Nothing shows the mismatch between public sentiment and government action more clearly than Uber. Regulators seem determined to destroy an industry with almost unanimous public support.
The latest weapon of choice by WA regulators against Uber is private investigators. Last week, the Department of Transport released a tender calling for contractors to "undertake covert investigative operations". Regulators are getting desperate and scrambling to clasp on to the "sharing economy", in whatever way they can.
These investigators are worrying — both in practice and in precedent. We now have a situation where taxpayer funds are being used to restrict voluntary and mutually beneficial trade. West Australians should be deeply concerned by this government encroachment on their right to exchange.
It is baffling why Uber users are not up in arms. It is a telling sign of unrepresentative regulators that citizens must lobby for their right to free trade. Government treatment of the sharing economy makes this blindingly clear. While the sharing economy remains uncertain and unlawful it is conservatively estimated in the tens of billions of dollars.
We must ask: who is representative? Is it the regulators and the Taxi Services Commission, or the millions of satisfied Uber users? Governments have clearly forgotten that their most fundamental role is to represent the Australian people.
These investigators also set a dangerous precedent for the entire suite of current and future "sharing economy" platforms. Uber is not the first or nor the last. We're already seeing the success of Airbnb, Kickstarter and Airtasker. While we don't know what the next "sharing" business will be, we certainly want them to be Australian.
Australian governments should be welcoming to innovators and entrepreneurs. We must provide political certainty by displaying our flexibility and willingness to adapt. This is not achieved by shutting down new industries, squeezing companies into outdated and ill-fitted rules, or spending taxpayer dollars on unattainable enforcement.
Aside from the benefits of innovation, Australians should be appalled at this latest government intrusion on exchange. Acceptance of an Uber ride is a voluntary exchange. As with any other free market transaction, both parties understand the risks and agree to the conditions. To require permission to willingly trade private property flies in the face of a free society.
Sharing economy platforms tend to be cheaper, faster and of higher quality than their government controlled rivals. They stimulate economic growth, generate flexible employment opportunities, and help with growing congestion and sustainability concerns in the process.
The problem is that incumbent industries are threatened by the loss of their artificially high profits. For years, taxis have enjoyed government-granted barriers to entry. And now we have tech entrepreneurs competing for the same customers but with a radically different and decentralised business model.
In the case of Uber, the root of the problem is that the entire structure of the taxi industry is based on government determined rules: what does a taxicab look like, how many there are, who can drive them, and so forth. Specific rules suppress competition because innovation occurs at the boundaries of industries. This brings higher prices for consumers, higher profits for licence owners, and a lower quality service. Any taxi ride in the previous few decades would make this obvious.
Unfortunately the transition from old rules to new rules will not be a frictionless. Traditional industries will continue to put up a fight. We are seeing this in real time with the Taxi Services Commission. And while these industries — which will be inevitably be destroyed — have every incentive to pay to protect their artificially high prices this does not make good policy.
Some deregulation is now inevitable. But the question is whether new legislation will be placed around Uber. Australians should be just as cautious of this.
There will undoubtedly be more disruption in the transport industry. Regulating ride sharing in the same way we regulated the taxis will only generate future problems similar to the ones we're having now. We would only be creating barriers for the next Uber.
As consumers rush towards this revolutionary mode of economic organisation, the Government needs to ensure that regulators are working for consumers, not for incumbent industries.
If a consumer and a producer wish to exchange on a free market without interfering with third parties, then they should be emphatically free to do so.
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