Scenes from the Rent-Seeking Society: A Final Post on Ride Sharing and the Importance of Constitutions
By Art Carden
As I tweeted yesterday, a quick review of the battle over ride-sharing regulation in cities around the world convinces me we’re building a bridge to the eighteenth century. Mercantilism is alive and well, and cities (like Birmingham) are missing a huge opportunity to revisit regulations that, in a 21st century economy where information is widely available and transparency is the norm, are unnecessary. Instead of trying to force Uber and others to play by taxi regulations and instead of creating a regulatory carve-out for ride-sharing services like Uber and Lyft, the city should’ve just scrapped the entire set of requirements for people willing to drive others around in exchange for money.
The Public Choice lessons are interesting and disheartening. Every day that passes that Birmingham-area residents don’t have access to ride-sharing apps is another day in which we’re all worse off relative to what might have been. Uber, in spite of their claim that they would simply walk away from Birmingham if they didn’t get what they wanted, has redoubled its efforts.
In a few points:
1. If Uber, Lyft, Sidecar, and others set up shop in Birmingham, they will create gains from trade.
2. Uber and City Council are consuming valuable resources fighting about whether companies like Uber will be allowed to enter the market and create these gains from trade.
The entire saga illustrates the importance of the rules by which rules are made. From the perspective of society at large, the battle over the rules governing the conditions under which people will be allowed to do certain things is pure social waste. Note that it isn’t the transfer that is the waste: if Uber, Lyft, and Sidecar could compensate incumbents and those with veto power over their entry, then at least in a static sense we could get an efficient outcome. The social waste is reflected in the resources consumed in the fight over the rules.