“Uber’s Real Crime is Giving in to Politics as Usual”

In a very short time, the
ridesharing service Uber has gone from being “everybody’s private
driver” to everybody’s favorite punching bag. Stupid reactions to
problems with drivers and juvenile responses to bad media
coverage—including threatening journalists with doxxing—will do
that to even the most-lauded new-economy startup.

In a new
column for Time, I argue that Uber’s real crime is
that it is currently colluding with local governments to write
regulations that give it room to operate while disadvantaging its
current and future competitors. Snippets:

In September…the company hired former Barack Obama adviser
David Plouffe specifically to work with local governments. “Uber
should be regulated,” says Plouffe, who
hails the legislation he hammered out in Washington, D.C. as
“groundbreaking legislation [that] provides a model going
forward.”

That model is one that gives clear advantages to Uber, which has
more market share and political clout than its rivals such as Lyft
and Sidecar. What the legislation does is establish “burdensome
new ridesharing regulations” dictating minimum ages of drivers
and other requirements that will make it more difficult for
competitors to catch up to Uber or enter new markets in the first
place.

In The
Myth of the Robber Barons, historian Burton W. Folsom made
a distinction between market entrepreneurs, who got rich by
providing goods and services to people at cheaply and efficiently,
and political entrepreneurs, who maintained and grew their market
share by lobbying for regulations and special privileges that gave
them an edge. Folsom underscored that it’s common for market
entrepreneurs to become political entrepreneurs (think Thomas
Edison, who used all sorts of political connections to kneecap
market rivals).

Uber’s latest strategy may make sense from a business point of
view—Plouffe even calls it “Uber-mentum”—but if you believe in free
markets, it’s just as dispiriting as most of the other things that
have ginned up anti-Uber fervor. And to the extent that new
regulations make it that much harder for the next great disruptive
business to come along, it’s worse still.