DC Taxi Commission Acting To Shut Uber Down

Moneybox
A blog about business and economics.
Jan. 13 2012 10:56 AM

DC Taxi Commission Acting To Shut Uber Down

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Photo by TOBY JORRIN/AFP/Getty Images

When I wrote about Uber, I said it was an exiting technological solution to a regulatory problem. The problem with being in that kind of business is that the regulations, or the interpretation of them, can always change. Here in Washington DC, for example, the Taxi Commission is orchestrating stings against Uber and says the company is operating illegally. Mike DeBonis reporting on the story gives this spin:

To address the issues, it appears Uber may have to do a better job coordinating cars and drivers with riders and their destinations — i.e., sending a D.C.-licensed car for D.C. -only trips. Second, the company might need to seek a change in city law or at least a new interpretation of city law allowing for their limos to use a meter system.
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I don't think that gets at the real issue, though, which I think is this. DC had a hard-fought mayor's election in 2010 in which the city's taxi drivers mobilized heavily in support of the challenger, Vince Gray. Gray won, Gray's administration owes favors to the taxi drivers, and the Gray administration has been moving on behalf of cabbies' economic interests by approving a substantial fare increase. Uber's game is to hack the regulatory system and introduce more competition with the taxis. A city government determined to increase the incomes of its cab drivers naturally isn't going to like that and will counter-mobilize with regulatory decisions. It's not really any one interpretation of any one rule so much as it is the underlying correlation of political forces. Does the DC government want more competition in the industry or does it want higher incomes for incumbent cab drivers? At the moment, the answer is higher incomes for incumbent cab drivers so this is what you get. 

CORRECTION: The original version of this item said Vince Gray was elected in 2006.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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