions

    Give the customer better service at lower prices or lose out to those who do. That’s how it should work in a market system.

    I take advantage of that every time I use Uber and Lyft. I really appreciate their services; the drivers I have spoken with are equally upbeat. As a bonus, competition from these ride-sharing services is making regular taxis better. Improve or lose.

    That’s why services where is no competition, such as urban schools and the US Post Office, offer such lousy service–and why their prices are so high.

    To take the schooling example, the US pays more per K-12 student than all but two countries in the world. But our rankings are miserable because the public school system is run largely as an adult-employment operation, not a child-education service.

    Preventing competition–and preserving a monopoly–is precisely why politicians, cab companies, and unions in deep blue cities want to drive the ride-sharing services out of business. They succeeded in Austin, TX, and they are working hard to do it in Seattle. See the story here.

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    CommentWhy do politicians, unions, and cab companies cooperate in this anti-competitive game? Because creating or sustaining a monopoly generates monopoly profits. There is enough for the unions, companies, and politicians to share. They do so at the public’s expense.

    Since the politicians are generating these monopoly profits, and since they can eliminate them, the companies and unions have powerful incentives to donate to friendly politicians, effectively dividing the spoils with them.

    It’s an old game. It is also why new, fast-rising cities that are not already encumbered by these monopolies usually escape them and gain competitive advantages. That Austin, Texas, gave in despite its youngish population is probably an indication that anti-competitive (because “anti-capitalist”) ideology is also important.

    It should be obvious, though, that Uber and Lyft riders and drivers are lower-income so the anti-competitive policies also amount to regressive taxes. Apparently, that’s okay if your intentions are good. (Charles Lipson comment)