Local Governments Are Going After Ride Services Like Uber & Lyft to Help Politically Connected Businesses, Not Customers. Any Questions?

Over at
USA Today, Glenn Reynolds (a.k.a. The Instapundit)
provides a primer about “regulatory capture” and crony capitalism.
He explains that the real reason local governments all over the
place are going after new ride services such as Uber and Lyft.

Taxi commissions in cities from Los Angeles to Washington, D.C.
ostensibly work to regulate providers in the name of public
safety. Commissions are there to make sure cab drivers
are properly licensed, that the cabs are safe, etc.,
right?

In reality, regulators are often (always?) “captured” by
the very business interests they are supposed to supervise and end
up doing the bidding of existing business interests even when that
screws customers or potentially innovative ways to deliver
services.

Regulators — and the industries they protect — will try to tell
you that all this regulation is in service of consumer protection.
Why, if you use an unlicensed, unregulated car service, you might
be robbed, raped or overcharged! As if those kinds of things never
happen in ordinary cabs or limos. (Actually, I think services like
Uber and Lyft are actually safer, since they keep a clear record of
when, where, and by whom riders are picked up, and track the cars
involved.)

The truth is that although occupational regulation is usually
presented as a protection for consumers, it’s usually demanded by
the regulated industries themselves, and not by consumers at all.
That’s not surprising, because it’s usually the regulated
industries and the well-off people controlling them who benefit. In
Chicago, a taxi medallion (license) costs $360,000 while
the actual drivers — employed by the medallion owner — can earn
less than minimum wage. And consumers pay higher taxi rates because
of reduced competition.

Whole thing here.

Hat Tip: Rikki Ratliff
#SERIOUSJOURNALIST

This dynamic will not be new to readers
of Reason or fans of public-choice economics (or of
the socialist historian Gabriel Kolko, who famously argued that
railroad “robber barons” approved of the Progressive regulation of
their industry as a way of maintaining the lucrative-to-them status
quo).

But the idea that regulators are often in cahoots with their
regulatees needs more press. It helps to explain why so many
regulations fail to achieve their stated goals and also provides a
potent argument against the idea that every industry needs more and
more rules that will make things safe, fair, and
effective. 

As Milton Friedman told
Reason‘s Tibor Machan
in 1974:

The case for free enterprise, for competition, is that it’s the
only system that will keep the capitalists from having too much
power. There’s the old saying, “If you want to catch a thief, set a
thief to catch him.” The virtue of free enterprise capitalism is
that it sets one businessman against another and it’s a most
effective device for control.

Keep that in mind next time you hear somebody saying that Amazon
is beating up on
poor, multi-national book publishing conglomerates that
want YOU, dear reader, to pay more for books.

Here’s a great vid from Reason TV on Washington, D.C.’s
war on Uber: