Friday, 23 January 2015

Uber in New Zealand

Mr Plod and The Free Market

Human interaction in the marketplace is a fascinating study.  At the point of exchange, where a buyer and seller exchange property, all kinds of evil can be present: deceit, fraud, dissembling, theft, passing off, price gouging, refusal to pay--the list goes on.  Given our common propensity to rape and pillage, how could a universal behaviour such as buying and selling ever be kept relatively honest?

The statist answer is--no prize for guessing--the state's rules and regulations, restrictions and permits will keep the market place fair and honest.  The libertarian's answer is a transparent marketplace itself keeps the participants honest.

The libertarian belief in the regulating and moderating power of the marketplace really turns around human prudence and freely available information. Exploiters and bad-faith traders become known and exposed. No-one except fools want to deal with them. Both buyer and seller have a duty of care to themselves.  Market information about participants--good and bad--means that bad traders are driven out; good (that is, ethical) traders become more prosperous.  There are sanctions available in a free market, but they are largely by means of claims in a civil court.  If one "rips off" another, they are liable to civil action where the court may order redress and restitution. 

Between the two poles of statism and libertarianism, the market manages to trundle along.  Every so often there is a paradigm shift which shakes up all the participants in a particular industry.  Right now, one example is the taxi industry versus Uber.  The interplay between the transactors and the marketplace and the authorities is fascinating--and predictable.  Rodney Hide tells us how it is playing out in New Zealand:

The police last week kicked a DJ, Tim Phin, out of a car. His crime? A capitalist act between consenting adults.  He and a mate had used Uber to hire a ride. I imagine it was going well. Phin and his mate were getting down the road, their driver providing good service and making money.

But, unfortunately, Mr Plod out on patrol had nothing better to do than use his Plod power to end the ride.  Plod then charged the driver with using a "form of meter"- ie a smartphone - to set a fare rather than an hourly rate or set fee.

Uber says Plod was wrong. Uber claims it is fully compliant and has laid a complaint against the police.  There's a clash over the rules but the real clash is the future colliding with the past.  Until now, we have relied on the police to regulate taxis. Politicians have piled regulation upon regulation, pushing up taxi fares and making it ever tougher to run a cab.  The Government even requires cameras in cabs and has police patrolling to ensure the correct camera is installed and that it works.

Technology and Uber blow all that away.  Uber hire cars are cheaper, better and more efficient. Bureaucrats and regulation can't beat the power of peer-to-peer business.  Uber's algorithms assign a driver whom you deal with from start to finish, not a dispatcher, and every ride allows you to assess the driver.  Customers give drivers a star rating out of five, which is public.

Too many negative reviews and you no longer drive for Uber. The discipline is fast and quick. It beats any system of government-mandated licensing.  Think of Trade Me. It enables peer-to-peer buying and selling. Uber does the same for a ride home.  It's a whole new way of doing business. It disempowers bureaucrats and puts customers and drivers in charge.

I love it. The public transport of the future won't be clapped-out trains but driverless cars and Uber. It may happen much quicker than we now can possibly imagine.  We won't own a car. A driverless car is always just a minute away, ready to whisk us to our destination.

Government should not use police power to stomp on the future. It should do what government should always do: get out of the way.  Uber is not compulsory. No one has to use the service. No one is being hurt by it. Sure, existing taxi companies are feeling the heat. But that's always the way with new technology and new ways of doing things. Progress is always disruptive.

I am looking forward to peer-to-peer policing.  Imagine the feedback we would give cops who toss us out of our ride home and ping us for travelling 1km over the speed limit.  And who wouldn't give feedback on their couldn't-care-less response to our complaints of burglary?

The police shouldn't stomp on Uber. They should learn from it.

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