The Uber problem is a classical Libertarian one, but not only in the sense you may think it is.
On the one hand, it is a classic libertarian success story about the power of the free market, individual choice, reputation based services, entrepreneurship and we could go on.
On the other hand, it is most divisive. No business in recent history created as much strife and conflict or faced as vehement opposition as Uber does. We may understand the opposition coming from the state, its regulators and the politicians. What seems puzzling is the opposition from cab drivers.
It reminds me of an old joke about a poor peasant who frees a genie from his bottle-prison. “I grant you one wish” says the Genie. “what would you want me do?” “My neighbor has a wonderful cow” says the peasant, “she is beautiful, healthy and produces a lot of milk” “….and you want one just like it?” asks the genie. “No” says the peasant. “I want his to die.”
The taxi industry, all around the world, could use Uber as an opportunity to shake off their own shackles but instead, they want Uber to be shackled just as they are. Misery wants company.
The state has everything to lose. Control, income, power. Licensing bureaucracies may cease to exist. So may the corrupt system that in many places developed around it. The state and its stakeholders will do anything to make Uber’s life impossible. Their attitude, their political interest is understandable. What is difficult to understand are the choices of the cab drivers.
They can choose freedom, flexibility, self reliance and fair competition on one hand and virtual slavery with miserable income security on the other. They could have a cow just as wonderful as their neighbour’s, but they prefer shared misery.
Or so it seems. My assessment is not complete without identifying the benefits of state protection.
The advantages and costs of cab licensing:
Limited competition. Gratuities. The ability to cheat and have a portion of your income off the books. No pressure of quality control. BUT: you have to pay dearly for the ‘protection’ of the state. It’s a racket.
The advantages and costs of Uber:
Better income. More freedom and flexibility. BUT: you have to be nice and competitive and you cannot cheat.
When cab drivers make a choice, it all comes down to perception, an evaluation of the costs and benefits of the two options. That perception is also fundamentally moral. How do we see our prospects? What can bring us more benefits? The honest or the dishonest way? The free competition of the market or the protection racket of the state? The state and its agents are doing their best to convince its beneficiaries that their offer is the better one. They are doing a pretty good job convincing not only the cab drivers but the rest of society as well that the world is a mean and evil place where one can only get ahead with the help of a powerful protector.
Uber exposes the greatest challenge libertarians have to face. The worst enemy of liberty is not the state, but the people enabling it. The state can’t do it alone. It needs the support of the people it can bribe. The libertarian task is to convince those same people that the state can never offer a fair deal. It will always cost them more than what they get in return.
Über’s struggle for acceptance is the crystallization of several problems of which I address a single one in this post.
The opposition to Über is part luddism, part political corruption, part aggressive syndicalism, an example of overall political corruption and as a result, a great example to show the need for an overall change in political attitude, as complex problems need complex answers. In the end I decided to write about these complexities in a separate and longer post.
According to a Globe article:
“In September 2012, one of Toronto’s taxi licenses sold for $360,000. As it turned out, this was a peak that presaged a major slide. By 2013, the average selling price of a cab plate had fallen to $153,867. In 2014, it was $118,235.”
The only proper answer is to phase out the licensing altogether. Issuer should buy back the medallions and set up an open and transparent system without any limit.
…….. but that would look an awful lot like the Über model, wouldn’t it?
When you bring freedom to a society, you are saving the future generations, but you are literally murdering the souls of those that accepted the previous system.
But that is a long argument why and I should make it in a post.
It is indeed an interesting question what can and should be done with state created monopolies and the corrupt system they create. It has three aspects:
• the state creates a monopoly and charges his beneficiaries directly.
• Depending on how successful the state’s enforcement of the monopoly is, the grants (in our case the taxi medallions) will develop a market value to reflect the value of the benefits the grants transfer onto his owner.
• Since the essence of the monopoly is to create artificial limits to supply, a black market may develop to meet the demand.
Let me illustrate the problem with some examples:
You own a shop. The neighborhood mafia guys come to your shop and ask you for protection money. You decide to pay. Does that mean that you ‘accepted the system’?
Now let’s suppose that the police (or divine providence) gets rid of the mafia. Will YOUR soul be ‘literally murdered’ by the change? Should we be concerned about the souls of the mafioso?
When I sit in a cab, I do not ‘accept’ the system willingly, I am doing so under duress.
To put it from principles, if there is no fundamental difference of function between the people who submit in the first place and those who rebel, then the people who submit have accepted the system. Naturally, there’s a common sense caveat to this and it presuposes that a rebellion would be successfull at any time over the lifespan of the system. (If a person’s rebellion is equivalent to their death, then you can’t call their compliance acceptance). In your example, there is a fundamental difference in function (the police cleans out the mob, which is why it’s an imperfect example), but in Uber’s case, there isn’t one (they’re all just drivers looking to get into the transport business) it’s just that now there’s a better way of bringing hitchhikers and drivers together. Both concepts existed before Uber, it’s just that they were inefficient at competing with the state driven model of taxis.
Maybe I used the wrong language, but the idea remains that whenever you bring change for freedom to a society then you obviously benefit all the future generations, but the generations that have acted under the non-free system, they have to deal with the loss of their investments (sometime their entire lives’ work).
This is not meant as an argument against freedom, I happen to think that all the benefits of freedom trump any kind of argument you might bring against it, but it is something worth keeping in mind when seeing all kinds of “illogical” behaviour from people. Which is kind of what you were puzzled with in the first place.
And there is one category of people who will absolutely not be better off when freedom is injected into a system. It’s the ones at the end of their economic lives. The retirees or those close to retiring. That’s not an effect of freedom, however, it is an effect of system change (it happens even more profoundly when freedom is taken away, but people notice it less because the injustice aspect is more prevalent therefore you can cast blaim on the oppressors).