Wednesday, January 20th, 2021

Government Logic — State Now Taxing Uber, Lyft to Give Money to Taxi Unions

Published on August 23, 2016 by   ·   No Comments

As Leopold Khor observed in his important book, The Breakdown of Nations, large organizations have a tendency to become too bureaucratic and rigidified to retain the resilience necessary to make adaptations to changes in their world. In the business world, instead of changing or downsizing, large corporations lean on the power of government to prop them up by implementing laws which grant them advantages over their smaller competition. The most recent case of corporations using government power to maintain a failing monopoly is taking place in the Massachusetts taxi service.

Because of the much more efficient ideas of Uber and Lyft and the novel design of their platforms, the archaic taxi industry is in decline. Instead of adapting to the changing climate of smartphone-based systems, taxi unions are doing what monopolies do best — having the government stifle their competition to legislate themselves an advantage.

This government mandated advantage for the taxi industry is in the form of a tax. Massachusetts’ ‘small government’ Republican Governor Charlie Baker signed into law this month a $.05 tax on ride-sharing companies such as Uber and Lyft.

This tax will not go to the state to build better amenities for the people. Five cents per ride will go directly to the taxi companies.

“I don’t think we should be in the business of subsidizing potential competitors,” said Kirill Evdakov, the chief executive of Fasten, a ride service that launched in Boston last year and also operates in Austin, Texas, as reported by Reuters.

The law says the money will help taxi businesses adopt “new technologies and advanced service, safety and operational capabilities” and will support workforce development. However, in typical government logic, they ignore the fact that it stifles the far more efficient and easier workforce development in the ride-sharing market.

Of course, the taxi unions aren’t satisfied with the government acting as their personal Robin Hood, and they want the law to go further.

Unions want to ban ride-sharing altogether unless these drivers submit to inspections by police and other needless government regulations.

“They’ve been breaking the laws that are on the books, that we’ve been following for many years,” said Larry Meister, manager of the Boston area’s Independent Taxi Operator’s Association.

Read More HERE

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