The Mero Moment: Uber versus New York City — August 6, 2015

New York City Mayor Bill de Blasio has a problem with Uber. His problem is that Uber is putting the taxicab industry out of business and the cab unions, city contracts and partisan political arrangements are being tested.

by Paul Mero
by Paul Mero

If you don’t know what Uber is, it’s a free market alternative to traditional taxicabs. Here’s how it works: Uber is run from an app on your smart phone. You download the app, provide some basic information and a method of payment (either a credit card or a PayPal account). When you need a ride, you open the app on your phone. Through its own GPS navigation system, it knows where you are. You type in your destination and request a car. An Uber driver accepts your request and comes to pick you up. The driver takes you to your destination and you hop out – just like a taxicab.

Unlike a taxicab, you know exactly what you’re getting. You know the Uber driver’s name, make and model of his car and even his license plate number. Every Uber driver is screened through a background check. Because drivers are rated by their customers and could lose their Uber license if they provide poor service or an unclean car, the drivers are incentivized to provide a pleasant and efficient ride. Your ride is pre-paid – usually at half the rate of a taxicab – and there’s no tipping expected.

A couple of weeks ago I was in Washington, D.C. and I needed to get from the United States Senate to a meeting in Arlington, Virginia, about 10 miles away. I stepped out to the street and waited to hail a cab. It took about ten minutes, standing in the hot sun and oppressive humidity, before an available cab passed by. Once in the taxicab, the driver didn’t know how to get to my destination. Like most cab drivers today, he got on his smart phone and spoke my destination into his GPS. The problem was that he had a very thick foreign accent and the GPS couldn’t make heads or tails of what he was saying.

Of course, I did what any frustrated passenger would do under the circumstances. I got on my smart phone and plugged the address into my GPS. Unfortunately, my GPS became confused with all of the downtown construction and alternative routes. I told the driver to just head toward Arlington – I grew up in the area and sort of knew where I was headed.

I mentioned that it was hot and humid that day. I actually had to tell the cab driver to turn on the air conditioning and, when he did, I barely felt it. And just when I thought the trip couldn’t get worse, the driver told me he had to shut off the A/C because it was affecting his gas mileage. In fact, he told me he had to pull into a gas station to refuel before we could get to my destination.

Look, the driver was a nice enough guy. But my experience in his cab was a disaster. By the time I reached my destination, I was soaking wet from the humidity and heat – a real bonus when I’m headed into an important meeting.

Contrast that ride with an Uber ride. Uber cars are clean. They actually function properly. The ride isn’t a crap shoot. You know exactly what you’re getting. You know when your car will arrive and you know how much it will cost. Unlike the taxicab experience, if something does go wrong with Uber, you have someone to complain to – you can even give your driver a poor rating. There are consequences for poor service. Can a consumer really ask for more than that?

But all of this great service and market incentives are in jeopardy in New York City. Mayor de Blasio is concerned that Uber cars will only create more traffic in an already congested environment. He says, “We cannot afford to have unlimited, unregulated growth of Uber.” What he can’t afford is to lose the political support of the taxicab industry. Uber represents an old story of free markets versus unnecessary government regulation.

The next time you need a taxicab, try Uber. You won’t be disappointed.

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