Regulating Uber can only leave Londoners worse off

Imagine that a man, who doesn’t run a business and who knows nothing about your industry or your customers, came into your workplace and started telling you what the limitations of your service should be and what standards you should require of your staff. You would probably find that perplexing and annoying. Not only because he came uninvited, but also because such decisions require knowledge that he can’t possibly have.

But now imagine he was so convinced he knew better than you what your customers wanted that he forced you all to act according to his decisions by threatening to take money from you or close your business down if you refuse. This would be beyond annoying. This would have profound economic consequences. Having to act according to his choices (or rather, guesses) would almost certainly harm your business’s profitability, and thus reduce the value your service adds to your customers’ lives.

This is analogous to what Transport for London (TfL) is doing to Uber. For our analogy to be even more accurate, our intervening and coercive man would have to have another man whispering in his ear. This man would represent London’s Black Cab union. A special interest group that refuses to accept that in a capitalist society others are free to provide the same service as you in a better way, and that wants to ruin or at least curtail Uber by getting its pals in power to regulate the life out of it.

What the Mayor of London, Sadiq Khan, and TfL are doing to Uber is called interventionism. It is based on the false premise that one group of men can know what millions of people value most, in some specific (usually economic) regard or other, better than the individuals themselves know. This belief is by no means particular to the current Mayor of London or TfL. Today, it is a universally held belief among the political class and the public sector, but it hasn’t always been that way.

In this case, TfL is convinced that it knows what 10 million Londoners prefer regarding the standards Uber should require of its non-English-speaking drivers, the insurance policies part-time drivers should have, and what updates Uber should make to its app.

But how do they know? This is the question. Are they supreme beings with access to knowledge that is beyond mere mortals? Where are they getting this knowledge from? The answer is nowhere because they aren’t getting it. It’s not obtainable through any other means other than the profit and loss signals, and the other feedback measures, that only Uber receives back every hour of every day.

Even Uber can’t know exactly what all its customers want, such knowledge is impossible to get, but there is no one better placed in society to have the best idea of what they want than Uber.

The simple truth is that TfL has no way of knowing what is the preferences of millions of Londoners regarding Uber and its drivers. In reality, then, all TfL can do is dictate to Londoners what they believe their preferences ought to be in regards to Uber.

As such, TfL’s slogan really should be this: “we can’t know what you do prefer, but we insist on doing something, and so we’ll force you to act according to what we think you should prefer.” I’m sure they won’t be putting this on their posters.

What London’s Black Cab drivers are attempting to do is use regulation to destroy their competition and maintain their monopoly on London’s metered-taxi market. So far, they haven’t succeeded. Which is why Uber has been such a success and added value to the lives of millions of people in London.

If the Black Cab drivers do succeed, however, then the value Uber adds to its drivers and customers’ lives could be severely restricted or even destroyed altogether eventually.

Thus benefitting London’s Black Cab drivers at the direct expense of everyone else. This is unjust. It is not an outcome of true capitalism, but of corrupted capitalism (which involves leveraging the coercive apparatus of the state). The way to tell the difference between the two is that the former benefits all at the expense of none and the latter benefits some at the expense of all.

The argument from liberty against government interventionism is always two-pronged. Firstly, interfering with the private economic exchanges of individuals requires coercion and thus violates our society’s widely held moral principles against aggression – and indeed our common law prohibiting aggressing against others (which supposedly no one is above). This is the ethical argument or the argument from principle.

The economic argument or argument from effect is that a few people at TfL cannot possibly do a better job of regulating Uber than Uber itself and its customers can. The many improvements and adjustments to its service that Uber has already made, without being forced to by the government, is ample evidence of this.

Allowing Uber to continue to be regulated by its customers is the best way because it’s the most democratic way. By aggregating everyone’s preferences, Uber is constantly moving towards the best achievable outcome.

Having the Mayor of London and a few people in power at TfL regulate Uber according to their own preferences (and according to the wants of black cabbies who desire nothing more than Uber to be disappeared) is the least effective and least democratic way. (And it will most probably lead to Uber having to raise its fares).

Any other way is a form of economic dictatorship, which is unjust and can only restrict the value Uber adds to society. And why on earth would Londoners want to do that? There’s no evidence whatsoever that they want Uber to put the brakes on.

If the Mayor of London is genuinely interested in giving Londoners what they want regarding taxi services, then he should refrain from removing Uber’s freedom to give it to them. That requires humility; that requires conceding that someone else and not him or his colleagues at TfL is best placed to know what Londoners want most from taxi services, and to give it to them.

If Sadiq Khan can muster this modesty in regards to Uber and indeed the rest of London’s productive people, then he would start moving towards becoming London’s best Mayor. At the moment, as he stands prepared to regulate Uber, against all sound economic reasoning and to satisfy the destructive urges of London’s black cabbies, he is moving towards becoming London’s worst.

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