Quality Control and a Level Playing Field in the Sharing Economy: Uber in Birmingham
By Art Carden
There has been an explosion of commentary on regulations in Birmingham regarding Uber and its services; I streamed part of yesterday’s City Council meeting at which they voted to delay a decision until next week. I wrote an open letter to the Council for Forbes.com and shared it in the r/Birmingham subreddit. A few people asked about the taxi drivers’ side of the argument, namely, that they be allowed to compete on a level playing field. People have invoked “safety” as a reason why UberX in particular should face the same regulations as area taxicabs. I think these are interesting issues, but I don’t think they make the case for regulation.
If people are really willing to pay a premium for the quality regulation ensures, then unregulated UberX shouldn’t threaten regulated and presumably-higher-quality, lower-risk taxis. Riders who want the assurance that they are getting a quality ride will forsake Uber and go with the regulated taxis.
If people aren’t willing to pay extra for high quality–if they are willing to accept a bit of additional risk for lower prices–or if Uber’s ratings system isn’t an effective way to maintain quality, then regulation is at best superfluous and at worst an unnecessary barrier to entry.
At The Skeptical Libertarian, Marc Scribner cautions people to be skeptical of Uber’s political strategy, and with good reason. That said, regulators seeking to avoid the error of permitting something that is too dangerous are almost certainly going to make the mistake of forbidding something that is safe.