In Sarasota, Florida, we are about to encounter a remarkable experiment. In a controversial political outcome that was completely unexpected, the city commission deregulated taxis, limos, and services that include Uber. It did not start in that direction, but it ended that way. The Herald Tribune released a story about this decision, “Sarasota opts to deregulate Uber — and taxis.”
It will not take long for Sarasota regional residents and visitors to see whether a deregulated and market-based system of services will result in more efficiency activity and competitive pricing. This writer has already experienced Uber in Sarasota, with great success. We are about to see what happens when regulations are lifted and market forces alone determine the outcome. Caveat emptor (“Let the buyer beware”) is now at work in Sarasota.
The positive response to the decision on Uber here in Sarasota stands in contrast to the outrageous rebellion that occurred in Paris. There, taxi drivers trying to defend medallion pricing, which is determined solely by government regulation, shut down the entire taxi system. Uber executives in Europe face the threat of jail time in cases now being contested in French courts.
Uber-Like
Uber’s success is being widely emulated, and similar services are expanding worldwide. In its September 16, 2015, article, “Uber Rivals Form International Alliance,” The Wall Street Journal listed some new names in the business, including Chauffeur-Privé, Didi Kuaidi, Gett, GrabTaxi, Hailo, Lyft, Ola, and SnapCar. Uber has had resounding success wherever it has been permitted to operate, and competing consortiums are forming quickly around the world. They are creating interconnected apps for electronic devices and enabling visitors from anywhere in the world to use a global networking on-call system.
Will we see these alternatives in Sarasota? It’s very likely we will, since Sarasota is an attractive place for visitors. When those visitors realize their app works to hail transportation efficiently, just as they do elsewhere in the world, they will use it.
We now undertake a grand experiment in rapid change, assisted by an unexpected governmental decision. Will the shock delivered by the Sarasota City Commission be positive or negative? Only time will tell.
Critics of the commission’s decision have voiced concerns about public safety. They want regulation and seek rules. They argue that Florida does not have taxi-service regulations at the state level, only at the county and city levels. The detractors of Uber find it difficult to accept the marketplace as the regulator. They would prefer the forceful application of government regulatory power.
Smear Tactics
One detractor circulated a report about an Uber driver who had a criminal record. The fact is that reports can be circulated about anything and anybody with regard to virtually any activity. Such reports will generally make an example of somebody who slipped through a screening process. Is that a problem for Uber and its users? That problem exists whenever people entrust themselves to others. Perhaps it would be more useful to criticize the system itself that permits people to slip through the cracks and misrepresent themselves.
There is an entrenched entity that is under attack here. It is the monopolistic structure based on taxi medallions. By regulating the number of taxis that can be licensed, the medallion system has driven up licensing prices to astronomical levels in places like New York. Suddenly those prices are falling as competition erodes the monopolistic structure that was controlled by government and influenced by politicians. In Sarasota, that monopolistic structure no longer exists.
On the west coast of Florida, Sarasota is engaged in a substantial experiment in market-based capitalism and unregulated business activity.
I will now open my Uber app, head for the elevator, expect to get in a car within three minutes, and take a trip across town.
David R. Kotok, Chairman and Chief Investment Officer.