Regulation, not Uber, is the enemy of metered taxi sector

The rapid rise of Uber in SA is an object lesson on how a marketdriven economy operates, and how it will eventually play out despite overregulation, ignorance and violent opposition.

Uber certainly has disrupted the hailed-taxi market. It is, in the first and most important instance, more affordable than traditional metered taxis. As a result, it has increased the size of the market; people who would otherwise not have considered using public transport now happily hail a ride.

It means, theoretically at least, that the traditional metered taxi operators also stand to benefit.

Moreover, Uber has a rating system that compels a customer to comment on the state of the vehicle and the behaviour of the driver. If the service is not up to scratch, Uber management knows instantly and the driver faces the consequences. This customer-oriented system is streaks ahead of the substandard experience the traditional taxi companies offer with their skorokoros.

However, the traditional taxi operators do have a point. They are regulated to charge a minimum fee and have to confine their operations to designated areas, unlike Uber operators, who are free to operate wherever they want and to undercut traditional taxis by as much as they like. This is what a free market means and, in a free market, Uber drivers have the advantage.

What the traditional taxi operators want is for the government to regulate Uber operators in the same way, presumably based on the assumption that oppressing their offering equally will result in equal opportunities for all.

It will not. What will happen is that the market will shrink to what it was before Uber arrived. Uber owner-drivers will sell their cars and join the ranks of the jobless, and drunk drivers will again take their chances. And yet another economic opportunity goes the South African way.

In this, Transport Minister Joe Maswanganyi appears to side with the traditional taxi operators, despite his apparent protestations. TimesLive reports him as saying that licensing Uber drivers means they would be restricted to a specific route or radius. “If you have a permit you are given a specific route. You do not operate everywhere.”

This is the same old anticompetitive drivel to which South Africans have become accustomed under the ANC’s authoritarian heel, and it has the same old consequences. Violence — the inevitable killing of an Uber driver — will have triumphed again.

The government’s response is equally predictable. Whenever something goes wrong, or even merely contradicts its insecure and authoritarian mindset, it makes another even more Draconian law. You would think the government would have worked out that its inability to countenance its own shortcomings is what creates the business-averse conditions that are the ruin of our economy.

Instead of imposing new and unenforceable regulations that create nothing but further opportunities for corruption and gouging, the minister should deregulate the metered taxi industry. Taxi regulation as it stands is a state-sanctioned instrument of collusion, designating areas and rates, which in a different statutory zone is a crime. What, were it not for the stipulations of the National Land Transport Act, would the Competition Commission have to say about that?

TAXI REGULATION AS IT STANDS IS A STATE-SANCTIONED INSTRUMENT OF COLLUSION, DESIGNATING AREAS AND RATES

When Maswanganyi tells the metered taxi industry “the issue is technology”, and when he issues a challenge to the industry to come up with “a South African solution”, he is being disingenuous. The way the industry is regulated now provides no incentive for the traditional taxi operators to change the way they do business. Technology is part of Uber’s success, but it is neither exclusive nor prohibitively expensive to embrace new technology.

Uber succeeds because the drivers are free to go where their customers demand and charge as little as they can tolerate. The government does not tell them to keep their vehicles clean and in good order, they do it because their business depends on it.

This is what the free market delivers. Everyone benefits — except perhaps the venal and the violent and the corrupt.

Blom is a fly-fisherman who likes to write.