Uber and taxi regulations are often pro-business, and that’s the problem

This is the scorecard of major U.S. cities, and their regulatory frameworks regarding taxi cabs and ridesharing programs. R Street, the free-market-favoring nonprofit in D.C., has conducted a study of the laws that allow for, ban, regulate, protect and cartelize cabs as well their competitors like Uber, Lyft and Sidecar.

This is a crucial topic because it gets at some of the most important issues regarding economic liberty, special-interest politics and political economy.

For instance, one of the most poignant periods in American economic history is the Progressive Period, when the concerns were monopolies and cartels. R Street’s study on cabs and Uber reminds us that today cartels and monopolies tend to be not the enemies of the state, but the creations of the state. Most of the cities R Street studied require taxi medallions or they restrict the number of taxis that can operate.

The study also shines a light on the difference between being “pro-business” and “pro-market.” New York Times blogger Josh Barro points out that many of the worst cities in R Street’s study are Republican-run. Barro explains the dynamic:

This malady appears on the federal level too. Look at the areas where congressional Republicans favor big government, and you see a pattern: Medicare prescription-drug benefit, farm subsidies, Export-Import Bank, TARP. The pattern, of course, is that these are government interventions that favor big business. As Barro’s article makes clear, on the local levels, the “pro-business” legislation Republicans back is often protectionist regulation, not merely subsidies.

But here’s the most important point in the R Street study (and I plan to discuss this at more length in a column soon): economic policymakers need to spend more time thinking about how their policies affect the individuals engaged in business, not merely the business owners.

Many of the most onerous regulations fall not on the executives or owners of Uber, but on the drivers. Many taxi cartels protect not the drivers, but the owners.

R Street writes: “Another interesting wrinkle comes from New York City, where the city took a novel approach to TNCs that forces even casual ride-sharing drivers to submit to commercial licensure and insurance.” This is an annoyance to full-time limo drivers. It’s a true barrier to entry to the guy who wants to make some extra money after his day job.

On city-enforced taxi cartels, R Street writes “economists generally agree that medallions tend to increase rents to owners, not drivers.”

When Republicans complain about regulation, and when they don’t want to sound like they’re sticking up for Big Business, they point to the entrepreneur — the guy who did build that!

But the dad trying to earn an extra $200/week by driving in order to afford his daughter’s soccer camp isn’t an entrepreneur. He is, however, the biggest victim of these regulations.