On Thursday, the San Antonio City Councilwill consider a restrictive ridesharing ordinance that could shutdown Uber and Lyft in the city. Government-protected taxicab companies, eager to shut out the new competition, are strongly supportive of the new rules.
But if the council wants to put the safety and best interests of its citizens ahead of the aggressive lobbying efforts of anti-competitive taxicab corporations, then it needs a new direction.
The ordinance’s proponents claim that ridesharing services are unregulated and unsafe. But both Uber and Lyft, the largest ridesharing companies to operate in San Antonio, carry $1 million in automobile liability insurance for their drivers. Both companies also provide liability coverage of $50,000 per bodily injury per person and up to $100,000 total per incident.
By contrast, taxicab companies are only required to carry insurance covering $30,000 per bodily injury per person, up to a total of $60,000 per incident. It would appear that Uber and Lyft, in the absence of government protection allowing them to slide by with lesser coverage, actually provide better insurance for their drivers and consumers’ protection.
Perhaps council members would be better off asking why taxi companies aren’t providing better coverage.
The truth is when government protects an industry and shuts out competition, there’s no reason to do better. Why try when you can just meet the minimum requirements?
As a protected industry, the taxicab companies are basically guaranteed customers and market share. They have very little incentive to provide the highest quality service or the lowest cost. Incidentally, this same factor is why, in most markets, ridesharing services price out much more inexpensively than traditional taxicabs.
In the real world, these abstract policy preferences can have serious implications. Consider the person who’s had one too many beers and stumbles out of a bar at 2:00 a.m. He has a decision to make: should he hail a cab, if one is even available? Or should he risk it and drive home?
Unfortunately, in San Antonio, too many risk it.
According to the National Highway Traffic and Safety Administration, in 2012 there were 132 fatalities in San Antonio due to drunk driving accidents. It’s no wonder, then, that Mothers Against Drunk Driving (MADD) has strongly opposed burdensome regulations on the ridesharing industry.
In an August 20, 2014 letter to California Governor Jerry Brown, MADD’s Chief Government Affairs Officer, J.T. Griffin, opposed two bills that would have burdened ridesharing companies. In the letter, he underscores the importance of “… those over the age of 21 to have a safe ride should they go out to consume alcoholic beverages.”
Griffin continues: “MADD supports new ridesharing platforms like Uber, Lyft, and Sidecar as well as traditional taxi services that are enabling more options to provide safe rides in communities across the country.”
It makes complete sense that providing consumers with the most options to get safe rides is best—and that’s why companies like Uber and Lyft have been so successful. They are filling a need that taxicab companies aren’t meeting by providing an easy, app-based solution that makes getting a ride really easy — even at 2:00 a.m.
Taxicab companies, ever protective of their government-enforced cartel, are no fans of the new “app-based” services because they are a threat to their established model of business.
But San Antonio’s council members would do well to remember that the threat of new competition threatens taxicab companies, not consumers while the threat of drunk drivers is very real indeed.
Jess Fields is the senior policy analyst for the Center for Local Governance at the Texas Public Policy Foundation, a Texas-based free-market think tank.