As negotiations continue, the Spanish government must not yield to the taxi drivers who are bringing chaos to the streets.
The driver unions are furious over ride-sharing firm Uber’s “intolerable” competition. They are demanding that Prime Minister Pedro Sanchez restrict Uber’s access to new licenses.
But while Uber is far from the perfect manifestation of capitalist innovation it claims, it deserves support here. Of course, for the socialist prime minister that’s a hard pill to swallow. The Spanish socialists rely on the unions for significant electoral and financial support, and opposing their demands opens Sanchez to internal challenges. Nevertheless, basic economic reality demands that the prime minister not back down.
Consider the facts. Spain’s lethargic economy is on a downward trajectory following two years of average growth around 3 percent. Its unemployment rate is 15 percent, and its youth unemployment rate is in excess of 33 percent. Those statistics speak to why it’s so important that Uber be allowed to continue growing in the Spanish market.
First, because without Uber, those who want to travel in Spain’s major cities will have to pay a lot more for lower-quality service. Spanish taxi drivers are notorious in Europe for charging extortionate prices. And they deserve little sympathy in the context of their willingness to have their fellow citizens subsidize their profligacy.
More broadly though, Uber represents a new kind of economics that Spain desperately needs to endorse. And if Uber wins there, it will offer unemployed Spaniards the hope of new jobs and a broader deregulation of the economy. The reality of European socialism is that its restriction on new market entrants and obstruction of effective competition are the major reason 33 percent of Spanish youth don’t have jobs. They either can’t find the jobs or the jobs can’t be created.
Sanchez must protect Uber here. Without it, Spain will continue stagnating and too many of its citizens will continue suffering unnecessarily.
UPDATE: An earlier version of this article suggested that Spain’s economy was struggling to grow beyond 1 percent GDP on an annual basis. That argument rested on quarterly figures not annual GDP figures. The piece has been updated to reflect the correct data.
