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PUC moves to protect Pittsburgh taxi monopoly

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By Matt Ryan
Wednesday, July 2, 2014, 9:00 p.m.

On Tuesday, the Pennsylvania Public Utility Commission ordered Uber and Lyft, popular ride-sharing services, to cease and desist their operations in Pittsburgh. And while the companies have seven days to file a response to the ruling, with a final ruling coming 30 days from the original ruling date, there will be no service in the interim (unless the services defy the order) — meaning Pittsburghers will be without services they have sought with increased frequency and found immensely valuable.

The PUC's ruling, like so many regulatory decisions, is couched in concern for the “public welfare.” But make no mistake, not only are Pittsburghers decidedly worse off, the regulated industry ends up capturing and controlling its oversight commission to better itself by restricting entry, decreasing service and increasing profits.

The outcomes of this particular instance of regulatory protection are plain enough to any Pittsburgh resident who has sought a ride from our own little OPEC. Taxi riders endure filthy vehicles and extensive wait times in the hope that their driver — operating purely in the public interest, of course — actually fulfills his end of the deal.

After all, regulatory protection and rigid pricing schemes lead to persistent shortages of available cabs. It's akin to severely restricting the number of meals served within the city limits — with diners begrudgingly accepting gruel since the alternative is nothing at all. Competition drives companies to serve their potential customers in ever-better ways; regulatory protection staves off this incentive to improve at the expense of consumers who would otherwise be receiving more for their dollar.

Do not let the guise of “public safety” lull you into a sense of obligation to the entrenched taxi industry; the rapid success of Uber and Lyft speaks volumes about taxi services locally. After all, if the public interest is of primary concern, why does the taxi industry need protection? If public interest is being met, what leg do Uber and Lyft have to stand on?

The myth that industries, absent government oversight, persist in undirected chaos must end. The question is not whether regulation exists or not; the question is who will do the regulating. Despite its persistent efforts, “The State” is not the world's largest regulator; that title lies with consumers.

Consumers regulate industries into providing goods people want. Consumers regulate industries into providing valuable service. Short of satisfying consumers, companies are regulated the way of Montgomery Ward. There exists no such thing as an unregulated industry.

Should you feel that our protected taxi service provides unwavering rides independent of destination — that is, it exists purely as a public service and not as a means of increasing profits through regulatory protection — then I offer the following experiment:

The next time you need a ride, call our trusty taxi companies and request two rides from two separate phones, one for one mile and one for 50 miles, both from the same location. See which taxi company — operating purely in the public interest, of course — arrives first.

Should our public servants be gracious enough to act in a manner befitting of our well-being and reinstate Uber and Lyft, I would recommend against trying such an act with Pittsburghers' preferred ride service — that is, unless you and your partner prefer to ride in two separate cars.

Matt Ryan is an assistant professor of economics at Duquesne University.

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