Taxi drivers in many countries and in the United States are petitioning their various governments to shut down Uber. Governments are listening and taking action.
First a quick look at Uber’s business model. Regular people become drivers for Uber. They undergo a relatively light background check, criminal records and the like, and when approved are allowed to pick up passengers in much the same way a cab does. The difference being that the drivers are on their own time with their own vehicles.
Passengers simply announce they are looking for a ride and the call goes out to nearby drivers who then take them to their destination.
It seems like a simple and elegant solution to getting people from point A to point B with as little fuss as possible. The rides are almost universally cheaper than cab rides. This does not sit well with taxi drivers and the solutions largely being proposed involve Uber paying larger fees.
Why, you might ask?
Because taxi companies pay large fees to the city governments in order to be licensed to operate their business. If a better model comes along and displaces them that means the taxi companies go out of business. This means, and here is the important part, the taxi companies stop paying ludicrous fees to cities in order to operate. That’s a nasty loss in revenue for the government.
The entire fee system is based on a government revenue plan that exacts money from businesses in order to operate in a legally licensed way. Without licenses the business cannot operate. It’s not completely ridiculous because it’s reasonable to have some sort of system for accountability should a business blow into town, sell a fake service or dangerous product, and then leave without recourse for those hurt or bilked.
But the entire system has gone way beyond any attempt to help protect citizens. It’s all about how much the city can extort from the business owner in order to operate. Liquor license? Pay up. Taxi license? Pay up. Any license? Pay up.
Not to mention companies bail on debts and responsibility all the time anyway, it’s called bankruptcy.
I’m not an anarchist. I don’t think anyone should be able to set up shop anywhere, anytime. That is dangerous. There are bad people in this world. That being said, Uber is a big company with a lot of money. They have executives who are well known. They can’t simply pack up and leave. Their business model is good for citizens, people want it. They love it.
The solution isn’t to charge Uber huge fees. It’s to reduce the ridiculous fees taxi companies pay. Let the best business model win. That’s good for you and me and ultimately the government, although those in such positions are far too short-sighted to see it.
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