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Regulating Rideshare: Uber & Lyft in Austin, TX


I moved my family to Austin in 2000. The population since we got here has doubled. Austin has, for the size of the city, one
of the most mediocre transit systems in America. Traditionally, regulation has been put in
place for all the best of intentions. I’ve been a Council Member since January
of 2015. My concern was getting in and saying, look,
let’s get some technical solutions to fixing the traffic congestion. It’s meant to lower prices or offer us more
choices or provide higher quality goods or solve information problems. But instead the new City Council chose to
focus on Uber and Lyft. When Uber and Lyft first came around, the
laws were written for the taxis. The results of regulating in the transportation
field or the lodging field for example has not been particularly good, and they’ve
been the two most ripe sectors for disruption. I think government definitely has a role. I think it’s state and local governments that really
have to think about this. This newer model had not been envisioned,
was not planned for, and so Uber and Lyft when they began had to operate either in a
gray area or in some cases just flagrantly against the law. Extra background checks and a city fee; 23,000
Austinites signed an Uber petition against these proposed regulations for the ridesharing
service. But right now an Austin mobility committee
is discussing those proposed policies. The chairman of the Mobility Committee is
a city Council Member by the name of Ann Kitchen. She came up with an ordinance saying that
fingerprinting should be mandated and then there were some other details, but in essence,
it was a question of fingerprinting. And from the time that she introduced it,
she argued that this was a public safety issue. The fingerprints are an identifier, it’s
a biometric identifier, and our public safety experts tell us that it is the best way to
make sure that you’re checking the background of the person that they’re who they say
they are. The problem here is that Uber has its own
proprietary background check process, and it seems to be working. We are in many ways much, much, much safer
in that environment than we are in a traditional taxicab. The Director of Transportation in the city
of Austin recommended that the city adopt the background check that Uber and Lyft employ,
and it should be extended across the board to include Austin taxicabs. You go down and you hail a cab, it picks you
up and drops you off somewhere, nobody knows when you’ve picked up, when you’ve been
dropped off, where you’re going, and if you ever get there. Compare that to say Uber. I’ve done about maybe 250, 275 rides since
I’ve started, and I would say a majority of the time I feel safe. There’ve been like two instances where I
was kind of like, oh what’s going on here this is what people warned me about. Um. Ha. If you’ve read the regulation you’ll recognize
that what they tried to do is they tried to impose taxi franchise regulations onto rideshare. It’s not just about the fingerprint background
checks, it was also a fire extinguisher in the back of your car. The danger of applying yesterday’s regulations
to today’s high-speed technologies is that you could ultimately slow down what are some
of the most innovative and pro-consumer innovations that we know today. Think of all the amazing things that wouldn’t
come to pass if every time something new came along that disrupted somebody’s job we stopped
it. TNCs are very important part of a ground transportation
because they’re an option. We are not talking about shutting down TNCs. That is misinformation. You would think that the regulations are there
to protect the consumers, to make your ride, in fact, pleasant, but really they serve a
much different purpose and that is protecting the existing taxicab companies from continued
competition. Regulation set up this nightmare, and essentially
technology has now allowed us to change the situation by allowing us to do an end run
around the old regulatory regime. I like to call that technological civil disobedience. The idea that there’s no regulation going
on in the shared economy just because the government doesn’t happen to be regulating
it is mistaken; there is plenty of regulation going on. It’s market regulation. First of all, that is a kind of misnomer. I mean regulation really should sit with an
outside entity that doesn’t have an incentive in the process. When you take an Uber ride, for example, you
are asked at the end of the ride to rate your driver on a scale of one to five stars, and
if you rate a driver three stars or less, you will immediately get an email from Uber
asking what the problem was. There’s been studies that found that if
you ride in a cab with a person of the same race or an Uber or a Lyft car with a person
of the same race, you are much more likely to give them a higher rating. So there’s definitely biases in the rating
system and that alone or other similar models like that aren’t enough to regulate. Within days, you had a grassroots movement
to petition the city to protest the vote. Uber and Lyft said you know we’re not going
to tolerate this ordinance, and they went out and collected 65,000 signatures on a petition
to have an alternative ordinance adopted that would have retained a lot of these regulations
but would have eliminated the requirement of fingerprinting for ridesharing drivers. Leaving fingerprinting in place for taxi drivers
and pedicab driver and other drivers. Within two weeks, they had blown through the
greatest number of signatures for putting something on the ballot in the history of
Austin, and they set the date for the election in May. I know that the council deliberately, deliberately
framed the ballot language of prop 1 to get people to vote against it. Saturday is Austin’s election on the future
of ridesharing in Austin, and if the voters don’t go their way, Lyft and Uber have said
they will leave the city. The rideshare people thought that they had
to spend millions of dollars educating people because the ballot language was faulty. You couldn’t listen to the radio without
listening to pro-Prop 1 ads; you couldn’t watch TV without pro-Prop 1 ads, full page
ads in the newspapers, multiple mail pieces every day. So vote for Prop 1. Keep ridesharing in Austin. Good luck. I actually had some of my friends that ended
up voting against it because they were so angry that the amount of money that’s being
spent. They got suspicious. Somebody’s trying to buy my vote, and they
voted against it. Proposition 1 which would have kept current
rules for ridesharing drivers in place failed. Uber and Lyft are no more in Austin. They closed up shop in the city this morning. So our absolute first priority is to help
the drivers sign up for other companies and get that, get that pool going. The reason they ultimately passed it was because
of progressive political ideology, which says that it’s the government, the federal government,
state government, local government, it’s government that is your best chance for safety, for prosperity,
for whatever it might be. Local government should not be in a position
of protecting a particular industry or a particular class of jobs per se. What they should be in the position of doing
is providing a framework for individuals to compete and provide the best service possible
to consumers. In a well-functioning economy, industries
are services that are no longer desired or no longer producing what people want efficiently
they go by the wayside. We should want that to happen. And it’s giving us more choices, more competition,
better prices, and yet we don’t see the harms that were alleged to be developing if
we didn’t regulate it. Whether it is the Internet, ridesharing, or
you name it, people think that there has to be regulation there or else there will be
chaos, and that’s simply not true. So the profit incentive works fantastic for
the majority of consumers, but if you’re one of a small number of minority consumers, let’s
say, or disabled, there’s not much of a, of a profit incentive for Uber to go rehaul
the entire app unless there’s some kind of outcry for it or some government pressure
or some other kind of other external pressure. Don’t start with the worst case scenario
and try to regulate to solve it. Instead, see how far self-regulation can take
you. I’m very skeptical of anybody seeking special
privileges or exemptions from a regulatory scheme, and the fingerprinting, in particular,
didn’t seem like, somehow, the ride-sharing should not have to submit to that. We all do it. Nurses do it. Cab drivers do it. Real estate agents do it. All of us do it, okay? We will not allow a company to come in here
and say: “We’re gonna set the rules for the city.” By having the consistent application of rules,
whatever they are, to everybody, that if the rule was a bad rule, if it made no sense,
if it was costly, burdensome, then the more widely that rule is applied, the more likely
it is that people would recognize the imprudence of the rule and repeal it or revise it. Some say, well, we need to level the playing
field by regulating everyone up to be the same as the old players. The better solution is to, instead, liberalize
down or deregulate down in the direction of the emerging technologies that are essentially
born free as opposed to being born in regulatory captivity. Why don’t we offer deregulation to the taxi
companies and allow them to respond to market forces? It doesn’t make sense that you need to change
what’s not broke. You don’t fix what’s broke. You leave it alone. But the taxi company said no, no they didn’t
want anything to do with deregulation. They wanted to impose these onerous restriction
on to the new rideshare model, knowing that would hurt their business model more than
it hurts the taxis. The purpose of regulation is not taxicab welfare
or hotel welfare; it’s consumer welfare. I think in the aftermath of the Prop 1 defeat,
there’s a lot more regret than there is crowing about how we beat Uber and Lyft. We are one of the few cities in the entire
country, I should say one of the few major cities in the entire country, where people
do not have access to Uber and Lyft, and I think that has been clearly to the detriment
of the people of Austin. Austin is growing. Austin is becoming a bigger and bigger city. They can’t stop that, but it’s like they’re
trying to keep Austin small. Overnight 10,000 people were out of a job
because the city and these companies didn’t get along. You have Mayor Steve Adler on one side trying
to find a solution to bring Uber and Lyft back into operation in the city of Austin. On the other side, you have Council Member
Ann Kitchen who says that she is not budging one bit on the rules to get fingerprinted
drivers behind the wheel only. People have just been forced to get used to
it. They’re still unhappy, but my guess is that
Uber and Lyft are not gonna come back until they get what they want. The fact of the matter is that there are very
strong arguments that can be made against the fingerprinting background check process. And this is all much ado about nothing. As we often hear, this is, in fact, the classic
solution in search of a problem. I don’t have any problems with a new industry
displacing an older one that just doesn’t seem to be working, for instance, the taxicab
industry. But at the same time, I also see the need
for more regulation, a simple background check is really not too onerous. The problem is we’ve already been down this
path and tried that sort of regulatory approach for other technologies and sectors, and it
ultimately led to less competition, less innovation, less choice, higher prices. It’s gonna take a big event, maybe a South
by Southwest, for Austin to really get angry about this, and that hasn’t happened yet,
but it is a desert. It is currently a transit desert.

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