Ride-share companies Uber and Lyft continue to face opposition at the Public Regulation Commission. Representatives of incumbent taxi cab companies have led lobbying efforts against the ride-share companies having published articles in various newspapers decrying the new companies’ plans to enter the New Mexico market.
Two articles, both written by taxi drivers, have appeared in the Albuquerque Journal alone. Concerns supposedly include “an uneven playing field” that gives ride-share drivers an “unfair” advantage.
Complying with complicated and arcane government regulations is expensive. Business models that avoid those regulations (often through the innovative application of new technologies) can provide better customer service at a lower cost. This is good, not bad for consumers.
Consumer interests are the other, oft-cited justification for onerous government regulations. In reality, consumers are no more than a fig-leaf in the fight against competition.
It is, after all, not angry users of these ride-share services that have been complaining to the media. We’re instead expected to believe that taxi drivers are so public-spirited that they are ignoring the benefits they receive from government regulations protecting their market-share to selflessly defend those poor consumers from being taken advantage of by the unethical competition!
In reality, of course, at least some self-interested taxi drivers are hoping to bend government regulations to protect their businesses. Absent government protections, taxi drivers are just another small business that must innovate and improve or whither away. Imagine if buggy whip manufacturers had been able to lobby government to strangle the automobile industry in its early years. How many American jobs would have been lost and how would living standards have been reduced?
The phenomenon of using government regulations to quash innovation in a given industry is called “regulatory capture” by economists.
Rather than lobbying for innovation-killing regulations on ride-share companies, it would be great if the taxi industry worked to deregulate their own industry to make it more competitive. The issue of market-entry was just dealt with a few years ago when modest reforms shifted the “burden of evidence” from proposed startups to the incumbents. Imagine having to ask your competition for permission to set up your business! But it is far from a “free” market when one has to hire legal help and beg the government for permission before trying to make a living.
And this is where New Mexico’s political culture and broader economy come into play. It isn’t news that the economy here in the Land of Enchantment is struggling terribly. And Lyft and Uber alone won’t provide enough jobs to drag our economy out of the ditch, but technophile Millennials in particular aren’t as interested in owning cars as were previous generations. They also like the hip factor that these services provide. We need to keep/attract these technophiles to New Mexico to start businesses and create jobs.
Of course, the suspicion of new technologies and outsiders attempting to make a profit is nothing new. It has been ingrained in the psyches of many New Mexicans for generations. Suspicion of free market capitalism has led to business and entrepreneurship-destroying public policies coming from Santa Fe. A report from the Canada-based Fraser Institute found New Mexico to be the least economically-free state in the US and New Mexico consistently underperforms its neighbors on business friendliness measures.
This lack of economic freedom was masked somewhat over the decades by generous federal spending in our state. We still had high poverty rates, but federal spending made the data look better than they really were.
That situation is changing. New Mexicans can no longer rely on Washington to prop up our economy. We need far-reaching, tax, education, and regulatory reforms. Allowing Uber and Lyft to operate in a competitive will not resuscitate New Mexico’s economy by itself, but such a move combined with broader deregulatory efforts could finally help grow New Mexico’s private sector economy.
Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility