That taxi drivers aren’t all that overjoyed at the arrival of Uber is obvious enough. No one does like the arrival of competition which undercuts the ability to make a living doing what one knows. More especially no one likes the undercutting of economic privilege. However, for the rest of us out there there’s a need to actually think a little about what it is that is being protected – and how it is being suggested that it remains protected.
This being what isn’t being done in Barcelona by either the taxi drivers or the government trying to regulate Uber. To insist that Uber must follow the usual rules on hiring, employment benefits and so on, fair enough. Perhaps, at least, it’s possible that this is fair enough. But destroying the entire economic value of the new technology does seem to be going a little too far:
Under the plan unveiled by Catalonia’s infrastructure minister, Damià Calvet, ride-sharing drivers would be obliged to return to their designated base after each service and customers would not be able to track the car they hire via GPS on the company app. But taxi drivers voted to reject the plan, mainly on the basis that the 15-minute delay between the contracting of a private service and the start of the ride would be too short to make any noticeable difference. Taxi driver unions have asked for a built-in delay of 12 or even 24 hours, effectively meaning that traditional taxis would have a monopoly on immediate services. On Sunday Mr Calvet unsuccessfully offered to negotiate a new minimum waiting time for ride-hailing services if the taxi drivers agreed to call off their strike.
Those proposals do indede destroy that basic economic value of the new technology. Leave aside who has a taxi licence and how much they paid for it and all that. Think instead of the basic taxi problem.
In order to be available for immediate hire there has to be a certain amount of driving around empty to be available for immediate hire. That empty cruising time – search costs more formally – is pure economic loss. What is it that Uber does? It reduces that search time. And we do indeed know that Uber cars spend more of their time with actual passengers in them than traditional taxis.
Yet what is the solution being proffered to the competition here? To ban that very economic benefit. We’re getting more taxi rides out of the same labor and capital inputs as a result of the Uber matching algorithm. This makes us all richer, makes society richer, it’s called Solow Growth.
We might even imagine a system in which only those with a taxi licence should be allowed to use the new technology. But to ban it in its entirety is simply ludicrous – it’s to deliberately make all poorer in defence of those taxi incomes. Making us all poorer isn’t a known aim of economic policy really. Thus we shouldn’t be trying to regulate Uber as they are in Barcelona.