In response to my recent blogging about Uber and Lyft, Daniel Klein sent me this paper (gated by JSTOR) by Ross Eckert and the recently-deceased George Hilton.
It’s a fascinating story of rent-seeking special interests (electric streetcar and railway companies) seeking to maintain regulatory insulation from competition and maintain a “level playing field” as they were obligated to help pay, in some places, for things like street lighting and road paving.
If you have access to JSTOR, it’s well worth your time. The same arguments people are offering for “why we need to regulate Uber and Lyft” are the same arguments people used to shut down municipal jitney services a century ago. As they say, those who don’t know history are doomed to repeat it. Many cities are on the cusp of repeating the early 20th century’s mistakes.
Of course, there’s still a knotty problem here. How do we help ensure that firms aren’t subsidizing their competitors? If I were a streetcar company paying to pave and light the streets, I’d be a little upset that my competitors didn’t have to play by the same rules, just as a brick-and-mortar restaurant might be upset if they had to pay licensing fees and submit to regular health inspections while the food truck just down the block isn’t regulated in the same way.
So what can we do about it? I have a few ideas, but I’m interested in your answers first.
READER COMMENTS
Patrick R. Sullivan
Aug 20 2014 at 12:01pm
For those without access to JSTOR, Cliff Slater has a section on the jitneys and their political battles with the streetcar companies in this piece from Transportation Quarterly. Scroll down to ‘The Jitney Craze’.
ThomasH
Aug 20 2014 at 3:56pm
From a Liberal perspective, a dispute over a “level playing field” is an opportunity to revisit the rational for and fairness of the tax or regulation that is supposedly creating the un-levelness. To begin with. taxes on business income is seldom optimal so removal of the tax on the incumbent firms is probably a good first step. (A road user charge applied to both commercial and private vehicles is not a tax on business income.) As for regulation, one would need to examine the evidence for the specific market failure that the regulation was aimed at correcting and whether it still is needed (if it ever was). In some cases the regulation should be applied to both and in some cases removed or modified and compliance costs minimized. A proposal to remove a regulation that is opposed by incumbents would create a presumption in favor of removal. (I believe this is an example of what Freakonomics calls “teaching your garden to weed itself.”)
vikingvista
Aug 20 2014 at 11:46pm
“Many cities are on the cusp of repeating the early 20th century’s mistakes.”
And with early 20th century technology. I suppose we should be glad that they’re not trying to pour billions of tax dollars into chariots. Thank Odin our culture didn’t romanticize chariots.
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