Russ Roberts  

Government Regulation vs. the Market

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This past summer I did a lot of EconTalk episodes related to the sharing economy. In the first one, with Mike Munger, we talked about how reputation established by users at Uber and AirBnB could substitute for direct regulation by government bureaucracy and the likely pluses and minuses of each approach. Here is a mind-blowing case study out of Nevada that reads like something out of the Onion (HT: Amy Webb). I actually think it's true. If anyone has any direct experience with these "innovations" by the Nevada Taxicab Authority, please mention it in the comments.

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COMMENTS (7 to date)
Carl Chesko writes:

I don't know about most of the 'innovations,' but I found this on the Nevada Taxicab Authority's website:

"If the Taxicab Authority finds it necessary to use this information as part of an investigation, this form may be returned to you for signature and notary stamp."

The PDF form appears to be the same as the one from the story.


Michael writes:

Sharing eCONonomy doesn't mean one tax-evading mega-corporation dictates everyone else how to behave and what to pay. In a private case of uber, there are thousands of local small transportation businesses offering same technology but lacking the multi-billon dollar muscle that uber has thanks to oligarchs supporting it. Yet, laws and regulations must be equal for all, be it a multi-billion dollar uber mega-corporation, or a small local taxicab business. Hope this post will make it, censoring opposing views it not the way to reach a consensus so needed on this high-divisive issue
of so-called "sharing" economy.

Russ Roberts writes:


Uber doesn't dictate anything to anybody. They have to compete with Lyft and if they do a bad job other competitors can come along. The only alternative to the Nevada Taxicab Commission is to leave Nevada or break the law. The real tragedy is that the Nevada Taxicab Commission serves the cab drivers rather than the riders.

Julien Couvreur writes:

I can't figure out if Blake Ross (link to Nevada story) is being sarcastic.

I hope it is, but bolded statements like "The Nevada state government is out-innovating Uber in attacking these scofflaws" give me doubts.

He doesn't say how Uber's reputation system fails to improve the problem, how banning Uber helps, or how the various government "solutions" helped.

Gene writes:

Julien, you might want to check the batteries in your sarcasm meter.

Gregg writes:

Michael, you are long on ambiguities and veiled accusations and short on specifics.

"there are thousands of local small transportation businesses offering same technology" Very well, name a couple who possess a mobile app that does what Uber does but because they lack the support of the "oligarchs" are being held back. For bonus points compare and contrast lack of Oligarch support with burden of State regulation. Which is better? Which is worse?

The organizing principle for Uber is (filthy -Dem) profit. For the Nevada Taxi Commission it is a deep caring for tourists on the way to their 10% hotel taxes. But, deep caring doesn't explain the idiotic actions of the NTC.

The NTC and its loyal officials can't make a profit directly. The officials can profit by constructing barely plausible schemes implemented through, I guess, specially created family and crony companies.

This requires that any proposal be so new and different that there is no competition to make bids when the contracts are let. We see wonderful ingenuity in producing schemes. Why else would the current solution be a unique hardware-software combination which avoids competition from the cheap solutions implemented by smartphone.

So profit explains the NTC after all.

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