Austin, Uber, and Democracy: What Happened and Why it Matters
by Carsten Hood
Alright, Austin—let’s talk about Uber, Lyft, and democracy.
In short, Austin voters recently considered some new regulations on so-called ride-sharing services, particularly a requirement that their drivers get fingerprinted. Uber and Lyft, the biggest names in this space, promised to skip town if these rules were upheld. Well, they were; and in turn the two companies made good on their word and left.
As a result, thousands of Austinites have lost their flexible jobs as drivers, and tens of thousands more a favorite mode of transportation, apparently needlessly. On top of that, there’s a widespread assumption that the original regulatory burden was motivated not by public safety concerns so much as by special interests—namely the Austin taxicab cartel, which has struggled with the nimble competition introduced by ride-sharing.
Others see big interests on the opposite end of this controversy. For example, many view Uber/Lyft’s efforts to sway the referendum—through radio advertisements, mass texts, door-to-door solicitation, and so on—as overly intrusive, often impolitic, and altogether a clear-cut case of trying to buy a democratic outcome with corporate wealth. From this perspective, the companies were, as one blogger put it, “trying to take the law into their own hands.”
Well, that certainly introduces the fundamental question here; that is, how society should determine safety in private services like ride-sharing. Should safety practices be decided by governments or by corporations? By voters or by consumers? By democracy—or by the democratic marketplace?
Most people would say, well, some combination of those things. That vaguely describes our present system. But many Austin locals were happier with the ride-sharing situation before democracy and regulation intervened. Why? Well, because the regulation and democracy inherent to the marketplace had subtly been at work all along.
Whenever you hail an Uber driver, you’re indicating a preference for that ride-sharing service over any alternative method of transportation. In essence, you’re voting for ride-sharing in that form. Because your vote directly affects you, you are likely to vote sensibly, taking into account your other options, your wallet, and yes, even your own safety. At least, you probably aren’t being steered by corporate interests, municipal politics, or career concerns—precisely the pressures that propelled both sides of the city’s recent referendum.
Thus, choosing market services is like casting votes in a democracy. But this sort of market democracy is much more elaborate and responsive than municipal voting. It comprehensively accounts for the public’s total demand for a service (conveyed by all of our voluntary payments towards it), the economic burden of the service’s safety measures (conveyed by the market prices the company has to pay for them), and the costs of mistakes when safety fails (conveyed by fallen demand and corporate liability expenditures). All these market-determined, crowd-sourced figures fit neatly on a firm’s balance sheet, allowing service providers like Uber and Lyft to apply basic arithmetic to help decide on an optimal, economic approach to safety.
Altogether these economic mechanisms are complex, but we don’t have to understand them for them to work. As citizens of society we must only appreciate that a market economy naturally seeks a balance between society’s unlimited desires—like safety—and the limited resources available to satisfy them.
Now, contrast a market’s built-in decision-making machinery with our recent municipal referendum. A majority of eligible citizens didn’t even participate; voter turnout was seventeen percent. Only a subset of this group represents the victorious proponents of regulating ride-sharing. Quite a few of them were confused about what they were actually voting for. Moreover, many of Austin’s heaviest ride-sharing users—visitors and tourists, locals from outside the city limits, and those too busy to vote—couldn’t participate at all.
All of this begs the question: why should the result of such an indirect, incomplete political contest override the invested and nuanced decisions of the hundreds of thousands of people who chose ride-sharing in Austin over its entire lifespan in town?
Well, it shouldn’t. State referendums are shoddy democracies. In such political spectacles, decisions are detached, options are limited, participation is a nuisance and likely inconsequential, and then, after a one-time determination, the outcome is suddenly universal, absolute, and compulsory. Besides, in this case the law had already been dictated by city officials and special interests; the vote was merely an effort to diminish it.
In effect the municipal government has, through the very illusion of voting, taken away our ability to truly vote in the marketplace. The end result was to remove two safe and popular services from Austin’s city limits. Austin is now less efficient, less safe, and poorer.
It all seems very regressive. My hometown is usually proud of being innovative and “weird,” but regulating away ride-sharing is a big step backwards. Forcing one’s judgement on others isn’t special; it’s typical. The city government’s policy falls in step with a long-established tradition of tyrants and bureaucrats who throughout history have wielded state power to enforce their own wills, the whole time professing to serve people’s interests. When will we—the people—wise up?
Free markets are a historically recent phenomenon. Similarly, ride-sharing is innovative and new. State paternalism, on the other hand, is getting very, very old. A final message to our municipal government, then: Let us decide what’s best for us. And please let Austin keep Austin weird.