Constipated Economy

October 22, 2014

By: Kelly Diamond, Publisher

By now, Lyft, Uber, and Sidecar are all fairly well known in metropolitan areas like San Francisco and the Greater Los Angeles area. It’s a smart phone application based service that is turning the taxi and private transportation industry on its ear!

They are drastically undercutting the taxi services, because they don’t call themselves a taxi service. They are a ride sharing business. Rather than metered fares, they are a relatively low suggested flat “donation”. Most users pay the suggested rate or higher, believe it or not. And the drivers can block passengers who aren’t willing to pay a higher rate or refuse the fare if they wish.

Prior to this structure, this operated much like Priceline: name your price and see if someone bites. But California found some obscure law on its books which said it was illegal for ride shares to let people split fares or some nonsense: “The DAs also told Sidecar, Uber, and Lyft that the way these companies calculate shared ride service fares violates California state law. This method lets customers who are traveling the same way share a car and split the fare.” OH THE HUMANITY!

The establishment of licensed taxi and limousine drivers are in a huff about it, too! To be fair, it’s not exclusive to this bunch. Cosmetologists who are licensed want brow weavers to get licensed. Licensed hair stylists want hair braiders to get licensed.

“It’s not fair!” is the general sentiment and battle cry against these rising entrepreneurs. What’s not fair – and I do agree – is that one group of people have to pay to keep up with the regulations associated with being in their profession, while another group – because they don’t quite fit into the same category as the former – does not.

Here is a list of examples:

• Married couples get certain tax benefits not enjoyed by gay couples who cannot get married.
• Undocumented immigrants who work under the table that don’t cost as much to the employer as documented ones.
• Online businesses that don’t have to pay state sales taxes.
• People who bake out of their homes and sell food to the public – or even people who sell out of a food cart or trailer – don’t face the same overhead costs as those proprietors who serve out of brick and mortar.
• States with a lower tax regime whose neighbor has a higher tax regime.
• People who buy tobacco and papers separately don’t get taxed as much as people who buy rolled packaged cigarettes.

There are countless iniquities in our regulatory and tax system that have people up in arms. It’s pathetic really considering the subtle nuances between one cluster being highly regulated and another being free and uninhibited simply because it’s new.

Interestingly enough, rather than argue for the abolition of these onerous regulations, fees, licenses, and/or taxes, those protesting are usually asking that the others be punished right along with them! Misery loves company, I guess.

Well, the afore-mentioned ride sharing companies have come up against some harsh opposition… not from the consumers or the market… but from the competition and the government. Where I diverge from the “it’s unfair” crowd is that the imposition of taxes, fees, and regulations on anyone is what’s unfair… not that one group or another didn’t participate in it.

Calling for a crackdown on competition flies in the face of a purported capitalist society. It’s downright cowardly, in fact. In marketing, there is what’s called Differential, Credibility, Stretch, and Relevance. All four are requisite for a lasting brand. Differentiating from your competition; establishing yourself as a trusted professional in your industry; optimizing and reinventing your business’ value proposition to grow with demand and create new demand; and offering something the market wants or needs.

What I’m reading about is a bunch of lazy people who have become complacent toward their once homogenous industry whining about fresh competition and who haven’t bothered with those tenets of marketing. What I see is a bunch of crony capitalists. Protectionism inherently is cronyism because essentially it’s nuzzling up to the state to keep the competition at bay.

Today, Uber, Lyft, and Sidecar are celebrating the fact that they are allowed to pick up and drop off people from the San Francisco Airport. Great news for them, but a rather sad testament to how oppressed we are.  Yay!  Someone other than a cab, friends, or family can pick you up and drop you off at the airport!

Isn’t it funny how regulations are suddenly needed when money gets involved? If I was going to work, and I offered to give you a ride into town because it was on my way, no one would care. Cab drivers don’t care. Government doesn’t care… in fact government encourages carpooling! If I was going to work, and offered to give you a ride into town, but this time I charged you for it, all of a sudden this same act became unsafe and requires a license.

If I bake a batch of cookies and bring them to your house where you and your family proceed to eat them, no one cares. If I bake a batch of cookies and bring them to your house and charge you for it, government cares. All of a sudden I need a Tax ID, three sinks in my kitchen, and pH strips for my water.

If a man takes a woman out to dinner, it leads to a consensual sexual encounter, and both individuals return to their respective homes afterward, no one cares. If a man takes a woman out to dinner, it leads to a consensual sexual encounter, the woman demands payment for services rendered and the man pays, that’s illegal.

If a man donates his kidney to a stranger, he’s lauded as a hero. Doctors get paid, nurses get paid, organ transporters get paid, and everything is cool. If this same man offers his kidney for payment, it’s illegal.

People are not getting what they want or need at prices they want to pay! Businesses aren’t free to charge the prices people prefer to pay. It’s not just poor people who suffer, but everyone! There is market demand, and there are those supplying the goods/services being demanded! They need to meet… without the government as its broker.

The Commerce Clause in the Constitution calls for the government to “regulate commerce”. Regulate it the way a laxative regulates your bowels: keep shit moving. Instead, it’s decided to micromanage it and constipate our economy.