Uber Shows How To Break Crony Capitalism

The taxi medallion scam is one of the worst examples of crony capitalism.  Uber (and some other app-driven services) are in the process of defeating the scam in New York and, apparently, in many other places as well.  It's about time.

The scam is simple.  A city issues a limited number of so-called "medallions," which convey exclusive rights to pick up passengers on the streets, and often at airports as well.  I have never heard anybody articulate a good rationale for why the number of medallions should be limited.  Fake rationales include preventing "destructive" competition (don't we have that in every industry?) and so-called environmental concerns (always articulated by those holding medallions whose only value lies in artificial scarcity). 

I have a long-time friend, call him R, who is head of one of those lenders that specialize in loans for the purchase of taxi medallions.  Twenty or so years ago I went for the first time to a fundraising event for a candidate for City office, and there was R.  Since then, I haven't been to many fundraising events for candidates for local offices, but at the few I have attended, somehow R was always there.  I can't say I was surprised when Bloomberg News reported last month that the medallion taxi industry had contributed over $500,000 to the campaign of Bill de Blasio for Mayor.  Probably, they contributed that amount or close to it to other candidates as well.  Other than the City employee unions and real estate interests, the taxi medallion guys have been right at the top of the political contribution heap.

Back when I first found out from R what business he was in (I think this was in the 90s), I expressed some very severe skepticism.  From there, the conversation went something like this:

R:  It's literally the best industry to lend in.  We have not had a single default in decades.

Me:  That will be true until the day that all the value suddenly disappears.  Basically, all the value comes from the artificial scarcity.  One day that will disappear, and the medallions will suddenly be worthless all at once.

R:  They've been saying that for decades.  Meanwhile we are diversifying to some degree.  

Since this was before this blog recorded all my thoughts, I don't have an official record of my prediction.  However, it is now rapidly coming true.

For the past few years, New York City taxi medallions have been trading for over $1 million each.  With over 13,000 medallions issued, this has represented a value of over $13 billion --a good measure also of the value of the inconvenience inflicted on people in neighborhoods where taxis have been systematically unavailable for decades due to the corrupt crony system.  But with the advent of Uber, the value of the medallions has suddenly plummeted. This article from CNN Money in July reports that the value of a medallion is off by some 40% from its peak just last year.

And that's if you can sell a medallion at all.  Many reports indicate that the market has gone dead as lenders have been spooked and refuse to lend. 

When the medallion market first started to plummet, de Blasio and his friends on the City Council (all takers of industry cash) floated several proposals to put the reins on Uber, including, for example, a limit on Uber licenses.  But when the reports started to come out about the unbelievable amounts of political contributions they had received from the medallion taxi industry, suddenly they were in a tough spot.  Turns out that our "progressive" Mayor and City Council would happily sell their outer-borough constituents down the river, inflicting them with $13 billion of inconvenience, and handing the $13 billion to a handful of cronies, in return for a paltry few million of political contributions.

The latest news is that de Blasio and the Council are refusing to help out their medallion-owning friends, so the medallion owners are now pinning their hopes on a litigation contending that existing law restricting non-medallion owners to only "pre-arranged travel" effectively outlaws the Uber model.  Good luck with that.  Of course de Blasio and the Council will gladly help out their medallion-owning friends as soon as nobody is looking; but it seems that people are going to be looking at this one, at least for a while.  Now, will anybody start to pay attention to, for example, the "green energy" scam?

Via: Manhattan Contrarian

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Uber's cheapest service significantly lowers drunken driving deaths in California, study finds

Ride-sharing services like Uber and Lyft have new ammunition in their fight to operate in cities around the world -- a study that concludes they could save thousands of lives.

The upstart services have battled the organized taxi lobby and politicians for entry into new markets around the world, but have made their case based on claims that they create jobs and provide competition that benefits consumers. Now, Temple University researchers have released a study that shows the entry of Uber into markets in California between 2009 and 2014 tracks a drop of as high as 5.6 percent in drunken-driving deaths. 

"We looked at the entire state of California from 2009 to 2014," Sunil Wattal, who co-authored the study with fellow researcher Brad Greenwood, told FoxNews.com. "We wanted to demonstrate in a quantitative and robust manner the impact Uber has on drunk driving.

"We found that UberX actually reduced drunk-driving related fatalities," Wattal added.

"We found that UberX actually reduced drunk-driving related fatalities."

- Sunil Wattal, Temple University

Using data from the California Highway Commission, the researchers found that UberX, the company's least expensive service, significantly reduced the number of alcohol-related motor vehicle deaths throughout the state -- with the greatest impact in the larger cities.

He noted, however, that no such link was found with Uber Black, the company's highest priced service, consisting of commercially registered and insured livery vehicles -- typically a black SUV or luxury sedan with a significant markup over traditional taxicabs.

The researchers theorized that the Uber Black's higher cost and lower accessibility might explain why it does not provide the same benefit as the no-frills version of Uber.

"Economically, results indicate that the entrance of Uber X results in a 3.6 percent to 5.6 percent decrease in the rate of motor vehicle homicides per quarter in the state of California," the two concluded. "With more than 1,000 deaths occurring in California due to alcohol-related car crashes every year, this represents a substantial opportunity to improve public welfare and save lives."

Matt McKenna, an Uber spokesman, said the Temple University study only bolsters similar data previously collected by Uber and Mothers Against Drunk Driving (MADD), the nation’s largest nonprofit working to protect people from drunken driving and underage drinking.

"The results of this study complement research we released earlier this year with MADD that showed that the introduction of reliable and affordable transportation options like Uber are having a meaningful impact on the rates of drunk driving crashes in California," McKenna told FoxNews.com Tuesday.

Uber and MADD studied the service's impact in several major U.S. cities. Their report found that in Miami, for instance, Uber ridership peaks at the same time as historical drunken-driving related crashes. In Seattle, Uber's entry into the market was associated with a 10 percent decrease in DUI arrests, according to the report, and in Pittsburgh, the demand for Uber spikes right around the times bars close. The report also looked at traditional taxi services, claiming that taxi supply in Austin decreases when people most want rides, and when DUI arrests are most common.

Taxi cab associations, however, take issue with the study that is being used to bolster support for Uber -- claiming traditional taxi services have long helped to reduce drunken driving, while also adhering to important safety procedures.

"UberX is absolutely their most controversial product," said Dave Sutton of the group, "Who's Driving You?" -- a public safety campaign formed on behalf of the Taxi, Limousine & Paratransit Association (TLPA).

"It’s been roundly criticized for its lack of insurance and lack of rigorous criminal background checks on drivers," Sutton said of UberX.

"It should be obvious to all involved that Uber is a taxi service, and taxi service is an extension of public transportation," he told FoxNews.com. "If you have passengers relying on this service to avoid dangerous activity, such as drunk driving, then the service itself should be adhering to the best safety practices and UberX is not."

To use Uber, passengers must first create an account with the service through the app on their iPhone or Android device -- which includes the customer's name, mobile number, email, language and billing information. After logging in with a username and password, the passenger selects his or her vehicle preference -- for instance, a black car, which can seat up to four people, or an SUV, which can seat up to six. The customer then marks the pick-up location on a map with a pin and the driver uses the phone holder's coordinates to arrive at the location. The cost of the ride depends on the time and distance. During certain peak times -- like New Year's Eve -- Uber enacts what it calls "surge pricing."

"The ease of Uber is just amazing," said Colleen Sheehey-Church, president of MADD, who praised the technology of the ride-sharing service and said the Temple University study "backs up everything we have already said."

"The study does show that easier and cheaper options will have an impact," Sheehey-Church told FoxNews.com. "We’re looking to change behavior and when a person has thought about it in advance, if they have easy access with a smartphone to do one click, it's the best thing for them to do to get home safely."

Sheehey-Church, whose teenage son was killed at the hands of a drunk and drugged driver, said she also advocates traditional taxi services as well as public transportation. 

Via: Fox News

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UBER AND THE DEMOCRATS’ OLD WAYS

Presidential candidate Hillary Clinton doesn’t get it. Obama administration Labor Secretary Thomas Perez doesn’t get it. New York Mayor Bill de Blasio doesn’t seem to get it, either, as he only reluctantly reversed a bad decision on the matter.

In fact, generally, in a somewhat surprising reversal, many so-called Democratic “progressives” want to protect the old ways. But there are exceptions, like Virginia Gov. Terry McAuliffe, who worked with Uber to create a legal framework in his state; Sen. Cory Booker (D-N.J.), who says that hailing a cab has provided some of his most humiliating moments; and Rep. Hakeem Jeffries (D-NY), a Brooklynite who during Uber’s recent showdown with de Blasio said, in essence, “What’s wrong with a little competition?”

On the other hand, Republicans, who are accused occasionally of supporting “crony capitalism,” have embraced the new way and have been eager to let in new businesses to compete. Sen. Marco Rubio of Florida, a Republican presidential hopeful, gets it. One of the chapters in his recent book is titled, “Making America Safe for Uber.”

The new way is the “sharing” or “gig” economy of Uber, Lyft, Airbnb and others. Republican politicians seem more open to embracing these new businesses and new jobs, and the freedom of citizens to contract with each other.  

Spurred by unions, powerful bureaucracies, a lack of personal experience, and perhaps a more favorable view of regulation, many Democrats want to ban, restrict, and tax these services.

A politician’s position on Uber is a proxy for how in touch they are with their community. De Blasio obviously had no idea how people move around his city. And Clinton likely hasn’t driven a car in decades. What all politicians should start seeing is why it is both bad policy and bad politics to jump in aggressively and try to ban or heavily burden these services. 

It’s bad policy because the transportation services are not just for upper-class urban dwellers. In fact, as a college president recently discovered while moonlighting as an Uber driver, these services are an important alternative for the working poor with limited public transportation options. They also don’t discriminate against minorities, the way many taxi drivers do.

Meanwhile, the home-sharing phenomenon created by Airbnb brings needed cash (and sometimes a cure for loneliness) for homeowners while allowing locales to attract additional visitors.

All this economic activity adds to reportable income and benefits both the public coffers and the economy.

My personal experiences with these services are almost all positive. My brother makes his mortgage payments on his Hawaii home only thanks to Airbnb. (He pays the same local taxes as a hotel.) My family is visiting Manhattan for a few days in August, and by using Airbnb we can have a reasonably priced separate room for the kids. (Try finding a Manhattan two-bedroom hotel room for less than $1,000 a day.)

I travel a lot for business and rely on Uber. I find ride hailing service drivers better. They have clean, smoke-free cars; they don't talk on the phone while driving; and our rating of each other after the drive ensures we both are courteous and safe. It is simply better than the typical cab experience. Plus, it is great competition.

In July, I took an Uber from Denver to Aspen for $240, less than half the cost of any timely alternative. It was scenic and fun, and I connected with the driver. Compare that to my United Airlines experience for that reverse route months earlier, when I paid double what I paid Uber, plus got hit with $250 in excess-baggage fees and was told a two-day-old policy barred me from checking my bags to another airline. (Thus, I missed my connecting Delta flight.) Yes, Uber was a great substitute for United.

It’s bad politics to oppose these services as they delight millions of average Americans. Moreover, they contribute to the financial well-being of tens of thousands of Americans who rely on them for supplemental income. For 84 percent of Lyft drivers, it’s not a full-time job. Uber likely has similar numbers.  

Some “progressives” are uncomfortable and argue that these drivers and homeowners are somehow worse off without government intervention. They want regulation going beyond safety, background screening, and insurance. They want union-like regulation for home-sharing and employee-related regulations and benefits for Uber and Lyft drivers.

Talk about imposing the nanny state on consenting adults. Having taken scores of Uber or Lyft rides, I have yet to meet a driver who says they want the government determining their employment status.

So, if Democratic politicians want to dig in their heels in fealty to unions and unnecessarily burden these services, Republicans can make inroads on many traditional Democratic constituencies. I can't wait to see the platforms of both parties leading up to their conventions. I predict that Republicans will embrace the sharing economy and that Democrats will try to, but add a lot of ifs, ands, or buts.

Via: American Spectator

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How Uber and Small Dollar Lending are Disrupting the Status Quo

Economics always finds a way. Especially in America where the entire system is founded on creatively providing needs to the society at large in hopes of profit. We’ve been doing just that since our inception. And basically, government has been meddling in that thing of beauty since that very moment as well.

Create a better mouse trap. We’ve all heard it. Companies like Uber and Lyft have done just that to the age old taxi-cab industry. These upstarts used the abundance of cars in America and combined it with new technology – app based – and voila an entire new way to get around is born. This new way is embraced by the public, at least the millennials, and everyone wins, except the people clinging to the old ways. The taxi industry hasn’t enjoyed having competition so rather than change with the times an illicit partnership with government has been created to crush their newfound competitors.

Government knows best. Hillary Clinton and New York City Mayor Bill de Blasio’s have launched an attack on what is being called the “sharing economy” exemplified by companies like Uber and Lyft. This is a classic example of the abuse of power in government. Politicians rooted in the old power structure found in the incestuous relationship between government and big industry are desperate to stop this change. Big industry and political power go hand in hand.

The old power structure means political support. It means campaign contributions. It means power for those in the established order. With new companies filling grass roots needs, like Uber and Lyft, there are no company bosses to ask for political contributions. There are no union bosses to demand endorsements from. And without the need for a “medallion” or other government regulatory stamp of approval, corporations no longer need to beg bureaucrats for permission to do business. Uber and Lyft represent a decentralization of power.

This kind of seismic shift hits politicians where it hurts, the pocket book. It’s no accident that the mayor of New York tried to limit Uber, despite its vast popularity with the cities residents. As the New York Post noted, blocking Uber means helping the city’s yellow cab monopoly, which “donated more than $550,000 to de Blasio’s mayoral campaign.”

The transportation industry is not the only industry where politicians believe they know better than the public. 12 million Americans, for example, use small dollar short-term lending to help solve their financial problems in times of need. These short-term loans are also known as, “Payday Loans”. Many of the people who use a payday loan could never qualify for a loan from a bank. Most banks are not in the business of lending people $250, $500 or even $1000 to just make ends meet. The risks are too high and the potential for default is too great. The payday loan industry discovered a need amongst society and is fulfilling very nicely thank you.

Americans actually need this service, no matter if the big banking industry or politicians want them to have it or not. When working class Americans have an unexpected expense, a car repair perhaps, they often need a small infusion of capital to make ends meet. These loans are designed to be paid in a week or a month and are statistically being paid back on time from a wide demographic of users actually building their credit history.

Instead of embracing new concepts like the short term loan industry, or Uber and Lyft, these brash new entrepreneurial pioneers have endured constant attack by politicians and establishment industry. It becomes obvious when you see the pattern from politicians. You don’t have to be in the smoky back room to know whose bed they are in. When politicians side with big business repeatedly over the exciting new companies fulfilling a need in society, it is obvious those politicians are the problem.

Steve C. Sherman is a writer, radio commentator and former Iowa House Republican candidate

Via: Human Events

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