As the last of major (and smaller) cities in Canada, my hometown Calgary finally saw the ride-sharing service Uber launch here a few days ago, to strong demand and to warnings from the mayor and city councilors. (Uber violates the city by-law of not charging the minimum of over $70 per ride, which the city dictates to limousine service that it claims Uber to be).

The customers love having less expensive, much more available rides than what Calgary’s taxi monopoly offers. The mayor and the rest of the advocates of the regulatory state hate Uber because they claim to be concerned about “public safety”—non-regulated drivers without government ‘oversight’ could not possibly drive safely, they insinuate. However, what these politicians are really concerned about is the loss of tax revenue in the form of taxi licenses that Uber drivers do not buy, and more importantly, the loss of their ability control how we buy and sell rides in the face of Uber’s defiance of the city by-law.

As for the legitimate concern for Uber drivers not having sufficient liability insurance, that is an important but not the fundamental issue here, and can be easily solved by Uber buying additional insurance (as it already has done in the United States).

Ironically, city councilor Joe Magliocca was quoted as saying about the Uber’s Calgary launch: “It’s just selfish, they’re just being bullies on the block … It’s typical Uber. That’s what they’ve been doing all across North America. Even if they had a mandate from council not to enter the area, they still enter.” The irony might be lost on Magliocca, but he is mistaken about who the bullies are—although he gets selfishness almost right.

It is the regulators, the city council, who are the bullies, not Uber. The regulators control the taxi industry, by arbitrarily limiting the number of taxi licenses issued in the city, thereby restricting the supply—and increasing prices. Presumably, the regulators know best how many taxi cabs should be operating in the city, how much they can charge, and what several other regulations taxi drivers should meet. The idea that the buyers and sellers of taxi rides could be left free to trade with each other, without any regulatory ‘oversight,’ is unthinkable to them. As if somehow it is in the ride providers’ interest to drive unmaintained cars recklessly and injure or even kill their passengers, or in the interest of passengers to accept rides from such drivers.

Quite the contrary, it is in the selfish interest of Uber and its drivers to offer the best, safest, lowest cost service, in order to ensure satisfied repeat customers who recommend them to others—and to maximize their profits. This is the beauty of the Uber model: it actually makes free trade between Uber’s drivers and their customers possible, without the intrusion of the regulatory state.

Anyone who has ridden licensed taxis anywhere knows that the license (and the high price) does not improve the odds for a safe, courteous, professional ride. Quite the contrary, the regulated owners of taxi licenses or their drivers have no incentive to offer better or less expensive service, as that has no impact on amount of business they can get and the profit they can make. They haven’t had to worry about real competition—until Uber entered the scene.

Understandably, the owners and drivers of licensed taxis are upset about Uber’s entry, like any other players in government-protected industries would be upset about new entrants that offer better and cheaper products or services and that bypass government licensing. However, in non-government-sheltered industries, even in the semi-free markets of today, there is no guarantee of a certain share of the market or a certain level of income. New, innovative, competitors can enter and provide alternatives that customers can choose, with no need of a ‘regulatory framework’ and ‘compliance’ officers beyond the laws and law enforcement that protect individual rights against the initiation of physical force and fraud.

This is the reason we should cheer and thank Uber. It sets an important precedent for protecting our freedom to choose and live our lives, freely trading with others, with the incentive to both sell and buy best possible products and services at the lowest possible prices.

4 COMMENTS

  1. Thank-you Jaana. Very insightful. I also recommend this related article from the Globe and Mail.
    http://www.theglobeandmail.com/globe-drive/adventure/red-line/how-uber-is-ending-the-dirty-dealings-behind-torontos-cab-business/article25515301/

    I was particularly surprised by this excerpt:

    “I discovered that almost none of Toronto’s city-issued taxi licenses – known as “plates” – were in the hands of working cab drivers. Instead, they were held by people who made others pay to use them. Among the key players was Mitch Grossman, a businessman whose family had collected more than 100 plates. These plates gave Grossman a pharaoh’s power.”

  2. Lessee now – isn’t that the Calgary whose taxi companies wouldn’t even answer the phone at busy times?
    (IIRC a year or two ago at Stampede time someone set up a dispatch service that promised to answer the phone even if they were very busy, IIRC drivers who owned their own license flocked to the new service.

    The Calgary that gave a difficult time to a startup that offered better service, such as carrying people’s purchases to their door.

    In the Alberta that has a licensing bureaucracy obstructing provision of bus service, but failed to ensure the handibus charity had a license.

    Established taxi companies, and drivers who have their own city license, are being protectionist.
    Most have a problem of having paid a high price for a taxi license – that’s the result of a quota system, purchasing a piece of the quota has not true value, it is artificial due to government interference.

    Uber will of course have to ensure its growth is managed well, including that they are sure is actually driving the car, it is alleged that some authorized drivers have someone else do the driving – that’s fraud (lying to Uber, who would have checked out the authorized driver).

    • Thanks, Keith. It looks like Uber is screening its drivers–they are also rated by customers–and will be providing liability insurance (for up to $5 million per any claim). I am very optimistic Uber will as work brilliantly in Calgary as in other cities.

  3. Thanks Terry, for the link to Toronto’s situation. “Amusing” items I noted:
    – the regular taxi driver who also registered with Uber (he’s vulnerable as he does not own the car nor the license)
    – the license holder who thinks free enterprise is the established system and Uber’s way is communism. Hello?
    – the city consciously accepted violation of rules on license ownership

Leave a Reply