June 11 2014

Government Sting on Innovation

Patrice J. Lee

What is the best use of time for police officers in cities like Miami? You might think stopping violent crimes, drug enforcement, investigating murder or rape cases, or even educating communities on how they can work with police to keep their neighborhoods safe.

Instead, officers in Miami are forgoing time on these priorities to host stings against drivers of ridesharing companies. They are going undercover as riders to catch Lyft drivers in the act and then impound their cars.

Enforcement of laws is important but would you rather arrest a driver who is taking people around in his private vehicle safely and securely, or take violent offenders off the street? And one can question whether Lyft drivers are breaking any laws at all.

Earlier this week, we reported that Virginia has ordered rideshare companies Uber and Lyft to cease operations and their drivers to halt picking up passengers until they can work out a new regulatory scheme like other taxi services. Uber and Lyft contend that they are just a tech platform (like a marketplace) for individuals to arrange their own rides in a peer-to-peer model.

As these and similar rideshare companies emerge in new cities and areas, lawmakers are scrambling to figure out how to appease the establishment taxicab and limousine companies that hate the new competition and resent the high taxes and fees they must comply with as well as secure new tax revenue.

Miami has chosen to take the time away from drug and prostitution stings to conduct car ride stings. If that sounds silly, it is.

The Miami Herald reports:

Moments after dropping the passenger off at the Ritz-Carlton Key Biscayne on Wednesday, [Juan] Arango turned onto Crandon Boulevard — and got stopped by Miami-Dade County cops.

The passenger was not just a fare — he was an undercover Miami-Dade County code enforcement officer, and the ride was a sting. Arango’s white Toyota Corolla, which hadn’t even been sporting Lyft’s signature hot-pink mustache on the hood, was towed away on the spot.

[T]he county, under pressure from existing taxicab and limousine owners, has escalated its enforcement of the defiant car-service industry, joining forces with the Miami-Dade Police Department to catch scofflaw drivers.

The county had been fining Lyft drivers up to $2,000 each for failing to get a chauffeur registration and for operating a for-hire vehicle without a valid for-hire license — both requirements for cabbies and limo operators. Impounding Lyft drivers’ vehicles represents a significant step toward more serious penalties allowed — but not required — under the county’s legal code.

Companies like Lyft and Uber in the transportation space are disrupting the traditional business model by allowing individuals who own their property to rent out or make use of those resources. And it’s not just that car industry being disrupted by innovation. There are food trucks, supper clubs, hospitality, and more. Technology is just facilitating these transactions; instead of a company arranging the services, individuals do it all on their smart phones.

Beneficiaries of the status quo have worked hard to achieve their position and sunk quite a lot of money along the way including lobbying dollars on lawmakers to secure for them regulations and incentives that keep them in business. So they see these new peer-to-peer business models as cutting into their competitive advantage. This is cronyism and it’s what stifles innovation, competition, and choices for consumers. When consumers have choices it drives down costs.

In these cases, Uber and Lyft drivers actually have higher insurance and more stringent background checks than regular taxicab drivers. Yet, they often offer cheaper and more pleasant rides. For many drivers, they are earning extra cash by giving rides to passengers. Passengers who benefit include many who may not be served by taxicabs and other car-for-hire services such as those in urban areas or less savory neighborhoods.

Lawmakers are revealing that their interests aren’t residents but the established companies that have bought their pockets. And officials are using the government’s coercive power to protect the connected.

I wonder what Miami residents would rather have police officers do: answer 9-1-1 calls and patrol their neighborhoods or conduct stings on Lyft drivers.

 

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