Uber, DC Taxi Commission, and a Level Playing Field

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I am second to none in my general annoyance with DC taxi cab drivers. They are frequently rude, drive dangerously, never showed up when I called for a cab, and, when I lived in the southeastern quadrant of the city, would regularly (and illegally) refuse to take my fare. They are, for the most part, terrible.

And I’m second to none in my general love for Uber, the service that allows you to hail a black sedan or SUV with your cell phone for a slightly pricier fare than cabs. It’s a great service providing a much-needed corrective to the terrible cab experience in Washington, D.C. I also love the fact that the company has been willing to go hammer and tongs at the corrupt DC Taxicab Commission.

But I have to say: I can’t quite get on board with Uber’s latest campaign. Writes Ronald Bailey over at Reason:

Now comes the D.C. Taxi Commission (DCTC) which has just banned the new UberX service from the fantastic, absurdly easy-to-use cellphone-activated car service Uber. I am an enthusiastic Uber customer (it’s my second favorite app) of its taxi and black car services. The taxi drivers I summon via Uber all tell me that they think it’s great – among other things, they don’t have to do as much aimless driving in search of fares off the streets.

I was looking forward to trying out its new UberX service which offers rides at lower rates than regular taxis. In Washington, DCTC taxis charge $3.00 for the first 1/8th of a mile, and 27 cents per 1/8th thereafter. So a four-mile trip would cost $11.37. The same UberX trip would cost $10.00, and you would have the convenience of summoning the car directly to you, rather than waving your arms at passing cabs.

If the DC taxi market was a perfectly free market,* there would be no problem. Charge lower rates than the competition! Go nuts! The DC taxi market is not a perfectly free market, however. The $11.37 fare Bailey notes above is a government-mandated fare. They have to charge that rate because it’s the law.

I don’t have a problem with Uber-proper because it charges more than the legally mandated fare. It was humorously disingenuous for the cabbies or the DCTC to argue that Uber was unfairly undercutting competition by charging more for a service. But when you offer a service like UberX at a rate significantly below a legally required rate that your competitors are bound to obey, I can understand why they might be a bit upset. The easy fix here is to simply put UberX’s rates in line with normal taxi rates.

There was a similar issue regarding DC’s food trucks a couple years back. Brick and mortar restaurants waged a legislative campaign to snuff out the nascent food truck industry. Saddled with higher costs and crippled by the ability of the trucks to drive around town trying to find customers, restaurants turned to politicians to kill their competition. This was anti-competitive and abhorrent.

But the restaurants did have one valid criticism: food trucks weren’t charging D.C. sales tax, which is an absurdly high 10 percent. Having a cheaper, more mobile business is a competitive advantage. It isn’t an unfair competitive advantage—but claiming an exemption from D.C.’s onerous sales tax most certainly is.

I’m all for disrupting the market with new technologies and better services. But we shouldn’t expect government to unfairly hold the old guard back at the same time.

*The free market solution to this problem is, obviously, get rid of all government-mandated fares and have people haggle for rides every time they get in a cab. While I’m sure this would provide an interesting experiment, I’m equally sure it would be a giant clusterf—k.

Featured Photo Credit: Nathan Congleton via Compfight cc