To understand the stranglehold the blue model puts on growth, consider the case of Uber, the service powered by a smartphone app that makes it much easier to get a cab and pay the fare by credit card. New York City has belatedly approved Uber under a “pilot program” that will allow only a limited number of such services. As Tim Worstall argues in Forbes, it’s a perfect example of how government hampers entrepreneurship:
Uber, or at least this part of Uber, is simply a method of hailing a cab. This is not a complicated task: it’s not rocket science and it’s not deciding where to put a nuclear power station. It’s an electronic version of standing in the street and waving your arms around.
Yet, despite this simplicity, the Taxi and Limousine Commission has taken nearly a year to even allow a pilot program to start. With only selected companies allowed to do so. That’s, writ small, what I think is the problem with the US (and it’s far worse here in Europe) at large. There are too many gatekeepers making it difficult to apply the new technologies to those real world problems. This limits growth simply because, at heart, growth is applying new technologies to real world problems.
Worstall’s main concern is that, for all the innovation in the US, there are still too many forces trying to prevent or limit creative destruction. Many New Yorkers would rather use a smartphone app to locate a nearby yellow taxi than stand on the street competing with other arm-wavers. But livery cab companies are complaining that such apps will render their services obsolete and put them out of business.
These car service companies are probably right, and their concerns are understandable. But like it or not this is how the free market works. Ordinary people want access to cheap and efficient services that make their lives easier and richer and are rightly unwilling to give up these advantages to give job security to the owners or operators of outdated services.
History tells us that lawmakers will eventually bow to these popular demands. But in the meantime, as Worstall concludes, “We’ve plenty of creation going on but just too many people not allowing the concomitant destruction.”
[Yellow taxi image courtesy of Shutterstock]