Ed Wallace

Automotive Regulations

There’s a political movement sweeping the country, and it’s difficult to tell whether it’s gaining momentum or disappearing under its own weight as it should. It’s based on the conceit that all big government is bad, all rules and regulations are unnecessary, and everything would be better if somehow most of our government had never existed. This mindset can be found in Austin, who insist that Texas sovereignty is superior to the nation’s; at the same time, some individuals do not believe our local communities have the right to pass laws and ordinances for cities’ benefit. The irony is that these people want to be the ultimate and total power in everything — by denying any other entity any power at all. And they sell it as more freedom for everyone. In fact, it is exactly the opposite.

And I heard that in the voice of one caller to my radio show last Saturday. Calling himself Steve from Indianapolis, he wanted to comment on my story about why Uber decided to turn off its taxi service in Boise, Idaho. Twice during our conversation he slid into it, “So, you believe in big government?” That’s such a black-and-white way to put that question, especially when an intelligent answer demands nuance.

Of course I believe in big government; so does any other intelligent, pragmatic, business-oriented American. However, that’s not to be confused with also disliking government waste, mismanagement or regulations that are time consuming and costly and do absolutely nothing to improve the issue at hand.

History shows that, in order to have a successful economy, a nation must have a large and well-formed government to organize society so that just such economic power can grow and thrive. America saw that exact argument played out during George Washington’s administration, when Thomas Jefferson and Alexander Hamilton debated what kind of government we should have; Jefferson foresaw a nation of agricultural workers, Hamilton an economic superpower.

One called for minimal central government; the other a larger and far more aggressive one that could build ports, roads and courts and administer the country’s growth. Hamilton’s debate was the true birth of our nation.

A Taxi by Any Uber Name

Steve commented on two stories I had done about the Uber individual ride-providing service. One involved an Uber driver by the name of David; he had leased a car to become a driver through Uber’s arrangements with Santander Bank — but he’d signed the lease and calculated his odds of succeeding when Uber was charging $1.48 per mile for travel. Soon after he joined up, Uber arbitrarily lowered its rate to 99 cents, at which point David could no longer make money driving for the taxi service and was in danger of losing that leased car.

He was not the first or only Uber driver to write me. One even sent his monthly statements from Uber, showing how his income fell from more than $3,000 a month, part time, to virtually nothing until he quit the company. My response was simple: Uber survives and possibly thrives by actions like slashing rates to get more fares. They get a lot more customers and for no additional costs; but their drivers, the ones paying the vast majority of the expenses to drive for the firm, are the ones who lose.

But that story wasn’t the one that set Steve off that day. No, it was the requirements that Boise, Idaho, demanded this taxi service meet. Uber General Manager Bryce Bennett’s response, as published in USA Today on February 27, was to call Boise’s demands “onerous.” Bennett went on to say, “The City is pursing an unworkable and outdated regulatory framework that would make it impossible for Uber to operate in Boise. Rather than crafting rules that recognize ridesharing is unique, … the city is trying to fit a square peg in a round hole, with no end date for approval in sight.”

Sorry Bryce, but Uber is not ridesharing. Ridesharing is like carpooling to work, where everyone pitches in for the gas. Uber is a taxi service for hire, pure and simple.

Nothing Extraordinary

Here’s what the city of Boise demanded of Uber and its drivers: That it perform background checks on drivers; an annual inspection of the car to be driven be done by the city; that the driver carry the right type of automobile insurance; that drivers get a physical and carry a commercial driver’s license; and, since by Uber’s definition their drivers are independent contractors and therefore self employed, that its drivers must obtain a city business license.

That’s right, Boise put no regulations on Uber that it doesn’t ask of any other local business owner which does home or business deliveries — other than the part about getting a physical. However, just to get a driver’s license you have to pass an eye exam. But Steve and those who share his political mindset see that as a huge intrusion, as government trying to shut down a brilliant idea.

Idaho and Montana are considered fairly conservative states, but Boise city spokesperson Mike Journee summed it up best when he said, “Unfortunately, Uber felt like us ensuring the safety of our residents is something they couldn’t do business with.” Nicely said.

And so I asked Steve whether he believed that airline pilots should be no longer required to have annual physicals, or that airlines should no longer have to do routine or periodic aircraft maintenance unless they feel like it. Come to think of it, maybe we should shut down the FAA and fire all the air traffic controllers; let the pilots and airlines sort out what’s needed for air travel, and let them pay for it all.

While we’re at it, why not shut down the National Highway Traffic Safety Administration and take all the laws off the books mandating automobile fuel efficiency and passenger safety features? And if we did all of that and went to the ultimate “let the buyer beware” economic society that this mindset is actually promoting, think of the money we could save on our judiciary: With no laws, regulations or enforceable contracts, there would be nothing left to adjudicate.

Cleaning up the Business Gene Pool

When put that way, most understand that by far most regulations put into place over the past 120 years were meant to save American industry from itself. After all, this modern regulatory environment started with Teddy Roosevelt’s Pure Food and Drug Act — enacted because some of our meatpacking plants, and some of the biggest corporate names still in America, were poisoning consumers with their food products. The government stepped into the early airline industry because they knew if planes kept crashing with passengers, America would never have a viable air transportation system. If the government hadn’t forced automakers to build more fuel-efficient and far safer vehicles, we would have a lot fewer car companies.

This current debate is far too one-sided; no one seems to stand up and point out that what really works well in America is also a direct result of government actions to promote or help viable industries. True, we could spend years discussing government waste and stupidity; frankly, that is always more fun. But this new mindset — “We can only make money if we are accountable to no one, including our customers” — is so … 1890s. (Please don’t e-mail me about how regulations hurt corporate profits; they’ve doubled as a percentage of our Gross Domestic Product over the past 40 years.)

These new start-up companies claim old rules don’t apply to new high tech ideas that are disruptive to the system. But hurricanes are disruptive too — and what’s left in their wake isn’t good. Then again, it’s government that cleans up their messes, too.

© Ed Wallace 2015

Ed Wallace is a recipient of the Gerald R. Loeb Award for business journalism. He hosts Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. E-mail wheels570@sbcglobal.net; read all of Ed’s work at www.insideautomotive.com.