A simple Taxi/Uber model

Once there was a service called a taxi. For a fee, passengers could hire a ride from here to there. This was an organized commercial venture with firms and drivers and passengers arriving at an acceptable balance of profits, fares, wages, and benefits. There was a govorning role in place as well, one developed over time.

Then came the internet and individuals outside the taxi service business could offer people rides. Without the formal structure and regulation, thus fares were considerably cheaper. This was good for the consumer, especially those of modest means. This internet-based method of connecting those with cars to those who needed rides seemed like a win-win for everyone.

Then drivers (who did this for a living instead of simply being in the neighborhood) found they needed better working conditions. The conditions that were most probably in place in the taxi industry that was disrupted. Labor activists jumped in to help guide a political process. Drivers donated extra voluntary time. Paths were forged with local politicians. A bill is written and passed. The celebration that followed looked like this.

But the stark numbers reality of the push to revert back to the original model has been ignored in favor of winning. The old model is considerably more expensive to the consumer. Without a need for the internet service, Uber and Lyft claim they will leave the market. Should the drivers prefer the original taxi model, that is fine. But it is a mistake to ignore the reality of the other parties. The Governor overrode the unanimous preference of his party in order to study the matter further.

I’ve got to give the Gov credit for putting economics over politics on this one. Or did he? If the ones being hurt by the labor regulations had been higher-income folks, I’m sure he would have signed off.

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