The Need to Regulate Destructive Regulation

Here is a letter to the Wall Street Journal today:

To the Editor:

The legal hassling you describe of ride-sharing services such as Sidecar, Uber, and Lyft (“Ride-Sharing Services Face Legal Threat From San Francisco, Los Angeles,” Sep. 25, 2014) is farcical. What should be shut down is not the ride services, but the regulations and taxicab commissions that would deny the public their service.

“The district attorneys of San Francisco and Los Angeles on Thursday accused Sidecar Inc. of violating California business law”—if that’s true, the law should be fixed, because the public likes Sidecar the way it is—“and threatened an injunction on its service… Similar letters were also hand-delivered to Sidecar’s larger rivals in San Francisco, Uber Technologies Inc. and Lyft Inc.” How will the public benefit from the shutting down of these valued services?

“The startups [are] sparring with lawmakers, local taxi commissions and regulators seeking to curb their expansion from Frankfurt to Seoul.” There should be some way for us, the people, to curb these taxi commissioners and regulators from interfering with our choices of transport.

George Gascon, the district attorney of San Francisco, and Jackie Lacey, his counterpart in Los Angeles, allege that Sidecar is misleading customers about how thoroughly it checks the criminal backgrounds and driving records of its drivers.

If some rider can show that she has been harmed by this, the appropriate response is to sue Sidecar for fraud and make them pay damages, not shut them down.

The regulators are also asking Sidecar to end its car-pooling feature, launched earlier this year, which allows passengers to share rides with strangers for cheaper rides. That service violates a section of the public-utilities code which prohibits transportation providers charging multiple people for the same ride.

Leaving aside the air-quality and traffic-congestion benefits of car-pooling, if the riders are okay with paying jointly, what’s the problem? That section of the public-utilities code should be repealed.

Mr. Gascon spoke out about the need for more restrictions around ride sharing in June, after an Uber driver in San Francisco was charged with two counts of battery for assaulting a passenger.

Has no licensed taxi driver ever assaulted a passenger? Could any conceivable regulatory scheme make sure no driver ever did? In whom would you have more confidence, a driver checked out by a for-profit ride-share service, or a taxi driver checked out by a city bureaucracy?

“We want to make sure that there is sufficient insurance to protect the public,” Mr. Gascon told San Francisco television broadcaster KCBS at the time.

The more pressing question is, how can we protect the public from government regulation?

Howard Baetjer Jr.
Department of Economics
Towson University
Towson, Maryland

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