The logo of car-sharing service app Uber on a smartphone next to the picture of an official German taxi sign in Frankfurt, September 15, 2014. REUTERS/Kai Pfaffenbach/FilesKAI PFAFFENBACH/Reuters
There's a reason to make Uber and other ride-sharing services legal – and these examples below, good as they are, are not it.
As part of Adopt-a-Shelter Pet Day, Uber delivered adoptable puppies for "puppy play dates" at offices across the country last Thursday. It received more than 100,000 requests. Proceeds went to animal shelters.
On a Toronto street-corner last month, Uber installed a breathalyzer – blowing above the legal alcohol limit immediately dispatched a ride home.
And the company last month partnered with grocer Loblaws Cos. to make it easier for customers without cars to pick up groceries ordered online. In March, in partnership with Roots stores, it offered free pickup in Toronto of donations to Goodwill.
These are all nifty ideas. But the fact that Uber has some imaginatively mercenary people in its marketing department – put your paws in the air, whoever came up with using puppies in need of love to burnish the image of a company in need of public support – is not the reason to open the market to it, or to any other ride-sharing services.
The reason to allow them to do business is this: The taxi industry in most cities across North America, including Canadian cities, is run like a cartel. And it's run that way because, decades ago, municipalities created property in cab permits. They created artificial scarcity. In cities from New York to Toronto, the licence or medallion needed to operate a cab became worth hundreds of thousands of dollars. The benefits of this artificial scarcity flow to the owners of licences, not the drivers of cabs or their customers.
Car-sharing services are examples of mobile technology in action. But compared with, say, picking up the phone and calling a cab, the benefits of this app are limited. Consider: Why have apps not revolutionized the pizza business? Because pizza parlours are not a government-mandated cartel. Uber is a legal revolution – a badly needed shakeup of a broken system of cab licensing – masquerading as purely technological revolution. Again, brilliant marketing.
In Toronto this week, Mayor John Tory urged his city colleagues to open up the taxi industry. A 2014 package of reforms, which take steps in favour of competition, are under threat from a licensing committee that wants to roll them back. Big mistake.