When ridesharing apps first came along a decade ago, many people saw it as a way of finally breaking up the arbitrary and inefficient taxi monopolies that dominated most cities. Cities offered taxi drivers a fixed number of permits, reducing the number of taxicabs available and pushing up the price of fares. Taxis are notoriously expensive, and so people don’t use them as much as they would if anybody and everybody were allowed to enter the market.
Ridesharing apps changed all that. People could open up their cars for others, charge a fee, and get around most city taxi rules. Drivers were just giving riders lifts from A to B, rather than offering a fully-fledged, legally-binding taxi service. It was a boon for both drivers and passengers. Drivers could earn a bit of extra money from their vehicles on the side, and passengers could get cheaper fares than through regular taxi services. But ridesharing has a dark side.
Government Rules Are Making Life Hard For Drivers
Academics and politicians love to rail against the injustices of the gig economy – the emerging low-wage sector of the economy that pays by the “job” and offers “zero hours” contracts. But although they like to present themselves as the agents of justice, their actions have serious knock-on effects for the regular people involved on the ground. Every time a city bans services like Uber, thousands of drivers earning good incomes have to find alternative work. Many don’t.
What’s more, it prevents new business models from emerging. People don’t want to be bound up with one employer for the rest of their lives. They don’t want that kind of dependency. Rational workers would rather depend on a range of employers so that if one goes bust, they can rely on another. Continually shutting down and messing with emerging digital business models denies workers that security and peace of mind they want.
Ridesharing Could Be Dangerous
Although apps track ridesharing drivers, ask any Uber accident lawyer, and they’ll tell you that these platforms still have their issues. Drivers can have accidents, putting themselves and their customers at risk. What’s more, many of these drivers are rank amateurs – just regular people who have managed to pass their tests. Training for situations on the job can be limited. Additionally, there have been various cases of violent crimes like physical and sexual abuse, and even rape.
A Drop In The Value Of Traditional Taxi Services
Perhaps the most significant impact of Uber and others is that they are forcing a drop in the value of taxi licenses. Licenses used to cost more than $400,000 in the years running up to the financial crisis. But since ridesharing apps became popular – around 2015 onwards – the value has dropped significantly. Four years ago, you could pick up a taxi license in, say, Sydney, for as little as $200,000 – half the previous value.
What this means for traditional operators is clear: new technologies are disrupting their business model. Either operators accept a smaller market share, or do what Uber and similar models are doing and reduce flagfall times to improve efficiency. The choice is clear.
What are your thoughts on these services?