Ride-Sharing Services Aren’t a Problem, They’re a Solution

Aeon Skoble – July 19, 2018

According to The New York Times, app-based ride share services are a serious problem in need of a regulatory solution.  While their editorial is about New York City, the fallacious thinking behind it is universal.  Most people who have used Uber or Lyft might wonder what exactly the problem is, never mind what sort of solutions might be warranted.  On the contrary, one might think that app-based ride sharing services are a solution to a problem.  The problem is that it’s often hard to get a taxi, and when you do, it’s expensive.  There is a cause for this problem: New York City requires taxis to have a “medallion,” which cost a lot of money, and there are only 13,587 taxi medallions.   This restricts the supply of taxis, which explains why they’re expensive, as well as why it’s often hard to get one.  App-based ride sharing services respond to this problem by, essentially, offering entrepreneurial drivers a work-around to be able to drive people for money without having a medallion.  This means that it’s much easier to get a ride, and typically less expensive also.  So, consumers have more and cheaper options, and more people who want to earn money have the opportunity to do so.  Sounds like it’s all win.

But the Times notes two phenomena which it casts as downsides in need of legislative correction.  One, the proliferation of services like Uber and Lyft means that taxi drivers make fewer trips and consequently are earning less money.  Two, there’s more traffic on city streets.  Deciding that these are serious enough problems to call for state regulation reveals not only mistaken theories of political economy, but also a class bias.

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