In November, Beaverton, Gresham, Hillsboro, and Tigard, Oregon joined Vancouver, Washington in welcoming ridesharing juggernaut Uber to operate legally in their cities. Conspicuously absent from this list was the region’s largest city, Portland, which became virtually surrounded by the smartphone app transit economy. Then, on the evening of December 5, Uber began operating without permission in Portland, in effect daring the authorities to stop it.*
If Soviet East Berlin couldn’t keep Western freedom out by building its infamous Wall, what chance does Portland have keeping its residents from exercising their freedom to choose ridesharing within arbitrary lines on a map?
Until now, most major cities have granted virtual monopolies to a few taxicab companies on the assumption that government must protect both the livelihoods of drivers and the safety and convenience of passengers within their jurisdictions. Economists will tell you that here, and in virtually every government-regulated industry, “the regulated end up capturing the regulators.” In this case the taxicab companies end up influencing government regulators to protect them from competition at the expense of the public.
Such influence is now ending in many cities, thanks to the rise of mobile applications, but it’s still going strong in Portland. So strong that a recent study of 50 large American cities gave Portland a grade of “F” for Transportation-Friendliness, primarily because it is so hostile to ridesharing.
Ridesharing can mean anything from carpooling with your neighbors to using a mobile app to summon one of many cars in your community whose owners are willing to drive you for money to your destination. Drivers can work as much or as little as they wish, “clocking in” to the app and out of it to fit their own lifestyles.
The new app economy has sprung up over a few short years, thanks to the creativity and productivity unleashed after another American “Berlin Wall” was torn down. The mandated breakup of the government-protected monopoly Bell Telephone System in 1982, and the rise of the Internet a few years later, led to the smartphones we all hold in our hands today. Going from no mobile applications in 2007, some two billion people worldwide now use them to improve their lives.
Mobile apps do virtually anything you can think of, from facilitating your online banking, to investing, to checking your health status…to helping you find quick, reliable transportation through companies such as Uber, Lyft, and a host of others.
Uber requires that drivers pass background checks, carry the proper insurance, own relatively new cars, etc. The beauty of ridesharing apps is that they can let drivers and passengers know something about who they’re riding with through instant feedback on the app. You can see your driver’s name, photo, car, license plate number, and rating by other passengers before ever getting in his or her car. Likewise, the driver can know your name and reputation assigned by your previous Uber drivers. Such feedback encourages everyone to be on their best behavior.
Uber requires that you pay with a previously enrolled credit card. No cash changes hands in the car, which may mean speedier and safer transactions. And, before ordering a ride the app can estimate the cost of your trip (often lower than a taxi) and how many minutes it will be before your car arrives. Note that nothing stops current taxicab companies from doing these same things―except perhaps government regulations.
This isn’t all about Uber. Uber is simply the largest ridesharing company at the moment, having just closed a $1.2 billion investment round that values the company at $40 billion. But if Uber fails to innovate or succumbs to recent bad publicity, it could end up like other also-ran technology firms. No ridesharing company has government-monopoly protection to shield it from your choosing another provider.
Beyond opening up transportation options for the public, ridesharing companies open up income-generating opportunities for car owners. In a truly free economy, we should celebrate the technological innovation that allows people with cars to make money by giving rides to people who want them.
The sharing economy itself stems from the realization that all of us own assets that we may not use all the time, whether it’s a spare bedroom in your home (think Airbnb), or an automobile that sits in your driveway for hours a day.
In city after city, people recognize the benefits of allowing ridesharing companies to operate. Portland Commissioner Steve Novick apparently justifies his decision to wait by saying he wants to find “…a way to adopt a less anachronistic [taxicab] system without destroying people’s livelihoods.” There is a way, Commissioner. Rather than imposing anachronistic regulations on ridesharing companies, remove them from the taxi industry and let everyone earn a living by offering customers more and better service.
Recently, more than 40 Portland business leaders demanded taxi reforms, calling on the City Council to legalize ridesharing. They wrote,
“…We have confidence you will see the laws and regulations that protect the taxi industry here in Portland for what they really are: outdated….They’re making people wonder―how can a taxi industry lobby keep Portland from being counted among the progressive, forward-thinking cities that are providing their residents and visitors with fast, easy, on demand services like Uber and its peers.”
It’s time for Portland to live up to its hype and let young (and not so young) creatives do what they do best—create services that the rest of us want and need. It’s time to legalize transit freedom and bring Portland out of the Transportation Dark Ages.
* On December 8 the City issued a cease-and-desist order against Uber for 5pm December 11 and asked a Multnomah County judge to stop Uber from operating in Portland. Within less than 24 hours of these developments, Uber’s online petition asking Mayor Hales to let Uber operate in the City gathered more than 10,000 signatures.
Steve Buckstein is Founder and Senior Policy Analyst at Cascade Policy Institute, Oregon’s free market public policy research organization.
