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OPINION - Getting into a stranger's car... a new area for government regulation

by Chris Conley

NEWS BLOG (WSAU) Lyft is a great idea unless youre a cabbie. If youre not familiar with how it works, Lyft is a smartphone based ride-sharing service. You download their app, and use it when you need a ride. Theyll match you with one of their drivers (usually someone whos using their own car part-time to make a few extra bucks). You pay for the service through a credit card you put on-file with the Lyft web site. Lyft gets a commission and gives the rest to your driver.

Taxi companies hate this. A cab medallion in a major city costs big bucks. (A taxi medallion costs $1,000,000 in New York City they get transferred from one company to another as if they were gold.) Cab companies often pay even more for franchise and licensing agreements with the cities they operate in. This amounts to a giant government-sponsored protection racket. Cities intentionally limit the number of taxi licenses. They want to make sure there are less than the right amount of cabs available to a limited number of drivers can maximize their earnings. And in exchange for paying exorbitant fees, the cab companies and drivers expect the city to keep new competition out of the marketplace. And all of this gets paid for by overcharging the actual riders which explains why a cab ride from Manhattan to Kennedy Airport is $52 plus tolls.

But its not safe to get into a strangers car. Yes, it is. Lyft does a background check on all their drivers. But are the cars safe? Yes, Lyft inspects the cars of their drivers before approving them. Perhaps the car wont be as comfortable as a big, comfy taxi. Yes, it is Lfyt only approves people with late model cars to be drivers. And at the end of the ride, you rate your driver. If you give them less than three stars, Lyft wont match you with them. The driver rates their passengers too so if youre a drunken fool who throws up in the back seat of a strangers Prius, they wont be driving you around anymore. And Lyft is bonded and insured in case youre involved in a crash.

A service like this also does away with many abuses in the taxi industry. When I lived in Brooklyn, many cabbies would refuse to take me home from Manhattan at night. Cab drivers didnt want to drive into distant, residential neighborhoods where they wouldnt be able to get a fare back to Manhattan. The rules say they have to take you anywhere in the five boroughs the reality was that theyd simply refuse to drive you. On rainy days, when there arent enough taxis, some cabbies will try to charge per-passenger, even though the rules say theyre entitled to one fair if everyone gets-in and gets-out at the same place. Blacks and Hispanics have long complained that theyre discriminated against while trying to hail a cab; the drivers pretend not to see them. Lyft does away with all these abuses.

Milwaukee is one of the markets that Lyft is entering. As you might imagine, the citys taxi companies have cried foul and are now looking to the city council to protect their franchises. The citys solution which isnt a solution at all is to increase the number of taxi permits by 100. Lyft is facing similar opposition in other cities. And there are already competitors in the share-ride business from other upstarts like Sidecar and Uber.

Technology, and the entrepreneurialism that it inspires, is always going to move faster than government regulation. And the governments default position is that everything must be regulated. Good luck with that; the effort is futile.

Chris Conley
7.23.14

IMAGE:The Lyft logo, via CreativeCommons.com