Government often lags behind the private sector in adapting regulation to meet the times. As technology, artificial intelligence and other developments transform industries and create new jobs not even dreamed of in the past, this empowers consumers, entrepreneurs and workers alike. That is, if government can enable, rather than harm progress.
Jared Meyer shows in his new book, “Uber-Positive: Why Americans Love the Sharing Economy,” how innovation is endangered by overzealous government regulations shielding incumbent businesses, supposedly in the name of protecting customers.
Meyer, a fellow at the Manhattan Institute for Policy Research, doesn’t accept this at face value.
“The question to ask with each new regulation is: who is actually being protected — the public or special interests?” he writes.
The leading candidates of both major parties are appealing to crowds by harking back to manufacturing-based, 20th-century economic policies. Yes, we did have a post-war boom, but those days are long gone, as National Affairs writer Yuval Levin dissects in his recent book. Whether it’s Donald Trump barking about how he’ll bring back manufacturing jobs by government fiat (an endeavor that would likely harm consumers) or Hillary Clinton assailing the “gig economy,” both sides risk jeopardizing the future.
Meyer, himself a Millennial, understands these risks well. He outlines many of them with his co-author Diana Furchtgott-Roth in their previous book, “Disinherited: How Washington Is Betraying America’s Young.” By focusing specifically on the sharing economy in this new book, Meyer offers a warning call to regulators who would deprive his own and future generations of exciting new opportunities.
“Policy makers often fail to realize that a twenty-first-century economy cannot flourish while it is under the thumb of outdated laws and regulations,” Meyer writes. “Economies grow through a dynamic process that necessitates change and disruption. Forcing new models to comply with rules that were written decades ago is no way to promote entrepreneurship.”
Meyer points to an 80-year-old New York City law restricting the number of yellow taxi medallions allowed to compete for riders. Technology giant Uber upended the juggernaut, enabling millions of rides to take place in a new rideshare marketplace. This didn’t sit well with the taxi industry or its government supporters, who endangered entrepreneurs and the vast benefits that they provide for Manhattan consumers. Uber prevailed (for now), though Meyer warns of the extent to which government can stifle consumer benefits flowing to the underserved consumer.
Meyer had access to proprietary Uber data showing that almost 9.5 million UberX rides took place in 2014, with the greatest consumer access benefits occurring in low-and middle-income outer-borough New Yorkers the most. During 2014, Meyer reports that historically low-income neighborhoods of Jackson Heights, Astoria, Harlem and Washington Heights all saw UberX trips increase more than 12-fold. Meyer himself lived four years in Queens, where he reported difficulty hailing a cab. The data he analyzed found fewer than 6 percent of yellow taxis made pickups in more expensive ZIP codes outside of Manhattan or from the airports in December 2014, compared to 27 percent for UberX.
“[New York Mayor Bill] De Blasio’s misguided attacks on ride sharing threaten the growth of a system that has achieved what yellow taxis were never able to — expanding transportation options for low-income outer-borough New Yorkers,” Meyer writes.
The irony, of course, is that De Blasio was unexpectedly swept into office with a wave of low-income voter support on promises to improve life for everyday New Yorkers. Yet De Blasio’s 20th-century lens, mirrored in Washington by Barack Obama’s lens, is an anachronistic, creaky approach to government that is growing increasingly irrelevant among young people. Perhaps this is part of why the share of the federal workforce under age of 30 dropped to 7 percent this year, the lowest figure in nearly a decade, according to the Washington Post.
Government regulators are becoming increasingly irrelevant to consumer protection, as Meyer points out, arguing that the main justification behind local, state, and federal regulation has been consumer protection.
“A few decades ago, before ubiquitous Internet access, this reasoning may have made some sense,” he says. “But in today’s economy, information is controlled by customers thanks to the web’s user-generated content. This means that regulators do not have to play as large of a role in protecting consumers. As the power dynamic continues to shift in favor of the customers, the need for an expansive regulatory framework further diminishes. The sharing economy is the natural extension of this consumer-friendly environment, with its embrace of robust feedback systems.”
In November, voters will provide a robust feedback system as to which worldview will occupy the Oval Office. Over the next five months, one hopes we’ll see the candidates learning to understand how to lead in a 21st-century economy. “Uber-Positive” offers some valuable guideposts for getting there.
Carrie Sheffield is a Senior Writer for Opportunity Lives. You can follow her on Twitter @carriesheffield and on Facebook.
Cross-posted from Opportunity Lives.
Carrie Sheffield is the founder of Bold. She is passionate about storytelling to empower and connect others. A founding POLITICO reporter, Carrie contributed on political economy at Forbes and wrote editorials for The Washington Times. After earning a master’s in public policy from Harvard University, she managed credit risk at Goldman Sachs and researched for Edward Conard, Bain Capital founding partner and American Enterprise Institute scholar. She earned a B.A. in communications at Brigham Young University and completed a Fulbright fellowship in Berlin.