Governments should adapt to the future, not give in to reactionary demands.
Madrid — I arrived at the airport here on Saturday to find the taxi-pickup lines empty and the lines for tickets at the airport’s Metro station overflowing. Madrid’s 20,000 taxi drivers have been on strike for two weeks to protest the existence of Uber and its imitators. Riot police have been used as strikers have lit bonfires and blocked traffic.
The cabbies hope to emulate the success of their counterparts in Barcelona, who last week won passage of new regulations that require app-based rides to be hired up to one hour in advance. Uber and its competitor Cabify have pulled out of Barcelona, putting 3,500 jobs at risk.
So far, the Madrid authorities appear to be made of sterner stuff. Angel Garrido, the conservative president of the Madrid region, isn’t backing down. “I am willing to legislate on attracting customers, but if someone wants to legislate to eliminate a sector, I tell them they have made a mistake,” he told the Madrid newspaper El Confidencial.
Uber is under pressure all over the world. After taxi drivers violently attacked Uber drivers in Istanbul, Turkey’s authoritarian president Recep Tayyip Erdogan moved to ban Uber last June. “That business is now over. There is no such thing anymore,” he said. In Hong Kong last month, cabbies vented their anger at online ride-hailing services by smashing two taxis with hammers. Hungary and Denmark have both banned Uber. Even in the U.S., Uber faces punishing government surcharges in New York City, and a ban in Oregon cities other than Portland.
But Uber drivers are fighting back. Last year, dozens of them conducted a sit-in in front of the presidential palace. “The people choose, we just want to work,” read one of the banners.
The Uber drivers say the taxi industry is using a dying model and needs to adapt to the disruption of ride-hailing services, not ban them.
Basically, the taxi industry is heavily regulated almost everywhere. The deal is that cab owners put up with a lot of picayune regulations in exchange for price floors or a limit on the number of cabs that are licensed to operate.
Uber and Lyft are straight out of the “creative destruction” model that economist Joseph Schumpeter said was the essence of free markets. Competition can serve as a powerful force to improve the operation of economies. Uber has built a better, tech-savvy “mousetrap” for transportation services. Uber drivers’ cars are often newer and cleaner than traditional cabs, and customers can easily request upgrades. Drivers are screened, and a passenger can see a picture of the driver and his or her customer-service rating before getting into the car. Low-ranked drivers can be and are removed from the system, accountability that’s missing from most cab companies.
Many drivers with an entrepreneurial bent also like Uber because they can decide what hours they will work and use the service to earn a supplementary income if they happen to be unemployed. Armando Rojas, an immigrant from Colombia who now lives in New York City, told me he likes the flexibility of Uber “and the fact you are more your own man.”
In Madrid, Adrián Fernández of Greenpeace says that a new model would help consumers, improve the lot of taxi drivers, and improve the environment. Under the old model, “the first people to be adversely affected are the taxi drivers, who have to spend hours wasting fuel driving around in an empty car,” he says. It would be much more efficient to consider increasing “the number of taxi stops, and creating a single mobile app that all taxi drivers could use.”
John Kramer, an executive with the Washington, D.C., Institute for Justice, which defends Uber drivers in court, notes that the challenge for government is to orient policy toward the future while smoothing the path for existing providers, to make the transition. It won’t be easy to explain that to the striking cab drivers of Madrid, which is why for the interim the Madrid government shouldn’t allow itself to be trapped into defending an outdated status quo.