Detroit enables ‘prison guards of the past’
“There you go again…” exclaimed Ronald Reagan famously, as he claimed the debate audience and eventually the White House. The City of Detroit is once more eschewing hospitable relations with its residents and visitors by making one of the most helpful advancements in local transportation illegal.
That was their first instinct as well, and the first official act was a cease-and-desist order. Then, bowing no doubt to public pressure, the city signed agreements with two of the popular ride-sharing networks, Lyft and Uber, to let them operate until the city can develop an ordinance. The agreement requires Lyft and Uber to carry a $1 million liability policy, maintain certified vehicles and to have annual background checks done.
Now, Detroit Council Pro Tem George Cushingberry Jr. has asked the police department to ban Lyft and Uber, and his earthy strategy was quoted in the Detroit News: “Because then maybe I can smoke them out, because I don’t know what else to do.”
The taxi companies complain that, in addition to the inspections and insurance issues the recent agreement looked to resolve, the transportation network companies don’t require their drivers to have taxi medallions ( called “bond plates” in Michigan) that cost up to $10,000. The taxi industry’s advocates are very active in Detroit and elsewhere to make sure that any new entrants to the system are burdened with all of the regulatory requirements that they face.
In his most recent book, “Breakout,” Newt Gingrich refers to the systemic barriers to the new economy and potentially disruptive businesses as “prison guards of the past.” There are many examples coming to light of people using what the insurance industry now generically calls “commercial use of personal assets.” People are sharing cooked meals, transporting people and stuff, (including a new business called Canary which delivers medical marijuana), and renting out bathrooms, power tools and many more kinds of assets as new small businesses.
Free-market advocates, including lawmakers, aren’t against all regulation of these new businesses, but we do want to see thoughtful and limited regulation, which probably doesn’t look like what taxicabs now have. Actually, the federal government’s main agency looking out for consumers shockingly has it about right. Here are a couple of quotes from a recent letter from the Federal Trade Commission to the state of Colorado and the city of Anchorage, Alaska.:
In evaluating claims that the practices to be prohibited impose a genuine threat to consumer welfare, we recommend that CPUC (Colorado Public Utilities Commission) be guided by the principle that any restriction on competition designed to address such potential harm should be narrowly crafted to minimize its anticompetitive impact…Because new entry and competition may generate consumer benefits and are unlikely to harm consumers or competition, staff strongly supports eliminating restrictions on the number of vehicles that may provide taxicab service by 2022, or sooner, if practical. Staff also recommends that rates relating to the business of passenger vehicle transportation services should generally be set by competitive forces where there are no restrictions on entry…Regulation of new computer and smartphone applications should focus primarily on ensuring the safety of customers and drivers, deterring deceptive pricing practices, and addressing other consumer protection issues, especially privacy and the prevention of identity theft. A regulatory framework should not restrict the introduction or use of new types of applications, or novel features they provide, absent some evidence of public harm. In the event that the Assembly finds evidence of harm from new methods of competition, a restriction on competition should be narrowly crafted to minimize its anticompetitive impact…
So we believe that Detroit is potentially once again turning the wrong way in service of its citizens and visitors. Hopefully, the grassroots efforts by people who really appreciate these breakout industries will prevail and limited regulation to insure safety and sufficient accident coverage will emerge as the right choice.