Taxi licensing has long been a means of limiting supply of a product with a view to raising its price. Taxi plates sell at up to half a million dollars with this cost passed onto consumers in fares that are above the market rate. In the process, plate holders earn economic rents in the form of the capitalised value of the excess plate prices that the regulated scarcity allows. Without the contrived regulatory scarcity taxi plates would not be worth anything.
As with all cases when a distortion into the market opens up artificial scarcity suppliers will seek to move in and in the process drive down prices.
For governments beholden to or intimidated by the beneficiaries of such the de facto taxi plate tax on the consumer this just will not do. The Victorian government has a plan to increase the number of plates through selling additional ones and enrich itself in the process. But entrepreneurs who find ways around the need to ply for hire only if in possession of a permit can undermine the plan and bring about the consumer benefits. This has the added benefit of preventing the government plan being derailed,as has so often been the case in the past, by the beneficiaries mounting a political campaign.
Enter Uber, a ride sharing app that allows ordinary motorists to act as hire cars. Uber operates on the edge of but within the law in many cities. Not so in Melbourne where the taxi regulator is none other than Graeme Samuel, formerly head of the ACCC and having a long history of seeking to regulate business and consumers to the great disadvantage of the economy. Samuel has fined people who are using the Uber system.
The farcical claim is that drivers are not trained. Does that mean they don’t have a driving licence? Surely it must mean they should not be allowed to transport their own elderly parents or children. What about if they gave a work colleague a lift home?
Uber has every incentive to ensure those supplying its service are capable, honest etc but for those who are slaves to state controls this is far less certain than if the government controls them. Then again, perhaps Mr Samuel does not really believe this but is merely mouthing such excuses so that he can keep his cushy regulatory gig. Surely he has more integrity than this!