TORONTO, Ont. May 3, 2016/ Troy Media/ – For Canadians who use Uber and believe ride-sharing is a sign of a healthy free market, this will be a huge week.
Toronto city councillors are holding a big vote on the regulation of Uber and taxis. Some see it as a means of leveling the playing field. Some feel it’s the only way to save taxis from eventual extinction. Still others believe it’s an irresponsible attack on Uber’s growing influence and popularity.
Here’s an additional wild card.
Ian Black, Uber Canada’s general manager, told the Toronto Sun’s editorial board that if City Hall passes the licensing and standards committee’s recommendations, they’ll close up shop. “It’s not something we would happily do or want to force,” he said, “but that’s what we would feel is being forced upon us.”
Some claim this is nothing more than an idle threat. Since Uber left Calgary for similar reasons, however, a precedent has been set. Meanwhile, the company can’t set up operations in Edmonton and Vancouver, and its status in Montreal is rather shaky, too.
When it comes to matter of The State v. Uber, who is making the more valid argument?
It’s easy to understand why taxi companies feel threatened. They’ve lost fares to Uber, which has led to a significant decrease in profit margins. Taxi drivers believe their livelihood is being lost to Uber drivers who pay no fees, follow virtually no regulations, and offer lower prices than standard fares.
Many of these complaints are questionable.
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Canadian taxis have long operated in a semi-monopolistic fashion. Competition existed between taxi companies, but no outside individuals or companies were legally allowed to compete against the industry. There have been some smaller ride-sharing companies, but they weren’t as well organized as Uber.
When a monopoly, or something similar to a monopoly, breaks down, the free market naturally expands to include successful new entities. Consumers are afforded greater personal choice, and spend their money accordingly.
Hence, taxi companies’ profit margins went down when Uber, a competitor, successfully acquired a significant percentage of the consumer base. That’s the way the free market works.
What about the fact that taxis and Uber serve the same purpose? If one is heavily regulated, and the other avoids regulation, doesn’t that create an unfair imbalance?
In theory, yes. There’s one big difference: Taxis and Uber aren’t the same, and don’t serve the same purpose.
While taxi companies are privately owned, the industry is heavily regulated. Some of the regulations that relate to safety and insurance are acceptable, but many fees and restrictions are above and beyond basic free market thinking. Uber, on the other hand, is free from state interference.
Uber also did something clever several years ago. It diversified the company, and branched out in different directions. In Canada, this includes UberEATS (food delivery) and uberPOOL (carpooling). Other parts of the world have expanded the Uber brand to include boats, package delivery and even garage services.
Hence, Uber is not a taxi service – in the proper definition of the phrase – and is much more than mere ride-sharing.
There’s no question Uber can’t have as free a ride any longer. The company seems to accept that a limited amount of regulation for driver and customer protection must exist. Yet they feel the current regulations on taxis in cities like Toronto are too onerous, and they don’t wish to operate under this business model.
A limited number of Uber fees and regulations should be established. Taxi fees and regulations should be massively reduced. And, to create a level playing field, Uber and taxi fees and regulations should be the same.
It’s a much better solution for consumers than gradually forcing Uber Canada out of the marketplace.
Troy Media columnist and political commentator Michael Taube was a speechwriter for former Prime Minister Stephen Harper. Michael is also included in Troy Media’s Unlimited Access subscription plan.
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