Wednesday, June 11, 2014

Who Regulates Uber?

I was singing the praises of Uber to Mrs. Knabe. She asked, "Who regulates Uber?" The short answer is no one, and everyone. The non-government regulation of Uber, in my opinion, is far more effective than the government regulation of taxi and livery services. 

I have never had a bad experience with Uber. I have had plenty of bad experiences with cabs. How can this be? How is it possible for Uber, with no government regulation, no agency protecting the consumer, to consistently provide a superior service to the regulated taxi service?

Technology in only part of the answer. With Uber, I rate each ride, and that data is used by Uber to control the quality of its service. But that's only part of the answer because the Taxi and Livery Commissions around the country could do the same thing if they wanted. The real answer is Uber is focused on providing a service that customers want and Taxi and Livery Commissions are focused on serving the owners of taxi medallions. If after a ride with Uber I was dissatisfied, I could instantaneously notify Uber. I could do the same with a cab, but I believe my complaint to Uber would be acted on and my complaint to the Taxi and Livery Commission would not have an impact.

It is not unique to Uber and taxis that regulation by consumers is more effective than the regulation of expert panels. Despite that, unfortunately, both the Left and Right want to rely on experts to manage a system instead of letting consumers punish poor service and reward good service.

Of course, the government is colluding with taxi and livery services to restrict Uber and others from entering the market. To protect consumers of course.

The Virginia Department of Motor Vehicles sent cease-and-desist orders Thursday to Lyft and Uber, telling the two taxi-like services they must stop operating in violation of state law or face fines against their drivers...

Along with the cease-and-desist orders, the DMV on Thursday told the public to research any ride service and learn about its insurance coverage, vehicle maintenance and driver screening process before using it. It pointed people to a list on its website at, where users can search for a company to see whether it is registered and insured under state regulations.

Neither Lyft nor Uber is on the approved list.


1 comment:

  1. I agree, this is a good example of how destructive regulations can be to true progress and improvement in society. Yet there are many examples of companies that regularly make their customers miserable (Comcast, Verizon, Nintendo, Microsoft, etc.). So how does Uber become Comcast? It seems to me that it's slightly different than what you said: it's not that companies are focused on providing a service that customers want, but rather that companies are focused on making customers pay for their service. That can be done one of two ways: provide a better service than everyone else, or use various legal and social coercive measures to leave customers in a position where their least-bad option is to buy the service.

    It seems that as long as companies are in something of an "underdog" position, the best option for making customers buy their service is by providing the best service they can. But once they become successful and achieve a position of dominance, it starts to become easier to use laws, free trade agreements, lack of alternatives, collusions with the other dominant companies, etc. to force customers to choose them. Yes, theoretically customers could still choose by refusing to buy from the dominant company (for example, Comcast), but it many cases that effectively means refusing to have that kind of service at all. It's a possible choice, but because of the structure of our society, with its pressures and stresses and fragmented social order, it's not really a real choice. Due to phenomena like "ego exhaustion", one very literally cannot make very many of the kinds of choices that require one to behave so differently from everyone around, because people don't have an infinite store of willpower.

    Regulations are an attempt to fix that, by providing a minimum standard that the now-essential service that the company provides must meet. But they're clearly a bad solution to the problem (not least because the dominant companies find ways of getting regulators friendly to them, and then regulating their opponents into oblivion). We need a better solution. What should it be?