Prop 1 Failed and Everybody Lost

In an unfortunate confirmation that nothing is sacred, last night's election results brought devastating news to thousands of would-be Mother's Day celebrators in Austin, Texas: the failure of Proposition 1.  How could this be?  Elections are generally neither noteworthy nor meaningful in the sense that they impact our day-to-day lives, and they certainly shouldn't ruin an event as hallowed as Mother's Day.  Get together with family, share a meal, and leave your politics at the door.  Regardless of what day it is, consider that it is almost statistically impossible to be the deciding vote that tips the scales one way or the other, and you are left with the conclusion that it is generally best to stay out of the sticky mess of politics altogether... but this time it's different.

The sole item up for vote was Proposition 1, a confusingly-worded ballot initiative that sought to overturn a recent City Council ordinance regulating ride-sharing companies like Uber and Lyft in several ways, most notably requiring fingerprint background checks on all drivers.  Both companies have warned that they will be forced to leave the city of Austin if these regulations are enforced, and as of today they have proven good on their word.  Uber and Lyft have shut down their service to the detriment of the 10,000-15,000 full and part-time drivers and the hundreds of thousands of their satisfied customers.

In the grand scheme of things, the City Council’s regulation on ride-sharing companies is a small crime of the State.  Compare it to 1,000,000 dead Iraqis or dropping atomic bombs on civilian cities and it's easy to dismiss this event as a first world problem.  However, just as some of my favorite pieces by Jeffrey Tucker concern the little ways the State screws us every day, like why our toilets require plungers or why our clothes aren't clean, the sorry tale of Prop 1 is a microcosm for why every day, in a million different ways both seen and unseen, the State makes our lives worse.

So on this celebration of Motherhood, when thousands of Austinites are going to open their iPhones expecting to effortlessly catch a ride to their favorite trendy brunch-spot and realize that 56% out of the 17% of eligible Travis County voters have made one of their most important apps stop working overnight, we should use this opportunity to restate the case that can never be made enough: that the State is the common enemy of mankind.

The Losers of Prop 1

To take the representatives of Lyft and Uber at their word, the decision to pack up and leave Austin is no small decision.  Obviously, they wouldn't have launched in Austin to begin with unless it were profitable to do so, so shutting down implies a reduction of those same profits.  When a new law or tax is passed, sometimes the additional cost can be passed onto the consumer, but many times it can be the breaking point between a company staying open or moving on to greener pastures.  So in this sense, the corporate employees and owners are the direct losers of Prop 1, but these individuals are not likely to draw sympathy from the selfish voter.  Instead, let's consider how the users, the drivers, and the average Austinite who doesn't use a ride-sharing service will suffer due to this action by the State.

To relay a personal story, I recall my weekly trips to the airport being an anxious crapshoot.  Every Sunday I would pre-order my taxi for the following morning, and it seemed half the time there would be some kind of problem.  Maybe the taxi would arrive late, or maybe the order would get lost and no one would show up at all.  This unpleasant game went on for years, and I had resigned myself to accept it, thinking that I would never see a higher level of service in this lifetime.

But then the skies parted, I rubbed my tired eyes and found Uber and Lyft.  Imagine my delight at opening the app and immediately seeing how many mere minutes away the nearest driver was from my location.  I could track, in real time, the driver approaching my home.  When my driver arrived I was often welcomed with complimentary water, and this stellar level of service was achieved for nearly half the cost of my previous taxi trips.  In other words, Uber and Lyft achieved both a higher quality of service and a lower cost, the holy grail of market competition.  And now, due to the actions of the State, hundreds of thousands of ride-sharing users like me are forced back into barbarism.

Now let's consider the drivers.  Whenever I used a ride-sharing service I always asked my drivers how long they had been pursuing their occupation and how the liked it.  I met single mothers who drove 1 day a week for supplemental income.  I met an Uber driver who started out part-time, but switched to full-time after repeatedly calling in sick to a dead-end job to drive instead.  I met the newly retired, driving for Lyft because they found their social-security benefits lacking or just because they enjoyed meeting new people and finding exciting things about the city.  All of them loved their job and the freedom to make their own hours and be their own bosses.  What awaits these former ride-sharing drivers now, Wal-Mart greeters?  The taxi-medallion mafia?  Destitution?  What kind of government "protection" is this?

Both users and drivers of apps like Uber and Lyft are examples of what is seen.  Now, let us consider the consequences that are not seen.  The first example is the user of Uber whose primary draw isn't its higher quality service but its lower cost.  Perhaps this individual will only pay for a ride if it can cost $10, but will not purchase the same ride from a taxi for $20.  Now the entire economic transaction is lost.  On the flip side, consider the aforementioned single mother who can only get a part-time job if it can be on her terms and her hours.  Without this option, all the economic transactions that would have taken place with her extra income as a ride-sharing driver will no longer happen.  And it is these innumerable mutually beneficial transactions that will now never take place that make our society inexorably poorer as a result.

Finally, to end with a sobering note, remember the people that may die as a result of this decision.  Given our Sovietized road system and the high cost and unreliable service from the government-monopolized taxi industry, it is plain that the removal of the ride-sharing option will result in more drunk drivers on the roads.  Whether it is a factor of cost or convenience, inebriated individuals who would otherwise have ordered an Uber or Lyft driver with the swipe of the finger will instead get behind the wheel.  This is an ironic but expected result of a government mandate purported to increase safety.  Like the anti-Midas touch, everything the government attempts to do fails miserably and generally produces the exact opposite of what they were hoping to achieve.

Ride-Sharing Apps: Benefactors of Mankind

Now that ride-sharing regulations have driven this service out of the market, let's review the actual function that companies like Uber and Lyft brought to Austin.  To do this, we first imagine a truly free market society where caveat emptor ruled the day.  In this world, anyone would be at liberty to start driving their car as a service with nothing more than slapping on a hand-drawn sign that says "Bob's Ride-Sharing".  Even ignoring the real-world regulatory perils of the taxi-monopoly, Bob would face major obstacles from earning any kind of meaningful income from his enterprise.

First, Bob would have to get his message out to his potential customers.  Without the capital of a company that can invest in market analytics and an advertising budget, Bob will have a hard time finding all the people that need a ride at a particular time and place, and letting them know that "Bob's Ride-Sharing Co." can meet their needs.

Second, even if Bob could solve this Herculean task before him, he will have a hard time convincing his potential customers to accept his business.  The average person does not know Bob, they don't know the quality of service he will provide, the cost he will charge, or the recourse they will have if they are unsatisfied with the experience.  Perhaps a determined person could spend all their time overcoming these obstacles through word of mouth, but if we consider the "part-time Bob" who is just looking to make money on the side a few hours a week, there is no feasible way for the transfer of knowledge to be facilitated between the "Bobs" of the world and their potential customers.  Those mutually beneficial transactions have no chance of taking place.

But then, mirable dictu, in comes Uber and Lyft, companies that leverage the latest technology to swiftly and simply solve all the problems for Bob and his potential customers.  First, they create the platform for people like Bob to get knowledge of his service out to everyone that seeks it.  Second, they agree on a price point that is satisfactory to both Bob and his customers.  And third, they are in the business of ensuring a safe and reliable product, bringing confidence and value to their brand.  This is the indispensable element of ride-sharing apps that gets to the heart of Prop 1.  It is the brand which allows ride-sharing customers to put faith in their drivers, men and women whom they have never met.

Ride-sharing companies have a financially-driven vested interest in making sure "Bob", "Tom", "Sally" and the thousands of other drivers are worthy of representing the Uber or Lyft brand.  While taxi companies don't need to focus on quality of service when they’re the only game in town through government-enforced monopoly, a private company sinks or swims depending on the whims of the consumer.  Given these natural incentives of the market, it should be no surprise that you actually see Uber having more stringent background checks then those enforced by the State for taxi cartels.

To drive the point home I'll end with a personal example.  One of my Uber drivers relayed a story of how he was working a Saturday night and accepted two rides for a "pool" trip, where different people accept the same driver at a reduced cost. His first passenger was a female and the second was male.  The driver became alert to the male passenger's intoxication after he made an inappropriate comment, and then immediately stopped the car when the female yelled, "DON'T TOUCH ME".  This entire scene was caught on video, and the driver demanded that the male passenger get out immediately or he would be arrested. When this was reported to Uber, the company responded by banning the male passenger for life, refunding the female passenger's money, and offering to pay the full cost of litigation to prosecute the male passenger.

Uber's response was commendable, but ultimately makes common sense in a voluntary, market-based context.  If Uber allowed this kind of behavior then passengers would stop using their service and go to a competitor like Lyft.  Compare this response to what you'd expect from the government-monopoly alternative, and not only would nothing of the sort have been done to compensate the female passenger for her trouble, but at best, she would be taxed for the prosecution!

Not Yours to Regulate

Many of the anti-Prop 1 commentators have focused on reasoning like "they should follow the same rules as taxi companies" or "the government can regulate commerce, so just like we license doctors, we can create safety rules for any company".  However, these assertions confuse the concept of something being promoted because it is right in itself, versus promoted because it is merely a precedent of how things have been done in the past - which speaks to neither the thing's rightness nor wrongness.

To absolutely prevent the charge of hypocrisy or false comparisons, let's be clear - the way to reach "fairness" is not to bring new regulation against companies that currently avoid it via loophole, but to de-regulate all industries.  In the examples above, a true sense of "fairness" makes it plain that any customer of "Bob" has the absolute right to accept or reject his service, just like any passenger can request or reject a private ride versus a pool-ride from Uber.  If an individual dares to assume the inherent risks of an uncertain world by merely getting out of bed in the morning, they should be free to engage in any transaction with anyone else that does not violate the right of another.  So when the question is posed to Austin City Council of whether or not to regulate ride-sharing services, it should not be answered by an analysis of whether the benefits for or against regulation outweigh one another, but to modify a famous speech by Congressman Davy Crockett, the sacred domain of voluntary transactions should simply be not yours to regulate.

Why do we need to continually restate this maxim that everyone follows in their personal lives and follows directly from the golden rule?  When put simply, it is absurd to argue the opposite.  I can't run into a grocery store and forcibly stop someone from buying produce that I think is too expensive or less healthy than some alternative.  I can't force my "protection" on them no matter how right I think I am, nor should I even if 98 out of 100 other people agree with me.  And yet, with the failure of Prop 1 we're not looking at the Tyranny of 98 over 2, but the Tyranny of 56% out of 17% of eligible voters.  With 49,158 voting for Prop 1 in a county with over 1.1 million people, that is the Tyranny of 4 over 96!  Remember this sham when Austin Mayor Steve Adler says "The people have spoken tonight loud and clear."  Rid yourself of the glib expressions and you're left with the shocking fact that our "representative democracy" has just ratified that 4% of the people can enforce their beliefs with the all-powerful violence of the State regarding with whom one can or cannot get a ride from down to the grocery store!


If the myths of "we are the government" or "the government serves the people" had any merit whatsoever, the draconian regulations regarding ride-sharing companies should put an end to such nonsense.  If I have no business inserting myself between two consenting adults regarding a voluntary transaction as innocent as getting a ride in a car, then putting on a costume and calling myself the government does not change that.  Put simply, if I do not have the power to do something, and the government serves me, then how could the government do that very thing in my name?  How can the servant have more power than the master?  How do multiple people acquire the moral authority to do something that a single person cannot?

The only logical answer is to accept the myth of government answering to the people as an outrageous lie.  The government does not serve the people in the way that a servant obeys the commands of his master, but as a chef serves chicken for dinner.  We are the dinner.  We are fed on by those that presume to rule over us like chattel.  The only good thing that has come from Proposition 1 is the hope that some politically apathetic souls will panic when they realize their Uber and Lyft apps no longer work, and they will begin to question just what happened to their "free country".
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