Imagine for minute that you owned a small business that sells Widgets.
To operate your business legally you have to pay for a city Widget license, you have to have your Widget factory inspected by the city to verify it meets safety requirements, you have to pay for hundreds of thousands of dollars of commercial liability insurance and prove to the city that you have it, you have to undergo drug tests, FBI background checks and a number of other service related requirements.
Now imagine that a new competitor opened up down the block from you. The city then allows that competitor to operate for over a year without meeting ANY of the requirements you had to meet, none of them. You would be pretty angry wouldn’t you? That would be fundamentally unfair wouldn’t it? That would be a case of our government picking winners and losers and messing with the free market, right?
That is exactly what has been going on in Seattle with taxis and the so called “rideshare” companies.
If you check the headlines in the last week you might be under the impression that the Seattle City Council is trying to “shut down” these companies and is out to stifle innovation at the behest of the “taxi monopoly.”
The prosecuting attorney’s office ruled earlier in the year that the “rideshare” companies do not meet the RCW definition for rideshare vehicles. They are, in fact, illegal for-hire vehicles. The mayor and the council were within their rights to issue a cease and desist order for the past year and they decided not to. If the council really wanted to shut down these companies, they could have. Instead they let them operate illegally, with a huge competitive advantage, to the detriment of the legal for-hire vehicle owners and drivers.
Can you name one other industry in the city where one group of businesses is allowed to operate free of regulations and costs while another group of businesses, in the same industry, has to adhere to crushing regulations?
The council has spent a year deliberating, cajoling and listening to everybody in the industry in an effort to craft legislation that would be fair to everybody. You might not like what they came up with, I sure don’t, but spare us all the indignation. We can debate the merits of specific regulations but having a customer facing app doesn’t exclude your business from regulatory oversight.
Now, what should be the appropriate level of regulation in the for-hire vehicle market?
Friends of the free market have asked for complete deregulation. They say the government shouldn’t be able to tell somebody they can or can’t use their car as a for-hire vehicle. It’s a fine argument. The problem is that Seattle tried that before and the results were troubling. There is no way Seattle is going to completely deregulate. It’s not a realistic option.
I would argue that there is a minimum level of public safety measures that need to be in place. When a tourist steps out of the Sheraton and gets into a for-hire vehicle, the tourist has an expectation of safety. At minimum, they expect that the driver is not a criminal, that the vehicle is not a death trap and that there is adequate insurance to cover any accidents. As it stands today, Seattle taxi drivers and owners have all of these regulations and “rideshare” has none of them. I don’t think it is too much to ask for everybody to compete on the same playing field.
The new ordinance by the council takes care of these safety measures. In fact, it allows for lower restrictions for “rideshare” cars if they are not working as full time taxis but rather as part time “rideshare” vehicles.
Another practical reason for these safety regulations is that the city could be subject to a lawsuit if there is an accident on the public right of way and they didn’t require safety regulations. The last thing we need in these challenging budget times is a huge legal liability for the city budget.
The rest of the regulations on taxis, and those proposed for “rideshare,” are fair game for debate in my opinion. However all regulations need to be uniformly applied across taxis and “rideshares.”
Finally, I’d like to say a word on the very negative feelings people have towards traditional taxis. It’s true that taxis have customer service challenges as was shown in the city’s demand study. Many people have had experiences such as drivers refusing to take short fares, declining credit cards for payment, rude drivers or dirty cars. Those are all legitimate reasons to switch to another service and nobody should defend the bad actors. There are definitely a few bad apples among the more than 3,000 licensed drivers in Seattle.
But not everybody in our society can switch to a new service that easily. Not everybody can afford a smart phone. Not everybody can afford UBER prices. Some people only pay with cash due to religious reasons. Taxis perform a public service that UBER doesn’t. Taxis serve a different socioeconomic segment of our population than “rideshare.” The elderly, the poor and the developmentally disabled populations depend on taxis. Those taxis you no longer choose to use are still an integral part of our transportation network.
P.S. Can we please eliminate deadheading Seattle?